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iminal Appeal No. 19 of 1957.
Appeal by special leave from the judgment and order dated March 7, 1956, of the former PEPSU High Court in Criminal Revision No. 45 of 1956, arising out of the judgment and order dated February 22, 1956, of the Additional Sessions Judge, Patiala, in Criminal Appeal No. 175/36 of 1955 56.
Pritam Singh Safe&, for the appellant.
N. section Bindra and T. M. Sen, for the respondent.
April 21.
The Judgment of the Court was delivered,by KAPUR, J.
This is an appeal by special leave against the judgment and order of the High Court of PEPSU passed in revision '.
The appellant was a sub Inspector of Police who at the relevant time was the Station House Officer in charge Shehna police station in the erstwhile PEPSU State.
He was convicted under section 193, Indian Penal Code, by a First Class Magistrate and his appeal to the Sessions Judge, Patiala, was dismissed except as to sentence.
He took a revision to the PEPSU High Court but that was also dismissed.
This appeal has arisen in the following circumstances: One Surjit Singh, s/o Risaldar Waryam Singh, was arrested on September 25, 1953, at Barnala in PEPSU State by the Police Inspector Jaswant Singh.
He was kept in the lock up at Barnala and on the following day his custody was handed over to the appellant and he was taken to Shehna and was kept in custody it 729 is not clear under what section in the police station lock up at Shehna.
Surjit Singh was there kept in custody from September 26, 1953, till October 10, 1953, when at about 10 p.m., he was surreptitiously removed to Police Station Dialpur and then to Police Post Hamirgarh and from there was taken to Police Station Baga Purana in Ferozepur District, of the then Punjab.
An application under section 491 of the Criminal Procedure Code and under article 226 of the Constitution was made for a writ of Habeas Corpus and Mandamus in the High Court of PEPSU.
In that petition it was alleged that Surjit Singh was being kept in unlawful custody without any charge being made and without obtaining a remand by a Magistrate.
In reply to this, an affidavit dated October 13, 1953, was filed by the appel.
lant in which he stated that Surjit Singh had association with notorious dacoits; that he, the appellant, had never taken him into custody at any time; that the said Surjit Singh was absconding and had not been arrested in spite of the best efforts of the police; that at the time of the making of the affidavit he was not in the appellant 's custody and that it was incorrect that Inspector Jaswant Singh had ever entrusted Surjit Singh to his (appellant 's) custody.
He also stated that no petition had been brought to him nor had he received any telegram in connection with the custody of Surjit Singh.
This affidavit was affirmed as follows: " I solemnly affirm that the facts stated from paras Nos.
I to 7 are true to the best of my knowledge and belief and nothing which is relevant to this case has been kept back from this Hon 'ble Court ".
As both the parties admitted before the High Court that Surjit Singh was not in the custody of the appellant the petition was dismissed.
On November 9, 1953, the brother of Surjit Singh made an application under section 476, Criminal Procedure Code, for the prosecution of Inspector Jaswant Singh and the appellant for perjury under section 193, Indian Penal Code, in that they had filed false affidavits.
This matter was heard by another learned Judge of that Court who ordered the 92 730 prosecution of the appellant and directed the Registrar of the High Court to file a complaint which was filed.
The complaint was taken cognizance of by the First Class Magistrate at Patiala who convicted the appellant and sentenced him to nine months ' imprisonment and a fine of Rs. 300/ and in default to undergo simple imprisonment for two months.
The appellant took an appeal to the Sessions Judge, Patiala, who confirmed the order of conviction but reduced the sentence to one of three months ' simple imprisonment and a fine of Rs. 50 and in default one month 's simple imprisonment, a revision against this order was dismissed in limine by the Chief Justice although he gave reasons for dismissing it.
The appellant then obtained special leave from this Court.
On behalf of the appellant the first contention raised was that the appellant was not bound to file an affidavit and therefore he could not be convicted under section 193, Indian Penal Code, because his case did not fall under section 191, Indian Penal Code.
In support of his contention he relied upon the Rules of the PEPSU High Court framed for the purpose of proceedings under article 226 and section 491(2), Criminal Procedure Code, for the issuing of writs of Habeas Corpus.
He also referred to the Rules made by that Court for the issuing of writs of Mandamus, Prohibition, Quo Warranto and Certiorari under article 226 and submitted that there was no Rule in the former, i.e., for writ of Habeas Corpus requiring a return to be made on behalf of the res pondent to be sup ported by an affidavit whereas in the latter, i.e., issuing of writs of Mandamus etc.
an affidavit was necessary and therefore it was submitted that section 191 was inapplicable.
Rule 2 of the Rules of the Court required that when a Judge was of the opinion that prima facie case had been made out for granting the application a rule nisi was to issue calling upon the person or persons against whom the order was sought, to appear before the Court and to show cause why such an order should not be made.
As has been pointed out in Greene vs Home Secretary (1) which was a case under Reg.
18 B of the Defence of the (1) , 302. 731 Realm Act the whole object of proceedings for a writ of Habeas Corpus is to make them expeditious, to keep them as free from technicality as possible and to keep them as simple as possible.
" The incalculable value of Habeas Corpus is that it enables the immediate determination of the right to the appellant 's freedom " (Lord Wright).
When there is no question of fact to be examined or determined no affidavit is needed.
As soon as there emerges a fact into which the Court feels it should enquire the necessity for an affidavit arises.
Ordinarily an affidavit may not be necessary in making the return if the detention is under orders of the detaining authority in exercise of its plenary discretion as in Liversidge vs Anderson (1) and in Greene 's case (2) or a person is detained under the orders of a Court.
But where the detention is, as it was in the present case, it becomes necessary for the detaining authority to justify its action by disclosing facts which would show to the satisfaction of the Court that the custody is not impro per.
Where the prisoner says " I do not know why I have been detained, I have done no wrong ", it is for the detaining authority to justify the custody.
When issues of fact are raised and the actions of the police officers, as in the present case, are expressly challenged and facts are set out which if unrebutted and unexplained would be sufficient for the writ to issue, an affidavit becomes necessary.
It cannot be said therefore that in the present case the appellant was not legally bound to place facts and circumstances before the Court to justify the detention of Surjit Singh and, this could be done by an affidavit.
Section 4 of the Oaths Act lays down the authority to administer oaths and affirmations and it prescribes the courts and persons authorised to administer by themselves or by their officers empowered in that behalf oaths and affirmations in discharge of the duties or in exercise of the powers imposed upon them and they are, all courts and persons having by law the authority to receive evidence.
Section 5 prescribes the persons by whom oaths or affirmations must be (1) ; (2) , 302. 732 made and they include all witnesses, i. e., all persons who ' may lawfully be required to give evidence by or before any court.
These two sections show that the High Court or its officers were authorised to administer the oath and as the appellant was stating facts as evidence before the High Court he had to make the oath or affirmation and was bound to state the truth.
Section 14 of that Act is in the following words: section 14.
Every person giving evidence on any subject before any Court or person hereby authorised to administer oaths and affirmations shall be bound to state the truth on such subject ".
As the appellant was giving evidence on his own behalf in that he was denying the allegation made in the affidavit of the brother of Surjit Singh he was bound to state the truth on the subject on which he was making the statement.
The contention therefore that under section 191 of the Indian Penal Code the relevant portion of which is: section 191.
" Whoever being legally bound by an oath or by an express provision of law to state the truth . . makes any statement which is false and which he either knows or believes to be false or does not believe to be true, is said to give false evidence " the appellant was not legally bound by oath to state the truth cannot be supported.
On the other hand at the stage of the proceedings in the High Court where it was being alleged that Surjit Singh was being detained by the appellant illegally it was necessary for the appellant to make an affidavit in making a return and therefore if the statement is false, as it has been found to be, then he has committed an offence under section 193.
The opening words of section 191 whoever being legally bound by an oath or by an express provision of law to state the truth. . do not support the submission that a man, who is not bound under the law to make an affidavit, can, if he does make one, deliberately refrain from stating truthfully the facts which are within his knowledge,.
The meaning of these words is that whenever in a court of law a person binds himself on oath to state the truth he is bound to state the 733 truth and he cannot be heard to say that he should not have gone into the witness box or should not have made an affidavit and therefore the submission that any false statement which he had made after taking the oath is not covered by the words of section 191, India Penal Code, is not supportable.
Whenever a man makes a statement in court on oath he is bound to state the truth and if he does not, he makes himself liable under the provisions of section 193.
It is no defence to say that he was not bound to enter the witness box.
A defendant or even a plaintiff is not bound to go into the witness box but if either of them chooses to do so he cannot, after he has taken the oath to make a truthful statement, state anything which is false.
Indeed the very sanctity of the oath re quires that a person put on oath must state the truth.
In our opinion this contention is wholly devoid of force and must be repelled.
It was then contended that the officer before whom the appellant swore the affidavit, i. e., the Deputy Registrar of the High Court of PEPSU was not authorised to administer oaths.
That officer as a witness for the prosecution has stated that he could administer an oath and therefore this contention of the appellant is also without any force and must be repelled.
It was also argued that the affidavit filed by the appellant was affirmed as being true to the best of knowledge and belief and therefore it could not be said as to which part was true to the appellant 's knowledge and which to his belief.
We have read the affidavit which consists of 7 paragraphs and each paragraph relates to affirmation of a fact which, if true, could only be so to the appellant 's knowledge.
But even belief would fall under Explanation 2 to section 191 which is as under: Explanation 2 to section 191.
" A false statement as to the belief of the person attesting is within the meaning of this section, and a person may be guilty of giving false evidence by stating that he believes a thing which he does not believe, as well as by stating that he knows a thing which he does not know 734 The appellant relied upon a judgment of the Allahabad High Court in Emperor vs Lachmi Narain (1).
But unless there was something peculiar in the facts of that case it cannot be considered to be good law.
It does not even take into consideration Explanation 2 of section 191.
Lastly it was urged that the procedure adopted by the Magistrate was erroneous in that he did not hold an enquiry as required under sections 200 and 202, Criminal Procedure Code, the former of which is expressly mentioned in sub section 2 of section 476, Criminal Procedure Code.
That contention is equally untenable because under section 200, proviso (aa) it is not necessary for a Magistrate when a complaint is made by a court to examine the complainant and neither section 200 nor section 202 requires a preliminary enquiry before the Magistrate can assume jurisdiction to issue process against the person complained against.
In our opinion the appellant has been rightly convicted and we would therefore dismiss this appeal.
Appeal dismissed.
| A habeas corpus application was made to the High Court alleging that one S had been illegally arrested and kept in unlawful custody without any charge being made against him and without obtaining remand from a Magistrate.
By way of a return the appellant, a sub Inspector of Police, filed a false affidavit controverting the allegations made in the application.
He was prosecuted and convicted under section 193, Indian Penal Code.
The appellant challenged his conviction on the grounds that: (i) as he was not bound under the law to file an affidavit, the case did not fall under section 191 of the Indian Penal Code and he could not be convicted under section 193 ; and (ii) the affidavit having been affirmed as true to the best of the knowledge and belief of the appellant it could not be said which part was true to his knowledge and which to his belief.
Held that, the appellant was rightly convicted.
It was not necessary for the application of section 191 of the Indian Penal Code that the accused should be bound under the law to make an affidavit.
If he chose to me one and bound himself on oath to state the truth he was liable under section 193 Of the Code if e made a false statement and it was no defence to say that he was not bound to enter the witness box or make an affidavit.
In the present case it was necessary for the appellant to file an affidavit as he was bound to place the facts and circumstances justifying 728 the detention which could only be done by an affidavit.
Ordinarily, where the detention is under orders of the detaining authority in exercise of his plenary powers or of a Court an affidavit may not be necessary in making the return but where it becomes necessary for the detaining authority to justify its action by disclosing facts it has to file an affidavit.
Held, further, that explanation 2 to section 191 of the Code brings a false statement affirmed to the belief of the accused also within the mischief of section 191 and thus makes it punishable under section 193 of the Code.
Emperor vs Lachmi Narain, I. L. R. 1947 All.
155, dis approved.
|
Appeal No. 1705 of1969.
Appeal by special leave from the order dated February 21, 1959, of the Central Government Labour Court, Delhi in I.C.A. No. 2 of 1968 and Civil Appeal No. 1781 of 1969.
Appeal by special leave from the order dated February 24, 1969 of the Additional Industrial Tribunal, Delhi in I.D. No. 73 of 1968 and Appeal from the judgment and order dated February 21, 1969 of the Patna High Court in Civil Writ Jurisdiction Case No. 730 of 1968.
Niren De, Attorney General and section P. Nayar, for the appellant (in C. A. No. 1705 of 1969).
M. K. Ramamurthi, E. C. Agarwala, R. P. Agarwala and M. V. Goswami, for the respondent (in C. A. No. 1705 of 1969).
H. R. Gokhale, Jitendra Mahajan, for the appellant (in C.A. No. 1781 of 1969).
M. K. Ramamurthi, J. Ramamurthy and Madan Mohan, for the respondents (in C. A. No. 1781 of 1969).
H. R. Gokhale, M. C. Bhandare, for the intervener.
180 A. K. Sen, Ranen Roy and A. K. Nag, for theappellant (in C. A. No. 1777 of, 1969).
D. Goburdhun, for respondent No. 1 (in C. A. No. 1777 of 1969).
P. N. Tiwari and Shiva Pujan Singh, for respondent No. 3 (in C. A. No. 1777 of 1969).
The Judgment of the Court was delivered by Hidayatullah, C.J.
This judgment will dispose of Civil Appeals Nos. 1705 of 1969, 1781 of 1969 and 1777 of 1969.
The first is an appeal by the Management of Safdarjung Hospital, New Delhi.
The second by the Management of Tuber culosis Hospital, New Delhi and the third by the Kurji Holy Family Hospital, Patna.
The first two are filed by special leave and the third by certificate.
They call in question respectively the order of the Central Government Labour Court, Delhi dated 21st February, 1969 on an application under section 33C(2) of the Industrial Disputes Act, 1949, the order of the Presiding Officer, Additional Industrial Tribunal, Delhi dated 24th February, 1969 and the judgment and order dated 21st February, 1969 of the Patna High Court.
They raise a common question of law whether these several hospitals can be regarded as industries within the meaning of the term in the Industrial Disputes Act.
They also raise different questions on merits which will be considered separately.
The facts of the three cases may be noticed briefly before we begin to examine the common question of law mentioned above.
C.A. Nc. 1705 of 1969.
The Management of Safdarjung Hospital, New Delhi was the respondent in a petition under section 33C(2) of the in a petition by the present respondent Kuldip Singh Sethi, a Lower Division Clerk in the Hospital, for computation of the amount of salary etc.
due to him in the pay scale of store keepers.
Kuldip Singh Sethi was appointed as a Store keeper on October 26, 1956 in the pay scale of Rs. 60 5 75.
This scale was revised to Rs. 110 180 on July 1, 1959 in accordance with the ,recommendations of the Second Pay Commission.
Two or three months later the pay was re fixed and the time scale was Rs. 110 131 with usual allowances.
On July 1, 1962 his basic pay was fixed at Rs. 131.
On November 26, 1962 the Government of India in the Ministry of Health re revised the pay scales of Store keepers to Rs. 130 5 160 8 200 EB 8 280 10 300 with the usual allowances.
The order was to lake effect from the date of issue.
Kuldip Singh Sethi complained by his petition that the Management of the Hospital had failed to give him pay in this scale and claimed Rs. 914 for the period November 26, 1,962 to May 31, 1968.
181 In rely to his petition the Management contended that Kuldip p Singh Sethi was not a workman but a Government servant governed by the Conditions of Service for Government Servants and hence he could not invoke the since the Safdarjung Hospital was not an industry.
The Tribunal following the decision of this Court in State of Bombay vs Hospital Mazdoor Sabha(1) has held that the Hospital is an 'industry ', that Kuldip Singh Sethi is a 'workman ' and hence he is entitled to take recourse to section 3 3C (2) of the .
On merits his claim is found sustainable and he is given an award for Rs. 914.
We need not mention at this stage the grounds on which the merits of his claim are resisted.
The point of law that arises in the case is whether the Safdarjung Hospital can be properly described as an 'industry ' as defined in the .
C.A. No. 1781 of 1969.
In this case there is a dispute between the Management of the Tuberculosis Hospital, New Delhi and its workmen represented by the Aspatal Karamchari Panchayat regarding pay scales, and other facilities demanded by the workmen.
The Management has taken the preliminary objection that the does not apply since the Hospital is not an industry and is not run as such.
The Management.
, therefore, questions the reference to the Tribunal under section 10(1) (d) of the .
A preliminary issue is raised : "Is T.B. Hospital an industry or not?" In support of the case that the Hospital is not an industry, the Management emphasises the functions of the Hospital.
It is pointed out that the Hospital is run by the Tuberculosis Association of India as a research institute where training is given to Medical ,,graduates of the Delhi University for the D.T.C.D. and D.C.H. Courses, and postgraduates and undergraduates of the All India Institute of Medical Sciences are also provided training and nurses from the Delhi College of Nursing, Safdarjung, Lady Hardinge, and Holy Family Hospitals receive training.
The Hospital, it is admitted, has paid and unpaid beds but it is submitted that treatment of tuberculosis is a part of research and training and education, and, therefore, the Hospital has affinity to a University and, not to a Hospital proper.
It is, therefore, contended that this ,Hospital is not an industry.
The Tribunal holds that neither the research carried on, nor the training imparted, nor the existence .of the Tuberculosis Association of India with which the Hospital is affiliated makes any difference and the case falls within the ruling of this Court in the Hospital Mazdoor Sabha(1) case.
The (1) ; 182 Tribunal holds the Tuberculosis Hospital, New Delhi to be an industry.
C.A. No. 1777 of 1969.
The appeal arises from a writ petition filed in the High Court of Patna.
The Kurji Holy Family Hospital took disciplinary action against two of its employees and the matter was taken up by the Kurji Holy Family Hospital Employees Association and the State of Bihar made a reference to the Labour Court, Patna under section 10 of the .
Before the Tribunal, the Management of the Hospital took the objection inter alia that a hospital was neither a trade nor a business, nor an industry as defined in the and as such the provisions of the were not applicable and the reference was incompetent.
The High Court holds this point against the Management, following the Hospital Mazdoor Sabha(1) case.
The later case of this Court reported in Secretary, Madras Gymkhana Club Employees Union vs Management of the Gymkhana Club(2) is held not to have weakened the effect of the decision in the case relied upon.
It is thus that the three cases came before us and were heard together.
Counsel in these cases submit that the ruling in the HospitalMazdoor Sabha(1) case has now been considerably shaken by the pronouncement in the Madras Gymkhana Club (2) case where it was I observed that the Hospital Mazdoor Sabha( ') case was one which might be said to be on the verge and that there were reasons to think that it took an extreme view of an industry.
Relying on this observation, counsel in the three appeals asked for a reconsideration of the Hospital Mazdoor Sabha(1) case although they conceded that it was not yet overruled.
We accordingly heard arguments on the general question whether a hospital can be said to be an industry falling within the and under what circumstances.
We also heard arguments on the merits of the appeals to determine whether the decisions rendered therein could be upheld even if the Hospital Mazdoor Sabha(1) case was held applicable.
We shall follow the same course here.
We shall first consider the general proposition whether a hospital can be considered to fall within the concept of industry in the and whether all hospitals of whatever description can be covered by the concept or only some hospitals under special conditions.
We shall then consider the merits of the individual cases in so far as may be necessary.
The was construed in the past on more than one occasion by this Court.
A fairly comprehensive summary of the various cases with the rationes decidendi of those (1) ; (2) [1968] 1 S.C.R. 742.
183 cases is to be found in the Gymkhana Club(1) case.
, The tests applied to find out whether a particular establishment falls within the definition of 'industry ' or not were not found to be uniform and disclosed a pragmatic approach to the problem.
This Court, ,therefore, in Gymkhana Club(1) case fell back upon the statute for guidance pointing out that they were not concerned with a popular phrase but one which the statute, had with 'great particularity defined itself.
Examining the content of the definitions this Court came to certain conclusions and held in their light that a non proprietary members ' club was not an industry.
The reasoning in the Gymkhana Club(1) case formed the basis of an attack on the former ruling in the, Hospital Mazdoor Sabha(2) case by the Managements of the three Hospitals which are appellants here.
The other side relied.
upon the ruling and the amendment of the by which 'Service in hospitals and dispensaries ' has now been added as item No. 9 in the First Schedule, as one of the industries which may be declared to be public utility services under sub cl .
(vi) of cl.
(n) of section 2 of the Act.
It is claimed that this is a legislative determination of the question whether hospital is an industry or not.
It has, therefore, become necessary to cover some of the ground covered,in the Gymkhana Club(1) case.
To begin with we may once again refer to the relevant definitions contained in the Act for they must necessarily control our discussion.
The , as its title and indeed its whole tenor disclose, was passed to make provision for the investigation and settlement of industrial disputes and for certain other purposes appearing in the Act.
The term 'industrial dispute ' is defined by section 2(k) in the following words " 'industrial dispute ' means any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
" The definition discloses that disputes of particular kinds alone are regarded as industrial disputes.
It may be noticed that this definition does not refer to an industry.
But the dispute, on the grammar of the expression itself, means a dispute in an industry and we must, therefore, turn to the definition of 'industry ' in the Act.
The word is defined in cl.
(j) and reads : " 'industry ' means any business, trade, undertaking, manufacture or calling of employers and includes any (1) [1968] 1 S.C.R. 742.
(2) ; 184 calling, services, employment, handicraft, or industrial occupation or avocation of workman.
" This definition is in two parts.
The first part says that it means any business, trade, undertaking, manufacture or calling of ,employers and then goes on to say that it includes any calling, service, employment handicraft or industrial occupation or avocation of workmen.
In dealing with this definition this Court in the Gymkhana ,Club case(1) attempted to keep the two notions concerning employers and employees apart and gave the opinion that the denotation of the term 'industry ' is to be found in the first part relating to ,employers and the full connotation of the term is intended to include the second part relating to workmen.
It was, therefore, concluded: "If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part, takes in the different kinds of activity of the employees mentioned in the second part, But the second part standing alone cannot define 'industry. .
By the inclusive part of the definition the labour force employed in an industry is made an integral part of the industry for purposes of industrial disputes although industry is ordinarily something which employers create or undertake." These observations need to be somewhat qualified.
It is to be noticed that this definition modifies somewhat the definition, of "industry ' in section 4 of the Commonwealth Conciliation and Arbitration Act 1909 1970) (Acts Nos. 13 of 1904 and 7 of 1910) of Australia where the definition reads " 'industry ' means business, trade, manufacture, undertaking, calling, service or employment, on land or water, in which persons are employed for pay, hire, advantage or reward, excepting only persons engaged in agricultural, viticultural, horticultural, or dairying pursuits.
" Although the two definitions are worded differently the purport of both is the same.
It is not necessary to view our definition in two parts.
The definition read as a whole denotes a collective enterprise in which employers and employees are associated.
It does not exist either by employers alone or by employees alone.
It exists only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, (1) [1968] 1 S.C.R. 742.
185 employment, handicraft or industrial occupation or avocation.
There must, therefore, be an enterprise in which the employers follow their avocations as detailed in the definition and employ workmen who follow one of 'the avocations detailed for workmen.
The definition no doubt seeks to define 'industry ' with reference to employers ' occupation but includes the employees, for without the two there can be no industry.
An industry is only to be found when there are employers and employees, the former relying upon the services of the latter to fulfil their own occupations.
But every case of employment is not necessarily productive of an industry.
Domestic employment, administrative services of public officials, service in aid of occupations of professional men, also disclose relationship of employers and employees but they cannot be regarded as in the course of industry.
This follows from the definition of 'workman ' in the Act defined in cl.(s) which reads "workman ' means any person (including an ap prentice) employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceed ing under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a conse quence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person (i) who is subject to the , or the or the Navy (Discipline) Act, 1934; or (ii) who is employed in the police service, or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv)who, being employed in a supervisory capacity,draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
" The word 'industry ' in this definition must take its colour from the definition and discloses that a workman is to be regarded as one employed in an industry if he is following one of the vocations mentioned in conjunction with his employers engaged in the vocations mentioned in relation to the employers.
Cl/70 13 186 Therefore an industry is to be found when the employers are carrying on any business, trade, undertaking, manufacture or calling of employers.
If they are not, there is no industry as such.
What is meant by these expressions was discussed in a large number of cases which have been considered elaborately in the Gymkhana Club(1) case.
The conclusion in that case may be stated : "Primarily, therefore, industrial disputes occur when the operation undertaken rests upon cooperation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in cases where the co operation is to produce material services.
The normal cases are those in which the production or distribution is of material goods or wealth and they will fall within the expressions trade, business and manufacture.
" The words 'trade ', 'business ', 'manufacture ' and 'calling ' were next explained thus : "The word 'trade ' in this context bears the X X meaning which may be taken from Halsbury 's Laws of England, Third Edn.
38 p. 8 (a) exchange of goods for goods or goods for money; (b) any business carried on with a view to profit, whether manual, or mercantile, as distinguished from the liberal arts or learned professions and from agriculture; and business means an enterprise which is an occupation as distinguished from pleasure.
Manufacture is a kind of productive industry in which the making of articles or material (often on a large scale) is by physical labour or mechanical power.
Calling denotes the following of a profession or trade.
" It may be added here that in National Association of Local Government Officers vs Bolton Corporations(2) at page 183 et seq Lord Wright observes that 'trade ' is a term of the widest scope.
This is true.
We speak of the occupation of men in buying and selling, barter or commerce as trade.
We even speak of work, especially of skilled work as, trade, e.g. the trade of goldsmiths.
But the word as used in the statute must be distinguished from professions although even professions have 'trade unions '.
The word 'trade ' includes persons in a line of business in which persons are employed as workmen.
Business too is a word of wide import.
In one sense it includes all occupations and professions.
But in the collocation of the terms.
and their definitions these terms have a definite economic content of a particular type and on the (1) [1968] 1 S.C.R. 742.
(2) , 183.
187 authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services.
Industry has thus been accepted to mean only trade and business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services.
Why professions must be held outside the ambit of industry may be explained.
A profession ordinarily is an occupation requiring intellectual skill, often coupled with manual skill.
Thus a teacher uses purely intellectual skill while a painter uses both.
In any event, they are not engaged in an occupation in which employers and employees co operate in the production or sale of commodities or arrangement for their production or sale or distribution and their services cannot be described as material services.
What is meant by 'material services ' needs some explanation too.
Material services are not services which depend wholly or largely upon the contribution of professional knowledge, skill or dexterity for the production of a result.
Such services being given individually and by individuals are services no doubt but not material services.
Even an establishment where many such operate cannot be said to convert their professional services into material services.
Material services involve an activity carried on through co operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like.
In providing these services there may be employment of trained men and even professional men, but the emphasis is not on what these men do but upon the productivity of a service organised as an industry and commercially valuable.
Thus the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors etc. are easily distinguishable from an activity such as transport service.
The latter is of a commercial character in which something is brought into existence quite apart from the benefit to particular individuals.
It is the production of this something which is described as the production of material services.
Mr. Ramamurti arguing against the Hospitals drew our atten tion to Citrine 's book 'Trade Union Law ' (3rd edn.
p. 609) where the author observes : "However, whilst the words 'trade ' and 'industry ' are separately capable of a wide interpretation, when they occur in conjunction the tendency of the courts is to give them a narrow one.
" 188 He cites the House of Lords case to which we have referred and criticises the tendency of the court to narrow the meaning of the expressions 'industry ' and 'workman '.
He says that this narrow interpretation unnecessarily excludes from workmen 'teachers employed by local authorities, university employees, nurses and others employed under the National Health Service, the domestic staff of the Houses of Parliament and Civil Servants who are not employed in 'trading ' or 'industrial undertaking '.
He includes all these in the definitions because a person doing the same type of work for a commercial undertaking is within the definition.
According to him any person gainfully employed must be within the definition.
On the strength of this definition Mr. Ramamurthi also contends that not the Hospital Mazdoor Sabha(1) case but the earlier cases off this Court such as University of Delhi and Anr.
vs Ramnath(2) and National Union of Commercial Employees vs M. R. Meher(3) must be reconsidered and overruled.
The reason for these cases, as also the Gymkhana Club(4) case lies in the kind of establishment with which we are concerned.
The Gymkhana Club(4) case of this Court (followed and applied in Cricket Club vs Labour Union(5) has held that non profit making members ' clubs are not employed in trade or industry and their employees are not entitled to engage in trade disputes with the clubs.
This view finds support from Hotel and Catering Industry 'Training Board and Automobile Proprietary Ltd (6).
The Solicitors case cited by Mr. Ramamurti was so decided because there the services rendered by the employees were in aid of professional men and not productive of material goods or wealth or material services.
The other case of University was also decided, as it was, for the same reason.
It, therefore, follows that before an industrial dispute can be raised between employers and their employees or between employers and employers or between employees and employees in relation to the employment or non employment or the terms of employment or with the conditions of labour of any person, there must be first established a relationship of employers and employees associating together, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and material services and the latter following any calling, service, employment, handicraft, or industrial occupation or avocation of workmen in aid of the employers ' enterprise.
It is not necessary that there must be a profit motive but the enterprise must be analogous to trade or business in a commercial sense.
(1) ; (2) ; (3) [1962] Supp.
3 S.C.R. 157.
(4) [1968] 1 S.C.R. 742.
(5) A.I.R. (6) H.L. S.C.; and C.A. 189 We do not find it necessary to refer to the earlier cases of this Court from which these propositions have been deduced because they are all considered in the Gymkhana Club case(1).
We accept the conclusion in that case that : ". . before the work engaged in can be described as an industry, it must bear the definite character of 'trade. ' or 'business ' or 'manufacture ' or 'calling ' or must be capable of being described as an undertaking resulting in material goods or material services.
" We may now consider closely the Hospital Mazdoor Sabha(2) case and the reasons for which it was held that the workmen employed in a hospital were entitled to raise an industrial dispute.
We may say at once that if a hospital, nursing home or dispensary is run as a business in a commercial way there may be found elements of an industry there.
Then the hospital is more than a place where persons can get treated for their ailment.
It becomes a business.
In the Hospital Mazdoor Sabha(2) case, hospitals run by Gov ernment and even by a private association, not on commercial lines but on charitable lines or as part of the functions of Government Department of Health were held included in the definition of industry.
The reason given was that the second part of the definition of industry contained an extension of the first part by including other items of industry.
As we have pointed out the first and the second parts of the definition are not to be read in isolation as if they were different industries but only as aspects of the occupation of employers and employees in an industry.
They are two counterparts in one industry.
The case proceeds on the assumption that there need not be an economic activity since employment of capital and profit motive were considered unessential.
It is an erroneous assumption that an economic activity must be related to capital and profit making alone.
An economic activity can exist without the presence of both.
Having rejected the true test applied in other cases before, the test applied was 'can such activity be carried on by private individuals or group of indivi duals '? Holding that a hospital could be run as a business proposition and for profit, it was held that a hospital run by Government without profit must bear the same character.
With respect, we do not consider this to be the right test.
That test was employed to distinguish between the administrative functions of Government and local authorities and their functions analogous to business but it cannot be used in this context.
When it was emphasised in the same case that the activity must be analogous to business and trade and that it must be productive of goods or their distribution or for producing material services to the community at large (1) [1968] 1 S.C.R. 742.
(2) ; 190 or a part of it, there was no room for the other proposition that privately run hospitals may in certain circumstances be regarded as industries.
The expression 'satisfying material human needs ' was evolved which bore a different meaning.
These observations were apparently based on the observations of, Isaacs and Rich JJ.
in Federated Municipal and Shire Council Employees of Australia vs Melbourne Corporation(1), but they were : "Industrial disputes occur when, in relation to operations in which capital and labour are contributed in cooperation for the satisfaction of human wants and desires, those engaged in co operation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the produce or any other terms and conditions of their co operation.
The question of profit making may be important from an income tax point of view, as in many municipal cases in England; but, from an industrial dispute point of view it cannot matter whether the expenditure is met by fares from passengers or from rates.
" The observations in the Australian case only indicate that in those activities in which government takes to industrial ventures, the notion of profit making and the absence of capital in the true sense of the word are irrelevant.
The passage itself shows that industrial disputes occur in operation in which employers and employees associate to provide what people want and desire in other words where there is production of material goods or material services.
In our judgment the Hospital Mazdoor Sabha (2) case took an extreme view of the matter which was not justified.
It is argued that after the amendment of the Industrial Dis putes Act by which 'service in hospitals and dispensaries ' is included in public utility services, there is no scope for saying that hospitals are not industries.
It is said that Parliament has accepted that the definition is suited to include a hospital.
This contention requires close attention in view of the fact that it was noticed in the Hospital Mazdoor Sabha(2) case although that arose before the amendment.
A public utility service is defined in the Act by merely naming certain services.
It will be noticed that these services are (i) any railway service or any transport service for the 'Carriage of passengers or goods by air; (1) ; (2) ; 191 (ii) any section of any industrial establishment on the working of which the safety of the establishment or the workmen employed therein depends; (iii) any postal, telegraph or telephone service; (iv) any industry which supplies power, light or water to the public; (v) any system of public conservancy or sanitation; After namingthese services the definition adds : (vi) any industry specified in the First Schedule which the appropriate Government may, if satisfied that public emergency or public interest so requires, by notification in the official gazette, declare to be a public uti lity service for the purposes of this Act, for such period as may be specified in the notification.
Provided that the period so specified shall not, in the first instance, exceed six months but may, by a like notification, be exceeded from time to time, by any period not exceeding six months, at any one time if in the opinion of the appropriate Government public emergency or public interest requires such extension.
The intention behind this provision is obviously to cassify certain services as public utility services with special protection for the continuance of those services.
The named services in the definition answer the test of an industry run on commercial lines to produce something which the community can use.
These are brought into existence in a commercial way and are analogous to business in which material goods are produced and distributed for consumption.
When Parliament added the sixth clause under which other services could be brought within the protection afforded by the Act to public utility services, it did not intend that the entire concept of industry in the Act, could be ignored and anything brought in.
Therefore it said that an industry could be declared to be a public utility service.
But what could be so declared had to be an industry in the first place.
We are concerned with the addition of item 9 'service in hospitals and dispensaries.
The heading of, the First Schedule speaks again of industries which may be de clared to be public utility services.
The original entries were five and they read: 1.
Transport (other than railways) for the carriage of passengers or goods, by land, water or air (now air is omitted).
Coal 192 3.
Cotton textiles.
Food stuffs 5.
Iron and steel.
It is obvious that general headings are given here.
Coal is not an industry but certain aspects of dealing with coal is an industry and that is what is intended.
That dealing must be in an industry in which there are employers and employees cooperating in the production of material goods or material services.
Similarly, cotton, textiles or food stuffs or iron and steel, as the entries stand, are not industries.
Therefore the heading of the First Schedule and the words of clause (vi) presuppose the existence of an industry which may be notified as a public utility service, for special protection under the Act.
Therefore when the list was expanded in the First Schedule and certain services were mentioned, the intention could not be otherwise.
The list was extended to 10 items by amendment of the Act by Act 36 of 1956 with effect from March 10, 1957.
The new items are (a) Banking, (b) Cement, (c) Defence Establishments, (d) Service in hospitals and dispensaries, and, (e) Fire Brigade Service.
Later by notifications issued under section 40 of the Act nine more items were added.
Section 40 gives to governments the power to add to the Schedule.
They are (a) Indian Government Mints, (b) India Security Press, (c) Copper Mining, (d) Lead Mining, (e) Zinc Mining, (f) Iron ore mining, (g) Service in any oil field, (h) Any service in, or in connection with, the working of any major port or dock and (i) Service in the Uranium Industry.
It is easy to see that most of them are items in which an industry proper involving trade, business, manufacture or something analogous to business can be found.
It is hardly to be thought that notifications can issue in respect of enterprises which are not industries to start with.
It is only industries which may be declared to be public utility services.
Therefore to apply the notification, the condition precedent of the existence of an industry has to be satisfied.
If there is an industry which falls within the items named in the First Schedule, then alone can it be notified to be classed as a public utility service.
The law does not work the other way round that every activity connected with coal becomes an industry and therefore on notification that activity becomes a public utility service.
The same is true of all items including all the services mentioned.
They must first be demonstrated to be industries and then the notification will apply, to them.
To hold otherwise would largely render useless all the definitions in the Act regarding industry, industrial disputes etc., in relation to the scheduled items.
Parliament has not attempted to declare that notwithstanding the definitions of 193 'industry ', 'industrial disputes, 'workman ' and 'employer ', every hospital is to be regarded as an industry.
All that has been provided is that an 'industry ' may be notified as a public utility service.
That is insufficient to convert non industries under the Act to industries.
We now take up the individual cases.
C.A. No. 1705 of 1969.
It is obvious that Safdarjung Hospital is not embarked on an economic activity which can be said to be analogous to trade or business.
There is no evidence that it is more than a place were persons can get treated.
This is a part of the functions of Government and the Hospital is run as a Department of Government.
It cannot, therefore, be said to be an industry.
In this case the petitioner chose to be a Lower Division Clerk.
The amount of security which he had to furnish in the job of a Store keeper was also refunded to him.
He had applied for the post on May 31, 1962.
On July 14, 1962 he again drew attention to his application.
His application was recommended on August 9, 1962.
It was only after November 26, 1962 when the scale of Store keepers was raised to Rs. 130 300 that he changed his views.
On December 12, 1962 he made a representation but in forwarding it the Medical Superintendent said that the incumbents of the posts of Store keepers could not be given the upgraded scale of Rs. 130 300.
In addition there were certain matters pending against him which precluded his appointment in that scale.
On August 11, 1966 the Director General wrote: "With reference to your letter No. 1 20/62 Estt., dated the 4th Jan, 1966 and subsequent reminder of even number dated the 24th May, 1966 on the subject noted above, I am directed to say that a reference was made to the Government of India in the Ministry of Health and Family Planning, New Delhi who have stated that it was not intended that the revised scale of Rs. 110 131 (previous scale of Rs. 60 75) should be further revised to Rs. 130 300 as all incumbents of the posts carrying the pay scale of Rs. 110 131 were promoted from Class IV and did not possess the requisite qualifications prescribed for posts, carrying pay scale of Rs. 130 300.
In view of the position stated above further action in the matter may kindly be taken in the light of the above remarks and storekeepers concerned informed accordingly.
In view of these facts it is hardly necessary to refer to the reports about the work of Kuldip Singh Sethi and other matters which 194 came in his way of promotion.
Both on the question of law decided by us and on the merits of his case, Kuldip Singh Sethi was not entitled to the pay scale of store keepers and the award of Rs. 914/ in his favour was wrong.
The appeal is allowed.
The order is set aside but there will be no order about costs.
C.A. No. 1781 of 1969.
The Tuberculosis Hospital is not an independent institution.
It is a part of the Tuberculosis Association of India.
The hospital is wholly charitable and is a research institute.
The dominant purpose of the Hospital is research and training, but as research and training cannot be given without beds.
in a hospital, the hospital is run.
Treatment is thus a part of research and training.
In these circumstances, the Tuberculosis Hospital cannot be described as an industry.
The order of the Additional Industrial Tribunal, Delhi on the preliminary point must be reversed.
The reference to the Tribunal under section 10(1)(d) of the was incompetent.
The appeal is allowed but we make no order about costs.
No. 1777 of 1969.
The objects of the Kurji Holy Family Hospital are entirely charitable.
It carries on work of training, research and treatment.
Its income is mostly from donations and distribution of surplus as profit is prohibited.
It is, therefore, clear that it is not an industry as laid down in the Act.
The reference made by the State Government, Bihar was thus incompetent.
The appeal will be allowed.
There will be no order about costs, except in the first case (C.A. 1705 of 1967) in which the earlier order of this Court shall be given effect to.
V.P.S. Appeals allowed.
| (1) The definition of industry in section 2(j) of the is in two parts.
But it must be read as a whole.
So read it denotes a collective enterprise in which employers and employees are associated.
It does not exist either by employers alone or by employees, alone.
It exists only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, employment handicraft or industrial occupation or avocation.
But every case of employment is not necessarily productive of an industry.
A workman is to be regarded as one employed in an industry only if he is following one of the vocations mentioned in conjunction with his employers engaged in the vocations mentioned in relation to the employers, namely, any business, trade, undertaking manufacture or calling of employers.
In the collocation of the terms and their definitions these terms have a definite economic content of a particular type and on the authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services.
Industry has thus been accepted to mean only trade and business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services.
Material services involve an activity carried on through co operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like.
In providing these services there may be employment of trained men and even professional men, but the emphasis is not on what they do but upon the productivity of a service organised as an industry and commercially valuable, in which, something is brought into existence quite apart from the benefit to particular individuals; and it is the production of this something which is described as the production of material services.
Thus, the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors, etc. are easily distinguishable from an activity such as transport service.
They are not engaged in an occu pation in which employers and employees cooperate in the production or sale of commodities or arrangement for the production or sale or distribution and their services cannot be described as material services and are outside the ambit of industry.
It, therefore, follows that before an industrial dispute can be raised between employers and employers or between employers and employees or between employees and employees in relation to the employment or non employment or the terms of employment or with the conditions of labour of any person, there must first 178 be established a relationship of employers and employees associating together, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and material services and the attack following any calling, service, employment, handicraft or industrial occupation or avocation of workmen in aid of the employers enterprise.
It is not necessary that there must be profit motive, but the enterprise must be analogous to trade or business in a commercial sense.
[183 H; 184 G H; 185 C, H; 186 H; 187 A B, E G; 188 F H] (2) The decision in State of Bombay vs Hospital Mazdoor Sabha, ; holding that a Government hospital was an industry took an extreme view of the matter and cannot be justified, because : (a) it was erroneously held that the second part of the definition of 'industry ' was an extension of the first part, whereas, they are only the two aspects of the occupation of employers and employees in an industry; (b) it was assumed that economic activity is always related to capital or profit making and since an enterprise could be an industry without capital or profit making it was held that even economic activity was not necessary; and (c) it was held that since a hospital could be run as a business proposition and for profit by private individuals or groups of individuals a hospital run by Government without profit must also bear the same character.
This test was wrongly evolved from the observations in Federated Municipal and Shire Council Employees of Australia vs Melbourne Corporation, ; , which only indicate that in those activities in which Government take to industrial ventures the motive of profit making and absence of capital are irrelevant.
The observations, on the contrary, show that industrial disputes occur only in operations in which employers and employees associate to provide what people want and desire, that is, in the production of material goods or services, and not the 'satisfaction of material human needs '.
If however a hospital, nursing home or dispensary is run as a business, in a commercial way there may be found elements of an industry there.
Then the hospital is more than a place where persons can get treated for their ailments and it becomes a business.
[189 D H; 190 E F] Hospital Case ; over ruled.
(3) Under section 2(n)(vi) any industry specified in the First Schedule to the Act could be notified by the appropriate Government as a public utility service.
But what could be declared had to be an industry in the first place.
The original entries in the Schedule were five and obviously only general headings were given.
For example 'coal ' is not an industry but certain aspects of dealing with coal would be 'industry ' and that is what is intended.
The dealing must be an industry in which.
there arc employers and employees cooperating in the production of material goods for material services.
Similarly, cotton, textiles or food stuffs or iron and steel, as the entries stand, are not industries.
Therefore, the heading of the First Schedule and the words of cl.
(vi) presuppose the existence of an industry which may be notified as a public utility service, for special protection under the Act.
[191 F H] When the list was expanded in the First Schedule and certain services were mentioned, the intention could not have been otherwise.
It could not have been intended by Parliament that the entire concept of 'industry ' in the Act could be ignored and anything could be brought in as industry.
Most of the new entries are items in which an industry proper involving trade, business.
manufacture or something analogous to business can be found% Therefore, to apply the notification.
the condition precedent of the existence of an industry has to be satisfied.
If there is an industry 179 which falls within the item named in the first Schedule, then alone can it be notified to be classed as a public utility service.
To hold otherwise would largely render useless all the definitions in the Act regarding industry, industrial disputes etc., in relation to the scheduled items.
It is hardly to be thought that notifications can issue in respect of enterprises which are not 'industry ' to start with.
Parliament could not have attempted to declare that notwithstanding the definitions of 'industry ', 'industrial dispute ', workman ' and 'employer ' every hospital is to be regarded as an industry, by including 'service in hospitals and dispensaries ' in the First Schedule.
[192 B C, F H] (4) The activities in the cases of Secretary Madras Gytmkhana Club Employees Union vs Management of the Gymkhana Club [1968] 1 S.C.R. 742, University of Delhi vs Ramnath, ; and National Union of Commercial Employees vs M. R. Meher, [1962] Supp. 3 S.C.R. 157 were rightly held not be industries, because, in the first the management was a non profit making members ' club not employed in trade or industry, and the other two were cases in which the services rendered by the employees were in aid of professional men and not productive of material wealth or services.
[188 C F] Hotel and Catering Industry Training Board and Automobile Proprietary Ltd. H.L.; S.C.; and [1968]3 All.
E.R. 399 C.A., referred to.
Therefore, the Safdarjung Hospital which is run as a department of the Government, the Tuberculosis Hospital which is a charitable and research institute.
and the Kurji Holi Family Hospital which is entirely charitable, are not industries within the meaning of the .
[193 C; 194 B E]
|
Appeals Nos. 10 and 10 A of 1952.
Appeal from the Judgment and Order dated 11th January, 1950, of the High Court of Judicature at Madras in Cases Referred Nos. 80 of 1946 and 38 of 1948.
M. C. Setalvad, Attorney General for India, (G. N. Joshi and P. A. Mehta, with him) for the appellant.
section Krishnamachariar for the respondent.
465 1952.
December22.
The Judgment of the Court was delivered by DAS J.
These two consolidated appeals are directed against the Judgment and order made on January 11, 1950) by the High Court of Judicature at Madras in References No. 80 of 1946 and No. 38 of 1948 under section 66 of the Indian Income tax Act whereby the High Court relying on its earlier decision in Commissioner of Income tax, Madras vs B. Rm.
M. Sm.
Sevugan alias Manickavasagam Chettiar(1) held that the references were incompetent and accordingly refused to answer the questions raised therein.
The facts are shortly as follows.
The respondent who is a Nattukotai Chettiar had, his headquarters at Karaikudi in India and also carried on his money lending business at branches at Maubin, Kualalumpur and Singapore.
He also had income from properties at Maubin and Singapore.
For the assessment year 1941 42 the Income tax Officer calculated the assessee 's accrued foreign income as Rs. 29,403 at Maubin, Rs. 27,731 at Kualalumpur and Rs. 34,584 at Singapore, in all Rs. 91,718.
After deducting out of this amount Rs. 4,500 allowed under the 3rd proviso to section 4 (1) of the Act, the Income tax Officer computed the total assessable foreign income at Rs. 87,218.
Out of the total remittances of Rs. 84,352 the Income tax Officer allocated Rs. 7,900 to the accrued income of Maubin and Rs. 62,315 to those of Kualalumpur and Singapore and the balance of Rs. 14,137 to the taxed income of earlier years.
The Income tax Officer disallowed the claim of the assessee to deductions under several heads.
On the basis of the total foreign income of Rs. 67,218 and income from ' other sources the Incometax Officer calculated Rs. 23,266 8 0 to be due by the assessee on account of income tax, super tax and surcharges thereon and by his assessment order dated January 31, 1942, made this amount payable on or before February 25, 1942.
The assessee preferred an (1) [1948] 16 I.T.R. 59; ; A.I.R. 1948 Mad, 418 466 appeal to the Appellate Assistant Commsioner against the disallowance of the several items of his claim including the claim for replantation expenses amounting to$498incurred at Kualalumpur and a bad debt of $ 15,472 at Singapore.
The Appellate Assistant Commissioner by his order dated May 25, 1942, allowed some of the several objections but disallowed the items of replantation expenses and ba` debt and reduced the assessment to Rs. 22,548.
The assessee took further appeal before the appellate Tribunal against the disallowance of the several claims by the Appellate Assistant Commissioner including the two items mentioned above.
The Appellate Tribunal by its order dated August 20, 1943, held that the replantation expenses "will be allowed to the appellant as expenses.
" As regards the bad debt the Tribunal held that it was permissible and that "the deduction claimed will, therefore, be allowed.
" The result was that the appeal was partly allowed.
The matter came back before the Income tax Officer on September 26, 1945.
Deducting Rs. 778 on account of replantation expenses the Kualalumpur income was reduced to Rs. 26,953 and after deducting Rs. 24,175 on account of the bad debt the Singapore income came down to Rs. 10,409.
These two reduced amounts together with Rs. 29,403 being the income 'from Maubin made up the total accrued income of Rs. 66,765.
Out of this amount Rs. 4,500 was deducted on account of unremitted profits of Maubin under the 3rd proviso to section 4(1) of the Act, leaving a balance of Rs. 62,265.
Out of the remittances the Income tax Officer allocated Rs. 7,000 towards the accrued income of Rs. 29,403 from Maubin and Rs. 37,362 against the totarl accrued income of Kualalumpur and Singapore.
He also allocated Rs. 24,549 as remittances out of assessed profits of previous years, leaving a balance of Rs. 13,541.
This amount the Income tax Officer considered as remittances out of earlier years ' unassessed income and held it to be asses. able to tax.
After adding Rs. 13,541 to Rs. 62,265 being the net accrued income of the year 467 from Maubin, Kualalumpur and Singapore, the Income tax Officer arrived at the total foreign income of Rs. 75,806.
On the basis of this foreign income together with other income the Income tax Officer.
recalculated the amount of income tax, super tax and surcharges thereon at Rs. 22,802 6 0 and after giving credit for certain amounts, found Rs. 21,211 14 0 as the balance due which by his order dated September 26, 1945, was made payable in equal moiety on or before September 30, 1947, and March 31, 1948.
He, however, did not issue any notice of demand under section 29 of the Act.
Being aggrieved by the inclusion of Rs. 13,541 as the alleged unassessed foreign income of earlier years remitted to India during the year of account the assessee preferred an appeal before the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner was not satisfied that the assessee had any right of appeal under section 30 of the Act for there had been no assessment under section 23 and no notice of demand had been served on the assessee under section 29 of the Act.
Accordingly the Appellate Assistant Commissioner by his order dated November 19, 1945, declined to admit the appeal.
He, however, expressed the view that the assessee 's remedy might lie in a miscellaneous application to the Tribunal complaining that the Income tax Officer had either misconstrued or had not given effect to the order of the Appellate Tribunal.
The assessee then brought a miscellaneous application to the Appellate Tribunal.
The Appellate Tribunal held that the.
finding of the Income tax Officer that the sum of Rs. 13,541 was to be assessed as untaxed profits of earlier years remitted to India in the accounting year did not arise in the course of giving effect to the Appellate Tribunal 's order and by its order dated February 20, 1946, cancelled that finding and directed the Income tax Officer to revise the computation accordingly.
The last mentioned order having been served on the Commissioner of Income tax, Madras, on March 8, 468 1946, the latter on May 1, 1946, made an application before the Appellate Tribunal under section 66(1) of the Act and prayed that three questions formulated by him in his petition should be referred to the High court.
The contention was that the Appellate Tribunal had no jurisdiction in law to entertain, consider and pass the order which it did on the miscellaneous application seeing that it was neither an appeal under section 33 of the Income tax Act nor could it be regarded as a rectification under section 35 of any mistake committed by the Bench.
The Appellate Tribunal took the view that although no specific provision was made in the Act by which it could give effect to its order or explain any ambiguity in such an order by a later order in any miscellaneous application filed by any party, such power, nevertheless ', was inherent in" the Tribunal.
The Tribunal accordingly thought that a point of law did arise and on August 23, 1946, referred the following question to the High Court, namely: "Whether in the facts and circumstances of this case the order of the Bench dated 20th February, 1946, in the miscellaneous application is an appropriate order and is legally valid and passed within the jurisdiction and binding on the Income tax Officer.
" The Tribunal declined to refer the other questions formulated by the Commissioner.
This reference came to be numbered as Case Referred No. 80 of 1946.
It appears that pursuant to an order made by the High Court on March 30,1948, on the application of the Commissioner of Income tax under section 66 (2) of the Act the Tribunal referred the following question to the High Court: " If the answer to the question already referred to the High Court by the order of the Appellate Tribunal dated 23rd August, 1946, is in the affirmative,, whether, in the circumstances and on the facts of the case, the recomputation made by the Income tax Officer pursuant to the decision of the Appellate 469 Tribunal in R.A.A. No. 53 (Madras) of 1942 43 was valid and correct." The Appellate Tribunal made this further reference on July 19, 1948, which came to be numbered as Case Referred No. 38 of 1948.
The two referred cases came up for consideration before a Bench of the Madras High Court and it was held that the reference under section 66(1) was incompetent in view of the earlier decision of that Court mentioned above which they felt to be binding on them and accordingly the Bench declined to answer the questions.
The Commissioner of Incometax thereafter applied for and obtained leave to appeal to this Court from the decisions in both the references and obtained such leave on his undertaking to pay the costs of the assessee in any event.
The two appeals were thereafter consolidated and have come up before us for final disposal.
Section 66 A (2) gives to the aggrieved party a right of appeal to this Court from any judgment of the High Court delivered on a reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to this Court.
Section 66, (5) provides that the High Court upon the hearing of any such case referred to it under section 66(1) and (2) shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded.
During the opening of the case by the learned Attorney General a question arose as to whether the simple refusal of the High Court to bear the case on the ground that the reference was incompetent was a decision and judgment such as is contemplated by section 66(5) of the Act from which alone a right of appeal to this Court is given.
While maintaining that the decision and judgment of the Madras High Court fell within the meaning of section 66(5) the learned Attorney General for greater safety asked that the appeal may be treated as one on special leave granted by this Court under article 136 of the Constitution.
The learned Advocate appearing for the 470 assessee respondent did not object to this prayer and accordingly we gave leave to the appellant under article 136 and treated this appeal as one filed pursuant to such leave.
In the circumstances it is not necessary for us to express any opinion on the appealability of the order of the High Court under section 66 A of the Act.
The learned Attorney General contends that the decision relied on by the High Court has no application to the facts of the present case.
In that case the Tribunal by its order dated July 11, 1944, allowed an appeal from the Appellate Assistant Commissioner and cancelled the assessment which it held to be illegal.
This order was served on the Commissioner shortly thereafter.
On October 5, 1944, an application was made to the Tribunal by the Income tax Officer under section 35 to correct a statement contained in the statement of facts in the order.
More than 60 days after the date of the service on him of the order of July 11, 1944, to wit on October 7, 1944, the Commissioner made an application under section 66 (1) of the Act requiring the Tribunal to refer to the High Court the question as to the correctness of its decision embodied in the order of July 11, 1944.
Both the applications were disposed of on the same day, namely, January 17, 1945, when the application for rectification was granted and a case was stated for the opinion of the Court as prayed.
Section 66 (1) requires the application to be made within 60 days of the date on which the applicant is served with notice of an order under sub section (4) of section 33.
It was held that the granting of an application for rectification under section 35 and correcting the error in the order was not an order under section 33 (4) and, therefore, was not one in respect of which section 66 (1) permitted a case to be stated.
It was further held that if the Appellate Tribunal improperly or incorrectly made a reference in violation of the provisions of the statute, the High Court was capable of entertaining an objection to the statement of the case and that, if it camp to the 471 conclusion that the case should not have been stated, the High Court was not compelled to express an opinion upon the question referred.
in the case before us there is no question that the present application was not made within time, but the contention is that section 66 (1) only contemplates an application for a reference of a question of law arising out of " such order" which clearly means an order made under section 33 (4), _and, therefore, if there is no valid order under that section no question of law can be said to arise out of "such order" and consequently the Appellate Tribunal can have on jurisdiction to make any reference to the High Court under section 66(1).
Section 66 (2) provides that if on any application being made under sub section (1) the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner may, within the time specified therein, apply to the High Court and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it.
The jurisdiction given to the High Court under this sub section is conditional on an application under sub section (1) being refused by the Appellate Tribunal.
This clearly presupposes that the application under sub section (1) was otherwise a valid application.
If, therefore, an application under sub section (1) was not well founded in that there was no order which could properly be said to be an order under sub section (4) of section 33 then the refusal of the Appellate Tribunal to state a case on such misconceived application on the ground that no question of law arises will not authorise the High Court, on an application under sub section (2) of section 66, to direct the Tribunal to state a case.
The jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under section 33 (4) and a question of law arising out of such an order.
The only question for our consideration, therefore, is whether in this case any question 472 of law arose out of an order which can properly be said to have been made by the Appellate Tribunal under sub section (4) of section 33, for if it did not, then the Appellate Tribunal would have no jurisdiction under sub section (1) of section 66 to refer a case, nor would the High Court have jurisdiction under sub section (2) of that section to direct the Tribunal to do so.
It was at one stage suggested by the learned AttorneyGeneral that we should in the first instance remit the matter to the High Court for their decision on this question but as the question is one of law depending on the construction of the relevant sections of the Act it will save time if it is decided by us here and now.
It is not disputed that we have the power, on the hearing of this appeal, to decide this question.
It will be recalled that when on 19th November, 1945, the Appellate Assistant Commissioner declined to admit the appeal, the assessee did not prefer any appeal but only made a miscellaneous application before the Appellate Tribunal.
There is no provision in the Act permitting such an application.
Indeed, in the statement of the case the Appellate Tribunal states that in entertaining that application and correcting theerror of the Income tax Officer it acted in exercise ofwhat it regarded as its inherent powers.
There being no appeal under section 33 (1) and the order having been made in exercise of its supposed inherent jurisdiction.
, the order cannot possibly be regarded as one under section 33 (4) and there being no order under section 33 (4) there could be no reference under section 66 (1) or (2) and the appellate Court properly refused to entertain it.
The learned Attorney General submits that this Court should not take such a narrow and technical view but should treat that miscellaneous application as really an appeal under section 33.
Turning now to section 33 we find that any assessee objecting to an order passed by an Appellate Assistant Commissioner under section 28 or section 31 may appeal to the Appellate Tribunal within the time specified in 478 sub section (1) which time, however, may be extended by the Tribunal under sub section (2A).
Under sub section (4) the Appellate Tribunal is given power, after giving both parties to.
the appeal an opportunity to be heard, to pass such order thereon as it thinks fit.
It is thus clear that the Appellate Tribunal can make an order under section 33 (4) only on an appeal from an order passed by the Appellate Assistant Commissioner under section 28 or section 31.
If, therefore, there is no order which may properly be said to have been made by the Appellate Assistant Commissioner under section 28 or section 31 then there can be no appeal under section 33 (1) and consequently there can be no order under section 33 (4).
Section 28 is not relevant for our present purpose.
Section 30 provides for filing of appeals against assessments made under the Act.
Sub section (1) of that section prescribes the different decisions against which an appeal will lie.
Sub section (2) prescribes the time within which the appeal is to be filed.
Subsection (3) prescribes the form in which the appeal is to be made.
Then comes section 31 which gives power to the Appellate Assistant Commissioner to hear and dispose of such appeal.
Sub section (3) of section 31 empowers the Appellate Assistant Commissioner in disposing of an appeal under section 30 to make one or other order under one or other of the several clauses of that ' sub section.
It is, therefore, clear that in order that the Appellate Assistant Commissioner may exercise his jurisdiction and make an order under section 3 1, there must be an appeal as contemplated by section 30.
The learned AttorneyGeneral only relies on the opening part of sub section (1) of section 30 and contends that the appeal before the Appellate Assistant Commissioner was with respect to the amount of income assessed under section 23 or section 27.
It will be recalled that the Appellate Tribunal held that the two sums claimed by the assessee would be allowed to him and concluded by saying that the appeal was partly allowed.
The power of the Appellate Tribunal under section 33(4) 474 is indeed wide, for on an appeal properly before it, it can make such order as it thinks fit.
Therefore, it be order made by the Appellate Tribunal in this case on August 20, 1943, must be read and construed as a direction to the Income tax Officer to carry out the directions by allowing the two deductions in question.
When the matter again came before the Income tax Officer his function was only to carry out the order of the Appellate Tribunal.
He could not otherwise reopen the assessment already made by him under section 23.
Therefore, in carrying out the directions of the Tribunal and in doing what be aid on September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and that being the position no appeal lay from that order of the Income tax Officer under section 30 (1) of the Act, I The result of it was that there was no proper appeal before the Appellate Assistant Commissioner such as is contemplated by section 30 (1) and, therefore, the order made by the Appellate Assistant Commissioner cannot be regarded as an order made by him under section 31 (3), for an order under section 31 (3) can only be made in disposing of an appeal properly ' filed under section 30, and consequently no further appeal lay to the Appellate Tribunal under section, 33 (1) so as to enable the Appellate Tribunal to make an order under sub section (4) of that section.
In the premises, there being no order which may properly be said to have been made under section 33 (4), no question of law can be said to arise out of an order made under section 33 (4) and consequently there can be no valid reference under section 66, subsection (1) or sub section (2).
If, therefore, the reference was incompetent for want of jurisdiction both under section 66 (1) or section 66 (2) surely the High Court could decline to entertain it as it did.
Even if the order dated September 26, 1945, made by the Income tax Officer after the matter came back to him to give effect to the decisions of the Appellate Tribunal be regarded as an order made by him under 475 section 23 or section 27 and as such appealable under section 30 (1) then the order made by the Appellate Assistant Commissioner on November 19, 1946, declining to admit the appeal clearly amounted to a refusal on his part to exercise the jurisdiction vested in him by law.
An order thus founded on an error as to his jurisdiction way conceivably be corrected by appropriate proceedings but it cannot certainly be regarded as such an order as is contem plated by any of the sub sections of section 31.
Such an order not coming within the purview of section 28 or section 31, no, appeal lay therefrom to the Appellate Tribunal under section 33 (1) and if no such appeal properly came before the Appellate Tribunal it could not properly make an order under section 33 (4) and if there was no order under section 33 (4) there could be no reference under section 66, sub section (1) or sub section (2).
It follows, therefore, that the order of the Appellate Tribunal correcting the order of the Income tax Officer directing that the sum of Rs. 13,541 should not be included in the assessment cannot be regarded as an order passed by the Appellate Tribunal under section 33 (4) so as to attract the operation of section 66.
The learned Attorney General urged that having under section 66 (2) of the Act directed the Appellate Tribunal to state a case the High Court could not afterwards refuse to answer the question thus referred to it.
Whether the High Court was so precluded or not requires no decision on this occa sion, for even conceding but ;not deciding that the High Court was so precluded, this Court, at any rate, can surely entertain the question of the competency of the reference.
The result, therefore, is that we dismiss these appeals with costs.
Appeals dismissed.
| By an order dated August 20, 1943, the Appellate Tribunal directed that certain deductions claimed by the assessee should be allowed.
The matter came back to the Income tax Officer and he made an order on September 26, 1945, but did not issue any fresh notice of demand.
The assessee appealed to the Appellate Assistant Commissioner complaining that in his order of September 26, the Income tax Officer had wrongly included a sum of Rs. 13,000 60 464 as unassessed foreign income of earlier years.
The Appellate Assistant Commissioner held that the order of September 26 was not appealable.
The assessee, therefore, made a miscellaneous application to the Appellate Tribunal, which held that the Incometax Officer acted wrongly in including the sum of Rs. 13,000 at that stage and directed the Income tax Officer to revise his computation accordingly.
The Commissioner of Income tax, being of opinion that the Appellate Tribunal had no jurisdiction to entertain or make such order on a miscellaneous application applied for a reference to the High Court under section 66 (1) of the Income tax Act.
The Tribunal referred certain questions and the High Court directed the Tribunal to refer certain other questions also but when the references came on for bearing the High Court held that the references were incompetent.
The Commissioner of Incometax appealed to the Supreme Court with the leave of the High Court : Held, (i) that in carrying out the directions of the Tribunal and in passing the order of September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and no appeal lay from his order under section 30 (1).
The order made by the Appellate Assistant Commissioner was not therefore an order under a. 31 (3) and no further appeal lay to the Appellate Tribunal under section 33 (1) so as to enable the Tribunal to make an order under section 33 (4) and us there was no order under a. 33 (4), no question of law can be said to arise out of an order under section 33 (4) and there can be no valid reference under section 66 (1) or section 66 (2); (ii) even assuming that the order of the Income tax Officer dated September 26, 1945, was an order under a. 23 or section 27 and as such appealable, the order made by the Appellate Assistant Commissioner declining to entertain the appeal was not an order under any of the sub sections of a. 31 and no appeal lay therefrom to the Appellate Tribunal under section 33 (1) and there could be no order of the Appellate Tribunal under section 34 (1).
The order of the Appellate Tribunal correcting the order of the Income tax Officer and directing that the sum of Rs. 13,541 should not be included cannot be regarded in any event as an order under section 33 (4) so as to attract the operation of section 66 (1) or (2).
|
Civil Appeal No. 653 of 1991.
284 From the Judgment and Order dated 11.
12.1989 of the Central Administrative Tribunal, Chandigarh in O.A. No. 694 of 1988.
Avadh Behari, A.K. Sharma and Inderjit Singh Mehra for the Appellants.
Dr. Anand Prakash, B. Krishna Prasad and S.M. Ashri for the Respondent.
The Judgment of the Court was delivered by SINGH, J.
Leave granted.
Whether family pension payable under the service rules could be bequeathed by means of a will by the deceased employee during his life time, is the question involved in this appeal.
Briefly, the facts giving rise to this appeal are that, Issac Alfred was employed in the Railway Workshop, Jagadhri as a Skilled Mechanic, Tool Shop, he died in harness on 16.10.1984.
On his death a dispute arose between Mrs. Violet Issac, widow of the deceased Railway employee, his sons, daughters and Elic Alfred, brother of the deceased regarding family pension, gratuity and other emoluments, payable by the Railway Administration.
Violet Issac, widow of the deceased employee made an application before the competent Railway Authority for the grant of family pension and for payment of gratuity and other dues to her, her four sons and one daughter, who are appellant Nos. 2 to 6.
The Railway Authorities did not pay any amount to the appellants as an injunction order had been issued by the Sub Judge, 1st Class, Jagadhri in Civil Suit No. 365/85 filed by Elic Alfred, brother of the deceased employee, restraining the appellants from claiming or receiving any amount which were to the credit of the deceased Railway employee towards C.T.D. Account, gratuity, family pension and other dues.
It appears that the relations between late Issac Alfred and his widow Smt.
Violet Issac and the children were not cordial, as a result of which he had made nomination in favour of his brother and further he had executed a will dated 9.9.1984 in favour of Elic Alfred bequeathing all his properties to him including the family pension, gratuity etc.
When the appellants raised claim for family pension and other dues before the Railway Authorities, Elic Alfred filed Civil Suit No. 365/85 for the issue of a permanent injunction restraining the appellants from receiving or claiming any monetary benefits from the Railway Administration.
In his suit Elic Alfred had 285 pleaded that in view of the will, his deceased brother 's widow and children were not entitled to any benefit from the Railway Authorities, instead he was entitled to the deceased 's estate including the right to receive family pension and other dues.
The Civil Court issued an injunction order restraining the appellants from receiving any amount from the Railway Authorities as a result of which the Railway Administration did not pay any amount to them.
The appellants, thereupon, made an application before the Central Administrative Tribunal, Chandigarh for the issue of a direction for the release of the amounts on account of gratuity, group insurance, provident fund, CTD account, and family pension.
The appellants pleaded that the will relied upon by Elic Alfred was a forged one and Elic Alfred was not entitled to receive pensionary benefits.
On an application made by the appellants the suit pending before the Civil Court was also transferred to the Tribunal 's file.
The Tribunal by its order dated 11.
12.1989 held that since the dispute related to rival claims based on title arising from relationship in one case and from a will in the other, it has no jurisdiction to decide the same.
The Tribunal further directed for the transfer of the civil suit to the Civil Court for trial in accordance with law.
The appellants have challenged the order of the Tribunal by means of the present appeal.
The dispute between the parties relates to gratuity, provident fund, family pension and other allowances, but this Court while issuing notice to the respondents confined the dispute only to family pension.
We would therefore deal with the question of family pension only.
Family Pension Rules 1964 provide for the sanction of family pension to the survivors of a Railway Employee.
Rule 801 provides that family pension shall be granted to the widow/widower and where there is no widow/widower to the minor children of a Railway servant who may have died while in service.
Under the Rules son of the deceased is entitled to family pension until he attains the age of 25 years, an unmarried daughter is also entitled to family pension till she attains the age of 25 years or gets married, which ever is earlier.
The Rules do not provide for payment of family pension, to brother or any other family member or relation of the deceased Railway employee.
The Family Pension Scheme under the Rules is designed to provide relief to the widow and children by way of compensation for the untimely death of the deceased employee.
The Rules do not provide for any nomination with regard to family pension, instead the Rules designate the persons who are entitled to receive the family pension.
Thus, no other person except those designated under the Rules are entitled to receive family pension.
The Family Pension Scheme confers monetary benefit on the 286 'wife and children of the deceased Railway employee, but the employee has no title to it.
The employee has no control over the family pension as he is not required to make any contribution to it.
The Family Pension Scheme is in the nature of a welfare scheme framed by the Railway Administration to provide relief to the widow and minor children of the deceased employee.
Since, the Rules do not provide for nomination of any person by the deceased employee during his life time for the payment of family pension, he has no title to the same.
Therefore, it does not form part of his estate enabling him to dispose of the same by testamentary disposition.
In Jodh Singh vs Union of India & Anr., [ ; this Court on an elaborate discussion held that family pension is admissible on account of the status of a widow and not on account of the fact that there was some estate of the deceased which devolved on his death to the widow.
The Court observed: "Where a certain benefit is admissible on account of status and a status that is acquired on the happening of certain event, namely, on becoming a widow on the death of the husband, such pension by no stretch of imagination could ever form part of the estate of the deceased.
If it did not form part of the estate of the deceased it could never be the subject matter of testamentary disposition.
The Court further held that what was not payable during the life time of the deceased over which he had no power of disposition could not form part of his estate.
Since the qualifying event occurs on the death of the deceased for the payment of family pension, monetary benefit of family pension cannot form part of the estate of the deceased entitling him to dispose of the same by testamentary disposition.
We, accordingly hold that Mrs. Violet Issac the widow of the deceased Railway employee is entitled to receive the family pension, notwithstanding, the will alleged to have been executed by the deceased on 9.9.1984 in favour of his brother Elic Alfred.
As regards appellant Nos. 2 to 6 are concerned, it has been stated on behalf of the Railway Administration that they are not minors, therefore, under the Rules they are not entitled to any family pension.
We, accordingly allow the appeal, set aside the order of the Tribunal and direct the respondent Railway Adminstration to sanction family pension in accordance with the Rules to the appellant No. 1 and to pay the arrears within two months.
The respondent 's suit, so far as it relates to the 287 family pension cannot proceed but we do not express any opinion, with regard to other claims raised therein.
It has been brought to our notice on behalf of the respondent Railway Administration that the appellants have been occupying the Railway quarter which had been allotted to late Issac Alfred, even though they are not entitled to occupy the same.
On behalf of the appellants, it was urged that since they had not been paid any dues by the Railway Administration they were not in a position to vacate the premises.
The Railway Administration is free to evict them in accordance with the Rules, only after arrears of family pension are paid to Mrs. Violet Issac.
The Railway Administration will charge rent from the appellants at the rate on which the quarter had been let out to the deceased Railway employee.
There will be no order as to costs.
V.P.R. Appeal allowed.
| On the death of a Railway employee, dispute arose among his wife, sons, daughters and brother for the family pension, gratuity and other emoluments.
The brother of the deceased employee filed a civil suit in the court of Sub judge for a permanent injunction restraining the appellants. the wife, sons and daughter from claiming or receiving any monetary benefits from the Railway Administration, contending that by a will dated 9.9.1984 of the deceased employee, he was entitled to receive the benefits to the deceased employee 's widow.
The Railway Authority did not pay any amount, as an injunction had been issued by the Civil Court.
The appellants there upon made an application before the Central Administrative Tribunal for a direction for the release of the amounts on the grounds that the will was a forged one, and the beneficiary was not entitled to receive pensionary benefits.
The Tribunal held that since the dispute related to rival claims based on title arising from relationship, it had no jurisdiction to decide the same.
It also directed transfer of the case to the Civil Court for trial.
In the appeal to this court on the question was: whether family pension payable under the service rules could be bequeathed by means of a will.
Allowing the appeal, this Court, HELD: 1.
Family Pension Rules, 1964 provided for the sanction of family pension to the survivors of a Railway Employee.
Rule 801 provides that family pension shall be granted to the widow/widower and where there is no widow/widower, to the minor children of a Railway servant, who may have died while in service.
Under the Rules, son of 283 the deceased is entitled to family pension until he attains the age of 25 years, an unmarried daughter is also entitled to family pension till she attains the age of 25 years or gets married, whichever is earlier.
The Rules do not provide for payment of Family Pension to brother or any other family member or relation of the deceased Railway employee.
The Family Pension Scheme under the Rules is designed to provide relief to the widow and children by way of compensation for the untimely death of the deceased employee.
The rules do not provide for any nomination with regard to family pension, instead the Rules designate the persons who are entitled to receive the family Pension.
Thus, no other person except those designated under the Rules are entitled to receive family pension.
[285E H] 2.
The Family Pension Scheme confers monetary benefit on the wife and children of the deceased Railway employee, but the employee has no title to it.
The employee has no control over the family pension as he is not required to make any contribution to it.
The family pension Scheme is in the nature of welfare scheme framed by the Railway administration to provide relief to the widow and minor children of the deceased employee.
[285H 286B] 3.
Since, the Rules do not provide for nomination of any person by the deceased employee during his life time for the payment of family pension, he has no title to the same.
Therefore, it does not form part of his estate enabling him to dispose of the same by testamentary dis position.
[286B C] [The appellant No. 1, widow of the deceased Railway employee is entitled to receive the family pension, notwithstanding the will alleged to have been executed by the deceased on 9.9.1984 in favour of his brother.
As regards appellant Nos. 2 to 6 are concerned, they are not minors, therefore, under the Rules they are not entitled to any family pension.
[286F H] The Railway Administration is free to evict them in accordance with the Rules, only after arrears of family pension are paid to the widow.] [287B C] Jodh Singh V. Union of India & Anr., [1980] 4 S.C.C. 306, followed.
|
Civil Appeal No. 1501 of 1978.
Appeal by Special Leave from the Judgment and Order dated 18 1 1978 of the Delhi High Court in Civil Misc.
Petition No. 1120 W of 1977 and 109/78 in Writ Petition No. 585/77.
Soli J. Sorabjee Addl.
General, Girish Chandra for the Appellant.
13 549 SCI/78 736 section T. Desai, B. P. Maheshwari and Suresh Sethi for Respondent No. 1.
A. K. Sen and Vineet Kumar for Respondent No. 2.
ORDER An ad interim order of stay passed by the High Court of Delhi has been challenged before us in this appeal.
We should have hesitated to interfere with an interlocutory order following the usual practice in this Court.
But, where repercussions are incalculable and the basis of the direction; though interlocutory, is obscure, the ends of justice dominate and we may interfere if public interest so dictates.
Here is an order of the Company Law Board under sec.
408(1) of the , which gives a wealth of facts and a variety of reasons to support an ultimate direction which runs thus: "Since all the three conditions referred to in sub section (1) of sec.
408 of the , are established on the facts and circumstances of the case, the Company Law Board hereby appoint officers for three years, in addition to the existing directors of the company: 1.
Shri B. M. Kaul, Member, Railway Board (Retd.) 5 J 4 Jawahar Nagar, Jaipur.
Shri A. K. Mazumdar, Chief Secretary, Orissa Govt.
(Retd.) 26/2, Dover Road, Apartment No. 4, Calcutta 19. 3.
Shri P. K. Choksi, Senior Partner, Price Water house Pest & Co., B 4, Gillander House, Calcutta 1. 4.
Shri section K. Mitra, President, Institute of Cost & Works Accounts of India, 14 A/6 Western Extension Area, Karol Bagh, New Delhi 5. 5.
Shri P. A. section Rao, Formerly President of the Institute of Company Secretaries of India, C 7/7, Vasant Vihar, New Delhi.
Shri M. C. Bhatt, Joint Secretary, Govt.
of India (Retd.) B 22, Defence Colony, New Delhi 24. 7.
Shri Triloki Nath Sharma, Business Executive, 247, Mohan Nagar, G. T. Road, Sahibabad, Ghaziabad (U.P.) 737 The Company Law Board direct further under sub section (6) of sec.
408 of the Act that Shri B. M. Kaul will act as Chairman of the Board of Directors of the Company.
In accordance with the order passed by the Delhi High Court on 24th August, 1977, referred to hereinbefore the implementation of this order will be subject to any order that may be passed by the Delhi High Court in the matter pending before it." This order, which inducted seven additional directors was based on the ground that the affairs of the company in question "are being conducted in a manner which is prejudicial to the interests of the company and to public interest." The High Court, after hearing counsel on both sides, passed a laconic order that: "We consider that the proper order to be made, in view of the circumstances of the case, is to stay the operation of the order of the Company Law Board, dated 17th December, 1977, except as regards Shri P. K. Choksi, Shri section K. Mitra and Shri P. A. Rao, and also to direct that the said three gentlemen will not vote at the meetings of the Board of Directors till the disposal of the writ petition.
We order accordingly.
" A company of considerable financial dimensions and involved in operations using public resources as investment, naturally becomes the concern not merely of the Company Law Board but also of the economic process of the country.
The specialised body with responsibility to watchdog corporate process, is the Company Law Board.
When it investigates and reaches a definite conclusion and makes a consequential direction, it is entitled to prima facie respect unless there are glaring circumstances to the contrary.
We do not wish to make any observations on the merits of the matter since the High Court is seized of the case.
It may well be that the order of the Board may be vitiated by infirmities, legal or other.
It may also be that the reasoning of the Board and the factual foundation for it is sound.
In such situations, acting at an interlocutory stage, the benefit of reasonable doubt belongs to the specialised body.
Of course, as stated earlier, if there are good grounds to strike down the order, certainly the High Court has jurisdiction to stay its operation.
However, we find nothing stated in the order itself indicating why the High Court prima facie thought it necessary substantially to stay the operation of the Company Law Board 's order of induction of seven persons as directors.
Nor have we any light regarding the total eclipse of four directors and the partial eclipse of the other three.
Unfortunately, the inscrutable face of a sphinx does not go well with the judicial process.
Whatever might have been 738 the basis of the High Court 's order we do not make any comments thereon we are inclined to nullify the interim stay.
Our inclination is explained by the prefatory observations we have earlier made in this order.
To expatiate more may prejudice one side or the other.
To indicate this much is obligatory to explicate ourselves.
There was some argument at the Bar about an order under sec.
18AA of the Industries (Development and Regulation) Act, 1951, and its impact upon the order impugned before us.
Maybe, by virtue of that appointment, the entire company comes under the control of the authorised person appointed under that provision.
It is not for us to explore here the effect and import of the order of the Central Government under section 18AA and we desist from doing so.
All that we need do and that we can do in the present appeal is to allow it so that the Company Board 's direction in regard to seven additional directors will come into full force until the final decision of the High Court.
We allow the appeal.
We may make it clear that the learned Additional Solicitor General did assure the court that nothing which will stultify the two writ petitions before the High Court will be done by the Company Law Board or the Central Government.
We hope the High Court will dispose of the case very expeditiously.
S.R. Appeal allowed.
| The Company Law Board by its order dt.
17th December, 1977 inducted several additional directors in addition to the existing directors of the respondent company, under section 408(1) of the , since it was of the opinion that the affairs of the company in question "are being conducted in a manner which is prejudicial to the interest of the company and to public interest".
But the Delhi High Court passed an ad interim stay of the said orders, while admitting the writ Petition.
Allowing the appeal by special leave, the Court ^ HELD: Where repercussions are incalculable and the basis of the direction, though interlocutory, is obscure, the ends of justice dominate and the Supreme Court may interfere, if public interest so dictates under article 136 of the Constitution.
[736B] (2) A company of considerable financial dimensions and involved in operations using public resources as investment naturally becomes the concern not merely of the Company Law Board but also all of the economic process of the country.
The specialised body with responsibility to watchdog corporate process is the Company Law Board.
When it investigates and reaches a definite conclusion and makes a consequential direction, it is entitled to prima facie respect unless there are glaring circumstances to the contrary.
It may well be that the order of the Board may be vitiated by infirmities, legal or other.
It may also be that the reasoning of the Board and the factual foundation for it is sound.
In such situations acting at an interlocutory stage, the benefit of reasonable doubt belongs to the specialised body.
If there are good grounds to strike down the order certainly the High Court has jurisdiction to stay its operation.
[737D G]
|
l Appeal No. 1803 of 1070 From the Judgment and order dated 6.8.1968 of Patna High Court in first appeal No. 444 of 1967.
D.N. Mukherjee, Ranjan Mukherjee, A.K. Ganguli & S.C. Ghosh for the appellant.
R.B. Datar and Ms. Vina Tamta for the respondents.
The Judgment of the Court was delivered by DEASI J.
Appellant, an employee of Tata Iron and Steel Company Limited (`Company ' for short) has been chasing a mirage.
to wit to recover a paltry sum of Rs 14040 being the amount of gratuity to which he was entitled for the continuous service rendered by him from December 31, 1929 till August 31, 1959 under what are styled as Retiring Gratuity Rules, 1937 (`Gratuity Rules ' for short) from the Company and in this wholly unequal fight he laid down his life before enjoying the pittance to which he was entitled after three decades of loyal service.
What a dreadful return for abject loyalty? When the appellant retired by resignation from service he was paid his provident fund dues but gratuity which he was entitled to be paid under the relevant rules was not paid to him.
When the appellant claimed payment of gratuity, the respondent turned deal 329 ears to it.
Appellant sevred a notice dated September 6, 1981 calling upon the respondent to pay the amount of gratuity being Rs. 14040 .
The Company did not respond to the notice.
Thereupon the appellant filed M.S. No. 452 of 1962 in the court of Subordinate Judge at Jamshedpur.
The respondent appeared and contested the suit inter alia contending that `in terms of the contract of service and particularly having regard to the relevant rules under which gratuity can be claimed, the same is payable on certification of satisfactory service by the head of the department, and it is payable at the absolute discretion of the Company irrespective of whether the employee has or has not performed all or any of the conditions stated in the rules and no employee howsoever otherwise eligible is entitled as of right to any payment under the rules. ' The learned trial Judge framed the issues on which parties were at variance.
The learned Judge held that the plaint does disclose a cause of action and the plaintiff was entitled to claim and recover the amount of gratuity with interest thereon.
Accordingly, the suit was decreed against the.
Company directing it to pay the amount claimed in the plaint with future interest at 6% per annum with costs.
The respondent Company preferred First Appeal No. 444 of 1963 in the High Court of Judicature at Patna.
A Division Bench of the High Court held: i) that the service conditions of the plaintiff were governed by the Works Standing orders and that it was an implied condition of service that the plaintiff could get gratuity in accordance with the Gratuity Rules; (ii) that in view of Rule 6, an employee governed by the Gratuity Rules is not entitled to claim the same as a matter of right but he merely attains the benefit of eligibility or suitability for the retiring gratuity and not the right; iii) that until and unless the Company has decided to pay the gratuity in accordance with Rule 7 or otherwise, the mere fact of the employee becoming eligible to get it under the relevant rules which can be enforced in a civil court because the matter of payment of gratuity is at the absolute discretion of the Company as provided in Rule 10, and the employee, howsoever unfortunate the position may be under the modern stage of the society is not entitled to claim it as a matter of right because even though payment of gratuity under the Gratuity Rules is an implied condition of service, 330 yet the condition is further conditioned by the provisions made in the Rules and is subject to them; iv) that such a claim may enforced before the Industrial Tribunal under the but it is not possible to hold that the law of contract or the law of master and servant which is the only law to be enforced in a civil court can justify on interpretation of the Gratuity Rules in question that the plaintiff can be granted decree for payment of gratuity on the footing that it was the unconditional or unconditioned contractual obligation of the employer to pay such a money; v) the payment of gratuity money is not a gift pure and simple, but under the relevant rules it is in the nature of an inchoate claim or interest and not a right enforceable by a suit in court, because under the contract of service, the grant of gratuity has been left to the sole discretion of the employer as the relevant rules provided that no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules.
Accordingly the appeal was allowed and the judgment and decree of the trial court were set aside and the plaintiff 's suit was dismissed, directing the parties to bear their costs.
Hence this appeal by the plaintiff by special leave.
At the outset it is necessary to notice the relevant rules relied upon by the respondent in support of its submission that the gratuity cannot be claimed as a matter of right and the claim to gratuity cannot be enforced in the civil court.
The Retiring Gratuity Rules came into force with effect from April 1, 1937 and at the relevant time, the rules as amended in 1948 were in operation.
Rule 5 provides for retirement of every uncovenanted employee of the Company on attaining the age of 60 years subject to the right of the company to grant extension.
This rule is a mere incorporation of S.O. 54 which provides for retirement on attaining the age of 60.
Rules 6, 7 and 10 may be extracted: "6.
(a) Subject to the conditions referred to in these rules, every permanent uncovenanted employee of the Company, whether paid on monthly, weekly or on daily basis, including those borne on the pay rolls of the Company of the Collieries and at ore Mines and Quarries, will be eligible for a retiring gratuity which shall be equal to half a month 's salary or wages for every completed year of continuous service, 331 subject to a maximum of twenty months salary or wages in all, (b) Provided that when an employee dies, retires or is discharged under Rule 11(2)(ii) and (iii) hereof, before he has served the Company for a continuous period of 15 years, a gratuity ordinarily limited to half a month 's salary or wages for each qualifying year may be paid subject, however, to a maximum of 6 months ' salary or wages in all.
(Amended vide Board Resolution No. VII dated 2nd July, 1953.) (c) The retiring gratuity will be based on the rate of the salary or wages applicable to the employee in the last month of active service or if the employee has retired while on leave, in the last month prior to the employee going on leave.
(d) In the case of an uncovenanted employee who has been transferred to another Tata concern, the retiring gratuity payable to him under Rule (4) 8 (a) hereunder will be based on the rate of the salary or wages applicable to the employee in the last month of service with the Company, (In force from 1.4.1946 as per Board Resolution dated 8.4.1948.) 7.
Notwithstanding anything contained in these Rules a gratuity shall become due and be payable and shall always have been deemed to have become due and payable only in such instalments and over such period or periods as may be fixed by the Board of Directors of the Company or subject to the direction of the Board by the Managing Agents.
Until any such instalment shall become or have become due and payable, the employee or any dependent who qualifies for payment under the Gratuity Rules shall not be eligible to receive or be paid any such instalment of the gratuity.
All retiring gratuities granted under these Rules other than special gratuity to be paid under the provisions of Rule 22 hereof shall be at the absolute discretion of the Com 332 pany irrespective of whether an employee has or has not performed all or any of the conditions herein after stated and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under these Rule.
(Amended vide Board Resolution No. v dated 25.8.1955).
" The contention of the respondent is that the plaintiff did not retire from service but he left the service of the Company by resigning his post.
This aspect to some extent agitated the mind of the High Court.
It may be dealt with first.
It is not only not in dispute, but is in fact conceded that the plaintiff did render continuous service from December 31, 1929 till August 31, 1959.
On exact computation, the plaintiff rendered service for 29 years and 8 months.
Rule 6(a) which prescribed the eligibility criterion for payment of gratuity provides that every permanent uncovenanted employee of the Company whether paid on monthly, weekly or daily basis will be eligible for retiring gratuity which shall be equal to half a month salary or wages for every completed year of continuous service subject to a maximum of 20 months salary or wages in all provided that when an employee dies, retires or is discharged under Rule 11(2)(ii) and (iii) before he has served the Company for a continuous period of 15 years he shall be paid a gratuity at the rate therein mentioned.
The expression 'retirement ' has been defined in Rule 1 (g) to mean 'the termination of service by reason of any cause other than removal by discharge due to misconduct '.
It is admitted that the plaintiff was a permanent uncovenanted employee of the Company paid on monthly basis and he rendered service for over 29 years and his service came to an end by reason of his tendering resignation which was unconditionally accepted.
It is not suggested that he was removed by discharge due to misconduct.
Unquestionably, therefore, the plaintiff retired from service because by the letter Annexure 'B ' dated August 26, 1959, the resignation tendered by the plaintiff as per his letter dated July, 27, 1959 was accepted and he was released from his service with effect from September 1,1959.
The termination of service was thus on account of resignation of the plaintiff being accepted by the respondent.
The plaintiff has, within the meaning of the expression, thus retired from service of the respondent an he is qualified for payment of gratuity in terms of Rule 6. 333 Rule 7, in our opinion, has hardly any relevance because it enables the Company to pay gratuity by instalments.
It is Rule 10 which is material for the purpose.
It provides that payment of retiring gratuity under the Gratuity Rules, other than special gratuity to be paid under the provisions of Rule 22 which is not the case herein, shall be at the absolute discretion of the Company irrespective of whether an employee has or has not performed all or any of the conditions hereinafter stated, and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules.
The stand taken by the respondent to deny gratuity to the plaintiff is that gratuity payable under the rules is a matter of employer 's largesse to be distribute at the absolute discretion of the Company and cannot be claimed as a matter of right even if the concerned employees has fulfilled the eligibility criteria.
It is the interpretation of this Rule which would govern the outcome of this appeal.
It may be mentioned that the High Court which ultimately upheld the contention of the respondent has specifically held that gratuity was an implied condition of service of the plaintiff in accordance with the relevant rules.
The High Court reached this conclusion by first referring to Works Standing Orders framed by the Company which govern the conditions of service of the plaintiff.
In other words according to the High Court, the service conditions of the plaintiff were governed by the Works Standing Orders.
It is therefore necessary to determine the character of the Works Standing Orders Exh.
C framed by the Company.
This aspect was overlooked by the High Court with the consequence that the High Court found it difficult to enforce the claim of gratuity against the respondent by a decree of the court.
What then is the character of the Works Standing Orders framed by the Company ? Are they mere unenforceable rules or are they statutory in character or have a statutory flavour ? If they are statutory in character and they form part of the contract of service of every employee governed by the same, then the question would be whether its breach can be repaired or enforced by a civil suit ? The Parliament enacted the ( '1946 Act ' for short).
The long title of the Act provides that it was an act to require employers in industrial establishments formally to define conditions of employment under them.
334 The preamble of the Act provides that it is expedient to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them.
By Section 3, a duty was cast on the employer governed by the Act to submit to the Certifying Officer draft standing orders proposed by him for adoption in his industrial establishment.
After going through the procedure prescribed in the Act, the Certifying Officer has to certify the draft standing orders.
Section 8 requires the Certifying Officer to keep a copy of standing orders as finally certified under the Act in a register to be maintained for the purpose.
Sub sec.
2 of Section 13 imposes penalty on employer who does any act in contravention of the standing orders finally certified under the Act.
The act was a legislative response to the laissez fairs rule of hire and fire at sweet will.
It was an attempt at imposing a statutory contract of service between two parties unequal to negotiate, on the footing of equality.
This was vividly noticed by this Court in Western India Mntch Company Ltd. vs Workmen as under : "In the sunny days of the market economy theory people sincerely believed that the economic law of demand and supply in the labour market would settle a mutually beneficial bargain between the employer and the workmen.
Such a bargain they took it for granted, would, secure fair terms and conditions of employment to the workman.
This law they venerated as natural law.
They had an abiding faith in the verity of this law.
But the experience of the working of this law over a long period has belied their faith.
" The intendment underlying the Act and the provisions of the Act enacted to give effect to the intendment and the scheme of the Act leave no room for doubt that the Standing Orders certified under the 1946 Act become part of the statutory terms and conditions of service between the employer and his employee and they govern the relationship between the parties.
Workmen of Messrs Firestone Tyre & Rubber Co. of India (P) Ltd. vs Management and Ors.
Workmen in Buckinghan and Carnatic Mills Madras vs Buckingham and Carnatic Mills and M/s Glaxo Laboratories (l) 335 Ltd. vs The Presiding Officer, Labour Court, Meerut & Ors.
The High Court recorded the finding that service conditions of the plaintiff were governed by the Works Standing Orders.
No exception has been taken to this finding.
It may at once be noted that the Works Standing Orders of the Company are Certified Standing Orders, under the 1946 Act evidenced by Certificate No. 45 dated March 18, provides that every uncovenanted employee of the Company shall retire from service on attaining the age of 60 years.
This S.O. 54 is bodily incorporated in Rule 5 of the Gratuity Rules.
Relying on S.O. 54 and the evidence recorded in the case, the High Court reached the conclusion that payment of gratuity was an implied condition of service of the plaintiff.
Rule 6(a) provides that 'subject to the conditions prescribed in the rules, every permanent uncovenanted employee of the Company will be eligible for a retiring gratuity in the manner and to the extent for a retiring gratuity in the manner and to the extent mentioned therein.
Retiring gratuity becomes payable on retirement, which means termination of service by reason of any cause other than removal by discharge due to misconduct.
On a combined reading of S.O. 54 and the Rule 5 of the Gratuity Rules the High Court rightly concluded that payment of gratuity was a condition of service but somehow the High Court qualified it by saying that it was an implied condition of service.
It is well settled by a catena of decisions, that Certified Standing Orders bind all those in employment at the time of service as well as those who are appointed thereafter. ' Agra Electricity Supply Co. Ltd. vs Sri Alladin & Ors.
Now upon a combined reading of S.O. 54 along with Rule 5 and 6(a) of the Gratuity Rules, it becomes distinctly clear that payment of gratuity was an express or statutory condition of service and to this limited extent the finding of the High Court has to be modified.
If payment of gratuity is thus shown to be a statutory or express condition of governing the relationship between the plaintiff and the company, it would be obligatory upon the company to pay the gratuity on retirement of the plaintiff.
If the company declines or refuses to pay or discharge its statutory obligation, could the claim be enforced by a civil suit ? The High Court was of the opinion 336 that even though payment of gratuity was a condition of service in view of the provision contained in Rule 10, the same cannot be claimed as a matter of right or its recovery cannot be enforced by a civil suit.
The High Court was constrained to observe that Rule 10 which confers absolute discretion on the Company to pay the gratuity at its sweet will is unconscionable and incompatible with the modern notions or conditions which ought to govern the relations between employer and that upon an industrial dispute being raised, the Industrial Tribunal may be in a position to award the gratuity as a matter or right even under the existing rules, but according to High Court, it cannot be enforced by a civil suit.
In reaching this conclusion the High Court overlooked the effect of certified Standing Orders and the inter relation between the Retiring Gratuity Rules and S.O. 54.
At this stage it would be appropriate to examine the effect of a breach of condition of service which is either statutory in character or has the statutory flavour.
When under 1946 Act, an obligation is cast on the employer to specifically and precisely lay down the conditions of service, Sec.
13(2) subjects the employer to a penalty if any act is done in contravention of the Standing Orders certified under the Act.
It would appear that such conditions of service prescribed in Standing Orders get incorporated in the contract of service of each employee with his employer.
A facet of collective bargaining is that any settlement arrived at between the parties would be treated as incorporated in the contract of service of each employee governed by the settlement.
Similarly certified Standing Orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer.
As far as the incorporation of the results of collective bargaining into the individual contract of employment is concerned, the courts have in effect created a presumption of more or less systematic translation of the results of collective bargaining into individual contracts where these results are in practice operative and effective in controlling the terms on which employment takes place: (Labour Law Text and Materials by Paul Davies and Mark Freedland p. 233) O Kahn Freund describes collective bargaining as crystalised custom to be imported into contracts of employment on the same basis as trade custom (System of Industrial Relations in Great Britain p. 58 59).
This would be all the more true of certified Standing Orders governing conditions of service between workman and his employer.
If the employer commits a breach of the contract of employment, the same can be en 337 forced or remedied depending upon the relief sought by a civil suit.
If contract for personal service is sought to be specifically enforced by a decree of civil court, the court will have to keep in view the provisions of Sec.
14 of the which provides that contract for personal service cannot be specifically enforced.
We are not concerned with the exceptions to this rule such as the power of Industrial Tribunal to grant relief of reinstatement.
We are concerned with the jurisdiction of civil court.
The jurisdiction of civil court amongst others is determined by the nature of relief claimed.
Now if the relief claimed is a money decree by enforcing statutory conditions of service, the civil court would certainly have jurisdiction to grant the relief.
Plaintiff filed the suit alleging that he was entitled to payment of gratuity on completion of service for the period prescribed.
He alleged it and the High Court accepted it as a condition of service.
Its breach would give rise to a civil dispute and civil suit would be the only remedy.
In the case of workman governed by the may provide an additional forum to recover monetary benefit.
It is not suggested that plaintiff was a workman governed by the .
The High Court was, therefore, in error in holding that the remedy was only by way of an industrial dispute and not by a civil suit.
In reaching this conclusion, the Court High closed the door of justice to every employee though entitled to gratuity but would not be a workman within the meaning of the to recover the same, except where a prosecution can be successfully launched for an offence under Sec.
13(2) against the employer.
One more difficulty the High Court experienced in the way of the plaintiff maintaining the suit and recovering the amount of gratuity was that under Rule 10 gratuity was payable at the absolute discretion of Company and cannot be claimed as a matter of right.
Undoubtedly, Rule 10 confers discretion on the company to pay the gratuity even if the same is earned by satisfying the conditions subject to which gratuity becomes payable.
Rule 10 provides that jail retiring gratuities granted under the rules shall be at the absolute discretion of the Company irrespective of whether an employee has or has not performed all or any of the conditions set out in the rules and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules. ' Such absolute discretion is wholly destructive of the character of gratuity as a retiral benefit.
It is satisfactorily established and the High 338 Court has so ruled that payment of gratuity was a condition of service albeit implied condition of service which part does not stand scrutiny.
1946 Act was amended specifically in 1956 by Amending Act 36 of 1956 by which power was conferred upon the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing orders.
It is not clear whether the Rule 10 which appears to have been framed in the heyday of laissez faire has been recast, modified or amended to bring the same in conformity with the modern notions of social justice and Part IV of the Constitution.
Assuming it is not done, the court while interpreting and enforcing the relevant rules will have to bear in mind the concept of gratuity.
The fundamental principle underlying gratuity is that it is a retirement benefit for long service as provision for old age.
Demands of social security and social justice made it necessary to provide for payment of gratuity.
On the enactment of a statutory liability was cast on the employer to pay gratuity.
Pension and gratuity coupled with contributory Provident Fund are well recognised retiral benefits.
These retiral benefits are now governed by various statutes such as the Employees Provident Fund and Miscellaneous Provisions Act, 1952, the .
These statutes were legislative responses to the developing notions of fair and humane conditions of work, being the promise of of the Constitution.
article 37 provides that the provisions contained in Part IV Directive Principles of State Policy, shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.
" article 41 provides that 'the State shall within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. ' article 43 obligates the State to secure, by suitable legislation to all workers, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure. . ' The State discharged its obligation by enacting these laws.
But much before the State enacted relevant legislation, the trade unions either by collective bargaining or by statutory adjudication acquired certain benefits, gratuity being one of them.
Pension and gratuity are both retiral benefits ensuring that the workman who has spent his useful span 339 of life in rendering service and who never got a living wage, which would have enabled him to save for a rainy day, should not be reduced to destitution and penury in his old age.
As a return of long service he should be assured social security to some extent in the form of either pension, gratuity or provident fund whichever retiral benefit is operative in the industrial establishment.
It must not be forgotten that it is not a gratuitous payment, it has to be earned by long and continuous service.
Can such social security measures be denuded of its efficacy and enforcement by so interpreting the relevant rules that the workman could be denied the same at the absolute discretion of the employer notwithstanding the fact that he or she has earned the same by long continuous service ? If Rule 10 is interpreted as has been done by the High Court, such would be the stark albeit unpalatable outcome.
It is therefore necessary to take a leaf out of history bearing on the question of retiral benefits like pension to which gratuity is equated.
In Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh wherein this Court observed that :" a Scheme of gratuity and a scheme of pension have much in common.
Gratuity is a lump sum payment while pension is a period payment of a stated sum.
" Undoubtedly both have to be earned by long and continuous service.
For centuries the courts swung in favour of the view that pension is either a bounty or a gratuitous payment for local service rendered depending upon the sweet will or grace of the employer not claimable as a right and therefore, no right to pension can be enforced through court.
This view held the field and a suit to recover pension was held not maintainable.
With the modern notions of social justice and social security, concept of pension underwent a radical change and it is now well settled that pension is a right and payment of it does not depend upon the discretion of the employer, nor can it be denied at the sweet will or fancy of the employer.
Deokinandan Prasad vs State of Bihar & Ors., State of Punjab & Anr.
vs Iqbal Singh and D.S. Nakara & Ors.
vs Union of India.
If pension which is the retiral benefit as a measure of social security can be recovered 340 through civil suit, we see no justification in treating gratuity on a different footing.
Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par.
The question then is: Can the court ignore Rule 10 ? If gratuity is a retiral benefit and can be earned as a matter of right on fulfilling the conditions subject to which it is earned, any rule conferring absolute discretion not testable on reason, justice or fair play must be treated as utterly arbitrary and unreasonable and discarded.
If rules for payment of gratuity became incorporated in the Standing Orders and thereby acquired the status of statutory condition of service, an arbitrary denial referable to whim, fancy or sweet will of the employer must be rejected as arbitrary.
Sec. 4 of the 1946 Act which confers power on the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions would enable this Court to reject that part of Rule 10 conferring absolute discretion on the employer to pay or not to pay the gratuity even if it is earned as utterly unreasonable and unfair.
It must be treated as ineffective and unenforceable.
It is well settled that if the Certifying Officer and the appellate authority under the 1946 Act while certifying the Standing Orders has power to adjudicate upon the fairness or reasonableness of the provisions of any standing orders, this Court in appeal under article 136 shall have the power to do the same thing when especially it is called upon to enforce the unreasonable and unfair part of the Standing Order.
It therefore follows that part of Rule 10 which confers absolute discretion on the employer to pay gratuity even if it is earned, at its absolute discretion is ineffective and unenforceable.
This approach does not acquire any precedent but if one is needed the decision of this Court in Western India Match Company Ltd. case clearly rules to that effect.
In that case, the company relied on a special agreement which was to some extent in derogation of the provisions of the certified Standing Order.
The Court observed that to uphold such special agreement would mean giving a go by to the principle of three party participation, in the settlement of the terms of employment, as represented by the certified Standing Orders and therefore, the inconsistent part of special agreement is ineffective and unenforceable.
The claim to absolute discretion not to pay gratuity even when it is earned is a hangover of the laissez faire days and utterly inconsistent with the modern notions of fair industrial relations and therefore, it must be rejected as ineffective and hence unenforceable.
341 Viewed from a slightly different angle, our Constitution envisages a society governed by rule of law.
Absolute discretion uncontrolled by guidelines which may permit denial of equality before law is the anti thesis of rule of law.
Absolute discretion not judicially reviewable inheres the pernicious tendency to be arbitrary and is therefore violative of article 14.
Equality before law and absolute discretion to grant or deny benefit of the law are diametrically opposed to each other and cannot co exist.
Therefore, also the conferment of absolute discretion by Rule 10 of the Gratuity Rules to give or deny the benefit of the rules cannot be upheld and must be rejected as unenforceable.
The High Court reversed the decree of the trial court on the sole ground that Rule 10 confers an absolute discretion on the respondent company to pay or not to pay gratuity at its sweet will.
Once Rule 10 is out of the way, the judgment of the High Court has to be reserved.
Accordingly, this appeal succeeds and will have to be allowed.
The trial court decreed the plaintiff 's suit with costs and with interest at 6% per annum.
Interest at 6% per annum has become utterly irrelevant in these days with devaluation of the rupee.
Further in our opinion, the company declined to meet its obligation on an utterly unreasonable stand and denied to the plaintiff or a period of a quarter of a century what the plaintiff was legitimately entitled without the slightest shadow of doubt.
Therefore, while allowing the appeal in order to compensate the loss suffered by the plaintiff who died before enjoying the fruits of his decree, we direct that the interest shall be paid at 15% per annum and full costs throughout.
Accordingly, this appeal is allowed and the judgment and decree of the High Court are set aside and the decree of the trial court is restored with this modification that the interest shall be paid on the principal amount of Rs. 14,040 at 15% from 1.7.1959 till payment and full costs throughout be paid to the plaintiff.
The costs plaintiff in this Court is quantified at Rs. 5,000.
The payment shall be made within a period of two months from today.
H.S.K. Appeal allowed.
| The appellant who resigned from service of the respondent company after serving for over 29 years was not paid retiring gratuity by the respondent, even when the appellant had become eligible for it under the relevant gratuity rules styled as the Retiring Gratuity Rules, 1937 (Gratuity Rules for short).
The appellant filed a suit in the Court of Subordinate Judge for recovering the amount of gratuity.
The Subordinate Judge decreed the suit.
The High Court allowed the appeal filed by the respondent.
Hence this appeal.
The respondents submitted; (1) that since the appellant did not retire from the service but left the service by resigning the post, he was not eligible for gratuity under Rule 6 of the Retiring Gratuity Rules, 1937; (2) that under Rule 10 the retiring gratuity was payable at the absolute discretion of the respondent and could not be claimed as a matter of right by the appellant even if he had become eligible for it; and (3) that claim to gratuity could not be enforced in the civil court.
Allowing the appeal ^ HELD: Rule 6(a) which prescribed the eligibility criterion for payment of retiring gratuity provides, inter alia, that every permanent uncovenanted employee of the Company, will be eligible for retiring gratuity.
The expression `retirement ' has been defined in Rule 1(g) to mean `the termination of service by reason of any cause other then removal by discharge due to misconduct '.
It is admitted that the appellant was a permanent uncovenanted employee of 326 the Company paid on monthly basis and he rendered service for over 29 years and his service came to an end by reason of his tendering resignation which was unconditionally accepted.
It is not suggested that he was removed by discharge due to misconduct.
Unquestionably.
therefore, the appellant has within the meaning of the expression, thus retired from service of the respondent and he is qualified for payment of gratuity in terms of Rule 6.
[ 332D F] According to the High Court, the service conditions of the appellant were.
governed by the Works Standing orders of the respondent.
No exception has been taken to this finding.
These Works Standing orders were framed and certified under the Industrial Employment (Standing orders) Act, 1946.
The Act was a legislative response to the laissez faire rule of hire and fire at sweet will.
It was an attempt at imposing statutory contract of service between two parties unequal to negotiate, On the footing of equality.
The intendment underlying the Act and the provisions of the Act enacted to give effect to the intendment and the scheme of the Act leave no room for doubt that Standing orders certified under the Act become part of the statutory terms and conditions of service between the employer and his employee and they govern the relationship between the parties.[333E 334G] Western India Match Company Ltd. vs Workman; [1974] I SCR 434.
Work man of Messrs Firestone Tyre & Rubber Co of India (P) Ltd. vs Management and ors; ; at 612.
Workman in Buckingham and carnatic Mills Madras vs the presiding Officer, labour Court, Meerut & Ors; [1984] 1 SCC 1.
Agra Electricity Supply co. Ltd. vs Sri Alladin & Ors;[1970] 1 SCR 806, referred to Upon a combined reading of Standing order (S.O) 54 along with Rule 5 and 6(a) of the Gratuity Rules, it becomes distinctly clear that payment of gratuity was an express or statutory conditions of service governing the relationship between the appellant and the respondent.
Therefore, it would be obligation upon the respondent to pay gratuity on retirement to the appellant.
If the respondent refuses to pay or discharge its statutory obligation, the claim can be enforce by a civil suit.
The High Court was of the opinion that in view of Rule 1 of the Gratuity Rules, recovery of gratuity cannot be enforced by a civil suit.
But upon an Industrial dispute being raised, the Industrial Tribunal may be in a position to award the gratuity as a matter or right even under the existing rules.
In reaching this conclusion the High Court overlooked the effect of the certified Standing orders and the inter relation between the Gratuity Rules and S.O 54, When under 1946 Act, an obligation is cast on the employer to specifically and precisely lay down the conditions of service, Sec.
13(2) subjects the employer to a penalty if any act is done in contravention of the Standing orders certified under the.
A face of collective bargaining is that any settlement.
arrived at between the parties would be treated as incorporated in the contract of service of each employee governed by the settlement.
Similarly, certified standing Orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer.
If the employer commits a breach of the contract of employment the same can be enforced or remedied depending upon the 327 relief sought by a civil suit.
The jurisdiction of civil court amongst others is determined by the nature of relief claimed.
If the relief claimed is a money decree by enforcing statutory conditions of service, the civil court would certainly have jurisdiction to grant the relief.
[335F 337B] Labour Law Text and Materials by Paul Davies and Mark Freedland p 233 and system of Industrial Relations in Great B itain p. 58 59, referred to.
In the instant case, the appellant filed the suit alleging that he was entitled to payment of gratuity on completion of service for the period prescribed.
He alleged it and the High Court accepted it as a condition of service.
Its breach would give rise to a civil dispute and civil suit would be the only remedy.
In the case of workmen governed by the may provide an additional forum to recover monetary benefit.
It is not suggested that appellant was a workman governed by the .
The High Court was, therefore, in error in holding that the remedy was only by way of an industrial dispute and not by a civil suit.
[337C D] The Court while interpreting and enforcing the relevant gratuity rules will have to bear in mind the concept of gratuity.
The fundamental principle under lying gratuity is that it is a retirement benefit for long service as a provision for old age.
Demands of social security and social justice made it necessary to provide for payment of gratuity.
On the enactment of the a statutory liability was cast on the employer to pay gratuity.
Pension and gratuity which have much in common are well recognised retiral benefits as measures of social security.
It is now well settled that pension is a right and payment of it does not depend upon the discretion of the employer, nor it can be denied at the sweet will or fancy of the employer.
If pension can be recovered through civil suit, there is no justification in treating gratuity on a different footing.
Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par [339G H; 340A] Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh; , Deokinandan Prasad vs State of Bihar & Ors.
,[1971] Supp SCR 634, State of Punjab & Anr. vs Iqbal Singh, ; , D.S. Nakara & Ors vs Union of India; , ; referred to.
If the rules for payment of gratuity become incorporated in the Standing orders and thereby acquired the status of the statutory condition of service, an arbitrary denial referable to whim, fancy or sweet will of the employer must be, rejected as arbitrary.
Sec. 4 of the 1946 Act which confers power on the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness of the provisions would enable this Court to reject that part of Rule 10 which confers absolute discretion on the employer to pay gratuity even if it is earned, at its absolute discretion, as utterly unreasonable, ineffective and unenforceable.
That part of Rule 10 must, therefore, be treated as ineffective and un enforceable.
[340C D] 328 The claim to absolute discretion not to pay gratuity even when it is earned is a hang over of the laissez faire days and utterly inconsistent with the modern notion of fair industrial relations and, therefore, it must be rejected as ineffective and hence unenforceable.
[340H] Western India Match Company Ltd. vs Workmen, ; referred to.
Our Constitution envisages a society governed by rule of law.
Absolute discretion uncontrolled by guidelines which may permit denial of equality before law is the anti thesis of rule of law.
Absolute discretion not judicially reviewable inheres the pernicious tendency to be arbitrary and is, therefore, violative of article 14.
Equality before law and absolute discretion to grant or deny benefit of the law are diametrically opposed to each other and cannot co exist.
Therefore also the conferment of absolute discretion by Rule 10 of the Gratuity Rules to give or deny the benefit of the rules cannot be upheld and must be rejected as unenforceable.
[341A C]
|
Civil Appeal No. 545 of 1975.
From the Judgment and order dated 25.11.1974 of the Madras High Court in Writ Appeal No 238 of 1974.
With Civil Appeal Nos. 637 42 of 1975.
From the Judgment and order dated 25.11 1974 of the Madras High Court in Writ Appeal Nos. 175, 228, 229, 238, 263 and 265 of 1974 T.S. Krishnamurthy and Ambrish Kumar for the Appellants in C.A. No. 545 of 1975.
233 K. Rajindera Choudhary, A.K Srivastava, K. Shivraj Choudhary and K. Ram Kumar for the Respondent Nos. 2 to 11 in C.A No. 545 of 1975.
Padmanabham, Sunder and Ambrish Kumar for the Appellants in C.A. Nos.
637 642 of 1975.
A. K. Srivastava, R. Mohan, K Shivraj Chowdhary and A V Rangam for the Respondents in A Nos. 637 642 of 1975.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The above appeals arise out of three petitions filed under Article 226 of the Constitution of India bearing Writ Petition Nos 1367, 1389 and 1448 of 1973 on the file of the High Court of Madras The appellant V Balasubramaniam was the petitioner in Writ Petition No. 1389 of 1973 and section Swaminathan and S Suruli were the petitioners in the other two writ petitions All of them were working as Supervisors in the Engineering Subordinate Service of the Tamil Nadu Housing Board (hereinafter referred to as 'the Board ').
The Board was established under the Tamil Nadu State Housing Board Act, 1961 (hereinafter referred to as 'the Act ') The posts of Assistant Engineers (now called as Assistant Executive Engineers) in the Engineering officers Service of the Board were to be filled up either by direct recruitment or by promotion from the cadre of Junior Engineers possessing the qualifications prescribed for a Junior Engineers or from the cadres of Supervisors, Head Draftsmen and Draftsmen Grade l According to the appellants the regulations framed by the Board which had received the approval of the State Government prescribed that in order to be eligible to be promoted to the cadre of Assistant Engineers a Junior Engineer should have put in service as Junior Engineer for not less than five years and that a Supervisor should have put in service as Supervisor for not less than ten years.
This difference between the Junior Engineers and the Supervisors was due to the minimum educational qualifications prescribed for entry into those posts.
A degree in Engineering or an equivalent qualification had been prescribed for entry into the cadre of Junior Engineers and a diploma in Engineering or any equivalent qualification was the minimum qualification prescribed for entry into the cadre of Supervisors.
The grievance of the appellants and other Supervisors was that Respondents 2 to 11 in these appeals (who were Respondents 3 to 12 in the writ petitions) and one C.J. Jayachandran, who had been impleaded as Respondent No. 2 in the writ petitions, 234 who were working as Junior Engineers had been promoted to the A cadre of Assistant Engineers even though they had not put in five years of service in the cadre of Junior Engineers contrary to the regulations of the Board and that the appellants and some other Supervisors who were eligible to be promoted as Assistant Engineers, had not been promoted to the cadre of Assistant Engineers.
They, therefore, approached the High Court by filing the above mentioned petitions for the issue of a writ in the nature of mandamus directing the Board to consider the claims of the appellants and other Supervisors who were eligible to be promoted to the 11 posts of Assistant Engineers in the place of Respondents 2 to 11 and C.J. Jayachandran who had been impleaded as Respondent No. 2 in the writ petitions The writ petitions were opposed by the Board and the Junior Engineers who had been impleaded as respondents in the said writ petitions.
The State Government was impleaded as a respondent to the writ petitions by the learned Single Judge who heard the writ petitions After hearing all the parties, the learned Single Judge allowed the Writ Petitions by his common judgment delivered on 30.1.1974 declaring that the promotion of Respondents 2 to 11 and C.J. Jayachandran as Assistant Engineers was in violation of the requirements of the regulations and directed the Board to fill up the posts to which Respondents 2 to 11 and C.J. Jayachandran had been promoted according to the regulations Aggrieved by the decision of the learned Single Judge the Board and the Junior Engineers whose promotions had been set aside by the learned Single Judge preferred in all seven appeals being Writ Appeal Nos. 175, 228, 229, 238 and 263 265 of 1974 before the Division Bench of the High Court.
The Division Bench allowed the appeals by its judgment dated 25.11.1974 on a ground entirely different from the grounds which had been urged in the course of the writ petitions to which we will advert to hereafter and dismissed the writ petitions.
These seven appeals by special leave have been filed against the judgment delivered by the Division Bench of the High Court.
It is necessary at this stage to set out briefly the relevant provisions of law and the contentions urged by the parties.
Chapter IV of the Act which is entitled 'officers and Members of the Staff of the Board ' contains provisions relating to the appointment of the employees of the Board and their conditions of service.
Section 16 of the Act provides that the Board may appoint a Secretary, a Housing Board Engineer and such other officers and servants as it considers necessary for the efficient performance of its functions.
Section 17 of the Act which deals with the conditions of service of officers and servants of the Board reads thus: 235 "17.
Conditions of service of officers and servants of the A Board The remuneration and other conditions of service of the Secretary, Housing Board Engineer and other officers and servants of the Board shall be such as may be prescribed by regulations.
" Section 18 of the Act contains the provisions relating to promotions and punishment of the officers and servants of the Board.
The material part of section 18 reads thus: " 18.
Promotions and punishment of the officers and servants of the Board (1) Subject to any regulations made under section 19, the power of making promotion to posts in the service of the Board . . . . . shall be exercised by the following authorities, namely: (a) by the Chairman in the case of posts, the maximum monthly salary of which does not exceed three hundred rupees and the servants holding such posts; D (b) by the Board, in the case of posts, the maximum monthly salary of which exceeds three hundred rupees but does not exceed one thousand rupees and officers and servants holding such posts; (c) by the Board, subject to the previous approval of the Government, in the case of posts, the maximum monthly salary of which exceeds one thousand rupees and officers and servants holding such posts: Section 19 of the Act provides that subject to the provisions of the Act, the Board shall with the previous approval of the Government, make regulations with regard to the various matters set out therein such as leave, disciplinary proceedings etc.
which are also referred to in section 18 of the Act.
But the promotions of officers and servants of the Board from a lower grade to a higher grade is not, however, one of the topics which is specifically mentioned in section 19 of the Act.
Section 160 of the Act deals with the power to make rules for the purpose of carrying into effect the provisions of the Act.
Subsection (3) of section 160 of the Act provides that all rules made under the Act shall be published in the Fort St. George Gazette and unless they are expressed to come into force on a particular day, shall come H 236 into force on the day on which they are so published.
The power to make regulations is conferred on the Board by section 161 of the Act.
Sub section (1) of section ]61 of the Act provides that the Board may, by notification, make regulations not inconsistent with the Act and the rules made thereunder, for the purpose of giving effect to the provisions of the Act.
Sub section (3) of section 161 of the Act states that no regulation or its cancellation or modification shall have effect until the same shall have been approved and confirmed by the Government.
In exercise of the powers conferred under sections 17 and 19 of the Act the Board has made regulations which are called Madras State Housing Board Service Regulations.
It is necessary to set out at this stage the manner in which the above regulations were made.
The Board by its Resolution No. 772 dated 20.3.1963 made and adopted the service regulations in regard to the conditions of the officers and service of the Board and sent them to the Government for its approval under section 16 1(3) of the Act.
In the said regulations as far as the promotion of the Junior Engineers and the Supervisors as Assistant Engineers was concerned, the Board had prescribed five years ' qualifying service in the case of Junior Engineers and ten years ' qualifying service in the case of Supervisors for being promoted to the cadre of Assistant Engineers.
However, during the pendency of the above matter before the Government, the Board on its own revised the said regulations which had already been forwarded to the Government by its Resolution No. 368 dated 8.12.1964.
By that revision, the Board altered the period of five years of service which had been prescribed as the qualifying service in the case of Junior Engineers to three years and forwarded the said resolution to the Government.
When the matter was still pending with the Government, the Board by its Resolution No. 467 dated 8.11.1965 went back on its revision and again prescribed the qualifying service of five years in respect of Junior Engineers for promotion to the cadre of Assistant Engineers since according to the Board that would be in accordance with the rules governing the Madras Engineering Service in the Government.
The Government considered the regulations submitted by the Board and gave its approval by .
No . 156 (Housing) Department of Labour dated 14.5.1969.
The regulations, as approved by the Government in the Government order, however, showed only three years as the qualifying service in respect of Junior Engineers and not five years as the qualifying service.
But the Government issued a memorandum dated 26.2.1971 which was styled as an erratum and it said that the words 'Three Years ' occurring under the sub head 'by promotion of (i) Junior Engineer? should be substituted by the words 'Five Years '.
This memorandum was signed by an Assistant Secretary to the 237 Government.
It was the contention of the Junior Engineers who had been promoted as the Assistant Engineers that the qualification prescribed by the regulations in respect of Junior Engineers for promotion to the cadre of Assistant Engineers was three years ' service as stated in the order of the Government dated 14.5.1969 and that the memorandum dated 26.2.
1971 which had been issued as an erratum was liable to be ignored since it had not been issued by following the procedure prescribed for modifying a regulation.
The Board, however, raised some inconsistent pleas with regard to the said erratum.
It is at the stage the learned Single Judge directed the State Government to be impleaded as a party in order to ascertain whether the Memorandum dated 26.2.1971 was only an erratum which had been issued for the purpose of correcting a clerical mistake which had crept into the Government order dated 14.5.1969 or whether it was in fact a modification of the earlier Government order dated 14.5.1969.
After the State Government was so impleaded an affidavit was filed on behalf of the State Government by Shri V.S. Subbiah, Secretary to Government Housing Department explaining reasons for issuing the erratum dated 26.2.
The relevant part of that affidavit reads thus: "2.
The Tamilnadu Housing Board in its resolution No. 772 dated 20.3.1963 approved the draft service regulations in regard to the conditions of service of the officers and Servants of the Board.
The Chairman of the Tamilnadu Housing Board in his letter No. 188884/E/63 I dated 7.6.63 requested the approval of the Government for the regulations framed by the Board with reference to sections 17 and 19 of the Tamilnadu State Housing Board Act 1961.
In the above proposals the post of Assistant Engineers in the scale of pay of Rs.350 25 650 was included in the Housing Board Engineering officers Service.
For the appointment as Assistant Engineer one of the qualifications proposed by the Housing Board included a service of five years in the State Housing Board, Public Works Department, or Highways in case of directly recruited Junior Engineers.
While the matter was under consideration of the Government the Tamilnadu Housing Board in its resolution No. 368 dated 8.12.1964 approved the revised draft service regulations.
In regard to the appointment of Assistant Engineer the revised draft service regulations provided a period of three years of service as Junior Engineer instead of five years (vide page 238 409 to 410 of the G.O.).
While these revised draft regulation were pending scrutiny by the Government the Tamil nadu Housing Board in its resolution No. 467 dated 8.11.1965 approved an amendment prescribing a period of five years as Junior Engineer for promotion as Assistant Engineer instead of three years.
The above amendment was made in accordance with Rule 5 of the Special Rule of the Madras Engineering Service (vide pages 555 to 556 of the G.O. ).
This resolution was forwarded by the Chair man, Tamilnadu Housing Board in his letter No. 97205A/ E2/64 9 dated 16.11.1965.
This letter was however omitted at the time of issue of orders by Government in G.o.
Ms. No. 156 Labour dated 14.5.69.
When this omission was noticed by Government this was rectified by issuing an erratum in Memorandum No. 6403/Housing/71 2 dated 26.2.71 (vide page 799 of the G.o.).
This respondent respectfully submits that the Tamilnadu Housing Board in its resolution No. 467 dated 8.11.1965 has proposed a period of 5 years as the minimum qualification required for promotion as Assistant Engineers in the case of directly recruited Junior Engineers.
At the time of approval by the Government in G. O .
Ms. No. 156/Labour dated 14.5.1969 the minimum period for promotion has been wrongly mentioned as 3 years instead of 5 years.
The above is purely a clerical mistake and in order to rectify the same, the Government has issued an errata in Government Memo No. 6403/Housing dated 26.2.71 wherein the period of 3 years was corrected into 5 Years.
The learned Single Judge after going through the various affidavits and counter affidavits in the case and the relevant Government files came to the conclusion that the period of 'three years ' had been mentioned in the Government order dated 14.5.1969 as a result of a clerical mistake.
He observed that his 'definite conclusion on this part of the case is that what has been subsequently issued by way of an erratum by the Assistant Secretary to the Government was really an erratum and not a modification of the regulations as approved by the Government in the Government order referred to already ' .
The learned Single Judge, therefore, found that the promotion of Respondents 2 to l l and C.J. Jayachandran from the cadre of Junior Engineers to the cadre of Assistant Engineers was contrary to the 239 regulations as they had not completed five years of service in the cadre of Junior Engineers when they were promoted as Assistant Engineers and that their promotions were liable to be set aside.
It may be mentioned here that no other infirmity with regard to the regulations was put forward when the case was before the learned Single Judge.
In the appeals before the Division Bench of the High Court a new plea was urged on behalf of the appellants, namely, that the petitioners in the writ petitions were not entitled to the issue of a writ in the nature of mandamus on the basis of the regulations since the regulations had not the force of law as they had not been published in the official Gazette.
The Division Bench permitted the apellants in the said appeals to raise the said plea.
It held that because section 17 of the Act had provided that the remuneration and other conditions of service of the officers and the servants of the Board had to be in accordance with the regulations made under the Act, section 18 of the Act had provided that subject to any regulations made under section 19 of the Act the power of making promotions to the posts of the Board could be exercised by the appropriate authority, section 161 of the Act had empowered the Board to make such regulations by issuing a notification and under section 3(19 A) of the Tamil Nadu General Clauses Act it was necessary that a notification issued under any statute should be notified or published in the official Gazettee unless the statute otherwise provided, the regulations were not valid as they had not been admittedly published in the official Gazette.
The Division Bench proceeded to hold that the effect of not notifying the regulations as required by sub section (I) of section 161 of the Act was that the regulations did not have the force of law and, therefore, no mandamus could be issued even if it was established that the regulations had been contravened in making the promotions.
On that sole ground, the judgment of the learned Single Judge was set aside and the writ petitions were dismissed.
These appeals, as already stated, have been filed against the judgment of the Division Bench.
There is one other plea urged on behalf of the Board to which reference has to be made at this stage before dealing with the contentions urged before us and that plea is contained in paragraph 3 of the counter affidavit filed by Shri K, Lakshminathan Bharathi, Chairman of the Board, which was sworn on 17.12.1973.
The relevant part of that counter affidavit reads thus: "3. . . .
Again in resolution No. 2 17 the Board has decided to relax the rule requiring 5 240 years of experience and also providing for promotion of Assistant Engineers in proportion of 3:1 between Junior Engineers/Supervisors.
This was approved by the Board in resolution No. 45 dated 20.1.1972.
In resolution No. 45 promotions were given to the Junior Engineers and Super visors by relaxing their required period of service.
" In the counter affidavit of the Chairman, extracted above, it is pleaded that the Board had decided to relax the rule requiring five years of experience in the cadre of Junior Engineers for purposes of promotion to the cadre of Assistant Engineers by its resolution No. 217 which was later on approved by the Board by its resolution No. 45 passed in January 1972.
The power to relax the regulations in appropriate cases is claimed under regulation 28(d) of the Regulations which at the material time read as follows: " Notwithstanding anything contained in these regulations or in any of the rules mentioned in these regulations, the Board shall have powers to deal with the case of any persons or class of persons (inclusive of those on foreign service terms) serving under the Board or any candidates or class of candidates for appointment/promotion/absorption to a service in such manner as may appear to it to be just and equitable subject to the approval of the Government. . . . " The first point which requires to be considered in this case is whether the qualifying service prescribed in respect of Junior Engineers was five years or three years on the date on which the impugned promotions were made.
The answer to this question P depends upon the fact whether the memorandum dated 26.2.1971 issued by the State Government stating that the period of qualifying service in respect of Junior Engineers was five years and not three years was an erratum or was a modification of the earlier Government order dated 14.5.1969.
The learned Single Judge has after going through the pleadings of the parties and the relevant Government record found that the error which had crept into the Government order dated 14.5.1969 was clerical in nature and it was open to the State Government to correct it by issuing an erratum.
The Division Bench has not recorded any finding on this question in the course of its judgment.
It is not disputed that the employees of the Board working in the cadre of Junior Engineers and in the cadre of Supervisors, the Board and everybody concerned with the question had understood 241 that the qualifying service prescribed for Junior Engineers to be eligible to be promoted to the cadre of Assistant Engineers was five years during the relevant time.
In fact, the Board had passed a resolution to the effect that the period of five years should be reduced to the period of three years.
Having heard the arguments of learned counsel of the parties and looking into the record, we are of the view that the memorandum issued by the State Government on 26.2.1971 was merely an erratum correcting was a clerical error and was not a modification of an earlier regulation.
We, therefore, uphold the finding of the learned Single Judge on the above question.
We now proceed to consider whether the Division Bench was right in allowing the appeals and in dismissing the writ petitions on a very short ground namely that relief by way of mandamus could not be granted on the basis of the regulations which had not been published in the official Gazette, without examining whether the petitioners in the writ petitions were entitled to relief otherwise or not.
The impugned promotions of 11 Junior Engineers were made on various dates between 25.6.197 1 and 7.2.1972.
It is true that the regulations which had received the approval of the State Government had not been published in the official Gazette by the relevant dates as required by section 3(19 A) of the Tamil Nadu General Clauses Act, 189 1 which defined the expression 'notification ' as a notification published in the official Gazette and by section 21 of the Tamil Nadu General Clauses Act, 1981 which provided that where in any Act or in any rule passed under any Act, it was directed that any order, notification or other matter should be notified or published such notification or publication should unless the said Act otherwise provided be deemed to be duly made if it was published in the official Gazette.
In the present case the Act did not in fact provide for any other mode of publication or notification.
The said regulations were actually published in the official Gazette only on May 14, 1975.
The Division Bench of the High Court as stated earlier proceeded to dismiss the writ petitions on the sole ground that no writ in the nature of mandamus could be issued because the regulations had not been published in the form of a notification in the official Gazette on the dates on which the Writ Petitions were filed and, therefore, they were not enforceable.
It is, however, not disputed that by the time the impugned promotions took place the regulations had been made by the Board and had also received the approval of the State Government although they had not been published in the official Gazette.
There were no other regulations which had been duly made and published in the official Gazette.
242 In the above situation could it be said there was a legal vaccum as regards the conditions of service of the officers and servants of the Board? Section 16 of the Act confers the power on the Board to appoint a Secretary, a Housing Board Engineer and such other officers and servants as it considers necessary for the efficient performance of its functions.
Section 17 of the Act no doubt provides that the remuneration and other conditions of service of the Secretary Housing Board Engineer and other officers and servants of the Board shall be such as may be prescribed by regulations.
The making of the regulations in the ordinary course of events occupies considerable time since they have to receive the approval and confirmation of the Government in order to be effective.
The Board came into existence on 22.4.6; and it passed the resolution adopting the regulations on 20.3.1963.
The regulations were submitted by the Board to the Government for its approval after the said resolution was adopted by the Board.
Until the regulations were approved and confirmed by the State Government the Board had necessarily to take decisions in accordance with certain norms laid down by it as regards the modes of appointment of officers and staff of the Board.
Those decisions cannot be invalidated merely on the ground that the regulations had not yet been promulgated in accordance with law.
In Dundee Harbour Trustees vs D. & J. Nicol, [19 15] A.C. 550 Viscount Haldane L.C. said that 'the answer to the question whether a corporation created by a statute has a particular power depends exclusively on whether that power has been expressly given to it by the statute regulating it, or can be implied from the language used.
The question is simply one of construction of language, and not of presumption. ' The above statement of law has been quoted with approval by a Constitution Bench of this Court in Mysore State Road Transport Corporation vs Gopinath Gundachar Char, ; In that case the respondent therein had questioned the validity of a notification issued by the General Manager of the Mysore State Road Transport Corporation inviting applications for appointments to certain posts on the ground that such a notification could not have been issued by the General Manager of the Mysore State Road Transport Corporation as no regulations had been made by that Corporation under Section 45(1) of the with the previous sanction of the State Government with regard to the conditions of appointment of servants and the scales of pay of officers and servants of the Corporation other than the Chief Executive officer and the General Manager and the Chief Accounts officers.
In the the provisions relating to the power of the Corporation to appoint its officers and staff and the manner in which the conditions of appointment and 243 service of such officers and staff was to be regulated were almost similar to the provisions in sections 16 and 17 of the Act.
For purposes of easy comparison the relevant parts of sections 14 and 45 of the Road Transport Corporation Act 1950 are given below: " 14(1).
Every Corporation shall have a Chief Executive Officer or General Manager and a Chief Accounts officer appointed by the State Government.
(2) A Corporation may appoint such other officers and servants as it considers necessary for the efficient performance of its functions.
(3) The conditions of appointment and service and the scales of pay of the officers and servants of a Corporation shall (a) as respects the Chief Executive officer or General Manager and the Chief Accounts officer be such as may be prescribed, and (b) as respects the other officers and servants be such as may, subject to the provisions of section 34, be determined by regulations made under this Act.
45(1).
A Corporation may, with the previous sanction of the State Government, make regulations, not inconsistent with this Act and the rules made thereunder, for the administration of the affairs of the Corporation.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely: . . . . . . . (c) the conditions of appointment and service and the scales of pay of officers and servants of the Corporation other than the Chief Executive officer or General Manager and the Chief Accounts officer.
" It is seen from the provisions set out above that sub sections ( 1) an (2) of section 14 of the 244 correspond to section 16 of the Act, section 14(3)(b) of the corresponds to section 17 of the Act and section 45 of the corresponds to section 161 of the Act.
Admittedly in that case no regulations had been framed by the Corporation under section 45(2)(c) of the prescribing the conditions of appointment and service and scales of pay of its officers and servants but still this Court upheld the power of the Corporation to make appointments in the absence of the regulations made under section 45 of the Road Transport Corporation Act, 1950.
The relevant part of the decision of this Court is given below: "In Dundee Harbour Trustees vs & J Nicol, Viscount Haldane L.C. said: "The answer to the question whether a corporation created by a statute has a particular power depends exclusively on whether that power has been expressly given to it by the statute regulating it, or can be implied from the language used.
The question is simply one of construction of language, and not of presumption.
" Bearing in mind this statement of law, let us consider whether the appellant had the power to appoint officers and servants and to lay down their conditions of service in the absence of regulations framed under section 45(2)(c) of the Road Transport Corporation Act, 1950.
The appellant is an autonomous Corporation incorporated under the Act for the purpose of operating road transport services in the State and extended areas.
For the proper discharge of its functions, it is necessary for the Corporation to appoint officers and servants.
Section 14(2) expressly confers upon the Corporation the incidental power to appoint such officers and servants as it considers necessary for the efficient performance of its functions.
Section 19(1)(c) empowers it to provide for its employees suitable conditions of service.
Section 14(3) provides that the conditions of appointment and service and the scales of pay of its officers and servants shall be such as may subject to the provisions of section 34 be determined by regulations made under the Act.
Section 45(2)(c) empowers the Corporation to frame regulations with the previous sanction of the State Government prescribing the conditions of appointment, service and scales of pay of the officers and servants.
If the State Government issues any directions under section 34 relating to the recruitment and conditions of service of the employees, the Corpora 245 tion must obey those directions.
The conjoint effect of sections 14(3)(b), 34 and 45(2)(c) is that the appointment of officers and servants and their conditions of service must conform to the directions, if any, given by the State Government under section 34 and the regulations, if any, framed under section 45(2)(c).
But until such regulations are framed or directions are given, the Corporation may appoint such officers or servants as may be necessary for the efficient performance of its duties on such terms and conditions as it thinks fit.
There is necessarily a time lag between the formation of the Corporation and the framing of regulations under section 45(2)(c).
During the intervening period, the Corporation must carry on the administration of its affairs with the help of officers and servants.
In the absence of clear words, it is difficult to impute to the legislature the intention that the Corporation would have no power to appoint officers and servants and fix the conditions of service unless the regulations under section 45(2)(c) are framed. " Assuming for purposes of argument that the non publication of the regulations in the official Gazette rendered them ineffective as regulations as held by the Division Bench of the High Court but without expressing any final opinion of the said question it has to be held that it was open to the Board to lay down appropriate norms in accordance with which it proposed to make appointments of its officers and staff.
The regulations which were made by the Board on 20.3.1963 which had been modified by its two resolutions dated 8.12.1964 and 8.11.1965 and which had been approved and confirmed by the State Government could still form the basis of the appointments of the officers and staff of the Board until they were replaced by formal regulations published in the form of a notification in the official Gazette.
Even in the case of the persons holding the civil posts in the Government this Court had held that notwithstanding the provisions of Article 309 of the Constitution the State Government had the executive power in relation to all matters with respect to which the legislature of the State had power to make laws and the absence of any such law made under Article 309 of the Constitution or the rules made under the proviso thereto the State Government could make valid appointment in exercise of its executive powers (vide B.N. Nagarajan and ors.
vs State of Mysore and Ors., The power of the Board under section 16 of the Act is similar to the power exercisable by a State Government under Article 162 of the Constitution as 246 regards appointment to State Public Services is concerned and that power could be exercised by the Board in accordance with its own resolution which in this case had received the approval of the State Government until appropriate regulations were published by it in accordance with section 161 of the Act.
Having taken a decision as per its resolution dated 8.11.1965 laying down that the qualifying service which a Junior Engineer should possess for purposes of promotion to the cadre of Assistant Engineers should be 5 years which had received the approval of the Government the Board was bound to follow faithfully the said decision while making promotions of Junior Engineers.
It could not have, therefore, departed from the norm prescribed by itself earlier without modifying it by another resolution of the Board and obtaining the approval of the State Government to it.
It is, however, urged on behalf of the Board that even though under the regulations framed by it, which had received the approval of the State Government it was necessary that a Junior Engineer should have experience of five years in that cadre for being promoted to the cadre of Assistant Engineers on the dates on which the impugned promotions were made, the impugned promotions cannot be questioned since under regulation 28(d) as approved by the State Government the qualification prescribed in respect of Junior Engineers had been relaxed by the resolution passed by the Board on 20th of January, 1972.
The learned counsel for the Board has produced before us copies of relevant records relating to the said resolution.
By resolution dated 20th January, 1972 the Board has no doubt approved the note prepared by the office.
The relevant part of the note states that in view of the availability of the large number of supervisors in service in excess of the proportion and in view of the non availability of Junior Engineers with five years of service for promotion, it is considered desirable that the rule requiring five years of experience should be relaxed in favour of Junior Engineers and that persons who have put in three years of service should be considered for promotion as Assistant Engineers.
The resolution approving the above note was passed by the Board in the light of regulation 28(d) of the Regulations which has been set out above.
Regulation 28(d) of the Regulations provided that it was open to the Board in appropriate cases to relax the qualifications subject to the approval of the State Government.
The appellants and the two other petitioners in the writ petitions clearly stated in the course of the writ petitions that the relaxation made in favour of the Junior Engineers who had been promoted was not in accordance with regulations 28(d) since even though more than nine months had elapsed after the resolution relaxing the qualifications was passed, the 247 approval of the Government had not been accorded to the resolution A relaxing the qualification.
The impugned promotions have been made between 25.6.1971 and 7.2.1972.
The resolution relaxing the qualification was passed by the Board on 20th of January, 1972.
On 5th July, 1972 a letter was addressed by the Board to the State Government which reads thus: "Lr.
No. 60880/FT2/69 date 5.7.72 TO The Secretary to Government, Labour Department, Madras 9.
Sir, Sub: Establishment Technical Tamil Nadu Housing Board Engineers officer Service Promotion to the Assistant Engineer reduction of service from five years to three years.
Amendment to service regulation.
Ref: Board Resolution No. 45 dated 20.1.1972.
I am to enclose a copy of the Note for the Board together with the Board 's resolution No. 45 dated 20.1.72 on the subject.
In the circumstances explained therein, the period of qualifying service for promotion as Assistant Engineer from the category of Junior Engineer has been reduced to three years by the Board in the resolution cited.
Relevant rules in the service regulation are to be amended suitably in accordance with the Board 's resolution cited.
Hence the following amendment is suggested to the rule in the service regulation for approval.
Rule 6 Existing: Must possess the qualification in items (i) or (ii) above and service as Junior Engineer for a period of not less than five years.
248 Amendment Must possess the qualification in items (i) and (ii) above and service as Junior Engineer for a period of not less than three years.
" In the above letter the Board had not actually sought the approval of the State Government for relaxing the qualification under regulation 28(d) but on the other hand it had actually sought the modification of the regulations themselves.
In reply thereto the State Government wrote to the Board on August 17, 1972 as follows: "Housing Department Letter No. 58479/Housing (ii)/72 dated 17.8.1972 From U.P. Govindasami B.A. Deputy Secretary to Government To The Chairman, Tamil Nadu Housing Board, Madras 35.
Sir, Sub: Establishment Technical Tamil Nadu housing Board Engineering officers Service Promotion to the Assistant Engineer reduction of service from five years to three years Amendment to service regulation.
Your letter No. 60880/FT2/69 dated 5.7.72.
I am directed to invite a reference to your letter cited wherein it is stated that the period of qualifying service for promotion as Assistant Engineer from the category of Junior Engineer has been reduced to three years by the Board in resolution No. 45 dated 20 1 72.
It is seen from the resolution that the Board has only relaxed the rules in favour of certain Junior Engineers who have not put in five 249 years of service but has not approved any proposal to amend the Service Regulation to provide for three years service in the case of Junior Engineers for promotion as Assistant Engineers.
Further the Board has approved a proposal to amend the service regulations to provide for promotion of Assistant Engineers in the proportion of 3: I where as in the letter cited it is requested that the service regulations may be amended to reduce the qualifying service of Junior Engineers for promotion to three years.
I am to request you to clarify the above points.
sd/ (T.K. Krishnan) for Deputy Secretary to Government.
" Under the above letter the State Government sought certain clarifications on points raised in it.
No further steps in this regard appear to have been taken after the said letter was written by the State Government perhaps because the writ petitions out of which these appeals arise had been pending before the High Court.
The writ petitions were disposed of by the learned Single Judge on January 13, 1974.
Thereafter the Board wrote a letter to the State Government on the question of relaxation of the rules on March 7, 1974.
The said letter reads as follows: "No. 60880/ET2/69 dated 7 3 74.
To The Special Secretary to Government, Housing Department, Fort St. George, MADRAS 600009.
Sir, Sub: Establishment Technical Tamil Nadu Housing Board Engineering officers Service Promotion to the post of Assistant Engineer.
250 Ref: 1.
Government lr.
No. 58479/Hg.
D(ii)/72 1 A dated 17.8.72.
I invite your attention to the reference cited above.
A reply could not be sent to para 3 of that letter till now, as the connected file of this office was handed to Board 's Legal Adviser in connection with the W.P. Nos.
1367, 1389 and 1448/73 filed in the High Court by the Section officers against the promotion of Junior Engineers as Assistant Engineers.
The connected file has now been received from the Legal Adviser.
The Board in its Resolution No. 45 dated 20 1 72, has approved inter alia the proposal to relax the qualifying service in respect of certain Junior Engineers who do not possess five years of service for promotion as Assistant Engineers.
According to Regulation 28(d) of the Tamil Nadu Housing Board Service Regulations, the powers conferred on the Board to relax the rule, in case of any person or a class of persons is subject to the approval of the Government The Writ Petitions referred to above have since been disposed of by the High Court and a copy of the judgment has been sent to the Government, Housing Department in this office letter No. 1112/ET 2/74 3 dated 21 2.74.
Action is also being taken to file an appeal by the Housing Board against the judgment referred to above.
It is also under stood from the Legal Adviser to the Housing Board that the Assistant Engineers affected by judgment have already filed a Writ Appeal which has been admitted and stay granted.
In the circumstances, I am to suggest that the question of the Government approving the relaxation of rules in respect of the 11 Assistant Engineers who were promoted on the basis of the Board 's Resolution No. 45 dated 20.1.72 may be held over till the Writ Appeal is disposed of.
sd/ Chairman" By this letter the Board requested the State Government not to take any decision on the subject matter of the above correspondence till the appeals were disposed of.
Till today the Government has not 251 approved the resolution passed by the Board on 20th January, 1972 relaxing the qualifications prescribed for promoting Junior Engineers to the cadre of Assistant Engineers.
In the context in which the words 'subject to approval of the Government ' appear in regulation 28(d) of the Regulations they have to be interpreted as meaning 'conditional upon the approval of the Government ', that is, that unless that approval is given by the Government the relaxation would not be valid because the regulations themselves had been put into effect after obtaining the approval of the State Government earlier.
The words 'subect to ' have been understood by this Court as meaning 'conditional upon ' in K.R.C.S. Balakrishna Chetty & Sons & Co. vs The State of Madras, ; Even if those words are understood as meaning that it was possible to obtain ex post facto sanction of a decision already taken by the Board, even then such an approval should have been given by the State Government within a reasonable time from the date on which the decision is taken by the Board.
Since the approval has not been given at all till now it cannot be said that the power had been validly exercised under regulation 28(d).
Since the claim made by the Board that the relaxation of the qualification has been done in accordance with regulation 28(d) is untenable in the aforesaid circumstances it would be wholly unjust to upheld the impugned promotions on the ground that there was a valid relaxation.
It should not be forgotten that having once obtained the concurrence of the State Government to the Regulations made by it, the Board could not act contrary to the said Regulations ignoring the State Government altogether merely because the Regulations had not been published.
Any such action would be arbitrary in character.
The impugned promotions are, therefore, liable to be set aside and it is necessary that the Board should be directed to pass fresh orders of promotion after considering the cases of all the Junior Engineers and the Supervisors as on the date on which the impugned promotions were made and to make promotions in accordance with the Regulations which had been acted upon by the Board with the approval of the State Government.
In the circumstances mere non publication of the Regulations in the official Gazettee was not fatal to the writ petitions.
The judgment of the Division Bench is, therefore, set aside and the judgment of the learned Single Judge is restored.
We, however, make it clear that if in the process of reviewing the promotions already made in accordance with the directions issued by the learned Single Judge it becomes necessary to revert any Junior Engineer from the post which he is now holding we direct that he shall not be so reverted but he shall be continued in the post which he is now H 252 holding by creating a supernumerary post, if necessary, until such time he becomes again eligible to be promoted to the said post.
The continuance of such Junior Engineer in the post which he is now holding as per this direction shall not, however, come in the way of the petitioners in the writ petitions or any other employee of the Board getting the promotion due to him and the seniority to which he is entitled in accordance with law.
These appeals are accordingly allowed.
There shall, however, be no order as to costs.
N.P.V. Appeals allowed.
| The Tamil Nadu Housing Board made Madras State Housing Board Service Regulations in exercise of the powers conferred under sections 17 and 19 of the Tamil Nadu State Housing Board Act, 1961.
The Board, by its Resolution No. 772 dated March 20, 1963, made and adopted the service regulations in regard to the service conditions of officers and servants of the Board and sent them to Government for approval under section 161(3) of the Act.
For promotion to the cadre of Assistant Engineers, the Board prescribed 5 years qualifying service in the case of Junior Engineers and 10 years in the case of Supervisors.
While the matter was pending with the Government.
For approval, the Board altered the period of 5 years ' qualifying service in the case of Junior Engineers to 3 years, by its Resolution No. 368 dated 8.12.1964 and forwarded the same to the Government.
Before the approval was received, the Board, by its Resolution No. 467 dated 8.11.1965, again prescribed the qualifying service of 5 years in respect of Junior Engineers, since, according to it, that would be in accordance with the rules governing the Madras Engineer ing Service in the Government.
By G.O. Ms. No. 156 (Housing) department of Labour dated 14.5.1969, the Government approved the regulations showing 3 years as qualifying service, but later issued a memorandum dated 26.2.1971, styled as an erratum, substituting the words "3 years" occurring under the sub head "by promotion of (i) Junior Engineers", by the words "5 years".
H 229 The appellants and other Supervisors who were working in the Engineering Subordinate Service of The Tamil Nadu Housing Board filed writ petitions challenging the promotions of respondents No. 2 to 11 and respondent No. 2 in the writ petitions in the High Court, who were working as Junior Engineers, to the cadre of Assistant Engineers, even though they had not put in 5 years ' service in the cadre of Junior Engineers, contrary to the regulations of the Board.
The writ petitions were opposed by the Tamil Nadu Housing Board and the Junior Engineers who had been impleaded as respondents in the writ petitions.
It was contended by the Junior Engineers who had been promoted as Assistant Engineers that the qualification prescribed by the regulations in respect of Junior Engineers was 3 years ' service as stated in the Government order dated 14.5.1969 and the memorandum dated 26.2.1971 which had been issued as an erratum was liable to be ignored since it had not been issued by following the procedure prescribed for modifying a regulation.
A Single Judge of the High Court directed the State Government to be impleaded as a party for ascertaining whether the memorandum dated 26.2.1971 was only an erratum for the purpose of correcting a clerical mistake that had crept into the Government order or whether it was in fact a modification of the earlier Government order.
The State Government filed an affidavit explaining the reasons for issuing the erratum.
The Single Judge concluded that the period of "3 years" mentioned in the Government order dated 14.5.1969 was as a result of clerical mistake, and that the memorandum dated 26.2.1971 was really an erratum and not a modification of the regulations as approved by the Government and held that the promotion of respondent Nos. 2 to 11 and respondent No. 2 in the writ petitions before the High Court from the cadre of Junior Engineers to the cadre of Assistant Engineers was contrary to the regulations as they had not completed 5 years ' service in the cadre of Junior Engineers when they were promoted as Assistant Engineers and, therefore, their promotions were liable to be set aside.
In the appeals before the Division Bench, a new plea was urged on behalf of the appellants that the petitioners in the writ petitions were not entitled to the issue of a writ in the nature of mandamus on the basis of the regulations since the regulations had no force of law as they had not been published in the official gazette.
Setting aside the Judgment of the Single Judge, the Division Bench held that the regulations were not valid and had no force of law 230 as they had not been published in the official gazette, as required by sub section (1) of section 161 of the Act and, therefore, no mandamus could be issued even if it was established that the regulations had been contravened in making the promotions.
Appeals by special leave were filed in this Court.
It was contended on behalf of the respondent Board that even though under the regulations it was necessary that a Junior Engineer should have experience of 5 years in the cadre for being promoted to the cadre of Assistant Engineers the impugned promotions could not be questioned since under regulation 28(d), the qualification prescribed in respect of Junior Engineers had been relaxed by.
the Resolution passed by the Board dated January 20, 1972.
Allowing appeals by special leave, this Court, ^ HELD: 1.
The memorandum issued by the State Government on 26.2.71 was merely an erratum correcting a clerical mistake and not a 1:) modification of an earlier regulation.
[241B] 2.
In the context in which the words "subject to approval of the Government" appear in regulation 28(d), they have to be interpreted as meaning "conditional upon the approval of the Government", i.e., that unless approval is given by the Government, the relaxation would not be valid because the regulations themselves had been put into effect after obtaining the approval of the State Government earlier.
Even if those words are understood as meaning that it was possible to obtain ex post facto sanction of a decision already given by the Board, even then such an approval should have been given by the State Government within a reasonable time from the date on which the decision is taken by the Board.
[251A C] The impugned promotions have been made between 28.6.1971 and 7.2.1972.
The resolution relaxing the qualification was passed by the Board on 20th January, 1972.
The approval has not been given at all till now.
Hence it cannot be said that the power had been validly exer cised under regulation 28(d).
Since relaxation of the qualification has not been done in accordance with regulation 28(d) it would be wholly unjust to uphold the impugned promotions on the ground that there was a valid relaxation.
[247A B; 251D] 3.1 No doubt the regulations which had received the approval of the State Government had not been published in the offecial gazette 231 by the relevant dates as required by sections 3(19 A) of the Tamil Nadu General Clauses Act, 1891.
The Tamil Nadu Housing Board Act did not provide for any other mode of publication or notification.
By the time the impugned promotions took place the regulations had been made by the Board and had also received the approval of the State Government although they had not been published in the official gazette.
[241D El 3.2 The making of the regulations in the ordinary course of events occupies considerable time since they had to receive the approval and confirmation of the Government in order to be effective.
The Board passed the resolution adopting the regulations on 20.3.63.
The regulations were submitted to the Government for approval.
Until the regulations were approved by the State Government, the Board necessarily had to take decisions in accordance with the certain norms laid down by it as regards the modes of appointment of officers and staff of the Board.
Those decisions cannot be invalidated merely on the ground that the regulations had not been promulgated in accordance with law.
[242B D] 3.3 It was open to the Board to lay down appropriate norms in accordance with which it proposed to make appointments of its officers and staff.
The power of the Board under section 16 of the Act is similar to the power exercisable by State Government under Article 162 of the Constitution as regards appointment to State Public Service is concerned, and that power could be exercised by the Board in accordance with its own resolution, which had received approval of the State Government, until appropriate regulations were published by it in accordance with section 161 of the Act.
[245E, H; 246A B] 3.4 Having taken a decision as per its resolution dated 8.11.1965 laying down that the qualifying service which a Junior Engineer should possess for purposes of promotion to the cadre of Assistant Engineers should be 5 years, which had received the approval of the State Government, the Board was bound to follow faithfully the said decision while making promotions of Junior Engineers.
It could not have, therefore, departed from the norm prescribed by itself earlier without modifying it by another resolution and obtaining the approval of the State Government to it.
[246B Cl 3.5 Having once obtained the concurrence of the State Government to the regulations made by it, the Board could not act contrary to the said regulations ignoring the State Government altogether merely 232 because the regulations had not been published.
Any such action would be arbitrary in character.
Mere non publication of the regulations in the of official gazette was not fatal to the writ petitions.
[251E, GJ The impugned promotions are, therefore, set aside, and the Board directed to pass fresh orders of promotion after considering the case of all the Junior Engineers and the Supervisors as on the date on which the impugned promotions were made and to make promotion in accordance with the regulations which had been acted upon by the Board with the approval of the State Government.
[251E F] [The Judgment of the Division Bench set aside and that of the Single Judge restored.
If in the process of reviewing the promotions, it becomes necessary to revert any Junior Engineer from the post which he is now holding, he shall not be so reverted but shall be continued in the post which he is now holding, by creating a supernumerary post, until such time he becomes eligible to be promoted to the said post.
The continuance of such a Junior Engineer shall not, however, come in the way of the petitioners in the writ petitions or any other employee of the Board getting promotions due and the seniority entitled in accordance with law.] [251G H; 252A B] Dundee Harbour Trustees vs D. & J. Nicol, [1915] A.C. 550; Mysore State Road Transport Corporation vs Gopinath Gundachar Char, ; ; B.N. Nagarajan and ors.
vs State of Mysore and ors.
, and K.R.C.S. Balakrishna Chetty & Sons & Co. vs State of Madras, ; , referred to.
|
Appeal No. 582 of 1969.
Appeal from the Judgment and Decree dated the 19th March, 1968 of the Bombay High Court at Nagpur in First Appeal No. 72 of 1959.
M. N. Phadke, R. A. Gupta and K. B. Rohatgi for the Appellant.
B. N. Lokur, Arun Kumar Sanghi and A. G. Ratnaparkhi for the The Judgment of the Court was delivered by CHANDRACHUD, J.
This is a plaintiff 's appeal on a certificate granted by the High Court of Bombay, Nagpur Bench, under Article 133(1)(a) of the Constitution On March 24, 1953 defendant 1 executed on behalf of himself and 'his minor son defendant 2, a deed of mortgage in favour of the plaintiff.
Defendant 3 is also a son of defendant 1 but he was born, after the mortgage deed, on September 30, 1955.
On January 11, 1956 a registered deed of partition was executed amongst the defendants under which the mortgaged property was allotted to the share of defendants 2 and 3. 884 On September 1, 1956 the mortgagee filed Civil Suit No. 3A of 1956 to enforce the mortgage.
On September 20, 1958 the trial court passed a preliminary decree for sale of defendant 1 's interest in the mortgaged property.
It held that part of the consideration for the mortgage was not supported by legal necessity and the, balance of the debt incurred on the mortgage was tainted with immorality.
Though, therefore, defendant 1 had executed the mortgage as a manager of the joint Hindu family consisting of himself and defendant 2, the debt was held not binding on the one half share of defendant 2 in the mortgaged property.
On the issue relating to the genuineness of the partition effected by defendant 1 between himself and his suits, the trial court recorded a finding that it wag a sham and colourable transaction and its object was to delay or 1 defeat the creditors.
Being aggrieved by.
the decree directing the sale of half the mortgaged property only, the plaintiff filed First Appeal No. 40 of 1959 in the High Court of Bombay.
Though the suit was dismissed as against defendants 2 and 3, they also filed an appeal in the High Court to challenge the finding of the trial court that the deed of partition was a sham and colourable transaction.
That was First Appeal No. 72 of 1959.
During the pendency of these two appeals, the preliminary decree was made final by the trial court on October 23, 1958.
On March 2, 1960 the plaintiff purchased, with the permission of tile court, a joint half share in the mortgaged property in full satisfaction of his decree.
On September 21, 1960 the auction sale was confirmed and on November 25, 1960 the plaintiff was put in joint possession of the property.
On March 15, 1966 the appeals filed by the plaintiff and by defendants 2 and 3 came up for hearing before a.
Division Bench consisting of Abhyankar and Deshmukh JJ.
The hearing of the appeals was adjourned from time to time and while the appeals were part heard, defendants 2 and 3 applied on August 2, 1966 for amendment of their Memorandum of Appeal in First Appeal No, 72 of 1959.
By the proposed amendment they sought leave of the High Court to challenge the preliminary decree passed by the trial court.
The plaintiff opposed that amendment and applied that she did not desire to prosecute First Appeal No. 40 of 1959 filed by her.
The High Court did not pass any orders either on the application for amendment made by defendants 2 and 3 or on the application of the plaintiff asking that her appeal be dismissed for non prosecution.
On August 24, 1966 the High Court adjourned the hearing of the appeals for three months to enable defendants to pay the amount due under the preliminary decree.
On November 24, 1966 defendants 2 and 3 deposited Rs. 12,500 and applied for an extension of two months for paying the balance.
The extension was granted by the High Court and on fabruary 25, 1967 defendants 2 and 3 deposited a further sum of Rs. 25,000 towards the satisfaction of the preliminary decree.
On February 14, 1968 another Division Bench of the High Court (Tambe and Badkas, JJ.) allowed the application of defendants 2 and 3 for amendment of their Memorandum of Appeal in First 885 Appeal No. 72 of 1959.
On an application made by their counsel, the High Court granted to those defendants time till February 23, 1968 to pay the deficit court fees, which they did.
The High Court then took up the two First Appeals.
for hearing in March, 1968.
As the plaintiff had applied that she did not desire to proceed with First Appeal No. 40 of 1959 filed by her, the High Court dismissed that appeal for non prosecution.
As a consequence of this order the High Court observed that the findings recorded by the trial court in favour of the defendants and adverse to the plaintiff would stand confirmed.
In First Appeal No. 72 of 1959 filed by defendants 2 and 3 it was urged by the plaintiff that as the appeal was originally filed to challenge the finding of the trial court on the question of genuineness of the partition.
defendants 2 and 3 were not entitled to include now grounds in the Memorandum of Appeal and that the Memorandum should not have been permitted to be amended.
The High Court hold that in view of the Provisions of Order 41, Rule 2, Civil Procedure Code.
it was oven to defendants 2 and 3.
with leave of the court, to urge additional grounds in their appeal without amending the Memo randum of appeal and therefore the objection raised by the plaintiff as against the amendment was futile.
The High Court further held that the appeal filed by defendants 2 and 3 was competent even though the suit, was wholly dismissed as against them.
According to the High Court, defendants 2 and 3 were aggrieved by the adverse finding on the question of partition and further they were denied under the preliminary decree the right to pay the decretal amount and to redeem the mortgage.
It was there fore open to them to file an appeal against that decree.
On the merits of the appeal the High Court set aside the finding of the trial court and held that the partition was "real and genuine" and that it was not effected in order to defeat :lie creditors.
Defendants 2 and 3 bad therefore become owners of the, equity of redemption and they could not be deprived of the right to redeem the mortgage.
In the result, the High Court set aside the preliminary decree as also the final decree and with it the auction sale in favour of the plaintiff.
The High Court passed a fresh preliminary decree under Order 34, Rule 4, Civil Procedure Code declaring that the plaintiff was entitled to recover Rs. 34, 386 and odd and directing the defendants to pay the entire decretal amount within six months of the date of decree.
The plaintiff questions the correctness of that decree in this appeal.
It is necessary first to understand the nature of the appeal filed by ,defendants 2 and 3 in the High Court and the relief they sought therein.
That appeal was in terms filed only against the finding recorded by the trial court that the partition between defendant 1 and his sons was a sham and colourable transaction intended to defeat or delay the creditors.
The Memorandum of Appeal as filed originally contained 886 seven grounds, each of which was directed against the finding given by the trial court on the question of partition.
The Memorandum contained a note that as the subject matter in dispute was not capable of being estimated in terms of a money value, a fixed court fee of Rs. 20 was paid thereon.
Only one prayer was originally made in the Memorandum of Appeal that the partition deed be declared as genuine.
Counsel for defendants 2 and 3, furnished to the registry of the High Court a written explanation as required by Rule 171 of the High Court Rules that as defendants 2 and 3 were only challenging the finding recorded by the trial court on the question of partition and as they were merely seeking a declaration that the partition was genuine, the fixed court fee of Rs. 20 was properly paid.
It is thus clear that the appeal filed by defendants 2 and 3 in the High Court was directed originally not against any part of the preliminary decree but against mere finding recorded by the trial court that the partition was not genuine.
The main controversy before us centers round the question whether that appeal was maintainable on this question the position seems to us well established.
There is a basic distinction between the right of suit and the right of appeal.
There is an inherent right in every person to bring suit of a civil nature and unless the suit is barred by statute one may, at one 's peril,_bring a suit of one 's choice.
It is no answer to a suit howsoever frivolous the claim, that the law confers no such right to sue.
A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit.
But the position in regard to appeals is quite the opposite.
The right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law.
That explains why the right of appeal is described as a creature of statute.
Under section 96(1) of the Code of Civil Procedure, save where otherwise expressly provided by the Code or by any other law for the time being in force, an appeal lies from every decree passed by any court exercising original jurisdiction, to the court authorised to hear appeals from the decisions of such court.
Section 100 provides for a second appeal to the High Court from an appellate decree passed by a court subordinate to the High Court.
Section 104(1) provides for appeals against orders of the kind therein mentioned and ordains that save as otherwise expressly provided by the Code or by any law for the time being in force an appeal shall lie "from no other orders".
Clause (i) of this section provides for an appeal against "any orders made under Rules from which an appeal is expressly allowed by rules". 'Order 43, Rule 1 of the Code, which by reason of clause (i) of section 104(1) forms a part of that section, provides for appeals against orders passed under various rules referred to in clauses (a) to (w) thereof, Finally, section 105(1) of the Code lays down that save as otherwise expressly provided, no appeal shall lie from any order made by a court in exercise of its original or appellate jurisdiction.
These provisions show that under the Code of Civil Procedure, an appeal lies only as against a decree or as against an order passed under, rules from which an appeal is expressly allowed by Order 43, Rule 1. 887 No appeal can lie against a mere finding for the simple reason that the Code does not provide for any such appeal.
It must follow that First Appeal No. 72 of 1959 filed by defendants 2 and 3 was not maintainable as it was directed against a mere finding recorded by the trial court.
The High Court mixed up two distinct issues : one, whether it was competent to defendants 2 and 3, if they were aggrieved by the preliminary decree of file an appeal against that decree; and two, whether the appeal such as was filed by them was maintainable.
If it be correct that defendants 2 and 3 could be said to have been aggrieved by the preliminary decree, it was certainly competent for them to challenge that decree in appeal.
But they did not file an appeal against the preliminary decree and therefore the question whether they were aggrieved by that decree and could file an appeal therefrom was irrelevant.
While deciding whether the appeal filed by defendants 2 and 3 was maintainable ' , the High Court digressed into the question of the competence of defendants 2 and 3 to file an appeal against the preliminary decree and taking the view that it was open to them to challenge that decree even though the suit was wholly dismissed against them, the High Court held that the appeal, which in fact Was directed against a find ing given by the trial court, was maintainable.
It the High Court had appreciated that the two questions were distinct and separate, it would not have fallen into the error of deciding the latter question by considering the former.
Adverting to the question which the High Court did consider, namely, whether defendants 2 and 3 could be said to be aggrieved by the preliminary decree, there is nothing in the terms of that decree which precluded those defendants from depositing the decretal amount to be able to redeem the mortgage.
The trial court had passed the usual preliminary decree for sale in Form No. 5A, under Order 34, Rule 4, Civil Procedure Code.
If the amount found due to the appellant under the decree was paid into the court within the stipulated or extended period, the appellant would have been obliged to deliver to the mortgagors all the documents in her possession or power relating to the mortgaged property and to deliver up to the defendants quiet and peaceable possession of the property free from the mortgage.
The amount declared to be due to the appellant by the preliminary decree was not paid by the defendants, from which it would appear that they were not interested in paying the amount.
It is significant that defendants 2 and 3 were served with the notice of final decree proceedings and they appeared therein.
The Code is merciful to mortgagors and perhaps 'rightly, because the mortgagee ought to have no grievance if the loan advanced by him is repaid with permissible interest, costs and expenses.
Under Order 21, Rule 89, it was open to defendants 2 and 3 as late as after the appellant purchased the property in the auction sale, to pay the amount due to her.
These defendants had interest in the mortgaged property by virtue of a title acquired before the sale, that is, under the registered partition dated January 11, 1956.
Under Order 21, Rule 89, where immovable property is sold in execution of a decree, any person owing the property or holding an interest there 888 in by virtue of a title acquired before the sale, can apply to have the sale set aside on his depositing in Court, for payment to the purchaser a sum equal to five per cent of the purchase money and for payment to the decree holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered.
Nothing of the kind was done and even the last significant opportunity was not availed of by the defendants.
Counsel for the appellant seems right that the defendants were content that only half the mortgaged property was directed to be sold and that it was only because of the later appreciation in prices of real property that defendants 2 and 3 awoke to the exigency of challenging the preliminary decree.
That was much too late.
So late indeed, that not having any plausible reason to assign for the inordinate delay caused in applying for an amendment of the appeal, they preferred not to file an application for condonation of delay at all.
The appeal was filed on January 4, 1959 while, the application for amendment was made on August 2, 1966.
Event though no explanation was offered for the long delay of over 7 1/2 years, the High Court allowed the amendment with a laconic order "Application for amendment allowed".
Thus, the appeal filed by defendants 2 and 3 being directed against a mere finding given by the trial court was not maintainable; defendants 2 and 3 were not denied by the preliminary decree the right to pay the decretal amount; and the two defendants could even have applied under Order 21, Rule 89, for setting aside the sale in favour of the appellant but they failed to do so as, presumably, they were not interested in paying the amount.
The High Court was therefore wholly in error in allowing the amendment of the Memorandum of Appeal, particularly when defendants 2 and 3 had neither explained the long delay nor sought its condonation.
The preliminary decree had remained unchallenged since Sep tember 1958 and by lapse of time a valuable right had accrued in favour of the decree holder.
The power to allow an amendment is undoubtedly wide and may at any stage be appropriately exercised in the interest of justice, the law of limitation notwithstanding.
But the exercise of such far reaching discretionary powers is governed by judicial considerations and wider the discretion, greater ought to be the care and circumspection on the part of the court.
The appeal in terms was originally directed against the finding given by the trial court that the partition was sham and colourable. "Being aggrieved by the finding given in the Judgment and the Decree. . . it is humbly prayed that findings given by the learned Judge in Para 34 of his Judgment may kindly be set aside, and instead the partition deed dated 11 1 56 may kindly be declared as genuine" So ran the Memorandum of Appeal.
Defendants 2 and 3 reiterated through their counsel by Ming a note to explain the payment of fixed court fees of Rs. 20 that they were "seeking the relief of declaration only" and therefore the court fee paid was proper and sufficient.
Long years thereafter, the High Court allowed the Memorandum to be amended not a reason was cited to, explain the delay and not a reason was given to condone it.
And it was not appreciated that in granting time to defendants 2 and 3 to 889 make up the deficit of the court fees 71 years after the appeal was filed, an amendment was being allowed which had its impact not only on the preliminary decree but on the final decree which was passed in the meanwhile, the auction sale which was held in pursuance of the final decree and the sale certificate which was granted to _the appellant who, with the leave of the court and in full satisfaction of her decree, had purchased a joint 1/3 share in the mortgaged property.
With the striking down of the preliminary decree, these proceedings had to fall but the error really lay in allowing the amendment so as to permit, without good cause shown, a belated challenge to the preliminary decree.
One other aspect of the question relating to the maintainability of the appeal yet remains to be examined.
Counsel for the respondents.
argues that the finding of the trial court on the issue of partition would have operated as res judicata against them and they were therefore entitled to appeal therefrom.
In Harchandra Das vs Bholanath Day on which the learned counsel for the respondents relies in support of this submission, a suit for preemption was dismissed by the trial court on the ground of limitation.
In an appeal filed by the plaintiff, the District Court reversed that finding but confirmed the decree dismissing the suit on the ground that the sale effected by defendants 4 and 5 in favour of defendants 1, 2 and 3 was not validly registered and there being no "sale", there can be no right of preemption.
Defendants 1 to 3 preferred an appeal to the High Court against the finding recorded by the District Court that the sale effected in their favour by defendants 4 and 5 was not valid as it was not lawfully registered.
On a preliminary objection raised by the plaintiffs to the maintainability of the appeal, the High Court of Calcutta, held that though under the Code of Civil Procedure there can be no appeal as against a mere finding, "it may be taken to be the view of courts in India generally, that a party to the suit adver sely affected by a finding contained in a judgment, on which a decree, is based, may appeal; and the test applied in some of the, cases for the purpose of determining whether a party has been aggrieved or not was whether the finding would be res judicata in other proceedings".
The High Court, however, upheld the preliminary objection on the ground that the issue regarding validity of the sale which was decided against defendants 1 to 3 would not operate as res judicata in any subsequent proceeding and therefore the appeal which was solely directed against the finding on that issue was not maintainable.
The position here is similar to that in the Calcutta case.
The trial court decreed the mortgagee"s suit only as against defendant 1, the father, and directed the sale of his one half interest in the mortgaged property on the ground that part of the consideration for the mortgage was not supported by legal necessity, the remaining part of the consideration was tainted with immorality and therefore the mortgage was not binding on the interest of the sons, defendants 2 and 3.
Whether the partition between the father and sons was sham or real had no (1) I.L.R. 890 impact on the judgment of the trial court and made no material difference to the decree passed by it.
The finding recorded by the trial court that the partition was a colourable transaction was unnecessary for the decision of the suit because even if the court were to find that the partition was genuine, the mortgage would only have bound the interest, of the father as the debt was not of a character which, under the .Hindu law, would bind the interest of the sons.
There is no substance .in the submission made on behalf of the sons that if the partition was held to be genuine, the property would have been wholly freed from .the mortgage encumbrance.
The validity or the binding nature of an .alienation cannot depend on a partition effected after the alienation; or else, a sale or a mortgage effected by the Karta of a joint Hindu family ,can easily be avoided by effecting a partition amongst the members of .the joint family.
As the matter relating to the partition was not directly and substantially in issue 'in the suit, the finding that the partition was sham cannot operate as res judicata.
Therefore, the appeal filed by defendants 2 and 3 against that finding was not maintainable, even on ,,the assumption that the High Court of Calcutta is right in its vie", that though under the Code there could be no appeal against a finding, ,yet "On grounds of justice" an appeal may lie against a finding provided that it would operate as res judicata so as to preclude a party aggrieved by the finding from agitating the question covered by the .finding in any other proceeding.
It is not necessary here to determine ,whether the view of the Calcutta High Court is correct.
For these reasons we allow the appeal with costs, set aside the judgment of the High Court and restore that of the trial court.
section C. Appeal allowed.
| In 1953, defendant 1 executed on behalf of himself and his minor son, defendant 2, a deed of mortgage in favour of the plaintiff.
Deft. 3 is also a son of deft.
I who was born after the mortgage deed.
In 1956, a regd.
deed of partition was executed amongst the defendants under which the mortgaged property was allotted to the share of defts 2 & 3.
Thereafter, the mortgagee filed a civil.
suit to enforce the mortgage and the trial court passed a preliminary decree for sale of deft.
1 's interest in the mortgaged property.
It held that part of the consideration for the mortgage was not supported by legal necessity and the balance of the debt incurred was tainted with immorality.
Therefore, the debt was held not binding on the one half share of deft.
2 in the mortgaged property.
As regards the partition, the trial court held that it was a colourable transaction effected to delay or defeat the creditors.
Being aggrieved, pltf.
filed an appeal (40/59) in the High Court.
Deft. 1 & 2 against whom the suit was dismissed, also filed an appeal (72/59) against the finding of the trial court that the partition was a colourable transaction.
During the pendency of these 2 appeals, the preliminary decree was made final by the trial court and in 1960, the plaintiff purchased with the permission of the court, a joint half share of the mortgaged property in full satisfaction of his decree.
Thereafter, the auction sale was confirmed and the plaintiff was put in joint possession of the property.
Thereafter, the appeals filed by the) plaintiff and defendants 2 and 3 came up for hearing and while the appeals were part hard, defts 2 & 3 applied on August 2, 1966 (nearly 7 1/2 years after filing the appeals), applied for amendment of their Memorandum of appeal in first appeal No. 72/59 and sought permission of the High Court to challenge the preliminary decree passed by the trial Court.
The plaintiff opposed that amendment and applied that she did not desire to prosecute first appeal No. 40/59 filed by her.
The High Court did not pass any orders either on the application for amendment or the plaintiff 's appeal, but adjourned the hearing of the appeals for 3 months to enable defendants to pay the amount due under the preliminary decree.
Accordingly the defendants deposited the money towards the satisfaction of the preliminary decree.
After about 2 years, another division bench of the High Court, allowed the amendments of the defendants Memo of Appeal in Appeal No. 72/59 and allowed time to the defendants to pay the deficit Court fee, which they paid.
The High Court, then took the 2 appeals for hearing and dismissed appeal No. 40/59 for non prosecution and confirmed the findings of the trial court in favour of the defendants.
As regards appeal No. 72/59, the High Court held that in view of Order 41, Rule 2 C.P.C., it was open to the defendants.
with the leave of the court, to urge additional grounds without amending the Memo of Appeal and therefore, the objection raised.
by the plaintiff that amendment should not be allowed, cannot be upheld.
The High Court further held that the defendants ' appeal was competent and they had the right to redeem the mortgage.
On the merits, the High Court held that the partition was real and genuine.
In the result, the High Court set aside the preliminary decree as also the final decree and with it the auction 883 sale in favour of the plaintiff.
The High Court passed a fresh preliminary decree under order 34, Rule 4 C.P.C., directing that that the plaintiff was to recover Rs. 34,386/ and 'odd and directed the defendants to pay the entire decretal amount within 6 months of the date of decree.
The plaintiff questions the correctness of the decree before this Court.
The appeal filed by defendants 2 & 3 Was against the finding recorded by the trial court that the partition between deft. 1 and his sons was a colourable transaction.
Therefore, it was clear that the appeal filed by defts.
2 & 3 was directed originally not against any part of the preliminary decree but against a mere finding recorded by the trial court that the partition was not genuine.
Before this Court, the main question was whether that appeal was maintainable and secondly, whether it was proper for the High Court to allow the amendment of the Memo of appeal after 7 1/2 years without good cause shown and Without any application for condonation of delay.
Allowing the appeal, HELD : (i) There is a basic distinction between the right of suit and the right of appeal.
There is an inherent right in every person to bring a suit of at civil nature, but the right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law.
The various provisions in the C.P.C. show that under the Code, an appeal lies only as against a decree or as against an order passed under rates from which an appeal is expressly allowed by Order 43, Rule 1.
No appeal can lie against a mere finding for the simple reason that the Codes does not provide for any such appeal.
Therefore, the first appeal filed by.
defendants 2 and 3 in the High Court was not maintainable as it was directed against a mere finding recorded by the trial court.
[886 D H] (ii) The High Court should not have allowed the amendment of the Menlo of Appeal particularly when defendants 2 & 3 had neither explained the long delay nor sought its condonation.
Defendants 2 & 3 were not denied by the preliminary decree the right to pay the decretal amount and the two defendants could even have applied under order 21, Rule 89 for setting aside the sale in favour of the appellant; but they failed to do so.
The preliminary decree had remained unchallenged since September, 1958 and by lapse of time a valuable right had accrued in favour of the decree holder.
Therefore, to allow the amendment after such a long time without a good cause was not a proper exercise of judicial discretion in the circumstances of the case.
[888 D E]
|
etition (Criminal) No. 1632 of 1981.
476 Under article 32 of the Constitution of India.
S.K Jain for the Petitioner.
The Judgment of the Court was delivered by SEN, J.
This petition under article 32 of the Constitution is clearly not maintainable and must be dismissed but in view of the growing trend of filing such frivolous applications, we deem it necessary to state the reasons therefor.
It appears that the petitioner along with two others was arraigned before the Sessions Judge of Alwar in Sessions Trial No. 110 of 1976 for having committed an alleged offence punishable under section 302 of the Indian Penal Code, alternatively, under section 302 read with section 34 of the Code.
By his finding and sentence dated April 21, 1977 the learned Sessions Judge convicted the petitioner and his two associates for having committed the murder of the deceased Jharia in furtherance of their common intention under section 302 read with section 34 and sentenced each of them to undergo imprisonment for life, while recording their acquittal under section 302.
On appeal, a Division Bench of the Rajasthan High Court (Jaipur Bench) in Criminal Appeal No. 219 of 1977 by judgment dated July 3, 1980 maintained the conviction of the petitioner under section 302 read with s.34 but acquitted his two associates giving them the benefit of doubt.
Dissatisfied with the judgment of the High Court, the petitioner applied to this Court for grant of special leave under article 136 of the Constitution.
The special leave petition was dismissed by this Court on February, 23, 1981.
An application for review was also dismissed on November 19, 1981.
Thereafter, the petitioner filed this petition under article 32 assailing his conviction and sentence.
The petitioner seeks the issuance of a writ of mandamus directing the State of Rajasthan to forbear from giving effect to the judgment and sentence passed by the learned Sessions Judge as also the judgment of the High Court as well as the order passed by this Court dismissing the special leave petition.
He further seeks a declaration that his conviction under section 302 read with section 34 by the High Court was illegal and therefore his detention in jail was without the authority of law and in violation of article 21 read with articles 14 and 19 of the Constitution.
477 The petitioner contends that in view of the decisions of this Court in Krishna Govind Patil vs State of Maharashtra(1), Maina Singh vs State of Rojasthan(2) and Piara Sinnh vs State of Punjab(3), his conviction under section 302 read with section 34 was illegal as he had been charged with two other named persons who have been acquitted by the High Court and therefore he cannot be convicted of an offence punishable under section 302 read with section 302 read with section 34.
Upon this basis, the contention is that the petitioner has been deprived of his life and liberty without the authority of law in violation of article 21 read with articles 14 and 19 of the Constitution.
It is represented to us that the contention based upon the decisions of this Court had been advanced during the course of the hearing of the special leave petition, but both the special leave petition and the application for review have been dismissed and therefore the petitioner has no other remedy except to approach this Court for appropriate writ, direction or order under article 32 of the Constitution.
We fail to appreciate the propriety of asking for a declaration n in there proceedings under article 32 that conviction of the petitioner by the High Court for an offence punishable under section 302 read with section 34 of the India Penal Code is illegal, particularly when this Court has declined to grant special leave under article 136.
Nor can the petitioner be heard to say that his detention in jail amounts to deprivation of the fundamental right to life and liberty without following the procedure established by law in violation of article 21 read with articles 14 and 19.
When a special leave petition is assigned to the learned Judges sitting in a Bench, they constitute the Supreme Court and there is a finality to their judgment which cannot be upset in these proceedings under article 32.
Obviously, the Supreme Court cannot issue a writ, direction or order to itself in respect of any judicial proceedings and the learned Judges constituting the Bench are not amenable to the writ jurisdiction of this Court.
In Shankar Ramchandra Abbyankar vs Krishnaji Dattatreya Bapat,(4) this Court laid down that if there are two modes of invoking the jurisdiction of the High Court and one of those modes has been 478 chosen as exhausted, it would not be a proper and sound exercise of discretion to grant relief the other set of proceedings in respect of the same order of the Subordinate Court.
In that case, the respondent had already chosen the remedy under section 115 of the Code of Civil Procedure 1908, but a learned Single Judge dismissed the revision.
Thereupon, the respondent moved the High Court by a petition under articles 226 and 227 of the Constitution challenging the same order of the appellate court.
A Division Bench of the High Court held that in spite of the dismissal of the revision petition, it could interfere under articles 226 and 227 on a proper case being made out, and after going into the merits of the case, it granted relief to the respondent.
On appeal to this Court, the contention was that the High Court could not have interfered under articles 226 and 227.
That contention of the appellant prevailed and the judgment of the Division Bench of the High Court was set aside.
It was observed: "The refusal to grant relief in such circumstances would be in consonance with the anxiety of the court to prevent abuse of process as also to respect and accord finality to its own decisions.
" There is no reason why the same principle should not equally apply to proceedings under article 32 of the Constitution which are initiated after the Court has declined to interfere under article 136.
For these reasons, the writ petition fails and is dismissed.
H.L.C. Petition dismissed.
| The petitioner and his two associates were convicted and sentenced under section 302 read with section 34, I.P.C. On appeal, the High Court maintained the conviction of the petitioner but acquitted his associates giving them the benefit of doubt.
The Petitioner applied to this Court for grant of special leave to appeal under article 136 but the same was dismissed.
By this petition under article 32 the petitioner sought issuance of a writ of mandamus directing the State to forbear from giving effect to the judgment and sentence passed by the trial court as also the judgment of the High Court as well as the order passed by this Court dismissing the special leave petition on the ground that his conviction was illegal and therefore his detention in jail was in violation of article 21 read with articles 14 and 19.
Dismissing the petition, ^ HELD: The propriety of asking for a declaration in these proceedings under article 32 that conviction of the petitioner by the High Court for an offence punishable under section 302 read with section 34 I.P.C. is illegal, particularly when this Court has declined to grant special leave under article 136 cannot be appreciated.
Nor can the petitioner be heard to say that his detention in jail amounts to deprivation of the fundamental right to life and liberty without following the procedure established by law in violation of article 21 read with articles 14 and 19.
When a special leave petition is assigned to the learned judges sitting in a Bench, they constitute the Supreme Court and there is a finality to their judgment which cannot be upset in these proceedings under article 32.
Obviously, the Supreme Court cannot issue a writ, direction or order to itself in respect of any judicial proceedings and the learned judges constituting the Bench are not amenable to the writ jurisdiction of this Court.
[470 D F] Shankar Ramchandra Abbyankar vs Krishnaji Dattatreya Bapat, ; , referred to.
|
ins Matters.
A. Movement by Road: (a) WP.
Nos.2907 2908,3234, 3238 39,3164,3254, 3630 31,3686, 3783, 3816, 4816, 4929 31, 4836 38, 4996 5001, 5051 54, 5089 93, 5136 46, 5247, 3160, 3634, 4494,4616,4967, 5362 71, 5416 20, 5447 50,5716 17, 5840,6015,6587 89 & 6609 14/81.
(b) WP.
5062,5157 58,5451 & 5615 17/81.
(c) WP Nos.
5097,5042, 5098, 5017, 5214 & 6135 36/81 & 7003/81.
(d) WP. Nos.3421, 3407, 3408 13, 3422, 3536, 3561 64, 5238,13824, 5466, 5544, 6009, 6130 31, 6572 74 & 6582 83/81.
(e) WP.
4904 4905, 5080, 5094, 5239 45, 5358 59, 5395, 5483, 5484 88, 5489 92, 5734 39, 6584 86 & 6817 21/81.
(f) WP.
Nos.4960 62, 4958 59, 5129 33, 5219 20, 5331 33, 5518 19, 5526, 5428 31 & 5527/81.
(g) WP.
4526, 4926, 4995, 5046, 5048 50, 5100, 5101, 5136 46,5402 11, 5436 38, 5560, 5520 21, 5562,5558, 5556, 5559,5550,5546 47, 5552, 5555, 5553 54,5511, 5482, 5618 19,5809 20,6132 33, 6244, 6273 75,6267 72, 5512 14, 5515,6570 and 5562/81, 7027 29 and 7032 34/81.
(h) WP.
Nos.5221,5380 83,5129 33,5421 22,5440, 5507 10, 5662, 5806 5807, 6245, 6246, 6265, 6398 and 6684/81.
1145 (i) WP.
3592, 3353, 5396, 6016, 6247 48, 6616, 6668 and 6798/81.
(j) WP.
Nos.5003, 4453, 4455 56,5346 48,4955,5082 89, 5577 80, 5581 and 5724/81.
(k) WP.
Nos.3489 and 4293/82.
(l) WP.
No. 4818/81.
(m) WP.
Nos.2916,2932,3242, 3297 3302,3334 43, 3475, 4098 4100, 4136, 4304, 4187, 4777, 5007 17,5027 34, 5352 55, 5473 79, 5604 5608, 5740 42, 5743 44, 5821, 6012 13 and 5583 92/81.
(n) WP Nos.
5391 and 5525/81.
(o) WP No. 5443/81.
(p) WP.
Nos. 5444,5663 and 6266/81.
(q) WP.
No. 5464/81.
(r) WP.
5451 and 5564 66/81.
(s) WP.
No. 5807/81.
(t) WP.
Nos.5571 75, 5622 29 and 6014/81.
(u) WP.
Nos.5718 19/81 and 6943/81.
(v) WP.
No. 5568 69/81.
B. Restriction on Quantum of Food Grains which can be held: (a) WP.
2932, 3776 3780, 4140 45, 4326 28, 4876 4902, 4670 78 and 5473 79/81.
(b) WP.
No. 5480/81.
(c) WP.
4955 56,5330,5392,3823 and 6278/81.
(d) WP.
Nos. 5529 30/81.
(e) WP.
Nos.5531 32/81.
1146 (f) WP.
5841 50/81.
(g) WP.
5656 58/81.
(Under Article 32 of the Constitution of India) Hari Sarup, M.N. Phadke, Soli J. Sorabjee, J.P. Goyal and C.M. Lodha, (M/s. B. Datta, R.A. Gupta, Miss Kamini Jaiswal, Rajiv Dutta, Manoj Swarup and Miss Lalita Kohli, R.S. Sharma, R.K. Jain, Pankaj Jain, P.K. Jain, K.K. Jain, K.B. Rohatgi, B.R. Kapur, B.S. Tawakley, S.R. Srivastava, N.N. Sharma, A.K. Goel, Mitter and Mitter and Co., S.K. Jain, Rajesh Jain, Mukul Mudgal, M. Qamaruddin, Mrs. M. Qamaruddin, Anis Suhrawardhy, A.P. Mohanty, K.K. Gupta, Ravi Prakash Gupta, C.K. Ratnaparkhi, S.C. Birla, M.C. Dhingra, and S.K. Gambhir for the appearing Petitioners.
G.N. Dikshit, O.P. Rana, Mrs. Shobha Dixit, R.N. Poddar, G. Gopalakrishan, A.V. Rangam, B.D. Sharma, D.P. Mohanty and A. Shroff for the Respondents.
The Judgment of the Court was delivered by SEN, J.
The issue in this and the connected 505 petitions under article 32 of the Constitution is of far reaching significance.
It raises questions of the highest importance as to the scope and extent of the executive power of the State under article 162 of the Constitution, in relation to regulation and control of trade and commerce in food stuffs.
It necessarily involves a claim by the petitioners who are wholesale dealers of foodgrains that the exercise of such governmental power conflicts with the rule of law and is in flagrant violation of the freedom of trade, commerce and intercourse guaranteed under article 301 of the Constitution and the fundamental right to carry on trade and business guaranteed under article 19 (1) (g) of the Constitution.
These petitions fall into two distinct and separate categories, one by the wholesale dealers of foodgrains from the Union Territory of Delhi and the neighbouring States of Punjab and Haryana, and the other by the wholesale dealers of foodgrains from the State of Uttar Pradesh.
1147 The short question that falls for consideration in some of the writ petitions by wholesale dealers of foodgrains from the Union Territory of Delhi and the State of Punjab and Haryana is whether the action of the State Government of Uttar Pradesh in setting up check posts on its borders and the stoppage and seizure of wheat in transit through the State of Uttar Pradesh during the course of inter State trade and commerce to various destinations in the States of Madhya Pradesh and Maharashtra at the check post at Saiyan on the border between the States of Uttar Pradesh and Madhya Pradesh on the strength of its instructions conveyed by its teleprinter message dated March 31, 1981, was in violation of article 301 of the Constitution.
In a majority of the writ petitions by wholesale dealers from the State of Uttar Pradesh, two questions arise, (1) whether Notification No. P XXIX Food 5 5 (42)/80 dated April 21, 1981, issued by the State Government of Uttar Pradesh, in exercise of the powers conferred by section 3 read with section 5 of the (hereinafter referred to as the Act), by which cl.4 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978, has been amended, providing that no wholesale dealer, commission agent or retailer shall have in stock wheat more than 250 quintals, 250 quintals and 20 quintals respectively, at any time, Infringes the fundamental right to carry on trade or business guaranteed under article 19 (1) (g) and (2) whether the governmental instructions conveyed by its teleprinter message dated March 31, 1981, placing restrictions on movement of wheat by traders on private account from the State of Uttar Pradesh to various other States and on inter district movement of wheat within the State, were in breach of the fundamental right under article 19 (1) (g) read with article 301 of the Constitution.
The following are the facts and circumstances so far as necessary to show as to how the legal questions are presented.
It would be convenient first to deal with the writ petitions filed by the whole sale dealers of foodgrains from the Union Territory of Delhi and the States of Punjab and Haryana seeking a declaration that the impugned action of the State Government of Uttar Pradesh in setting up check posts on the borders of the State and directing seizure of wheat in transit through the State, on the strength of the impugned teleprinter message, conflicted with the guarantees of inter State trade and commerce dealt with by Art, 301 of the Constitution.
1148 Facts in all these cases are more or less similar.
The petitioners who are wholesale dealers of foodgrains from the Union Territory of Delhi and the States of Punjab and Haryana allege that between April 29 30, 1981, they, acting as commission agents, purchased wheat from the open market in Delhi and elsewhere and despatched the same by trucks to various destinations in the State of Maharashtra and to some places in the State of Madhya Pradesh.
According to them, the trucks laden with wheat were accompanied by relative bills, goods receipts, inter State transit passes etc.
, duly crossed the check post at Faridabad and were also allowed to cross the check post at Kotwan on the border between the Union Territory of Delhi and the State of Uttar Pradesh and were on their way to their respective destinations.
They allege that the Senior Marketing Inspector, Agra, intercepted the trucks in question at the check post at Saiyan on the border between the State of Uttar Pradesh and Madhya Pradesh between April 30, 1981, and May 2, 1981.
The seized trucks were brought back to the purchase point at Agra and the wheat was unloaded.
Thereupon, the petitioners rushed to Agra and made an application on May 4, 1981, under s.6A read with sections 3 and 7 of the Act before the Additional District Magistrate (Civil Supplies), Agra, for the release of the seized wheat.
In the said application, the petitioners, inter alia, claimed and unequivocally stated that there was no ban on export of wheat from the Union Territory of Delhi to other States, that the wheat in question was neither purchased at Agra, nor was it being transported from Agra to any other district in Uttar Pradesh, that Agra was a place in transit, and that the instructions of the State Government contained in the impugned teleprinter message dated March 31, 1981 did not constitute a validly notified order under sub section
(5) of section 3 of the Act.
The Chief Marketing Inspector, Agra, had in the meanwhile seized 42 trucks laden with wheat either at the check post at Saiyan or at Agra and lodged first information reports at the Saiyan police station or at the Civil Lines police station in respect of the consignments alleging that the movement of wheat was in contravention of the impugned teleprinter message and was therefore seized, and in three of them it was alleged that the wheat had been purchased at Agra.
On the report of the Chief Marketing Inspector, the Additional District Magistrate (Civil Supplies), Agra drew up proceedings under section 6A of the Act and directed the police to complete the investigation within 15 days.
1149 On May 23, 1981, the Additional District Magistrate (Civil Supplies), Agra under sub section
(2)(i) of section 6A of the Act passed interim orders for the sale of the seized wheat as it was subject to speedy and natural decay, at the request of the Senior Marketing Inspector, similar to the one reproduced below: These proceedings under s.6A of the started on the report of SMI Saiyan dated 30.4.1981 (Paper No. 1) whereby it was brought to the notice of this Court that truck nos. . were caught carrying 120 quintals. .of wheat respectively beyond Saiyan border outside the State in contravention of the orders issued by the Government vide telex No. 1061/29 Food 5 dated 31.3.1981 F.I.R. was lodged at P.S. Saiyan in respect of the above contravention.
Notice under section 6B of the EC Act was issued to the O.Ps. . who were driving the trucks at the time of search and seizure.
Replies were filed by the owners of the wheat contending that the said rules were not part of any Control Order under Section 3 of the EC Act nor they had any legal sanction for want of publication in the Official Gazette.
The O.Ps.
have pleaded that they were taking their goods in transit through Agra and in fact the movement of wheat so made by them was inter state movement which was not banned by the Central Government or State Government.
I heard the learned counsels on behalf of the O.Ps.
and the learned PO as well.
In these proceedings final orders cannot be passed at this stage as the matter is still under investigation.
PO directed to put up progress of investigation within 15 days from now.
In the meanwhile I order that the wheat seized by SMI Saiyan be got purchased at the Official Price so that the same does not get damaged.
The sale proceeds be got deposited in Government Treasury under proper Head of Account.
1150 This interim order is being passed under sub section
(2) (i) of s.6A of the .
File be put up after 15 days along with report of prosecuting office regarding progress of investigation.
Sd/ N.N. Varma Addl.
Collector, Agra 23.5.1981 The seized wheat has been purchased by the State Government on Government account at the procurement price and the sale proceeds credited into the Treasury.
The State Government has filed a counter affidavit of the Chief Marketing Officer, Lucknow, in all these cases as also the affidavits of the Senior Marketing Inspectors at Agra controverting the allegations made by the petitioners.
It is stated that the source of the power to effect the seizure was not the impugned teleprinter message, but the power of search and seizure conferred on an Enforcement Officer under cl. 6 of the U.P. Foodgrains Dealers (Licensing and Restriction on Hoarding) Order, 1976 and under cl.6 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978 (hereinafter called the 1976 Order and 1978 Order respectively), both of which were issued by the State Government, in exercise of the powers under section 3 of the Act, read with Government of India, Ministry of Agriculture (Department of Food) Notification No. G. S.R. 888 dated June 28, 1961, No. GSR 316 (E) dated June 20, 1972, No. GSR 452 (E) dated October 25, 1972, No. GSR 168 (E) dated March 13, 1973 and No. GSR 800 dated June 9, 1978 respectively, since it was of opinion that it was necessary or expedient so to do for securing the equitable distribution and availability of foodgrains at fair prices.
The State Government contends that the impugned teleprinter message dated March 31, 1981 was in the nature of an executive instruction issued by the State Government under its undoubted powers under article 162 of the Constitution for the due observance of the provisions of the two Control Orders.
It is said that no person can carry on business in foodgrains as a dealer or as a commission agent except under and in accordance with the terms and conditions of a valid licence issued in that behalf under cl. 4 of the 1976 Order.
It is also said that no wholesale dealer, commission agent or trader can have in stock more than 250 quintals, 250 quintals and 20 quintals respectively, at any time.
It is asserted that the State Govern 1151 ment has the right to set up check posts for the purpose of verification so that there is no contravention of the provisions of the two Control Orders, particularly with a view to ensure that excess quantity of wheat is not transported in violation of the 1978 Order to other districts or other States.
The State Government in the counter affidavit of the Chief Marketing Officer, Lucknow, specifically denies the allegations made by the petitioners that the 42 trucks laden with wheat seized at the check post at Saiyan on the border between the States of Uttar Pradesh and Madhya Pradesh or at Agra were in transit during the course of inter State trade and commerce.
With regard to the seizure of the wheat, it is averred in para 13 of the counter affidavit: "The correct fact is that the authority on the bona fide apprehension that the wheat so moved actually was purchased from the State of Uttar Pradesh from nearby places and the same was being moved to other States on the garb of outside wheat.
It is submitted that such traders who are exporting wheat alleged to have purchased from places other than the State of Uttar Pradesh and were/are carrying the same to other States, have only to satisfy the authorities concerned of the bona fides of such transactions.
However there is no ban on such movement from one State to another.
" As regards the check posts, it is submitted that the State Government is committed to provide price support in wheat to farmers at Rs. 130 per quintal.
This commitment also involves purchase of wheat directly from the farmers without interference from traders/middlemen, who try to purchase wheat from the farmers at lower prices and sell the same at Government purchase centres with substantial profits.
Such transactions are effected in fictitious names.
This not only frustrates the procurement policy of the Government but also prejudicially and financially affects the producers ' interests.
In para 5 it is accordingly averred: "In order to curb the above tendencies and preventing the activity of traders/middlemen the State Government have provided a simple system of verifying all transactions by traders.
1152 This procedure involves getting all transactions of wheat verified by the Deputy Regional Marketing Officer indicating inter alia the name of the persons to whom the stocks are sold, their licence numbers etc.
and quantum of stocks sold, price paid etc.
This process will make it simultaneously very difficult for traders to buy at low price from farmers and resell at high prices at the Government purchase centres.
" As regards the impugned teleprinter message it was stated that it was issued by the State Government in order to sustain and maintain and maximise the procurement of wheat by introducing a system of verification at the check posts.
The State Government contests the right of the petitioners falling in the first category, that is, wholesale dealers of wheat from the Union Territory of Delhi and the States of Punjab and Haryana, to relief under article 32 of the Constitution who question the legality and propriety of the seizures.
It is a matter for investigation which is pending before the Additional District Magistrate (Civil Supplies), Agra and, according to it, the question cannot be decided without full investigation into facts.
In support of the writ petitions, learned counsel appearing for the petitioners have, in substance, urged three grounds.
(1) There was nothing to prevent the State Government from making a law placing reasonable restriction on the freedom to carry on any occupation, trade or business guaranteed under article 19(1) (g) read with article 19(6) of the Constitution, or on the freedom of trade, commerce and intercourse, throughout the territory of India, guaranteed under article 301 of the Constitution, but the restriction must be by "law" or by an "order having the force of law" and not by recourse to the executive authority of the State under article 162 of the Constitution, i.e., by an executive action.
(2) The seizure of the consignments of the wheat, while they were in transit in the course of inter State trade and commerce from the Union Territory of Delhi and the States of Punjab and Haryana to various destinations in the States of Maharashtra and Madhya Pradesh, was without the "authority of law" and in violation of article 300A of the Constitution.
The seizure of the wheat being wrongful, the petitioners were entitled to an appropriate writ, direction or order for the return of the seized wheat or the price thereof.
(3) The impugned teleprinter message of the State Government dated March 31, 1981 on the basis of which the seizures were effected, in truth and 1153 substance, had no legal sanction and cannot be construed to be a notified order within the meaning of sub section
(1) read with sub section
(5) of section 3 of the Act; it was nothing but an executive direction.
No executive action which operates to the prejudice of a citizen can be taken without the authority of law.
It was asserted that the seizures effected were in compliance of the instructions contained in the impugned teleprinter message and not for breach of the two Control Orders and therefore it was nothing but a "colourable exercise" of power.
The real purpose of the seizure was procurement of wheat in furtherance of the directives of the Central Government, without any legal sanction since the farmers were not willing to sell their wheat at the procurement price.
Learned counsel for the petitioners also challenge the action of the Additional District Magistrate (Civil Supplies) Agra in passing an interim order in terms of sub section (2) (i) of section 6A of the Act for the sale of the seized wheat on Government account and for the sale proceeds to be credited into the treasury in an appropriate Head of Account; it is urged that under sub section
(2) (ii) of section 6A of the Act there being no control price for wheat, the wheat should have been sold by public auction.
In reply, learned counsel for the State has repelled all these contentions.
It is submitted that the source of power to effect the seizure was not the impugned teleprinter message, but the two Control Orders issued under section 3 of the Act.
He asserted that the wheat in question was not being transported during the course of inter State trade and commerce from the Union Territory of Delhi and the States of Punjab and Haryana to various other States.
The wheat had in fact been purchased at Agra and was being lifted from the State of Uttar Pradesh and had, therefore, to be seized at the check post at Saiyan and at Agra.
He points out that under cl. 3 of the 1976 Order, no person can carry on business as a dealer or commission agent, except and in accordance with the terms and conditions of a licence issued in that behalf by the licensing authority.
According to him, the seized wheat had been purchased at Agra in the course of trade, and they were not isolated transactions and, therefore, the Delhi traders committed contravention of cl. 3 of the 1976 Order.
It is also pointed out that cl. 4 of the 1978 Order, as amended, provides that no person who is a wholesale dealer, commission agent or retailer shall have in stock wheat in quantities exceeding 250 quintals, 250 quintals and 20 quintals at a time.
It is further pointed out, cl. 14 of the 1976 Order, and cl. 6 1154 of the 1978 Order confer the power of search and seizure on an enforcement officer or the licensing authority or any other officer authorised by the Government in that behalf, and the expression "enforcement officer" defined in cl. 2 (e) of the former Order and cl. 2(d) of the latter, includes the Chief Marketing Inspector.
According to the learned counsel the Government instructions conveyed in the impugned teleprinter message is merely in the nature of an executive instruction for the enforcement of the two Control Orders.
In support of the contentions, he also relies on the executive power of the State under article 162 of the Constitution.
In the premises, the contention on behalf of the State is that the question whether the seized wheat was liable to be confiscated or not under section 6A of the Act, was a matter pending adjudication before the Additional District Magistrate (Civil Supplies) Agra.
That depends on whether or not there was contravention by the petitioners of any of the Order issued under section 3 of the Act and, therefore, cannot be determined without full investigation into the facts.
The Inter Zonal Wheat (Movement Control) Order, 1976, issued by the Central Government, in exercise of the powers conferred by section 3 of the Act has been rescinded with effect from April 13, 1977.
The result of this is that the whole country constitutes a single zone for free movement of wheat except in such States where an order is issued under section 3 read with section 5 of the Act, placing a ban on export of wheat such as in the State of Rajasthan.
Admittedly, the State Government of Uttar Pradesh has not issued any order under section 3 read with section 5 of the Act, placing a ban on export of wheat from the State or any restriction on inter district movement of wheat within the State.
The State Government does not contest this position and indeed, the Chief Marketing Officer in his counter affidavit states: "The State of Uttar Pradesh has not banned the movement of wheat outside the State or from one district to another district within the State.
It is submitted that such traders who are transporting wheat alleged to be purchased from a place other than the State of Uttar Pradesh and were/are carrying the same to other States other than Uttar Pradesh have only to satisfy the authorities concerned of the bona fides of the transactions.
However, there is no ban on such movement from one State to another." 1155 The impugned teleprinter message dated March 31, 1981 runs as follows: "For: Regional Food Control, Agra/Bareilly/Dehradun/Faizabad/Gorakhpur Jhansi/Haldwani/Kanpur/Meerut/Varanasi Lucknow (by Hand) From: Secretary (Food) Lucknow.
No. TP 1061/XXIX Food 5 Dated: Lucknow: March 31, 1981.
Refer Tel TP 712/XXIX Food 5 5(1)/81 of 9th March 1981 regarding renewal of and issue of new licences to dealers(,) Government committed to provide benefits of support price to producers hence to ensure that maximum quantity of wheat is purchased by agencies (.) Para (.) After careful consideration Government have decided that with effect from first April 1981 till thirtieth June 1981 no repeat no fresh licences are to be issued to any person who wish to deal in wheat, wheat products or both as wholesaler commission agent retailer (.) Para (.) Government have also decided that during April 1981 to June 1981 movement of wheat by traders on private account to outside district shall be regulated only on the endorsement of Deputy Regional Marketing Officer concerned and hitherto this power being exercised by Senior Marketing Inspector shall not repeat not be used by them (.) Para (.) At the same time easy availability of wheat in open markets is to be ensured(.) Keeping all the relevant factors in view endorsement by Dy.
R.M.O. should be made judiciously on genuine and bonafide grounds(.) Para(.) Dy.
RMO will send daily report to RFC of the cases in which such permission is granted or endorsement made(. ) RFC will compile and send weekly report to Government(.) Permission to be given very sparingly and general impression made should be that they will not gain by doing any trading in wheat(.) Visit Mandis regularly and check quantities lying in traders premises(.) Presence of large stocks with trade means staff 1156 is not during their job properly(.
) Inform all concerned immediately for strict compliance(.) Dated: Lucknow; March 31, 1981 Sd/ M. Subrahmanyam Secretary Food & Civil Supplies Sec.
5 U.P. Secretariat, Lucknow.
" There can be no doubt that the aforesaid teleprinter message was in the nature of executive instructions of the State Government to the Regional Food Controllers of the various regions to secure compliance with the orders.
It may be mentioned that the State Government was committed to provide price support in wheat to producers and hence to maximise procurement of wheat, issued instructions that no fresh licences till June 30, 1981 were to be granted to any person who wished to deal in wheat, wheat products, or both, as well as a wholesale dealer, commission agent or a retailer.
It further conveyed the policy decision of the Government that during April 1981 movement of wheat by traders on private account to outside districts shall be regulated only on the endorsement of the Deputy Marketing Officer concerned and not by the Senior Marketing Inspectors as hitherto before.
The Government also directed the Regional Food Controllers to ensure easy availability of wheat in open market.
As regards the making of endorsement, they were advised that the powers should be exercised with due circumspection.
They were also asked to visit the mandis and keep a constant vigil on the stocks lying with the traders.
There appears to be nothing unusual on the State Government issuing such executive instructions.
Even assuming that the impugned teleprinter message is not relatable to the two Control Orders, the State Government undoubtedly could, in exercise of the executive power of the State, introduce a system of verification on movement of wheat from the State of Uttar Pradesh to various other States at the check posts on the border and place restrictions on inter district movement of wheat by traders on private account within the State.
The executive power of a modern State is not capable of any precise definition.
In Ram Jawaya Kapur vs State of Punjab, Mukherjea, C.J., dealt with the scope of articles 73 and 162 of the Constitution.
The learned Chief Justice observed that neither of the two Articles contains any 1157 definition as to what the executive function is or gives an exhaustive enumeration of the activities which would legitimately come within its scope.
It was observed: "Ordinarily the executive power con notes the residue of governmental functions that remain after legislative and judicial functions are taken away".
It is neither necessary nor possible to give an exhaustive enumeration of the kinds and categories of executive functions which may comprise both the formulation of the policy as well as its execution.
In other words, the State in exercise of its executive power is charged with the duty and the responsibility of carrying on the general administration of the State.
So long as the State Government does not go against the provisions of the Constitution or any law, the width and amplitude of its executive power cannot be circumscribed.
If there is no enactment covering a particular aspect, certainly the Government can carry on the administration by issuing administrative directions or instructions, until the legislature makes a law in that behalf.
Otherwise, the administration would come to a standstill.
In Ram Jawaya Kapoor 's case (supra) it was contended that the executive power of the State did not extend to the carrying on of trade of printing, publishing and selling of text books for schools unless such trade was authorised by law.
In repelling the contention, Mukherjea, C.J. speaking for the Court, observed : Our Constitution, though federal in its structure, is modelled on the British Parliamentary system where the executive is deemed to have the primary responsibility for the formulation of governmental policy and its transmission into law though the condition precedent to the exercise of this responsibility is its retaining the confidence of the legislative branch of the State.
The executive function comprises both of the determination of the policy as well as carrying it into execution.
This evidently includes the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, the direction of foreign policy, in fact the carrying on or supervision of the general administration of the State.
The learned Chief Justice then went on to observe : The Indian Constitution is a written Constitution and even the legislature cannot override the fundamental rights 1158 guaranteed by it to the citizens.
Consequently, even if the acts of the executive are deemed to be sanctioned by the legislature, yet they can be declared to be void and in operative if they infringe any of the fundamental rights of the petitioners guaranteed under Part III of the Constitution.
On the other hand, even if the acts of the executive are illegal in the sense that they are not warranted by law, but no fundamental rights of the petitioners have been infringed thereby, the latter would obviously have no right to complain under article 32 of the Constitution though they may have remedies elsewhere if other heads of rights are infringed.
In Naraindas Indurkhya vs State of Madhya Pradesh & Ors Bhagwati, J., speaking for the Court, reiterated the principles laid down by Mukherjea, C.J. in Ram Jawaya Kapur 's case (supra) and held that the State Government could act in exercise of the executive power of the State under article 162 of the Constitution in relation to any matter with respect to which the State Legislature has power to make laws even if there was no legislation to support such executive action.
There is no denying the fact that the State Legislature is competent to enact a law on the subject covered by Entry 33, List III, which reads: 33.
Trade and commerce in, and the production, supply and distribution of, (b) foodstuffs, including edible oilseeds and oils.
The was enacted by Parliament in exercise of concurrent jurisdiction under Entry 33 List III of the Seventh Schedule to the Constitution as amended by the Constitution (Third Amendment) Act, 1954.
The exercise of such concurrent jurisdiction would not deprive the State legislature of its jurisdiction thereunder.
The State legislature, therefore, could still make a law on the subject regulating trade and commerce in, and the production, supply and distribution of 'foodstuffs ' and the only question that would arise is one of repugnancy dealt with in article 254 of the Constitution.
The executive power of the State being co extensive with its legislative power under Entry 33, List III, it relates to all matters covered by the subject 'foodstuffs ', 1159 trade and commerce in, and the production, supply and distribution thereof.
This is, of course, subject to the limitation contained in Proviso to article 162 which directs that in any matter with respect to which the legislature of a State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by the Constitution or by any law made by Parliament upon the Union or authorities thereof.
This leads us to another aspect of the problem of considerable difficulty and importance.
The subject 'search and seizure ', is a field which has not come before the court with considerable frequency, but this is a hard fact of life which the citizen does encounter very often.
The executive power of 'search and seizure ' is a necessary concomitant of a welfare State.
It tends to promote the well being of the nation.
Many questions arising in the field of search and seizure are factual in nature.
They involve varying degrees of difference among the infinitely diverse facts.
Every factual variation presents not only a new problem, but also a new constitutional question.
It is a limitless area in which different issues may arise with vast variations of facts which are involved in each individual case.
This is, indeed, a peculiar field in which the decisions of courts do not help in clarifying the law.
The decisions in the field are of little precedental value because, the more the cases that are decided, the more new issues arise, through possible factual variations.
The check posts and barriers on the borders of the State of Uttar Pradesh are set up under section 28 of the U.P. Sales Tax Act, 1948 and are designed and meant to prevent evasion of sales tax and other dues.
The constitutional validity of section 28 and its cognate provisions, sections 28A to 28C has, rightly, if we may say so, not been challenged before us.
From the point of view either of Entry 54, List II, or of article 301 of the Constitution, there is no question of any lack of competence in the State legislature to set up the checkposts and barriers on the State 's borders.
These provisions, read with the requirements of r. 83(4) of the U.P. Sales Tax Rules, 1948 require that the owner, driver or any other person in charge of the vehicle or vessel shall, in respect of such goods carried in the vehicle or vessel as are notified under sub section
(1) of section 28A, carry with him, a declaration in Form XXXI, a certificate in Form XXXII, a transit pass in Form XXXIV in duplicate, cash memo, bill of sale or challan and a trip sheet in triplicate.
The factual existence of these check 1160 posts or barriers on the State 's borders is not denied, nor their legality challenged.
It is not suggested that the setting up of these check posts is a restriction on the freedom of trade, commerce and intercourse guaranteed under article 301 of the Constitution, or is such as directly and immediately restricts or impedes the free flow or movement of goods.
It is also not suggested that these regulatory measures in setting up the check posts on the State 's borders are such as impede freedom of trade, commerce and intercourse.
Just as inter State trade and commerce must pay its way and be subject to taxation, persons engaged in such inter State trade or commerce are equally subject to all regulatory measures.
There is no reason why the check posts or barriers set up by the State Government under section 28 of the U.P. Sales Tax Act, 1948, cannot be utilised as a machinery for due observance of the laws, e.g. for verification and control of movement of wheat by traders on private account from the State of Uttar Pradesh to various other States.
The instructions conveyed by the State Government by the impugned teleprinter message dated March 31, 1981, were a direct sequel to the Centre 's directives contained in its earlier teleprinter message.
It was intended and meant to achieve three main objectives, namely, (1) to provide price support in wheat to purchasers with a view to sustain, maintain and maximise the procurement of wheat; (2) to prevent hoarding and blackmarketing; and (3) to provide for equitable distribution and availability of wheat at fair prices.
These directions were obviously meant to subserve the object of the legislation and were in public interest.
These cases were argued with much learning and resource particularly with reference to the rule of law and the consequent limitations on the executive power of the State under article 162 to 'trench ' upon the fundamental right to carry on trade or business guaranteed under article 19 (1) (g) and the freedom of trade, commerce and intercourse throughout the territory of India guaranteed under article 301 of the Constitution.
It necessarily involves a claim by the State that the measures taken by the State Government by the impugned teleprinter message were nothing but regulatory measures to ensure that the excess stock of wheat held by a wholesale dealer, commission agent or a retailer is not transported to a place outside the State or from one district to another within the State and therefore were not a 'restriction ' on the fundamental right to carry on trade or business guaranteed under article 19 (1)(g) or on the freedom of trade, commerce and intercourse under article 301.
1161 The quintessence of our Constitution is the rule of law.
The State or its executive officers cannot interfere with the rights of others unless they can point to some specific rule of law which authorises their acts.
In State of Madhya Pradesh vs Thakur Bharat Singh, the Court repelled the contention that by virtue of article 162, the State or its officers may, in the exercise of executive authority, without any legislation in support thereof, infringe the rights of citizens merely because the legislature of the State has power to legislate in regard to the subject on which the executive order is issued.
It was observed: "Every act done by the Government or by its officers must, if it is to operate to the prejudice of any person, be supported by some legislative authority.
" The same principle was reiterated by the Court in Satwant Singh Sawhney vs Dr. Ramarathnam, Assistant Passport Officer, Government of India, New Delhi & Ors, and Smt.
Indira Nehru Gandhi vs Shri Raj Narain.
There can be no doubt that the , is a 'law ' within the meaning of article 302 of the Constitution imposing reasonable restrictions on the right to carry on trade and commerce as guaranteed by article 19(1)(g) and article 301 of the Constitution.
The object of the Act is to provide, in the interests of the general public, for the control, production, supply and distribution of, and trade and commerce in, certain essential commodities.
To appreciate the points involved, it is necessary to set out the material statutory provisions.
Sub section
(1) of section 3 of the Act provides as follows: "3(1).
If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
1162 Sub section
(2) thereof provides that without prejudice to the generality of the powers conferred by sub section
(1) an order made thereunder may provide for any of the matters enumerated therein.
Sub section
(5) provides that any order made under this section shall in the case of an order of a general nature or affecting a class of persons, be notified in the Official Gazette.
By virtue of the delegation of powers under section 5 of the Act the State Government in relation to such matters and subject to such conditions as may be specified, may exercise the powers of the Central Government under section 3 Clause (j) of sub section
(2) of 3 provides that the Central Government or the State Government, as the case may be, may by order provide: "For any incidental and supplementary matters, including, in particular, the entry, search or examination of premises, aircraft, vessels, vehicles or other conveyance and animals, and the seizure by a person authorised to make such entry, search or examination. ' Sub sections
(1) and (2) of section 6A of the Act, insofar as material, provide as follows: "6A(1).
Where any essential commodity is seized in pursuance of an order made under section 3 in relation thereto, a report of seizure shall, without unreasonable delay, be made to the Collector of the district or the Presidency town in which such essential commodity is seized and whether or not a prosecution is instituted for the contravention of such order, the Collector may, if he thinks it expedient so to do, direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the order, may order confiscation of (a) the essential commodity so seized; 6A(2).
Where the Collector, on receiving a report of seizure or on inspection of any essential commodity under sub section
(1), is of the opinion that the essential commodity is subject to speedy and natural decay or it is otherwise expedient in the public interest so to do, be may (i) order the same to be sold at the controlled price, if any, fixed for such essential commodity under this Act or under any other law for the time being in force; or 1163 (ii) where no such price is fixed, order the same to be sold by public auction: Provided that in case of foodgrains, the Collector may, for its equitable distribution and availability at fair prices, order the same to be sold through fair price shops at the price fixed by the Central Government or by the State Government, as the case may be, for the retail sale of such foodgrains to the public." Learned counsel for the State Government, in all fairness, does not assert that the impugned teleprinter message having regard to the requirements of sub section
(5), has the effect of a notified Order under section 3 of the Act placing a ban on export of wheat from the State or imposing a restriction on inter district movement of wheat.
It is submitted that it only conveyed the instructions of the State Government requiring the Regional Food Controllers to be more vigilant to secure due observance of the laws.
The question still remain whether the instructions conveyed by the teleprinter message had the force of law.
It is therefore to be considered whether the instructions conveyed by the State Government by the impugned teleprinter message were relatable to the two Control Orders and therefore could be considered to be 'law ' or an order having the force of law placing reasonable restriction on the freedom to carry on any occupation, trade or business guaranteed under article 19(1)(g) read with article 19(6) of the Constitution or on the freedom of trade, commerce and intercourse throughout the territory of India guaranteed under article 301 o the Constitution.
It is further to be considered whether the seizure of wheat in transit was with authority of law.
It is submitted that although the impugned teleprinter message dated March 31, 1981 was in the nature of executive instructions of the State Government to the Regional Food Controllers of the various regions to secure compliance with the two Control Orders, it had the force of law.
It is pointed out that under licence conditions Nos. 11, 12 and 13 of the licence issued in Form B under cl. 4 of the 1976 Order, a dealer is required to comply with any direction that may be given by the State Government in regard to purchase, sale or storage for sale of foodgrains, to furnish such information relating to his business as may be demanded of him and to carry out such instructions as may, from time to time, be given, 1164 by the State Government or the licensing authority, and to give all facilities at all reasonable times, to the enforcement officer or the licencing authority or any officer authorised by him or the State Government for the inspection of the stocks etc.
It is further pointed out that the State Government of Uttar Pradesh has by Notification No. P XXIX Food 5 5(42)/80 dated April 21, 1981, in exercise of the powers conferred by section 3 read with section 5 of the Act, with the prior concurrence of the Central Government, issued the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) (First Amendment) Order, 1981.
By cl. 2 thereof, a new cl. 4 has been substituted in the 1978 Order by which the stock limit of dealers in foodgrains has been re fixed, as it was of the opinion that it was necessary and expedient so to do for securing equitable distribution and availability of wheat at fair prices.
The new cl. 4 provides that no wholesale dealer, commission agent or retailer, shall have in stock, wheat more than 250 quintals, 250 quintals and 20 quintals respectively, at any time.
The re fixation of the stock limit of a wholesale dealers at 250 quintals, at any time, is to ensure that wholesale dealers in the State of Uttar Pradesh do not try to corner stocks of wheat for purposes of speculation.
The submission is that the State Government without placing any restriction on movement of wheat from the State of Uttar Pradesh to various other States, has virtually frozen the excess stock of wheat lying with wholesale dealers of foodgrains in the State.
There is, in our opinion, considerable force in these submissions.
The real question at issue is whether or not the seizure of wheat was with the authority of law.
The fundamental right to carry on trade or business guaranteed under article 19(1)(g) or the freedom of inter State trade, commerce and intercourse under article 301 of the Constitution, has its own limitations.
The liberty of an individual to do as he pleases is not absolute.
It must yield to the common good.
Absolute or unrestricted individual rights do not and cannot exist in any modern State.
There is no protection of the rights themselves unless there is a measure of control and regulation of the rights of each individual in the interests of all.
Whenever such a conflict comes before the Court, it is its duty to harmonise the exercise of the competing rights.
The Court must balance the individual 's rights of freedom of trade under article 19(1)(g) and the freedom of inter State trade and commerce under article 301 as against the national interest.
Such a limitation is inherent in the exercise of those rights.
1165 Under article 19(1)(g) of the Constitution, a citizen has the right to carry on any occupation, trade or business and the only restriction on this unfettered right is the authority of the State to make a law imposing reasonable restrictions under cl.
The principles underlying in cls.
(5) and (6) of article 19 are now well settled and ingrained in our legal system in a number of decisions of this Court, and it is not necessary to burden this judgment with citations.
The expression 'reasonable restriction ' signifies that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.
The test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable in all cases.
The restriction 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 in article 19(1)(g) and the social control permitted by cl.
(6) of article 19, it must be held to be wanting in that quality.
The nature of the right alleged to have been infringed is that wholesale dealers in foodgrains from the State of Uttar Pradesh or elsewhere are prevented from moving their stock of wheat to various other States or from one district to another without the transaction being verified and duly endorsed by the Deputy Marketing Officer or the Senior Marketing Officer concerned.
The other restriction on the enjoyment of their right placed by the impugned teleprinter message is that there should be physical verification at the checkposts on the State 's borders.
These steps were designed to prevent a price rise in wheat in the State of Uttar Pradesh and to prevent outflow of wheat from the State to various other States and from one district to another district within the State.
The whole object was to ensure that the wholesale dealers in foodgrains did not corner stocks of wheat for the purpose of speculation.
It cannot be said that they do not contain the quality of reasonableness or were not in the interests of the general public.
In judging the validity of these restrictions, the Court has to strike a proper balance between the freedom guaranteed under article 19(1)(g) and the social control permitted by article 19(6).
If, therefore, the seizure can be justified on the basis of any valid law, it cannot be held to be illegal.
This is equally true of article 301.
article 301 imposes a general limitation on all legislative 1166 power in order to secure that trade, commerce and intercourse throughout the territory of India shall be free.
Having placed a general limitation on the legislative powers of Parliament and the State Legislatures, article 302 relaxes that restriction in favour of Parliament by providing that authority may, by law, impose such restrictions on the freedom of trade, commerce and intercourse between one State and another and within any part of the territory of India in the public interest.
Likewise, article 304(b) provides that notwithstanding anything in article 301 or article 303, a legislature of a State may, by law, 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 cl.
(b) shall be introduced or moved in the legislature of a State without the previous sanction of the President.
Although article 301 guarantees that trade, commerce and intercourse throughout the country shall be free, the right to carry on inter State trade and commerce may be subject to reasonable restrictions in the interests of the general public.
The word 'free ' in article 301 does not mean freedom from laws or from regulations.
article 301 guarantees freedom of trade, commerce and intercourse throughout the country from any State barriers.
It declares that subject to the other provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free.
The whole object was to bring about the economic unity of the country under a federal structure, so that the people may feel that they are members of one nation.
One of the means to achieve this object is to guarantee to every citizen the freedom of movement and residence throughout the country.
That is achieved by article 19(1)(d) and (e).
No less important is the freedom of movement or passage of commodities from one part of the country to another.
The progress of the country as a whole also requires free flow of commerce and intercourse as between different parts, without any barrier.
This freedom of trade, commerce and intercourse throughout the country without any 'State barriers ' is not confined to inter State trade but also includes intra State trade as well.
In other words, subject to the provisions of Part XIII, no restrictions can be imposed upon the flow of trade, commerce and intercourse, not only between one State and another, but between any two points within the territory of India whether any State border has to be crossed or not.
It is now well settled that the regulatory measures or measures imposing compensatory taxes do not come within the purview of the 1167 restrictions contemplated by article 301.
The regulatory measures should, however, be such as do not impede the freedom of trade, commerce and intercourse.
It cannot be said that the instructions conveyed by the State Government by the impugned teleprinter message imposing the requirement for the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer or the physical verification of stocks of wheat during the course of transit, are a 'restriction ' on the freedom of trade, commerce and intercourse within the country, i.e, across the State or from one part of the State to another.
These are nothing but regulatory measures to ensure that the excess stock of wheat held by a wholesale dealer, commission agent or a retailer is not transported to a place outside the State or from one district to another.
Even if these requirements are construed to be a 'restriction ' on the inter State or intra State trade, the limitation so imposed on the enjoyment of the right cannot be considered to be arbitrary or of an excessive nature.
Nor can it be said that such restrictions do not satisfy the test of reasonableness.
The question whether or not the seizure of the wheat was for contravention of any order issued under section 3 of the Act is pending investigation before the Additional District Magistrate (Civil Supplies), Agra.
For the establishment of their rights the petitioners have still to establish that the wheat in question was bought by them in open market in Delhi and elsewhere and was being merely transported through the State of Uttar Pradesh in the course of inter State trade and commerce.
If that be so, then there was no contravention of any order issued by the Central Government under section 3 or by the State Government under section 3 read with section 5 of the Act.
If, on the contrary, the wheat had been purchased by them at Agra or nearby places within the State of Uttar Pradesh, the question would arise whether such purchase, storage or sale of wheat was in contravention of any of the two Control Orders.
In case there was such contravention of any of the provisions of the two Control Orders, then there was undoubtedly the power of search and seizure.
The case of the State Government before us was that the source of power to effect the seizure was the two Control Orders.
It was asserted that the wheat was not being transported during the course of inter State trade and commerce from the Union Territory of Delhi to various other States, but had, in fact, been purchased at Agra and was being lifted from the State of Uttar Pradesh and had therefore to be seized at the check post at Saiyan and at Agra.
Under cl. 3 of 1976 Order, no person can carry on business as a 1168 dealer or commission agent except and in accordance with the terms and conditions of a licence issued in that behalf by the licensing authority.
The term 'dealer ' is defined in section 2(c) of the Order to mean a person engaged in the business of purchase, sale or storage for sale of foodgrains.
According to the State, the seized wheat had been purchased at Agra in the course of trade and they were not isolated transactions and, therefore, the Delhi traders committed contravention of cl. 3 of the 1976 Order.
14 thereof confers the power of search and seizure on an enforcement officer or the licensing authority or any other officer authorised by the State Government in that behalf.
The expression 'enforcement officer ' is defined in cl. 2(e) of that Order and it includes the Chief Marketing Officer and in that capacity the Chief Marketing Officer, having reason to believe that contravention of the provisions of the Order had been, was being, or was about to be committed, had the power to seize the trucks at the check post at Saiyan and effect the seizure of the trucks laden with wheat and bring them to the purchase point at Agra.
Furthermore, under cl. 4 of the 1978 Order, as amended, no person who is a wholesale dealer, commission agent or a retailer, shall have in stock wheat in quantities exceeding 250 quintals, 250 quintals and 20 quintals respectively at a time.
6 confers the power of search and seizure on an enforcement officer which term as defined in cl.
2(d) likewise includes the Chief Marketing Inspector, Under cl. 6(d), the Chief Marketing Inspector, as an enforcement officer, had the power to seize any article in respect of which he had reason to believe that a contravention of the Order had been, was being, or was about to be committed.
The fixation of the maximum limits of stocks of wheat at 250 quintals 250 quintals and 20 quintals respectively, which a wholesale dealer, commission agent or a retailer may hold, at any one time, has necessarily the effect of freezing the excess stock of wheat lying with such dealer.
This also results in preventing the movement of such excess stock of wheat from the State of Uttar Pradesh to various other States or from one district to another.
The excess stock of wheat lying with such dealer, that is, a wholesale dealer, commission agent or a retailer, in truth and substance, became their 'unlicensed stock '.
If really the Delhi traders had purchased the excess stock of wheat from wholesale dealers, commission agents or retailers in the State of Uttar Pradesh, as is alleged, it is possible to contend that there was a contravention of the provisions of cl. 4 of the 1978 Order.
The question whether the seizure was for any contravention of any Order issued under 1169 section 3 of the Act has to be determined by the Additional District Magistrate (Civil Supplies), Agra, on the evidence adduced by the parties before him.
The facts being controverted, the petitioners have no right to relief under article 32 of the Constitution.
Each of the petitioners has filed a sheaf of documents showing that the wheat had been purchased in the open market in Delhi and elsewhere, that the trucks laden with their wheat were accompanied by the relevant bills, goods receipts, inter State transit passes etc., that the trucks in question were allowed to cross the check posts at Kotwan on the border between the Union Territory of Delhi and the State of Uttar Pradesh.
but were seized either at the check posts at Saiyan on the border between the States of Uttar Pradesh and Madhya Pradesh or at Agra, while they were in transit through the State of Uttar Pradesh.
It was also asserted that all the documents were seized and taken away by the Senior Marketing Inspector, and that he had given an acknowledgment of the same.
Learned counsel appearing for the State vehemently contends that these documents were not shown to the authorities concerned and it is for the petitioners to prove these documents before the Additional District Magistrate (Civil Supplies), Agra, in support of their claim We cannot act on the documents because the transactions are still to be proved.
It is asserted on behalf of the State Government that such documents could always be brought into existence, particularly when none of the transactions were effected through a Bank.
This Court cannot obviously pronounce upon the genuineness of the transactions or record any finding on the basis of the documents when the facts are in dispute.
There still remains the question whether the seizure of wheat amounts to deprivation of property without the authority of law.
article 300A provides that no person shall be deprived of his property save by authority of law.
The State Government cannot while taking recourse to the executive power of the State under article 162, deprive a person of his property.
Such power can be exercised only by authority of law and not by a mere executive fiat or order.
article 162, as is clear from the opening words, is subject to other provisions of the Constitution.
It is, therefore, necessarily subject to article 300A.
The word 'law ' in the context of article 300A must mean an Act of Parliament or of a State Legislature, a rule, or a statutory order; having the force of law, that is positive or State made law.
The decisions in Wazir Chand vs The State of Himachal 1170 Pradesh and Bishan Das and others vs The State of Punjab and others are an authority for the proposition that an illegal seizure amounts to deprivation of property without the authority of law.
In Wazir Chand 's case (supra), the police in India seized goods in possession of the petitioner in India at the instance of the police of the State of Jammu and Kashmir.
The seizure was admittedly not under the authority of law, inasmuch as it was not under the orders of any Magistrate; nor was it under sections 51, 96, 98 and 165 of the Code of Criminal Procedure, 1898, since no report of any offence committed by the petitioner was made to the police in India, and the Indian police were not authorised to make any investigation.
In those circumstances, the Court held that the seizure was not with the authority of law and amounted to an infringement of the fundamental right under article 31(1).
This view was reaffirmed in Bishan Das 's case (supra).
The effect of the Constitution (Fourth) Amendment Act, 1955, is that there can be no 'deprivation ' unless there is extinction of the right to property.
It is urged that the seizure of wheat was not with a view to extinction of the rights of the petitioners, but the property in the seized wheat was theirs.
No doubt, the wheat had to be sold, as it was subject to speedy and natural decay, but the petitioners are entitled to the sale proceeds, if ultimately it is found by the Additional District Magistrate (Civil Supplies), Agra, that there was no contravention by them of an order issued under section 3 of the Act.
It is not necessary for us to deal with the question whether an illegal seizure amounts to 'deprivation ' of property within the meaning of article 300A for purposes of this case, as the State Government does not dispute the right of the petitioners to the sale proceeds.
It is true that the seizure was with intent to confiscate under section 6A of the Act, but that would not make the seizure illegal, if, ultimately, it is found that there was contravention of an order issued under section 3 of the Act.
If the facts were not in controversy and if the petitioners were also able to prove that there was wrongful seizure of wheat by the State Government of Uttar Pradesh at the check post of Saiyan on the border, while in transit, in the course of inter State trade and commerce from the Union Territory of Delhi, perhaps, they would be entitled to the return of the seized wheat, or, in the alternative, 1171 to the payment of price thereof.
The State contests the right of the Court to investigate into the facts, particularly when the matter is a fact in issue in the aforesaid proceedings before the Additional District Magistrate (Civil Supplies), Agra.
Normally, it is not the function of this Court to investigate into facts in proceedings under article 32 of the Constitution when they are controverted with a view to discerning the truth.
The matter must, in a situation like this, be left to the fact finding body.
For the establishment of their right to relief under article 32, the petitioners must, in our opinion, establish the necessary fact before the said Additional District Magistrate in the proceedings under section 6A of the Act.
If they fail to get relief in such proceedings, their obvious remedy lies in a suit for damages for wrongful seizure.
The question that the seizures were in reality for procurement of wheat in furtherance of the directive of the Central Government, and not for breach of the two Control Orders and, therefore, were nothing but a 'colourable exercise of power ', is dependent on facts to be found on investigation.
Further, the question that there being no control price for wheat, the wheat should have been sold by public auction, is again a question that must be raised before the Additional District Magistrate (Civil Supplies), Agra, in the proceedings pending before him under section 6A of the Act.
Turning to the petitions under article 32 of the Constitution by wholesale dealers of foodgrains from the State of Uttar Pradesh, learned counsel appearing for these petitioners challenged the impugned teleprinter message dated March 31, 1981, and the Notification No. P. XXIX Food 5 5(42)/80 dated April 21, 1981, issued by the State Government of Uttar Pradesh, by which cl. 4 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978, has been amended, particularly on three grounds, namely, (1) the impugned notification fixing the maximum limit of wheat permitted to be possessed by a wholesale dealer at 250 quintals, at a time, is an unreasonable restriction on the freedom of trade guaranteed under article 19(1)(g) of the Constitution; (2) there is no distinction made between a wholesale dealer and a commission agent in as much as the maximum limit of wheat allowed to be possessed by them is the same, i.e., 250 quintals at a time and the fixation of such limit in the case of a wholesale dealer is arbitrary, irrational and irrelevant and thus violative of article 14 of the Constitution; and (3) the instructions conveyed by the State Government by its teleprinter message dated March 31, 1981, placing restrictions 1172 on movement of wheat by traders on private account from the State of Uttar Pradesh to various other States and on inter district movement of wheat within the State, were in breach of their fundamental right under article 19(1)(g) read with article 301 of the Constitution.
The first and second contentions may conveniently be dealt with together.
In order to appreciate these contentions, it is necessary to state a few facts: During the year 1979 80, the country was victim to a very serious drought which affected with Kharif as well as Rabi crops.
The Government of India, therefore, fixed a target of 9.5 million tonnes of wheat to be purchased in the summer months of 1981 for the national buffer stock.
It fixed the procurement price at Rs. 130 per quintal as against the support price of Rs. 127 per quintal recommended by the Agricultural Price Commission to provide a better incentive to the farmers.
The procurement was carried out as a measure of price support without any restriction on movement from one State to another.
However, some of the States were implementing local laws with regard to ensuring that the private trade adhered to the stock limit restrictions on them and did not try to corner stocks for speculation purposes.
The original target fixed for procurement was 9.5 million tonnes but at the end of June, only 6.5 million tonnes had been purchased, leaving a deficit of 3 million tonnes.
The result was that the Government of India was thus forced to buy 1.5 million tonnes of wheat in the world market.
The Government 's procurement drive was mainly frustrated by wholesale dealers of foodgrains cornering the stocks of wheat by paying a price higher than the procurement price to the farmers.
The imperatives of the situation demanded that the speculative tendencies of the trade were curbed by strictly enforcing the stock limits of traders.
Under original cl. 4 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978, a wholesale dealer, commission agent or a retailer could have in stock wheat not more than 750 quintals, 750 quintals and 100 quintals respectively, at any time.
In view of the worsening situation in the national buffer stock and in the light of the experience gained during the past few years, the State Government was of the opinion that it was necessary and expedient to re fix the stock limits of such dealers.
This was expected to maximise procurement of wheat to meet the requirement of public distribution, as well as, the buffer stock.
1173 It cannot be asserted that the restriction imposed by the State Government on wholesale dealers of wheat is either arbitrary or is of an excessive nature.
The fixation of the stock limit of wheat to be possessed by wholesale dealers, at any time, at 250 quintals is an important step taken by the State Government to obviate hoarding and black marketing in wheat which is in short supply.
It is hardly necessary to emphasise the extent and urgency of the evil sought to be remedied thereby.
Perhaps fixation of the minimum limit of wheat permitted to be possessed by a wholesale dealer at 250 quintals, at a time, is too low, but the restriction so imposed cannot be treated to be arbitrary or of an excessive nature, beyond what is required in the national interest.
It is a matter of common knowledge that wholesale dealers of foodgrains mainly operate in large cities and towns and have the means and capacity to manipulate the market by withholding stocks of a commodity.
There was need to check such speculative tendencies in the trade.
It was therefore felt expedient to re fix the stock limit of wheat for wholesale dealers at 250 quintals at a time, as in the case of a commission agent.
The underlying idea is that the wholesale dealers should be allowed to continue their trading activities within reasonable limits.
The fixation of stock limit at 250 quintals implies that wholesale dealers can have at any time, in stock, a wagon load of wheat.
In Krishan Lal Praveen Kumar & Ors. etc.
vs The State of Rajasthan, this Court has interpreted the words 'at any time ' as meaning 'at any given time '.
This means that a wholesale dealer should not have in stock more than 250 quintals at a time.
But there is nothing to prevent a wholesale dealer from entering into a series of transactions during the course of the day.
This Court in Krishan Lal Parveen Kumar 's case (supra) and Suraj Mal Kailash Chand & Ors.
vs Union of India & Anr., has upheld the validity of a similar notification dated March 23, 1981, issued by the State Government of Rajasthan in exercise of the powers conferred by cl. 18 of the Rajasthan Trade Articles (Licensing and Control) Order, 1980, fixing the maximum limit of wheat to be possessed by a dealer at any one time at 200 quintals, on the ground that it is a reasonable restriction by the State Government within the meaning of article 19(6) of the Constitution.
In view of these decisions, it is difficult to conceive as to how the contention based on article 19(1)(g) of the Constitution can survive.
1174 True it is, if the governmental action is arbitrary or there is no rational nexus to the object sought to be achieved it is liable to be struck down as violative of article 14 of the Constitution.
The State Government has adopted various measures in the interest of the general public for the control of production, supply and distribution of, and trade and commerce in, essential commodities.
To obviate hoarding and blackmarketing in foodstuffs, it has promulgated the Order.
It introduces a system of checks and balances to achieve the object of the legislation, i.e., to ensure equitable distribution and availability of essential commodities at fair prices.
It cannot be said that looking to the prevailing conditions, the imposition of such restrictions does not satisfy the test of reasonableness.
Nor can it be said that the fixation of such stock limit is arbitrary or irrational having no nexus to the object sought to be achieved and is, therefore, violative of article 14.
On the contrary, the limitation imposed fixing a stock limit for a wholesale dealer at 250 quintals is a reasonable restriction within the meaning of article 19(6) of the Constitution.
One further point requires to be noticed.
The contention that the action taken by the State Government in issuing the impugned teleprinter message amounts to an 'intrusion ' on the fundamental right to carry on trade or business under article 19(1)(g) or on the freedom of trade, commerce and intercourse under article 301 of the Constitution appears to be wholly misconceived.
As already stated the instructions conveyed by the State Government by the impugned teleprinter message imposing the requirement for the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer or the physical verification of stocks of wheat during the course of transit, are not a 'restriction ' on the fundamental right to carry on trade or business guaranteed under article 19(1)(g) or on the freedom of trade, commerce and intercourse under article 301.
These are nothing but regulatory measures to ensure that the excess stock of wheat held by a wholesale dealer, commission agent or a retailer is not transported to a place outside the State or from one district to another.
Even if these requirements are considered to be a 'restriction ' on inter State or intra State trade, that is, across the State or from one part of the State to another, the limitation so imposed on the enjoyment of the right cannot be considered to be arbitrary or of an excessive nature and thus violative of article 19(1)(g) or article 301 of the Constitution.
The State Government in its return has stated that there is no ban on the export of wheat from the State of Uttar Pradesh to various other States or from one 1175 district to another within the State, subject to the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer concerned.
The petitioners who are wholesale dealers of foodgrains in the State of Uttar Pradesh are, therefore, free to carry on their business within the permissible limits, i.e., they may carry on their trade or business or enter into inter State or intra State transactions of wheat subject to the stock limit of 250 quintals at a time.
In the result, the writ petitions must fail and are dismissed.
The stay orders passed by the Court, from time to time, stand vacated.
Formal orders for vacating stay granted in those matters need not be issued.
There shall be no order as to costs.
S.R. Petitions dismissed.
| In exercise of the powers vested under the Essential Commodities Act, 1951, the State Government of Uttar Pradesh issued two orders, namely (1) the Uttar Pradesh Food Grains Dealers (Licensing and Restriction on Hoarding) Order, 1976 and (2) the Uttar Pradesh Food Grains (Procurement and Regulation of Trade) Order 1978.
By its teleprinter message dated March 31, 1981 to all the Regional Food Controllers, the State Government issued certain further instructions for effective enforcement of the two Orders and in particular regulating the inter district and outside the State movement of wheat by traders on private account.
By a Notification No. P XXIX Food 5 5(42)/80 dated April 21,1981, clause (4) of the 1978 Order, was amended providing that no wholesale dealer, commission agent, or a retailer shall have in stock wheat more than 250 quintals, 250 quintals and 20 quintals respectively, at any time, since it was of opinion that it was necessary or expedient so to do for securing the equitable distribution and availability of foodgrains at fair prices.
Pursuant to the powers vested in them, the Senior Marketing Inspector and the Chief Marketing Inspector, Agra, intercepted and seized the trucks laden with wheat of the petitioners who are wholesale dealers of foodgrains from the Union Territory of Delhi and the States of Punjab and Haryana at the check post at Saiyan on the border between the States of Uttar Pradesh and Madhya Pradesh, and after bringing them back to the purchase point at Agra unloaded the wheat from the said trucks.
While the petitioners moved an application for the release of the seized wheat before the Additional District Magistrate (Civil Supplies), Agra, the Marketing Inspectors not only lodged First Information 1138 Reports but obtained an interim order on May 23, 1981 for the sale of the seized wheat as it was subject to speedy and natural decay.
The seized wheat had been purchased by the State Government on Government account at the procurement price and the sale proceeds were credited into the treasury.
The petitioners challenged the teleprinter message dated March 31, 1981 and the Notification dated April 21, 1981 on the following grounds: (1) The Notification fixing the maximum limit of wheat permitted to be possessed by a wholesale dealer at 250 quintals, at a time, is an unreasonable restriction on the freedom of trader guaranteed under Article 19(1)(g) of the Constitution; (2) there is no distinction made between a wholesale dealer and a commission agent in as much as the maximum limit of wheat allowed to be possessed by them is the same, i.e., 250 quintals at a time and the fixation of such limit in the case of a wholesale dealer is arbitrary, irrational and irrelevant and thus violative of Article 14 of the Constitution; (3) the instructions conveyed by the State Government by its teleprinter message dated March 31, 1981, placing restrictions on movement of wheat by traders on private account from the State of U.P. to various other States and on inter district movement of wheat within the State, were violative of their fundamental rights under Article 19(1)(g) and Article 301 of the Constitution; (4) the seizure of the consignments of the wheat, while they were in transit in the course of inter State trade and commerce from the Union Territory of Delhi and the States of Punjab and Haryana to various destinations in the States of Maharashtra and Madhya Pradesh, was without "the authority of law" and in violation of Article 300A of the Constitution; (5) the restriction must be by "law" or by an "order" having the force of law and not by recourse to the executive authority of the State under Article 162 of the Constitution, that is, by an executive action.
The teleprinter message of the State Government dated March 31, 1981 on the basis of which the seizures were effected in truth and substance, had no legal sanction and cannot be construed to be a notified order within the meaning of sub section (1) read with sub section (5) of section 3 of the Essential Commodities Act; it was nothing but an executive direction.
No executive action which operates to the prejudice of the citizens can be taken without the authority of law.
The seizures effected were not in compliance with the instructions contained in the teleprinter message and not for breach of the two control Orders and, therefore, it was nothing but a "colourable exercise" of power.
The real purpose of the seizure was procurement of wheat in furtherance of the directives of the Central Government without any legal sanction, since the farmers were not willing to sell their wheat at the procurement price; and (6) under sub section 2(ii) of section 6A of the Act there being no control price for wheat, the wheat should have been sold by public auction by the Additional District Magistrate while passing an interim order.
Dismissing the petitions, the Court ^ HELD: 1:1.
The restriction imposed by the State Government on wholesale dealers of wheat is neither arbitrary nor is of an excessive nature beyond what is required in the national interest.
To check speculative tendencies of the wholesale traders and others who manipulate the market by withholding stocks of a commodity and to obviate blackmarketing, the stock limit of wheat was fixed for wholesale dealers at 250 quintals at a time, as in the case of a commission agent, the underlying idea being that the wholesale dealers should be allowed to 1139 continue their trading activities within reasonable limits.
The fixation of stock limit at 250 quintals implies that wholesale dealers can have at any time, in stock, a wagon load of wheat.
The words "at any time" mean "at any given time", which means that a wholesale dealer should not have in stock more than 250 quintals at a time.
But there is nothing to prevent a wholesale dealer from entering into a series of transaction during the course of the day.
[1173 A E] 1:2.
The State Government had adopted various measures in the interest of the general public for the control of production, supply and distribution of, and trade and commerce in, essential commodities.
The Order fixing a stock limit introduces a system of checks and balances to achieve the object of the legislation, that is, to ensure equitable distribution and availability of essential commodities at fair prices.
Looking to the prevailing conditions, the imposition of such restrictions satisfies the test of reasonableness.
The fixation of such stock limit is not arbitrary or irrational having no nexus to the object sought to be achieved and is, therefore, intra vires of Article 14.
The limitation imposed fixing a stock limit for a wholesale dealer at 250 quintals is also a reasonable restriction within the meaning of Article 19(6) of the Constitution.
[1174 A D] 2:1.
The teleprinter message No. PP 1061/XXIX.Food 5 dated 31st March, 1981 was in the nature of executive instruction of the State Government to the Regional Food Controllers of the various regions to be more vigilant and to secure due observance of the control orders.
[1156 B, E F, 1163 C] 2:2.
The instructions conveyed by the State Government by the impugned teleprinter message imposing the requirement for the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer or the physical verification of stocks of wheat during the course of transit, are not a 'restriction ' or an 'intrusion ' on the fundamental right to carry on trade or business guaranteed under Article 19(1)(g) or on the freedom of trade, commerce and intercourse under Article 301.
These are nothing but regulatory measures to ensure that the excess stock of wheat held by a wholesale dealer, commission agent or a retailer is not transported to a place outside the State or from one district to another.
Even if these requirements are considered to be a 'restriction ' on inter State or intra State trade, that is, across the State or from one part of the State to another, the limitation so imposed on the enjoyment of the right cannot be considered to be arbitrary or of an excessive nature and thus violative of Article 19(1)(g) or Article 301 of the Constitution.
There being no ban on the export of wheat from the State of Uttar Pradesh to various other States or from one district to another within the State, subject to the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer concerned, the Petitioners who are wholesale dealers of foodgrains in the State of Uttar Pradesh are, therefore, free to carry on their business within the permissible limits, that is, they may carry on their trade or business or enter into inter State or intra State transactions of wheat subject to the stock limit of 250 quintals, at a time.
[1174 D H, 1175 A B] 2:3.
The teleprinter message dated March 31, 1981 was a direct sequel to the Centre 's directives contained in its earlier teleprinter message and intended or meant to achieve three main objectives, namely, (i) to provide price support in wheat to purchasers with a view to sustain, maintain and maximise the pro 1140 curement of wheat; (ii) to prevent hoarding and black marketing; and (iii) to provide for equitable distribution and availability of wheat at fair prices.
The directions were obviously meant to subserve the object of the legislation and were in public interest.
The State Government was committed to provide price support in wheat to producers and hence to maximise procurement of wheat, there is nothing unusual on the State Government issuing such executive instructions.
[1156 E F, 1160 D E] 2:4.
Even assuming that the impugned teleprinter message is not relatable to the control Orders, the State Government undoubtedly could, in exercise of the executive power of the State, introduce a system of verification on movement of wheat from the State of Uttar Pradesh to various other States at the check post on the border and place restrictions on inter district movement of wheat by traders on private account within the State.
[1156 E F] Ram Jawaya Kapur vs State of Punjab and Naraindas Indurkhya vs State of Madhya Pradesh & Ors., ; , explained and followed.
The State Legislature is competent to enact a law on the subject covered by Entry 33, List III, regulating trade and commerce in, and the production, and supply and distribution of "foodstuffs".
The was enacted by Parliament in exercise of concurrent jurisdiction under Entry 73, List II, of the Seventh Schedule to the Constitution as amended by the Constitution (Third Amendment) Act, 1954.
The exercise of such concurrent jurisdiction would not deprive the State Legislature of its jurisdiction thereunder.
The executive power of the State which is coextensive with the legislative power is subject to the limitation contained in Article 162 which directs that in any matter with respect to which the legislature of a State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by the Constitution or by any law made by Parliament upon the Union of authorities thereof.
[1158 F H, 1159 A B] 3:2.
The State in exercise of its executive powers is charged with the duty and the responsibility of carrying on the general administration of the State.
So long as the State Government does not go against the provisions of the constitution of any law, the width and amplitude of its executive power cannot be circumscribed.
If there is no enactment covering a particular aspect, certainly the Government can carry on the administrative directions or instructions, until the legislature makes a law in that behalf.
Otherwise the administration would come to a standstill.
[1157 B C] 3:3.
The executive power of "search and seizure" is a necessary concomitant of a welfare State.
It tends to promote the well being of the nation.
Many questions arising in the field of search and seizure are factual in nature, involving varying degrees of difference among the infinitely diverse facts.
It is a limitless area where not only every factual variation presents a new constitutional question, but it is a peculiar field in which the decisions of courts do not help in clarifying the law.
The decisions in the field are of little precedental value, because the more the cases that are decided the more issues arise, through possible factual variation.
[1159 B E] 1141 4:1.
The quintessence of the Constitution is the rule of the law.
The State or its executive officers cannot interfere with the rights of others unless they can point to some specific rule of law which authorises their acts.
[1161 A] State of Madhya Pradesh vs Thakur Bharat Singh, ; , Satwant Singh Sawhney vs Dr. Ramarathnam, Assistant Passport Officer, Government of India, New Delhi & Ors., at 542; Smt.
Indira Nehru Gandhi vs Shri Raj Narain, at 524, reiterated.
The is a "law" within the meaning of Article 302 of the Constitution imposing reasonable restrictions on the right to carry on trade and commerce as guaranteed by Article 19(1)(g) and Article 301 of the Constitution.
The object of the Act is to provide, in the interest of the general public for the control, production, supply and distribution of, and trade and commerce in, certain essential commodities.
[1161 D E] 5.
From the point of view either of Entry 54 List II or of Article 301 of the Constitution, the State Legislature is competent to set up the check posts and barriers on the State 's borders, designed and meant to prevent evasion of sales tax and other dues.
Just as inter State trade and commerce must pay its way and be subject to taxation, persons engaged in inter state trade or commerce are equally subject to all regulatory measures.
The check posts or barriers set up by the State Government under section 28 of the U.P. Sales Tax Act, 1948, which is legally accepted as valid and also considered not a restriction or impediment to the freedom of trade, commerce and intercourse granted under Article 301 of the Constitution, can certainly be utilised as a machinery for due observance of the laws, for example, for verification and control of movement of wheat by traders on private account from the State of Uttar Pradesh to various other States.
B D] 6:1.
The fundamental right to carry on trade or business guaranteed under Article 19(1)(g) or the freedom of inter State trade, commerce and intercourse under Article 301 of the Constitution, has its own limitations.
The liberty of an individual to do as he pleases is not absolute.
It must yield to the common good.
Absolute or unrestricted individual rights do not and cannot exist in any modern State.
There is no protection of the rights themselves unless there is a measure of control and regulation of the rights of each individual in the interests of all.
Whenever such a conflict comes before the Court, it is its duty to harmonise the exercise of the competing rights.
The Court must balance the individual 's rights of freedom of trade under Article 19(1)(g) and the freedom of inter State trade and commerce under Article 301 as against the national interest.
Such a limitation is inherent in the exercise of those rights.
[1164 E H] 6:2.
Under Article 19(1)(g) of the Constitution, a citizen has the right to carry on any occupation, trade or business and the only restriction on this unfettered right is the authority of the State to make a law imposing reasonable restrictions under clause (6).
[1165 A] 6:3.
The expression "reasonable restriction" signifies that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.
The test of reasonableness, wherever prescribed, should be applied to each individual 1142 statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable in all cases.
The restriction 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 in Article 19(1) (g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality.
[1165 B D] 6:4.
Several steps taken, in the instant case, like prevention of movement of stock of wheat to various other States, movement of wheat from one district to another within the State only after the verification of the transaction and due endorsement by the Deputy Marketing Officer or the Senior Marketing Officer concerned and also the physical verification at the check post on the State 's borders etc. were designed to prevent a price rise in wheat in the State of Uttar Pradesh and to prevent outflow of wheat from the State to various other States and from one district to another district within the State.
The whole object was to ensure that the wholesale dealers in foodgrains did not corner stocks of wheat for the purpose of speculation, and hence the steps taken were reasonable and in the interests of the general public.
If, therefore, the seizure can be justified on the basis of any valid law, it cannot be held to be illegal.
[1165 D H] 7:1.
Article 301 imposes a limitation on all legislative power in order to secure that trade, commerce and intercourse throughout the territory of India shall be free.
Although Article 301 guarantees that trade, commerce intercourse throughout the country shall be free, the right to carry on inter State trade and commerce may be subject to reasonable restrictions in the interests of the general public.
[1165 A, 1166 A, C] 7:2.
The word 'free ' in Article 301 does not mean freedom from laws or from regulations.
Article 301 guarantees freedom of trade, commerce and intercourse throughout the country from any State barriers.
The whole object was to bring about the economic unity of the country under a federal structure, so that the people may feel that they are members of one nation.
One of the means to achieve this object is to guarantee to every citizen in addition to the freedom of movement and residence throughout the country, which is achieved by Article 19(1)(d) and (e) is the freedom of movement or passage of commodities from one part of the country to another.
This freedom of trade, commerce and intercourse throughout the country without any "State barriers" is not confined to inter State trade but also including intra State trade as well.
In other words, subject to the provisions of Part XIII, no restrictions can be imposed upon the flow of trade, commerce and intercourse, not only between the State and another, but between any two points within the territory of India whether any State border has to be crossed or not.
[1166 D H] 7:3.
The regulatory measure or measures imposing compensatory taxes do not come within the purview of the restrictions contemplated by Article 301.
The regulatory measures should, however, be such as do not impede the freedom of trade, commerce and intercourse.
[1166 H, 1167 A] 8:1.
In view of the provisions of clause (3) of the 1976 Order read with clauses (4) & (6) of the 1978 Order, the validly seized excess stock of wheat lying with such dealer, that is, a wholesale dealer, commission agent or a retailer, in truth and substance, became their "unlicensed stock".
Here, if really the Delhi traders had purchased the excess stock of wheat from wholesale dealers, com 1143 mission agents or retailers in the State of Uttar Pradesh, as is alleged, it is possible to contend that there was a contravention of the provisions of clause (4) of the 1978 Order.
The question whether the seizure was for any contravention of any order issued under section 3 of the Act has to be determined by the Additional District Magistrates (Civil Supplies), Agra, on the evidence adduced by the parties before him.
The facts being controverted, the petitioners have no right to relief under Article 32 of the Constitution.
[1168 D H, 1169 A B] 8:2.
Supreme Court can neither act on documents which are yet to be proved nor can they pronounce upon the genuineness of the transactions covered by them or record any finding on the basis of the documents when the facts are in dispute.
[1169 E] 8:3.
Normally, it is not the function of Supreme Court to investigate into facts in proceedings under Article 32 of the Constitution when they are controverted with a view to discerning the truth.
The matter must, in a situation like this, be left to the fact finding body.
For the establishment of their right to relief under Article 32, the petitioners must establish the necessary facts before the said Additional District Magistrate in the proceedings under section 6A of the .
If they fail to get relief in such proceedings, their obvious remedy lies in a suit for damages for wrongful seizure.
[1171 A C] 9:1.
The State Government cannot while taking recourse to the executive power of the State under Article 162 of the Constitution deprive a person of his property.
Such power can be exercised only by authority of law and not by a mere executive fiat or order.
Article 162 being subject to other provisions of the Constitution, is necessarily subject to Article 300A. [1169 F G] Wazir Chand vs The State of Himachal Pradesh, ; ; Bishan Das and Others vs The State of Punjab and Others, ; , referred to.
The word 'law ' in the context of Article 300A must mean an Act of Parliament or of a State Legislature, a rule, or a statutory order, having the force of law, that is positive or State made law.
[1169 G H] 9:3.
The effect of the Constitution (Fourth) Amendment Act, 1955, is that there can be no 'deprivation ' unless there is extinction of the right to property.
Here, no doubt, the wheat had to be sold, as it was subject to speedy and natural decay, but the petitioners are entitled to the sale proceeds, if ultimately it is found by the Additional District Magistrate (Civil Supplies), Agra, that there was no contravention by them of an order issued under section 3 of the Act.
It is true that the seizure was with intent to confiscate under section 6A of the Act, but that would not make the seizure illegal, if, ultimately, it is found that there was contravention of an order issued under section 3 of the Act.
If the facts were not in controversy and if the petitioners were able to prove that there was wrongful seizure of wheat by the State Government of Uttar Pradesh at the check post of Saiyan on the border, while in transit, in the course of inter State trade and commerce from the Union Territory of Delhi, perhaps, they would be entitled to the return of the seized wheat, or, in the alternative, to the payment of price thereof.
[1170 D H, 1171 A] 1144 9:4.
The question that the seizures were in reality for procurement of wheat in furtherance of the directive of the Central Government, and not for breach of the two Control Orders and, therefore, were nothing but a 'colourable exercise of power ', is dependent on facts to be found on investigation.
Further, the question that there being no control price for wheat, the wheat should have been sold by public auction, is again a question that must be raised before the Additional District Magistrate (Civil Supplies), Agra, in the proceedings pending before him under section 6A of the Act.
[1171 C D]
|
iminal Appeal Nos. 211 & 212 of 1969 and Review Petition No. 37 of 1970.
Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18, 1969 in Criminal Appeal No. 183 of 1961.
C. K. Daphtary and section K. Dholakia, for the petitioner.
V. A. Seyid Muhammad and section P. Nayar for the respondents.
The Judgment of the Court on August 18, 1970 was delivered by Sikri, J.
These appeals, by special leave, are directed against the judgment of the High Court at Calcutta whereby the High Court (A. K. Das and K. K. Mitra, JJ.) set aside the order of acuittal and convicted the appellants before us under section 23(1A) of the Foreign Exchange Regulation Act (VII of 1947) hereinafter refered to as the Act.
The appellant Girdharilal Gupta, and the appellant Puranmall Jain, were sentenced to rigorous imprisonment for six months each and to pay 750 a fine of Rs. 2,000/ each, in default, to rigorous imprisonment ' for a further period of three months each.
The appellant, Bhagwandeo Tewari was sentenced to rigorous imprisonment for three months and to pay a fine of Rs. 1,000/ , in default, to rigorous imprisonment for two months.
The firm was sentenced to pay a fine of Rs. 2,000/ .
It does not appear that any special leave was obtained on behalf of the firm.
In order to appreciate the contentions made before us it is ncessary to state the relevant facts.
On October 25, 1958, Customs Preventive Officer B. Roy examined a parcel (wooden case) which purported to contain Rasogolla, Achar, papar and dried vegetable, booked for Hongkong, to be taken by the Swiss Air of which the Indian Airlines Corporation was the ,cargo handling agent.
The articles had been declared to be worth Rs. 20/ but the freight which had been paid came to Rs. 127.73 nP.
This excited the suspicion of the Customs Preventive Officer, B. Roy, and on opening the parcel and breaking down the case, five hundred ten currency notes of the denomination of hundred rupees each, valuing Rs. 51,0001 , were found.
The name of the consignor was Ramghawan Singh at Karnani Mansion, Park Street, Calcutta, but on enquiry no trace could be found of this Ramghawan Singh at Karnani Mansion.
In the course of further investigation suspicion fell ,on M/s. Agarwala Trading Corporation of which the appellants Girdharilal Gupta and Fumanmall Jain were the partners and the appellant Bhagwandeo Tewri was an employee.
On January 22, 1959, the office of the firm at 191, Mahatma Gandhi Road and the alleged residence of the partners at 11 B Jatindra Mohan Avenue was searched.
The appellant, Bhagwandeo Tewari, on being identified by the Traffic Assistant of the Indian Airlines Corporation, Ambar Nath Sen, P.W. 4, and one loader of Thai Airways, section K. Battu, P.W. 26, was arrested.
Certain incriminating documents, including account slips and cash books of the firm were seized.
On June 3, 1959, a complaint was lodged at the instance of the Assistant Collector of Customs, Calcutta.
After stating the above facts it was alleged, in the complaint that sending out money in Indian currency was prohibited under section 8(2) of the Act and any attempt to do the same was punishable under section 23B of the, Act.
At the trial a number of witnesses were examined.
B. Roy, Customs Preventive Officer, gave evidence regarding the dis covery of Rs. 51,0001 in Indian currency notes, apart from Rasogollas, pickles, etc.
on October 25, 1958.
No cross examination was directed to show that this did not happen on October 25, 1958.
751 section A. D. Moira, Traffic Assistant of the Indian Airlines Corporation, P.W. 2, who checks freight and does other transshipment work in course of his duties at Dum Dum airport, deposed that he received the relevant documents on October 25, 1958, from Calcutta office.
H. , said that the documents were in the handwriting of N. Sen of the Freight Section of the Calcutta Office.
Armed with the letter of authority, he took the parcel to the Customs Officer and P.W. 1, B. Roy, asked him to open the parcel and currency notes of the value of Rs. 51,000/ , along, with other things were discovered.
R. R. Mukherjee, Traffic Officer of the Indian Airlines Corporation, P.W. 3, is another witness to the recovery of the currency notes.
P.W. 4, Ambare Nath Sen, was the Traffic Assistant in the Indian Airlines Corporation, who had typed out the consignment note in respect of this parcel after seeing the shipping bill (Ext. 1).
He identified the appellant, Bhagwandeo Tewari, as the, person who had handed over the shipping bill to him and the letter of authority, Ext. 11 He said that he .calculated the freight and received the freight, from this appellant.
He further said that this appellant signed the consignment notes in Hindi in his presence and he remembered having seen this appellant writing a postcard on the adjoining table while he was preparing the consignment notes.
He further stated that his immediate superior officer, P. K. Chatterjee, was also present at the time this consignment was being booked.
Apparently this is not the first time that hiss appellant had gone to the Indian Airlines Corporation because P.W. 4 says that seven days ahead of October 24, 1958, this appellant had called on him with another shipment although that consignment was booked by P. K. Chatterji.
Some days after October 25, 1958, this witness P.W. 4was taken by the Customs Officer to some place to find the man who is alleged to have booked the Parcel.
Two or three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area, which was the place of Agarwal Trading Corporation, and he said that he Pointed out the appellant, Bhagwandeo Tiwari, as the one who had taken the Parcel to him on October 24, 1958.
He was cross examined in order to show that he could not remember customers.
He admitted that it was not always possible for him to remember all the men who came in contact with him in the course of his work, but 'he said that he had told C. R. Basu who wag investigating the case that the person who brought the parcel was an oldish man and lean one, and had also described his nose.
He further admitted that at the place he identified appellant Bhagwandeo Tiwari, he was the only oldish man there.
He 4 Ll 100SupCI/71 752 said that he did not think that he committed a mistake unless the man he identified had a double in the shape of a twin brother and the like.
He further admitted that he had been trying to recollect the appearance of the man to reconstruct in his mind the outline of his appearance as far as he could.
The evidence of P.W. 4 impresses us and there is no reason why we should not place reliance on his evidence.
P. K. Chatterjee, P.W. 5, speaks of the earlier visit of the appellant Bhagwandeo Tiwari as the person who called on him with the shipping bill on October 17, 1958.
C. R. Basu, P.W. 6, Officer of the Customs who investigated the case, said that after making enquiries he applied for the issue of search warrant to search the premises No. 191, Mahatama Gandhi Road.
He also applied for a search warrant to search the premises of the partners of the firm at 11 B, Jatindra Mohan Avenue.
He did not himself search 11 B, Jatindra Mohan Avenue, but went to execute the search warrant at 191, Mahatma Gandhi Road, where on the identification of P.W.4 he arrested the appellant Bhagwandeo Tiwari.
He then conducted the search of the premises in the presence of the witnesses and took into possession one Rokar, one khata bahi, one nakal bahi, the attendance register and three account slips which he marked 8, 9 and 10 (Ext.
9 and 9/1 and 9/2 respectively).
We may reproduce his evidence regarding the discovery of these account slips because a great deal of argument has been addressed to us on the recovery of these slips.
He stated "The three slips, about which I have spoken just now, are in the same condition to day as I found them on the day when they were seized.
The witnesses to the search I conducted are Radhesyam Gupta and Lalit Kumar Chandu Lal Parekh.
Here is the search list over my signature and the signature of the witnesses.
(Ext. 10).
" In his cross examined he stated "You are right that Exhibits 9, 9/1 and 9/2 are included in Serial No. 38 of the search list.
The search list does not mention the slips separately but only mentions loose sheets in 'a sealed parcel.
It has been urged that there is no evidence to show when the seal was opened.
It is suggested that these slips have been fabricated and planted.
No such question was put to the witnesses and we are 753 unable 'to presume that the investigating officer would go about fabricating account slips in order to rope in the appellants.
The prosecution produced two witnesses who had signed the recovery list.
The evidence of Radheshyam Gupta, P.W. 7, must be discarded because although he was examined before the Chief Presidency Magistrate he was not made available for cross examination.
The learned counsel, Mr. Bhattacharya, suggested that if this witness had been produced for cross examination he would have deposed against the prosecution.
We are unable to draw any such presumption.
The other witness was Lalit C. L. Parekh, P.W. 8.
He had signed the search list but on cross examination he stated that "Basu had taken slips of paper from the 'Agal Bagal ' of the guddy, by which I mean from underneath the Takia on the bed".
He further said that "bits of paper Basu found from a wooden case as well." He further stated as follows "You are right that Basu placed all these bits of papers at one and the same place.
How many pieces ? I cannot say.
I did not count.
By guess I can say that the number of bits of paper would run to 50 or 60. 1 signed all the pieces of paper which were found so.
" The learned counsel fastens on the last line and says that these slips do not bear the signature of Lalit C. L. Parekh, and therefore it is clear that these have been fabricated later.
We are unable to sustain this contention.
The witness had signed a number of documents including the search list and he pay well have thought that he had signed every piece of paper which was seized.
No such question was put to the investigating officer.
P.W. 11, N. R. Paul, who was the assistant attached to the Appraising Department of the Calcutta Customs deposed re garding the preparation of the shipping bill.
It appears that the shipping bill bore the words "Thai Airways Co." and these words were scored out and "Swiss Air" written in hand.
He could not say who corrected the entry but nothing turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons it was not possible to send that parcel through this airways.
The prosecution led evidence to show that as a matter of fact appellant Bhagwandeo Tiwari had approached some body in Thai Airways but we need not dwell on, this part of the case.
754 The prosecution also produced Shridhar Chatterjee, hand writing expert, who examined the signature reading as "Ram Chandra" writing in Hindi and in pencil in the two way bills, Ext. 3 and 4, and the specimen writing, He was of the opinion that the writer of the specimen writing was the writer of the signature "Ram Chandra" appearing in the airway bill.
We may mention that Bhagwandeo Tiwari is alleged to have signed as "Ram Chandra".
The expert also gave the opinion that.
the type written papers, Exts. 11 and IX had been typed on the same machine.
Exhibit 9/2, 'one of the seized account slips, is a very im portant document.
The official translation is printed in the records and reads: "Translation of EXT.9/2 dated 24 10 58. . . 2/8/ 4 cases Godown A/C 1 . . . /8/ 3 "opened below and goods brought.
In Cash (Paper Torn) cases bound (Pettis)(?). . . /4/ Case I ' (Illegible) /2/ Illegible (Paper tom) Cases (Pettis)(Illegi ble) 2 R.B. /151 for coming and going to I.A.C. Rs.223/8/. 4/51 127/73 HongkongShanghai (torn & illegible)" The High Court had to translate it again and the last line was translated into "Hongkong Lagaya" in, place of "Hongkong Shanghai".
In the account books of M/s. Agarwala Trading Corporation (Exts. 21 and 21/1) under the entries dated October 24, 1958, on which date the booking is alleged by the prosecution to have been done, on entry appears as follows: "Rs. 415/ Through Bhagwan Deo /8/ Colli (Janka) 115/ Rickshaw fare 2/ 14/ Cart Charge Rs. 1/8/ Through Ghanshyam & Pandey /4/ Bus fair 1/4/ Bus fair 1/4 Bus Tarm" It will be noticed that the same items appear in Ext.
The breakup in exhibit 9(2) is slightly different but in the account book 755 the four annas and two annas entries have been added to Rs. 2/8/to make Rs. 2/14/ as cart charge.
Again the entries in Ext.
9/1 are as follows "/1/ But hire for going home.
1/4/ Caine from home to Thai (?) Taxi /12/ Riksha hire from Thai /1/ Coolie /4/ Thai Office Colie ______________________ 2/6/ Rs. 147/10/ In Cash" The corresponding entry in the account books are as follows "Rs. 2/6/ (Bus fare /1/Taxi fare Rs. 1/4/ Rickshaw Rs. /12/ Cooli 151 " It is true that the entry of Rs. 127/73 which exists in Ext.
9/2 has not been carried over into the account books but perhaps that would have been even too much for an accountant to do.
He never dreamt that these entries, of Rs. 4/5/ and Rs. 2/6/ in the account books would be seized upon by the prosecution to complete the case against the appellants.
Be that as it may, the entries in the account books demolish the case of defence that these slips were fabricated and that they had nothing to do with the firm.
exhibit 9/2, on the other hand, clearly shows that somebody had gone to the I.A.C. office and paid /15/ for going and coming to the I.A.C. office and paid the incidental charges.
Mr. Bhattacharya, who followed Mr. Chagla for the appellants, contends that a serious question of law is involved, the question being that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated.
It is a novel proposition and he has not been able to cite any authority or principle in support of it.
It all depends on the facts in each, case.
At any rate here we have the corroborative evidence of P.W. 8, who signed the search document and also the entries themselves in the account books and their tallying with the slips.
It was urged on behalf of the defence counsel that these slips could not be taken into consideration at all because they are not evidence.
We are unable to appreciate why they are not evidence.
These are part of the things discovered during search and 756 if the entries therein are carried into the account books there is no reason why these things could not be looked at.
The learned counsel has taken us through the judgments of the Chief Presidency Magistrate and the High Court.
We are in agreement with the conclusions arrived at by the High Court.
We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or two places made minor mistakes.
Mr. Chagla, while arguing on behalf of the partners, said that there was evidence that one, partner was not in Calcutta on the 24th or 25th October, 1958,as he was in Japan.
But even if we take this fact into consideration, which fact was not brought to the notice of the Chief Presidency Magistrate or the High Court, it does not help him at all.
Entries were made in the account books and it was the firm 's money which was spent and he being an active partner is clearly liable under section 23C(1) of the Act which reads : "23C(1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and, was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly; Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to pre vent such contravention.
" This sub section deems the appellant Girdhari Lal Gupta guilty.
The question is : Has he proved that the contravention took place without his knowledge and he exercised due diligence to prevent such contravention ? What he said in his statement under section 342, Cr P.C., was that he alone looks after the affairs of the firm.
There is also no evidence to show that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.
The entries were there in his account books and the only thing that, he had to say about these entries in his account books is that they pertain to the routine work of the firm.
Under the circumstances we are unable to exonerate him of the charge.
As far as the other partner, Puramnall Jain, is concerned ' he stated that he does not look after the affairs of the firm and further 757 that he stays all along at Sriganganagar in Rajasthan and does not stay in Calcutta.
The prosecution has not led any reliable evidence to prove that he took any active part in the conduct of the business of the firm.
In these circumstances we are inclined to give him the benefit of doubt and acquit him.
In the result the appeal of Puranmall Jain is allowed and he is acquitted of the charge.
Ms bail bond shall stand cancelled.
The appeals of Girdhari Lal and Bhagwandeo Tewari are dismissed.
[After the above judgment was delivered Review Petition No. 37 of 1970 was filed.
The judgment of the Court thereon was delivered on February 18, 1971 by] Sikri, C.J. We disposed of Criminal Appeals Nos. 211 and 212 of 1959 by our judgment dated August 18, 1970, whereby the appeals of Girdharilal Gupta, and Bhagwandeo Tewari against.
their convictions were dismissed.
Girdharilal Gupta put in this review petition stating that the counsel had omitted to bring to our notice the provisions of section 23C(2) of the Foreign Exchange Regulation Act, 1947 hereinafter referred to as the Act which has a vital bearing on the case.
The judgment in Criminal Appeal No. 211 of 1959 has, therefore, been re opened.
We may mention that Bhagwandeo Tiwari has not filed a review petition against his conviction, upheld by this Court.
Mr. Daphtary contends that on the facts, as found by us, the appellant, Girdhari Lal Gupta, does not come within the purview of section 23C(1) or section 23C(2) of the Act.
Sections 23C(1) and 23C(2) read as follows "23C. (1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place, without his knowledge or that he exercised all due diligence to prevent such contravention.
23C. (2) Notwithstanding anything contained in sub section (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the 758 part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.
For the purposes of this section, (a) " company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm.
Mr. Daphtary contends that there is no evidence to show that the appellant was in charge of the conduct of the business of the firm at the relevant time and therefore, section 23C(1) does not apply.
He further says that as the appellant was abroad, the contravention took place without his knowledge.
We may mention, however, that the defence that he was abroad at the relevant time was not taken in the courts below.
At the time of the last hearing learned counsel produced the passport of the appellant before us from which it appears that he was abroad at that time and came back a few days after the alleged contravention.
Mr. Daphtary further contends that section 23C(2.) also does not apply because there is no evidence that the contravention took place with the consent or connivance of, or was attributable to any neglect on the part of, the appellant.
He referred to us a number of authorities of the High Courts in India which have interpreted similar provisions and we shall refer to them later.
It seems to us quite clear that section 23C(1) is a highly penal section as it makes a person who was in charge and responsible to the company for the conduct of its business vicariously liable, for an offence committed by the company.
Therefore, in accordance with well settled principles this section should be construed strictly.
What then does the expression "a person in charge and responsible for the conduct of the affairs of a company mean ' ? It will be noticed that the word 'company" includes a firm or other association and the same test must apply to a director in charge and a partner of a firm in charge of a business.
It seems to us that in the context a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
This inference follows from the wording of section 23C(2).
It mentions director, who may be a party to the policy being followed by a company and yet not be in charge of the business of the company.
Further it mentions manager, who 75 9 usually is in charge of the business but not in over all charge.
Similarly the other officers may be in charge of only some part of business.
In State vs section P. Bhadani(1), Kanhaiya Singh, J., in construing a similar provision of the Employees Provident Fund Act (1952).
Section 14A held that the first sub section would be confined only to officers in the immediate charge of the management of the company.
Later he observed that "it is, therefore, manifest that all the officers of the company not in direct charge of the management of the business are immune from the liability for the offence, unless they have contributed to its commission by consent, connivance or neglect." In R. K. Khandelwal vs State (2 D. section Mathur, J., in construing section 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed : "There can in directors who merely lay down the policy and are not concerned with the day to day working of the Company.
Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable.
" In The Public Prosecutor vs R. Karuppian(3), Somasundaram J., while dealing with a case arising under the (section 17(1)) observed that the Secretary of the Co operative Milk Society, on the facts of the case, could not be held to be a person in charge of the Society.
On the facts of that case the business of selling milk was done by the clerk of the Society and the Secretary was only an honorary Secretary and was not coming to.
the Society daily.
The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker.
He stated in examination in chief : "Who exactly the proprietors of the said firm are, I cannot say.
But I can say this much that whenever I had been there I was referred to Girdharilal Gupta (accused No. 2) and Puranmal Jain (accused No. 3) as the Maliks of the firm.
I see accused No. 2 Girdharilal Gupta in court (identified him).
I know that Bhagwandeo Tewari (accused No. 4) is the Cashier of that firm.
I see him here in court (identifies accused No. 4).
(1) A.I.R. [1959] Pat.9.
(2) (3) A.I.R. [1958] Mad.
760 .lm15
I know of another employee of the firm the manager, Jagdish Prasad.
I know another employee of the firm the accountant, Shyamlal.
" The appellant in 'his statement under section 342, Cr.
P.C. stated thus "You ask me, Sir, if I have to say anything about the evidence led in this case to the effect that I happen, to be a partner of accused No. 1 firm.
To that, Sir, my answer is that I am. " The evidence to that end is correct.
I shall only add that I alone look after the affairs of _this firm." Mr. Daphtary says that on this evidence it cannot be held that the appellant was in charge of the conduct of the business.
We are unable to agree with him on this point.
The appellant has himself stated that he alone, looked after the affairs of the firm.
This means that the is in charge of the business of the firm within the meaning of the section though there may be a Manager working under him.
The question then arises whether the appellant was in charge of the conduct of the business of the firm at the time the contravention was committed.
He was not physically present, in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad.
was the manager of the firm.
It is true that the onus of proving that the appellant was in charge of the conduct of the business of the company at the time the contravention took place lies on the Prosecution, but when a partner in charge of a business proceeds abroad it does not mean that he ceases to be charge, unless there is evidence that he gave up charge in favour of another person ' Therefore, we must hold that the appellant was in charge of the business of the firm within the meaning of sec.
23C(1).
But while imposing sentence a Court might take notice of the fact that a person is being vicariously punished for an offence and if he shows that it is possible that the contravention of the Act took place without his knowledge or neglect a sentence of imprisonment may not be imposed.
In this case he was abroad at the time of contravention and it is possible that the contravention took place without his knowledge or because of lack of diligence.
It seems to us that on the facts of this case a sentence of fine of Rs. 2,000/ will meet the ends of justice.
The learned counsel for the respondent State urges that this is not a case fit for review because it is only a case of mistaken judgment.
But we are unable to agree with this submission 761 because at the time of the arguments our attention was not drawn.
, specifically to sub section 23C(2) and the light it throws on the interpretation of sub section
In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No. 211 of 1969 modified to the extent that the sentence of six months ' rigorous.
imprisonment imposed on Girdharilal is set aside.
The sentence , of fine of Rs. 2,000/ shall, however, stand.
G.C. Ordered accordingly.
| An air parcel declared by the consigner to contain rasogollas and other edibles was found to contain Rs. 51,000 worth of Indian currency notes.
The parcel was booked to be sent from Calcutta to Hong Kong.
The consignor 's name as given.
on the parcel was found to be false and on investigation the suspicion of the customs authorities fell on the appellants two of whom were partners in a firm, the third being an employee of the firm.
The office of the firm was searched.
Certain incriminating documents including account slips and cash books of the firm were seized.
In a complaint filed by the Assistant Collector of Customs against the appellants and their firm it was alleged that sending out money in Indian currency was prohibited by section 8(2) of the Foreign Exchange Regulation 7 of 1947 and any attempt to do the same was punishable under section 23B of the Act.
The trial court acquitted the appellants but the High Court in appeal convicted them under section 23(1A).
By special leave appeals were filed in this Court.
Judgment was delivered on August 18, 1970.
Thereafter review petition No. 37 of 1970, was filed.
A further judgment in respect of the contention raised therein as to the interpretation of section 23C(i) was delivered on February 18, 1971.
HELD : (i) The proposition that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated is a novel one with no principle or authority to support it.
It all depends on the facts of each case.
In the present case there was the corroborative evidence of P.W. 8 who signed the search document and also the entries themselves in the account books and their tallying with the slips.
[755 G] (ii) There was no substance in the argument that the account slips could not be taken into consideration because they were not evidence.
These were part of the things discovered during search and if the entries therein were carried into the account books there was no reason why they could not be looked at [755 H] (iii) In the context of section 23C(1) a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
The inference follows from the wording of section 23C(2).
It mentions director who may be a. party to the policy being followed by 749 a company and yet not be in charge of the business of the company.
Further it mentions manager who usually is in charge of the business not in over all charge.
Similarly the other officers may be in charge of only some part of the business.
[758 G 759 A] State vs section P. Bhadani, A.I.R. 1959 Pat. 9, R. K. Khandelwal vs State and Public Prosecutor vs R. K. Karuppian, A.I.R. 1958 Mad.
183, referred to.
In the present case the appellant G had himself stated that he alone looked after the affairs of the firm.
This meant that he was in charge within the meaning of the section though there may be a manager working under him [760 C D] When a partner in charge of a business proceeds abroad it does not mean that he ceased to be in charge, unless there is evidence that he gave up charge in favour of another person.
Therefore it must be held that the appellant was in charge of the business of the firm within the meaning of section 23C(1).
[760 E F].
In view of the fact that G was abroad at the time of contravention it was possible that the contravention took place without his knowledge or lack of diligence.
He was being vicariously punished.
In such a case a. sentence of imprisonment may not be imposed but a sentence of fine only would meet the ends of justice.
[760 G] (iv) As regards appellant P the prosecution had been unable to prove by any reliable evidence that he took any active part in the conduct of the business of the firm.
He must therefore be given the benefit of doubt and acquitted.
[757 A] (v) The case was fit for review because at the time of arguments the attention of the court was not drawn specifically to sub section 23C(2) and the light it throws on the interpretation of sub s.(1).
[761 A]
|
149 and 167 of 1950.
758 Application under article 32 of the Constitution for a writ in the nature of habeas corpus I Bawa Shiv Charan Singh for the petitioner in petition No. 149.
Bindra for the petitioner in Petition No. 167.
B.K. Khanna, Advocate General of the Punjab, for the respondent in both the petitions.
M.C. Setalvad, Attorney General for India, for the Union of India (Intervener in Petition No. 149).
February 23.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
The earlier of the two petitions has been filed by one Ujagar Singh, under article 32 of the Constitution of India, for a writ of habeas corpus and for an order of release from detention.
The latter petition is a similar one by one Jagiit Singh.
In both the petitions, the respondent is the State of Punjab.
The orders of deten tion were made under the preventive Detention Act IV of 1950.
The petitions are not connected with each other, except that they raise the same grounds.
In petition No. 149 of 1950, Ujagar Singh was originally arrested and detained under the East punjab Public Safety Act on 29th September, 1948.He was released on 28th March, 1949, but on the same date, there was an internment order against him.
On 29th September, 1949, he was rearrested.
On 2nd March, 1950, an order of detention under the , was served on him, and on 3rd April, 1950, he was served with the grounds of detention dated 11th March, 1950.
Both in September, 1949, and in March, 1950, the ground alleged was ' 'You tried to create public disor der amongst tenants in Una Tehsil by circulating and dis tributing objectionable literature issued by underground communists.
" Additional grounds were furnished in July 1950.
In petition No. 167 of 1950, Jagjit Singh was arrested on 24th July, 1948.
under the provisions of the 759 Punjab Safety Act, 1947.
After the East Punjab Public Safety Act, 1949, came into force, a fresh detention order dated 14th May, 1949, was served on him and he continued to be kept in jail.
Grounds of detention were given to him on 7th September, 1949.
A fresh order of detention under the Pre ventive Detention Act (IV of 1950) dated 2nd March, 1950, was served on 7th March, 1950.
Grounds of detention dated 11th March, 1950, were served on him on 3rd April, 1950.
Both in September 1949 and April 1950, the same ground was given, i.e., "In pursuance of the policy of the Communist Party, you were engaged in preparing the masses for violent revolutionary campaign and attended secret party meetings to give effect to this programme.
" Additional or supplementary grounds were served on 5th August, 1950.
Several contentions were advanced on behalf of the petitioners challenging the legality of their detention and urging that as the detention was unlawful and the petition ers ' fundamental right of personal liberty had been in fringed, they should be set at liberty.
The points taken on their behalf can be briefly summarised as follows_ As the ground of detention now mentioned was the same as the ground specified in 1948 or 1949, i.e., months earlier under the Provincial Acts, the order of detention was made mechanical ly and was really mala fide in the sense that there is nothing to show that were was any fresh satisfaction on the part of the detaining authority that detention was necessary in the interests of public order.
Secondly, the grounds were not given "as soon as may be", which is required under section 7 of the Act; and as an unusually long period of time elapsed between the order of detention and the giving of the grounds, the detention must be held to be unlawful after the lapse of a reasonable time.
Thirdly, the grounds given originally were so vague that they could not be said to be grounds at all such as would enable the detenu to make any representation against the order.
Fourthly, supplemen tary grounds could not be furnished and should not be taken into account in considering whether the 760 original order was lawful, or whether the detention became unlawful after a particular period of time.
Two other points of a subsidiary nature were also raised, namely that the order was bad as the period of detention was not specified therein as appears to be required by section 12 and that the grounds given did not purport to state that the authority making the order was the Governor of the State.
There is no substance in the last two points.
Section 12 of the Act does not require that the period of detention should be specified in the order itself where the detention is with a view to preventing any person from acting in any manner prejudicial to the maintenance of public order.
The section itself provides that he can be detained without obtaining the opinion of an Advisory Board for a period longer than three months but not exceeding one year from the date of detention.
Normally, the detention period shall not exceed three months, unless an Advisory Board reports before the expiration of the said period that there is in its opinion sufficient cause for such detention.
See arti cle 22, clause (4), sub clause (a) of the Constitution.
Under sub clause (7) (a) of the same article, Parliament may by law prescrib, the circumstances under which, and the class or classes of cases in which, a person may be detained for a period longer than three months under any law provid ing for preventive detention without obtaining the opinion of an Advisory Board in accordance with the provisions of sub clause (a) of clause (4).
" Therefore, detention for more than three months can be justified either on the ground of an opinion of the Advisory Board sanctioning or warrant ing longer detention or on the ground that the detention is to secure the due maintenance of public order, in which case it cannot exceed one year in any event, as stated.
in sec tion 12 of the .
It is thus clear that the period is not to exceed three months generally, but may go up to one year in certain special cases.
In view of these provisions, the non specification of any definite period 761 in the detention order is not a material omission rendering the order itself invalid.
Under section 3 of the , the authority to make the order is the State Government.
Sec tion 166 (1) of the Constitution provides that all executive action of the Government of a State, shall be expressed to be taken in the name of the Governor.
The orders of deten tion expressly state that the Governor of Punjab was satis fied of their necessity and that they were made by his order.
The orders are signed no doubt by the Home Secre tary, but this is no defect.
The communication of the grounds need not be made directly by the authority making the order.
Section 7 does not require this.
The communica tion may be through recognized channels prescribed by the administrative rules of business.
Let us now turn our attention to the main contentions.
There is nothing strange or surprising in the fact that the same grounds have been repeated after the lapse of several months in both the cases, when it is remembered that the petitioners were under detention and in jail during the whole of the intervening period.
No fresh activities could be attributed to them.
There could only be a repetition of the original ground or grounds, whether good or bad.
It does not follow from this that the satisfaction of the detaining authority was purely mechanical and that the mind did not go with the pen.
The past conduct or antecedent history of a person can be taken into account when making a detention order, and, as a matter of fact, it is largely from prior events showing the tendencies or inclinations of the man that an inference could be drawn whether he is likely even in the future to act in a manner prejudicial to the maintenance of public order.
If the authority satisfied himself that the original ground was still available and that there was need for detention on its basis, no mala fides can be attributed to the authority from this fact alone.
The Act does not fix the time within which the grounds should be furnished to the person detained.
762 It merely states that the communication must be "as soon as may be".
This means reasonable despatch and what is reasona ble must depend on the facts of each case.
No arbitrary time limit can be set down.
The delays in the communication of the grounds in the two petitions have been adequately explained by the Home Secretary who says in this affidavits that grounds had to be supplied to nearly 250 detenus and that the printing of the necessary forms occupied some time.
According to him, he made an order even on 11 3 1950 for the supply of the grounds.
The extreme vagueness of the grounds is alone left as the chief line of attack.
As stated already, the original ground communicated in Petition No. 149 of 1950 is "to create public disorder amongst tenants in the Tehsil by circulating and distributing objectionable literature issued by underground communists.
" In the other petition, the ground is "In pursuance of the policy of the Communist Party you were engaged in preparing the masses for violent revolu tionary campaign and attended secret party meetings to give effect to this programme.
" We shall leave aside for the moment the supplementary grounds furnished later.
There can be little doubt that in both the cases the grounds furnished in the first instance were highly vague.
If we had only Iswar Das 's case to go by, Petition No. 30 of 1950, such vagueness by itself would constitute a justifica tion for release of the petitioners.
Since the date of that decision, however.
this Court had to consider the question at great length in two cases from Bombay and Calcutta re spectively Cases Nos. 22 and 24 of 1950 where the subject of the meaning and scope of section 7 of the and article 22, sub clauses (5) and (6)of the Constitution of India.
came up for elaborate consideration.
The said cases were decided on 25th January, 1951, and we are now governed by the principles laid down in these judg ments.
It was held by a majority of the Judges in Case No. 22 of 1950 (1) State of Bombay vs Atmaram Sridhar Vaidya [1951] S.C.R. 167.
763 (a) that mere vagueness of grounds standing by itself and without leading to an inference of mala fides or lack of good faith is not a justiciable issue in a court of law for the necessity of making ' the order, inasmuch as the ground or grounds on which the order of detention was made is a matter for the subjective satisfaction of the Government or of the detaining authority; (b) that there is nothing in the Act to prevent particulars of the grounds being furnished to the detenu within a reasonable time, so that he may have the earliest opportunity of making a representation against the detention order what is reasonable time being dependent on the facts of each case; (c) that failure to furnish grounds with the speedy addition of such particulars as would enable the detenu to make a representation at the earliest opportunity against the detention order can be considered by a court of law as an.
invasion of a fundamen tal right or safeguard guaranteed by the Constitution, viz., being given the earliest opportunity to make a representa tion;and (d) that no new grounds could be supplied to strengthen or fortify the original order of detention.
We are not concerned so much with the earlier history of the detenus as with what happened to them under the Preven tive Detention Act, 1950.
OverloOking the fact that the ground mentioned In March 1950 was the same as that given in September 1949, and condoning the vagueness in the original ground furnished in both the cases to support the making Of the order, it is impossible to justify the delay of nearly four months in furnishing what have been called additional or supplementary grounds, Let us take up Petition No. 149 first.
In the grounds furnished in July 1950, there are several which do not apparently relate to the original ground.
"You were respon sible for hartal by labourers working on Bhalera Dam in October 1947". "You instigated labourers working in Nangal in 1948 to go on strike to secure the acceptance of their demands" "After release you absconded yourself from your village and 99 764 remained untraced for a considerable period" . "When you were re arrested on 29 9 1949, lot of objectionable communist literature was recovered from your personal search" are instances of new grounds, and they have to be eliminated therefore from consideration.
In Jagjit Singh 's petition No. 167 of 1950, the supplemental grounds, which are as many as ten in number, are dated 31 7 1950, but they were served on him on 5 8 1950, that is two days after he had prepared his petition to this court under article 32 of the Constitution.
The grounds may be taken as particulars of the general allegation made against him on 3 4 1950 when the original grounds of detention were served.
But the time factor to enable him to make a representation at the earliest opportunity was not borne in mind or adhered to.
In the affidavit of Shri Vishan Bhagwan, Home Secretary to the Punjab Government, dated 6th September, 1950, no explanation has been offered for this abnormal delay in the specification of the particulars.
This delay is very unfor tunate indeed.
But for its occurrence the petitioner would not have been able to urge that one of the valuable rights guaranteed to him by the Constitution has been violated.
It is not alleged b.y the Home Secretary that the detenu was furnished with these particulars when he was arrested and detained under the Provincial Act and that consequently it was considered unnecessary to give him the same particu lars once over.
On the other hand, the detenu 's complaint has throughout been that he was given no particulars at all till the 5th August, 1950.
As the petitioners were given only vague grounds which were not particularised or made specific so as to afford them the earliest opportunity of making representations against their detention orders, and their having been inex cusable delay in acquainting them with particulars of what was alleged.
the petitioners have to be released, the rules being made absolute.
Ordered accordingly.
765 PATANJALI SASTRI J.
I concur in the order proposed by my learned brother Chandrasekhara Aiyar J. DAS J.
In view of the majority decision in Case No. 22 of 1950 (The State of Bombay vs Atma Ram Sridhar Acharya), I concur in the order proposed by my learned brother.
Order accordingly.
Petition No. 194 of 1950 Agent for the petitioner: R.R. Biswas.
Agent for the intervener: P.A. Mehta.
Petition No. 167 of 1950 Agent for the petition: R.S. Narula.
| Non specification of any definite period in a detention order made under section 3 of the Preventive Detention Act, IV of 1950, is not a material omission rendering the order invalid in view of the provisions contained in clauses (4) (a) and (7) (a) of article 22 the Constitution and section 12 of the Act.
An order of detention which expressly states that the Government of the State concerned was satisfied of the necessity of 757 making such an order and that it was made by the order of the Governor is not defective merely because it is signed by Home Secretary.
Communication of the grounds of the order need not be made directly by the authority making the order but may be made through recognized channels prescribed by the adminis trative rules of business.
The past conduct or antecedent history of a person can be taken into account in making a detention order, and as a matter of fact, it is largely from prior events showing tendencies or inclinations of a man that an inference could be drawn whether he is likely even in the future to act in a manner prejudicial to the maintenance of public order.
If the authority making an order is satisfied that the ground on which the detenue was detained on a former occasion is still available and that there was need for detention on its basis no mala fides can be attributed to the authority from the fact that the ground alleged for the second detention is the same as that of the first detention.
Whether grounds have been communicated "as soon as may be" must depend on the facts of each case.
No arbitrary time limit can be laid down.
The recent rulings of the Supreme Court establish (a) that mere vagueness of grounds standing by itself and with out leading to an inference of mala fides or lack of good faith is not a justiciable issue in a court of law for the necessity of making the order, inasmuch as the ground or grounds on which the order of detention was made is a matter for the subjective satisfaction of the Government or of the detaining authority; (b) that there is nothing in the Act to prevent particulars of the grounds being furnished to the detenu within a reasonable time so that he may have the earliest opportunity of making a representation against the detention order what is reasonable time being dependent on the facts of each case; (c) that failure to furnish grounds with the speedy addition of such particulars as would enable the detenu to make a representation at the earliest opportu nity against the detention order can be considered by a court of law as an invasion of a fundamental right or safe guard guaranteed by the Constitution, viz. being given the earliest opportunity to make a representation; and (d) that no new grounds could be supplied to strengthen or fortify the original order of detention.
Where the petitioners against whom detention orders were made were given only vague grounds and there was inex cusable delay of nearly 4 months in acquainting them of the particulars, held that their detention was illegal and they should be released.
|
Special leave Petition (Civil) No. 6056 of 1979.
From the Judgment and Order dated 12 7 1979 of the Patna High Court in C.W.J.C. No. 1618/79.
P. Govindan Nair and S.K. Sinha for the Petitioner.
L.N. Sinha, Attorney General, V.P. Singh and R.B. Mahton for the Respondent.
The Order of the Court was delivered by KRISHNA IYER, J. An unusual grievance of a Government Pleader, the petitioner, ventilated in a writ petition, was given short shrift by the High Court in a laconic order, but undaunted by this summary brevity the petitioner has pursued his case to this Court under Article 136.
In utter nudity, his case is a claim of monopoly of all government cases in the Patna District, including lucrative land acquisition litigation, as part of the professional 'estate ' of a Government Pleader.
The prospective cash value of this heavy crop of cases is estimated by him to be around one lakh of rupees and this secret is perhaps at the back of this lawyer 's litigation.
Sri Govindan Nair, appearing for him, has, however, argued that his client 's claim as the sole representative of Government in courts is not a legal cover for seeking lucre but for vindicating the inviolability of the high public office of Government Pleader by politicking men in the Secretariat or by practitioners of favouritism dressed in 'little brief authority ', a deeper issue in which the Bar has a stake and the Bench must also be concerned.
We wholly endorse the view that at some vital levels of justice, the Besh Bench may hang limp if the Bar does not represent.
Justice to his office, not love of rupees, was urged as the respectable motivation for his persistent litigation, Maybe.
761 The fabric of facts, on which the grievance in law rests, may be appreciated first.
The petitioner was admittedly the Government Pleader for the Patna District, 'authorised to represent ' Government in all the civil cases.
During the currency of his term a plurality of nine Assistant Government Pleaders was appointed and one of them was put in charge of a bunch of land acquisition cases.
The petitioner was requested to make over those briefs to the new nominee.
Thereupon, the petitioner challenged the power of Government, like any other litigant, to appoint any other lawyer except under him and never by excluding him.
He went to the extent of writing to Government: "I am, therefore, unable to comply with your instruction in allowing any Assistant Government Pleader to work in this case.
I shall myself conduct this case and I have enough time for it.
" Government wrote back that in future he would not be given such cases.
Chagrined by this loss of income and mayhem to his monopoly he rushed to the High Court for the universal panacea of a writ.
The chemistry of Article 226 is governed by severe rules, and the High Court declined to dispense the magic remedy.
So he has sought special leave from this Court but Article 136 has its own conditions and limitations.
Sans substantial question of law of public importance which deserves to be decided by the Supreme Court or at least flaw in law which is fraught with manifest injustice, there is no other open sea same for this House of Justice.
That password has not been uttered here, despite exercises in professional martyrdom the petitioner claims to have suffered, and so we close the door but by a speaking order since counsel 's arguments have centered on the peril to the public office of Government Pleadership with potential menace to the administration of justice.
Mystic muteness, however correct, may sometimes mislead when plain speech may finally silence.
What is the gravamen of this Government Pleader 's legal grievance ? His economic grievance, however much he may hide it, is the prospective loss of fee from land acquisition cases which were spirited away.
This 'commercial ' aspect is an unhappy temptation against which the legal profession must take care.
Having due regard to the rhetoric and reality surrounding the profession, is an avidity for briefs, because they yield a lakh of rupees by way of fees, a clean linen to be washed in court ? What, in essence, is the orientation of the bar ? 'Geared to the people or ' a conspiracy against the laity ? 'The politicisation of government pleadership which is a public office and the lucre loving appetite for law offices, in the absence of a wholesome ceiling on lawyer 's fees, 762 are issues of moment in a developing society controlled by the politics of skill and enjoying a legal monopoly.
The State of Bihar, like many other States in the country, has an enormous volume of litigation.
Government litigation policy is vital for any State if resources are to be husbanded to reduce rather than increase its involvement in court proceedings.
It is lamentable that despite a national litigation policy for the States having been evolved at an all India Law Ministers ' Conference way back in 1957 and despite the recommendations of the Central Law Commission to promote settlement of disputes where Government is a party, what we find in actual practice is a proliferation of government cases in courts uninformed by any such policy.
Indeed, in this country where government litigation constitutes a sizeable bulk of the total volume, it is important that the State should be a model litigant with accent on settlement.
The Central Law Commission, recalling a Kerala decision, emphasised this aspect in 1973 and went to the extent of recommending a new provision to be read as Order 27 Rule 5B.
The Commission observed: "27.9.
We are of the view that there should be some provision emphasising the need for positive efforts at settlement, in suits to which the Government is a party.
27.10.
With the above end in view, we recommend the insertion of the following rule: 5 B(1) In every suit or proceeding to which the Government is a party or a public officer acting in his official capacity is a party, it shall be the duty of the Court in the first instance, in every case where it is possible to do so consistently with the nature of the circumstances of the case, to make every endeavour to assist the parties in arriving at a settlement in respect of the subject matter of the suit.
(2) If in any such suit or proceeding, at any stage it appears to the court that there is a reasonable possibility of a settlement between the parties, the court may adjourn the proceeding for such period as it thinks fit, to enable attempts to be made to effect such a settlement.
(3) The power conferred by sub rule (2) is in addition to any other power of the court to adjourn the proceedings.
" The relevance of these wider observations is that avoidable litigation holds out money by way of fees and more fees if they are contested 763 cases and this lures a lawyer, like any other homo economics, to calculate income on a speculative basis, as this Government Pleader has done in hoping for a lakh of rupees.
We have been taken through the Bihar Governments rules for fees of Government Pleaders in subordinate courts.
Rule 115 appetises and is unrelated to the quantum or quality of work involved nor the time spent.
Ad valorem calculation in filing fees for land acquisition cases has a tendency to promote unearned income for lawyers.
The petitioner here has presumably fallen victim to this proclivity.
The time has come for State Governments to have a second economic look not only at litigation policy but lawyer 's fees rules (like rule 115 in the Bihar instance) especially in mass litigation involving ad valorem enormity and mechanical professionalism.
Even a ceiling on income from public sector sources may be a healthy contribution to toning up the moral level of the professional system.
After all, the cost of justice is the ultimate measure of the rule of law for a groaning people.
Government and other public sector undertakings should not pamper and thereby inflate the system of costs.
Maybe, this petition would not have been filed had the prospect of income without effort not been offered by Government Rules.
A closer look at the legal stand may be helpful.
The manifest injustice pleaded by the Government Pleader (the petitioner) is that the official income, expected from this heavy harvest of cases, of Rs. 1 lakh was being taken away by a brother practitioner.
In support of this alleged injustice, he has pressed into service section 2(7) of the Code of Civil Procedure which runs thus: "2(7). 'Government Pleader ' includes any officer appointed by the State Government to perform all or any of the functions expressly imposed by this Code on the Government Pleader and also any pleader acting under the directions of the Government Pleader.
" Manifestly, this is an inclusive definition and, read alongwith Order 27 Rule (4) and (8) B(c), clearly yields the inference that Government may have as many Government Pleaders as it likes to conduct its cases even as any client, who has a crowd of cases to be conducted, my engage a battery of lawyers.
Government is in no worse position that an ordinary litigant and is not bound to encourage monopoly within the profession.
Indeed, the root cause of the petitioner 's desire to corner all the litigation of the Government is that its policy of legal remuneration has no distributive bias nor socially sober ceiling.
Some States have already adopted such a 764 policy.
Indeed, the State must evolve a policy in regard to its Law Officers which concedes to counsel freedom to recommend settlement of cases if they feel it just to do so and further practises distributive justice which preempts the need for adjournment because of absence of counsel and, lastly, sets a limit on the total fee payable for government work executed.
Section 2(7) of the Code of Civil Procedure being an inclusive definition allows any number of Government pleaders.
It vests no sole control on one Government pleader over others and Government is perfectly free to put a particular Government pleader in charge of particular cases.
Each one of them is a Government Pleader and may depute other lawyers and exercise control over such surrogates.
In this view, there is no error in the summary despatch deservedly given by the High Court to the writ petition whose main merit was daring novelty.
We must state that the learned Attorney General, appearing for the State, was critical of a lawyer asking for or clinging to briefs and counsel for the petitioner (a former High Court Chief Justice) rightly slurred over the pecuniary part of the petition and veneered his submissions with the law of the high office of government pleadership.
We fully appreciate the perspective presented by counsel.
But before we come to that, let it be bluntly stated that if Government does an act offending the public office filled by a Government pleader what becomes the incumbent in the land of Gandhi is a dignified renunciation of office, not a chase for the lost briefs through the 'writ ' route.
Moreover, the legal position is plain.
As explained earlier, a bunch of Government pleaders is perfectly permissible consistently with Section 2(7) and Order 27 rule (4) Civil Procedure Code.
Nor do the Bihar rules regarding government pleaders help.
They are purely administrative prescriptions and serve as guidelines and cannot found a legal right, apart from the fact that they do not contradict Government 's power to appoint more than one Government Pleader.
Allocation of work or control inter se is an internal arrangement and we see no error even in that behaviour.
Not to have provided more government counsel when the volume of litigation demanded it, would have clogged the dockets in Court and helped one pleader to corner all the briefs without reference to expeditious or efficient disposals.
Be that as it may, one of the major streams of litigation in which government finds itself entangled flows from land acquisition. 'The States ' developmental projects which necessarily must be large, involve acquisition of lands on a large scale.
Bihar is no exception.
Since com 765 pensation claims come in considerable number before the Civil courts, several lawyers have to be engaged by the State for expeditious attention to its court litigation.
The State, appreciating this need and with a view to help the court liquidate the docket explosion, appointed more than one government pleader for every District, depending on the case flow.
Thus, Government Pleaders and Assistant Government Pleaders were appointed according to administrative rules of the State.
Each one is a Government Pleader under Sec.
2(7), Code of Civil Procedure.
It is heartening to notice that the Bihar Government appoints these lawyers after consultation with the District Judge.
It is in the best interest of the State that it should engage competent lawyers without hunting for political partisans regardless of capability.
Public offices and Government Pleadership is one shall not succumb to Tammany Hall or subtler spoils system, if purity in public office is a desideratum.
After all, the State is expected to fight and win its cases and sheer patronage is misuse of power.
One effective method of achieving this object is to act on the advice of the District Judge regarding the choice of Government pleaders.
When there were several thousand cases in the Patna courts and hundreds of cases before a plurality of tribunals, it was but right that Government did not sacrifice the speedy conduct of cases by not appointing a number of pleaders on its behalf, for the sake of the lucrative practice of a single government Pleader.
It is inconceivable how he would have discharged his duties to the court and to his client if this crowd of land acquisition cases were posted in several courts more or less at the same time.
Adjournment to suit advocates ' convenience becomes a bane when it is used only for augmentation of counsel 's income, resisting democratisation and distributial justice within the profession.
These principles make poor appeal to, those who count, which is a pity.
Coming to the larger submission of counsel for the petitioner, we do recognise its importance in our era of infiltration of politicking even in forbidden areas.
A Government pleader is more than an advocate for a litigant.
He holds a public office.
We recall with approval the observations a Division Bench of the Madras High Court made in Ramachandran vs Alagiriswami and regard the view there, expressed about a Government Pleader 's office, as broadly correct even in the Bihar set up. " . the duties of the Government Pleader, Madras are duties of a public nature.
Besides, as already explained the public are genuinely concerned with the manner in 766 which a Government Pleader discharges his duties because, if he handles his cases badly, they have ultimately to foot the bill.
The Rajasthan case does not take into account all the aspects of the matter.
(36) The learned Advocate General argued that the Government Pleader, Madras is only an agent of the Government, that his duties are only to the Government who are his principles and that he owes no duty to the public at all and that for that reason he would not be the holder of a Public office.
(37) It is difficult to accept this view.
The contention of the learned Advocate General may have been less untenable if the duties of the Government Pleader were merely to conduct in courts cases to which Government are a party.
But, as the rules stand, he has a number of other duties to discharge.
Besides, even if his only duty is the conduct of cases in which Government have been impleaded, still as explained more than once before the public are interested in the manner in which he discharges his duties.
. . . (90) I am clearly of opinion that having regard to the fact that the Government Pleader of this court is employed by the State on remuneration paid from the public exchequer and having regard to the various functions and duties to be performed by him in the due exercise of that office, most of which are of an independent and responsible character, the office must be held to be a public office within the scope of a quo warranto proceeding.
I consider that the most useful test to be applied to determine the question is that laid down by Erle, J. in ; The three criteria are, source of the office, the tenure and the duties.
I have applied that test and I am of opinion that the conclusion that the office is a public office is irresistible".
In this view, ordering about a Government Pleader is obnoxious but nothing savouring of such conduct is made out although we must enter a caveat that Governments under our Constitution shall not play with Law Offices on political or other impertinent considerations as it may affect the legality of the action and subvert the rule of law itself.
After all, a Government Pleader and, in a sense, every member of the legal profession, has a higher dedication to the people.
767 We dismiss the special leave petition but with a sad tag, which is the message of this martyrdom.
Professions shall not be concealed conspiracies with 'effete, aristocratic, protective coloration ', which at the same time enables one to make a considerable Sum of money without sullying his hands with a "job" or "trade".
The remarks of Tabachnik, in 'Professions for the People ', about English professions of the eighteenth century smell fresh: "One could carry on commerce by sleight of hand while donning, the vestments of professional altruism.
To boot, one could also work without appearing to derive in come directly from it.
As Reader explains: The whole subject of payment. seems to have caused professional men acute embarrassment, marking them take refuge in elaborate concealment, fiction, and artifice.
The root of the matter appears to lie in the feeling that it was not fitting for one gentleman to pay another for services rendered, particularly if the money passed directly.
Hence, the device of paying barrister 's fee to the attorney, not to the barrister himself.
Hence, also the convention that in many professional dealings the matter of the fee was never openly talked about, which could be very convenient, since it precluded the client or patient from arguing about whatever sum his advisor might eventually indicate as a fitting honorarium (1966 p 37).
The established professions the law, medicine, and the clergy held (or continued to hold) estate like positions: The three 'liberal professions ' of the eighteenth century were the nucleus about which the professional class of the nineteenth century was to form.
We have seen that they were united by the bond of classical education: that their broad and ill defined functions covered much that later would crystallize out into new, specialised, occupations: that each, ultimately, derived much of its standing with the established order in the State.
(1966, p. 23).
" The time has come to examine the quality of the product or service, control the price, floor to ceiling, enforce commitment to the people who are the third world clients, and practise internal distributive justice oriented on basic social justice so that the profession may flourish without wholly hitching the calling to the star of material amassment immunised by law from the liabilities of other occupations.
We do not suggest that lawyering in India needs a National 768 Commission right now as in England and elsewhere, nor do we subscribe to the U.S. situation on which the President and the Chief Justice have pronounced.
We quote "We are over lawyered. .
Lawyers of great influence and prestige led the fight against civil rights and economic justice.
They have fought innovations even in their own profession.
Lawyers as a profession have resisted both social change and economic reform." (President Carter, May, 1978) "We may well be on our way to a society overrun by hordes of lawyers, hungry as locusts, and brigades of justices in numbers, never before contemplated." (U.S. Chief Justice Burger) Law Reform includes Lawyer Reform, an issue which the petitioner has unwittingly laid bare.
After all, as Prof. Connel states "Criticism of relatively conservative institutions in times of social questioning is hardly a new phenomenon." (Australian Law Journal, Vol. 51, p. 351) This long judicial journey vindicates the Short High Court order Dismissed.
P.B.R. Petition dismissed.
| The petitioner, who was an Advocate, was authorised by the Government to represent it in all the civil cases in a district court.
Considering the pendency of a large number of Government cases before courts and tribunals the Government appointed nine Assistant Government Pleaders during the term of office of the petitioner as Government Pleader and asked him to make over all the land acquisition cases to one of the Assistant Government Pleaders.
The petitioner refused to comply with the Government 's instructions and stated That he would himself conduct all the cases.
The Government, however, stuck to its stand.
His writ petition impugning the Government 's decision was dismissed by the High Court.
Dismissing the petition under article 136.
^ HELD: 1.
The definition of Government Pleader contained in section 2(7) of the Code of Civil Procedure is an inclusive definition which, read along with O. 21, rr. 4 and 8(c) clearly yields the inference that Government may have as many Government Pleaders as it likes to conduct its cases.
The section vests no sole control on one Government Pleader over others and the Government is perfectly free to put a particular Government Pleader in charge of particular cases.
Government Pleaders and Assistant Government Pleaders who had been appointed according to administrative rules of the State are Government Pleaders within the meaning of the definition in section 2(7) of the Code.
Each one of them may depute other lawyers and exercise control over such surrogates.
[763 G; 764 C] 2.
The Bihar Rules regarding Government Pleaders, which are purely administrative prescriptions and which serve as guidelines and on which no legal right can be founded do not help the petitioner.
The allocation of work or control inter se is an internal arrangement and there is no error in the behaviour of the Government.
[764F G] 3.
When there were several thousand cases in the courts in the State and hundreds of cases before Tribunals it was but right that Government did not sacrifice the speedy conduct of cases by not appointing a number of pleaders.
It is inconceivable how the petitioner would have discharged his duties to the court and to the client of this crowd of land acquisition cases was posted in several courts more or less at the same time.
[765D E] Ramachandran vs Alagiriswami, A.I.R. 1961 Madras 450, approved.
Despite the national litigation policy evolved by the All India Law Ministers ' Conference in 1957 and the recommendation of the Law Commission there is still a proliferation of government cases in courts uninformed 760 by such policy.
It is important that the State should be a model litigant with accent on settlement.
Time has come for State Governments to have a second look, not only at the litigation policy but lawyers ' fees rules especially in mass litigation involving ad valorem calculations in fixing fees in land acquisition cases.
[762 B; 763 CI 2.
The politicisation of Government Pleadership which is a public office is an issue of moment in a developing society controlled by the politics of skill and enjoying a legal monopoly.
It is a healthy practice that the Government appoints these lawyers after consultation with the District Judge.
Governments under our Constitution shall not play with law offices on political or other impertinent considerations as it may affect the legality of the action and subvert the rule of law itself [765 C]
|
Civil Appeal No. 96 of 1972.
From the Judgment and Order dated 23rd December, 1971 of the High Court of Judicature at Allahabad in Second Appeal No. 3082 of 1971.
Yogeshwar Prasad, Mrs. Rani Chhabra and section K. Bagga for the Appellants.
B. R. Agarwala, R. H. Pancholi and Ms. Vijayalakshmi Menon for the Respondent.
The Judgment of the Court was delivered by VENKATRAMIAH, J.
The short question which arises for consideration in this appeal by special leave is whether a nominee of a life insurance policy under section 39 of the (Act No. IV of 1938) (hereinafter referred to as 'the Act ') on the assured dying intestate would become entitled to the beneficial interest in the amount received under the policy to the exclusion of the heirs of the assured.
994 The facts leading to this appeal are these: One Jag Mohan Swarup who was governed by the died intestate on June 15, 1967 leaving behind his son, Alok Kumar (plaintiff No. 2), his widow Usha Devi (defendant) and his mother Sarbati Devi (plaintiff No. 1) as his heirs.
He had during his lifetime taken out two insurance policies for Rs. 10,000 each and had nominated under section 39 of the Act his wife Usha Devi as the person to whom the amount was payable after his death.
On the basis of the said nomination, she claimed absolute right to the amounts payable under the two policies to the exclusion of her son and her mother in law.
Thereupon Sarabati Devi and Alok Kumar (minor) represented by his next friend Atma Ram who was the father of Jag Mohan Swarup filed a suit in Civil Suit No. 122 of 1970 on the file of the Ist Additional Civil Judge.
Dehradun for a declaration to the effect that they were together entitled to 2/3rd share of the amount due and payable under the insurance policies referred to above.
Usha Devi, the defendant resisted the suit.
Her contention was that on the death of the assured, she as his nominee became absolutely entitled to the amounts due under the insurance policies by virtue of section 39 of the Act The trial court dismissed the suit.
The first appeal filed by the plaintiffs against the decree of the trial court was dismissed by the District Judge, Dehradun.
The second appeal filed by them against the judgment of the District Judge before the High Court of Allahabad was dismissed in limine under Rule 11, Order 41 of the Civil Procedure Code.
The plaintiffs have filed this appeal after obtaining special leave under Article 136 of the Constitution.
The only question which requires to be decided in this case is whether a nominee under section 39 of the Act gets an absolute right to the amount due under a life insurance policy on the death of the assured.
Section 39 of the Act reads: "39.
Domination by policy holder. (1) The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death: Provided that where any nominee is a minor, it shall be lawful for the policy holder to appoint in the prescri 995 bed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee.
(2) Any such nomination in order to be effectual shall unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated to the insurer and registered by him in the records relating to the policy and any such nomination may at any time before the policy matures for payment be cancelled or changed by an endorsement, or a further endorsement or a will, as the case may be, but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.
(3) The insurer shall furnish to the policy holder a written acknowledgement of having registered a nomination or a cancellation or change thereof, and may charge a fee not exceeding one rupee for registering such cancellation or change.
(4) A transfer or assignment of a policy made in accordance with section 38 shall automatically cancel a nomination: Provided that the assignment of a policy to the insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer 's interest in the policy.
(5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be 996 payable to the policy holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.
(6) Where the nominee or if there are more nominees than one, a nominee or nominees survive the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors.
(7) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women 's Property Act, 1874 applies or has at any time applied : Provided that where a nomination made whether before or after the commencement of the Insurance (Amendment) Act, 1946, in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section the said section 6 shall be deemed not to apply or not to have applied to the policy.
" At the out set it should be mentioned that except the decision of the Allahabad High Court in Kesari Devi vs Dharma Devi on which reliance was placed by the High Court in dismissing the appeal before it and the two decisions of the Delhi High Court in section Fauza Singh vs Kuldip Singh & Ors.
and Mrs. Uma Sehgal & Anr.
vs Dwarka Dass Sehgal & Ors in all other decisions cited before us the view taken is that the nominee under section 39 of the Act is nothing more than an agent to receive the money due under a life insurance policy in the circumstances similar to those in the present case and that the money remains the property of the assured during his lifetime and on his death forms part of his estate subject to the law of succession applicable to him.
The cases which have taken the above view are Ramballav DhanJhania vs Gangadhar Nathmall.
Life Insurance Corporation of India vs United Bank of India Ltd. & 997 Anr., D. Mohanaeelu Muldaliar & Anr.
vs Indian Insurance and Banking Corporation Ltd. Salem & Anr., Sarojini Amma vs Neelakanta Pillai Atmaram Mohanlal Panchal vs Gunavantiben & Ors., Malli Dei and Lakshmi Amma Anr.
vs Sagnna Bhagath & Ors.
, Since there is a conflict of judicial opinion on the question involved in this case it is necessary to examine the above cases at some length.
The law in force in England on the above question is summarised in Halsbury 's Laws of England (Fourth Edition), Vol. 25, Para 579 thus : "579.
Position of third party, The policy money payable on the death of the assured may be expressed to be payable to a third party and the third party is then prima facie merely the agent for the time being of the legal owner and has his authority to receive the policy money and to give a good discharge; but he generally has no right to sue the insurers in his own name.
The question has been raised whether the third party 's authority to receive the policy money is terminated by the death of the assured; it seems, however, that unless and until they are otherwise directed by the assured 's personal representatives the insurers may pay the money to the third party and get a good discharge from him.
" We shall now proceed to analyse the provisions of section 39 of the Act.
The said section provides that a holder of a policy of life insurance on his own life may when effecting the policy or at any time before the policy matures for payment nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death.
If the nominee is a minor, the policy holder may appoint any person to receive the money in the event of his death during the minority of the nominee.
That means that if the policy holder is alive when the policy matures for payment he alone will receive payment of the money due under the policy and 998 not the nominee.
Any such nomination may at any time before the policy matures for payment be cancelled or changed, but before such cancellation or change is notified to the insurer if he makes the payment bon fide to the nominee already registered with him, the insurer gets a valid discharge.
Such power of cancellation of or effecting a change in the nomination implies that the nominee has no right to the amount during the lifetime of the assured.
If the policy is transferred or assigned under section 38 of the Act, the nomination automatically lapses.
If the nominee or where there are nominees more than one all the nominees die before the policy matures for payment the money due under the policy is payable to the heirs or legal representatives or the holder of a succession certificate.
It is not necessary to refer to sub section (7) of section 39 of the Act here.
But the summary of the relevant provisions of section 39 given above establishes clearly that the policy holder continues to hold interest in the policy during his lifetime and the nominee acquires no sort of interest in the policy during the lifetime of the policy holder.
If that is so, on the death of the policy holder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him.
Such succession may be testamentary or intestate.
There is no warrant for the position that section 39 of the Act operates as a third kind of succession which is styled as a 'statutory testament ' in paragraph 16 of the decision of the Delhi High Court in Mrs. Uma Sehgal 's case (supra).
If section 39 of the Act is contrasted with section 38 of the Act which provides for transfer or assignment of the rights under a policy, the tenous character of the right of a nominee would become more pronounced.
It is difficult to hold that section 39 of the Act was intended to act as a third mode of succession provided by the statute.
The provision in sub section (6) of section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees.
We have to bear in mind here the special care which law and judicial precedents take in the matter of execution and proof of wills which have the effect of diverting the estate from the ordinary course of intestate succession and that the rigour of the rules governing the testamentary succession is not relaxed even where wills are registered.
As observed in the Full Bench decision of the Allahabad High Court in Raja Ram vs Mata Prasad & Anr.
which has interpreted 999 section 39 of the Act correctly, the judgment of that High Court in Kesari Devi 's case (supra) related to a different set of facts.
In Kesari Devi 's case (supra) the dispute arose regarding the person who was entitled to the succession certificate in respect of the amount payable under a life insurance policy which had been taken out by the assured between the widow of the assured and the widow of the nominee under section 39 of the Act.
On going through the judgment in Kesari Devi 's case (supra) we feel that the Court in that case paid little heed to the earlier judicial precedents of its own Court.
The decision of the Full Bench in Raja Ram 's case (supra) set at rest all doubts which might have been created by Kesari Devi 's case (supra) about the true import of section 39 of the Act in so far as the High Court of Allahabad was concerned.
In Fauja Singh 's case (supra) there is reference only two three cases Life Insurance Corporation of India vs United Bank of India Ltd. (supra), Matin vs Mahomed Matin and Kesari Devi 's case (supra).
The Court expressed its dissent from the Calcutta decision on the ground that decision had not considered sub section (6) of section 39 of the Act.
The Lahore case was one decided before the Act came into force.
The distinguishing features of Kesari Devi 's case (supra) are already mentioned.
Otherwise there is not much discussion in this case about the effect of section 39 of the Act.
We have carefully gone through the judgment of the Delhi High Court in Mrs. Uma Sehgal 's (case) supra.
In this case of the High Court of Delhi clearly came to the conclusion that the nominee had no right in the lifetime of the assured to the amount payable under the policy and that his rights would spring up only on the death of the assured.
The Delhi High Court having reached that conclusion did not proceed to examine the possibility of an existence of a conflict between the law of succession and the right of the nominee under section 39 of the Act arising on the death of the assured and in that event which would prevail.
We are of the view that the language of section 39 of the Act is not capable of altering the course of succession under law.
The second error committed by the Delhi High Court in this case is the reliance placed by it on the effect of the amendment of section 60(1) (kb) of the Code of Civil Procedure, 1908 providing that all moneys payable under a 1000 policy of insurance on the life of the judgment debtor shall be exempt from attachment by his creditors.
The High Court equated a nominee to the heirs and legatees of the assured and proceeded to hold that the nominee succeeded to the estate with all plus and minus points '.
We find it difficult to treat a nominee as being equivalent to an heir or legatee having regard to the clear provisions of section 39 of the Act.
The exemption of the moneys payable under a life insurance policy under the amended section 60 of the Code of Civil Procedure instead of 'devaluing ' the earlier decisions which upheld the right of a creditor of the estate of the assured to attach the amount payable under the life insurance policy recognises such a right in such creditor which he could have exercised but for the amendment.
It is because it was attachable the Code of Civil Procedure exempted it from attachment in furtherance of the policy of Parliament in making the amendment.
The Delhi High Court has committed another error in appreciating the two decisions of the Madras High Court in Karuppa Gounder & Ors.
vs Palaniammal & Ors.
and in B.M. Mundkur vs Life Insurance Corporation of India & Ors.
The relevant part of the decision of the Delhi High Court in Mrs. Uma Sehgal 's case (supra) reads thus: 10. "In Karuppa Gounder vs Palaniammal, AIR 1963 Mad. 245 (para 13), K had nominated his wife in the insurance policy.
K died.
It was held that in virtue of the nomination, the mother of K was not entitled to any portion of the insurance amount.
I am in respectful agreement with these views, because they accord with the law and reason.
They are supported by section 44 (2) of the Act.
It provides that the commission payable to an insurance agent shall after his death, continue to be payable to his heirs, but if the agent has nominated any person the commission shall be paid to the person so nominated.
It cannot be contended that the nominee u/s 44 will receive the money not as owner but as an agent on behalf of someone else vide B.M. Mundkur vs Life Insurance Corporation, AIR 1977 Mad. 72.
Thus, the nominee excludes the legal heirs.
" 1001 Two mistakes committed by the Delhi High Court in the above passage are these.
In Karuppa Gounder 's case (supra), the question was whether the amount payable under the insurance policy in question was joint family property or separate property of the assured.
In that connection, the High Court of Madras observed thus: "But where a coparcener has effected insurance upon his own life, though he might have received the premia from out of the funds which he might have received from the joint family, it does not follow that the joint family insured the life of the member or paid the premia in relation thereto.
It is undeniable that a member of a coparcenary may with the moneys which he might receive from the coparcenary effect an insurance upon his own life for the benefit of the members of his immediate family.
His intention to do so and to keep the property as his separate property would be manifested if he makes a nomination in favour of his wife or children as the case may be.
It would therefore appear that no general proposition can be advanced in the matter of the insurance policy of a member of a coparcenary and that each case must be dealt with in accordance with the circumstances surrounding it.
" It is obvious from the above passage that the above case has no bearing on the meaning of section 39 of the Act.
The fact of nomination was treated in that case as a piece of evidence in support of the finding that the policy was not a joint family asset but the separate property of the coparcener concerned.
No right based on the ground that one party was entitled to succeed to the estate of the deceased in preference to the other or along with the other under the provisions of the was asserted in that case.
The next error committed by the Delhi High Court is in drawing an analogy between section 39 and section 44(2) of the Act thinking that the Madras High Court had done so in B. M. Mundkur 's case (supra).
In B.M. Mundkur 's case (supra), the High Court of Madras instead of drawing an analogy between section 39 and section 44(2) of the Act actually contrasts them as can be seen from the following passage: 1002 "There are vital differences between the nomination contemplated under Section 39 of the Act and the nomination contemplated under the proviso to Section 44(2) of the Act.
In the first place, the sum assured, with which alone Sec.
39 was concerned, was to be paid in the event of the death of the assured under the terms of the contract entered into between the insurer and the assured and consequently it was the contractual right which remained vested in the insured with reference to which the nomination happened to be made.
It should be pointed out that the nomination as well as the liability on the part of the insurer to pay the sum assured become effective simultaneously, namely, at the moment of the death of the assured.
So long as he was alive, the money was not payable to him, in the case of a whole life policy, and equally, having regard to the language of Section 39(1) of the Act, the nominee 's right to receive the money arose only on the death of the assured, Section 39 itself did not deal with the title to the money assured, which was to be paid by the insurer to the nominee who was bound to give discharge to the insurer.
It was in this context that the Court took the view that the title remained with the estate of the deceased, and therefore, with the heirs of the deceased, that the nomination did not in any way affect the title and that it merely clothed the nominee with the right to receive the amount from the insurer.
On the other hand, the provisions and purport of Section 44 of the Act are different.
In the first place under Section 44(1) it was a statutory right conferred on the agent to receive the commission on the renewal premium notwithstanding the termination of the agreement between the agent and the insurer, which provided for the payment of such commission on the renewal premium.
The statute also prescribed the qualification which rendered the agent eligible to receive commission on such renewal premium.
Section 44(1) provides for the payment of the commission to the agent during his lifetime only and does not contemplate the contingency of his death and the commission being paid to anybody even after his death.
It is section 44(2) which deals with the 1003 payment of commission to the heirs of deceased for so long as such insurance agent been alive.
Thus it was not the general law of inheritance which conferred title on the heirs of the deceased insurance agent to receive the commission on the renewal premium, but it was only the particular statutory provision, namely, Section 44(2) which conferred the right on the heirs of the deceased agent to receive the commission on the renewal premium.
In other words, the right of the heirs to receive the commission on renewal premium does not arise under any law of succession and it is a right directly conferred on the heirs by Section 44(2) of the Act, even though who the heirs of the deceased insurance agent are will have to be ascertained under the law of succession applicable to him.
Thus the statute which conferred such a right on the heirs is certainly competent to provide for an exception in certain cases and take away such a right from the heirs; and the proviso which has been introduced by the Government of India notification 1962 has done exactly this in taking away the right of the heirs conferred under the main part of Section 44(2), in the event of the agent, during his lifetime, making a nomination in favour of a particular person and not cancelling or altering that nomination subsequently.
If the statute itself was competent to donfer such a right for the first time on the heirs of the deceased agent it is indisputable that the statute could take away that right under stated circumstances.
" The reasons given by the Delhi High Court in this case in support of its view are not tenable.
Moreover there is one other strong circumstance in this case which dissuades us from taking a view contrary to the decisions of all other High Courts and accepting the view expressed by the Delhi High Court in the two recent judgments delivered in the year 1978 and in the year 1982.
The Act has been in force from the year 1938 and all along almost all the High Courts in India have taken the view that a mere nomination effected under section 39 does not deprive the heirs of their rights in the amount payable under a life insurance policy.
Yet Parliament has not chosen to make any 1004 amendment to the Act.
In such a situation unless there are strong and compelling reasons to hold that all these decisions are wholly erroneous, the Court should be slow to take a different view.
The reasons given by the Delhi High Court are unconvincing.
We, therefore, hold that the judgments of the Delhi High Court in Fauja Singh 's case (supra) and in Mrs. Uma Sehgal 's case (supra) do not lay down the law correctly.
They are, therefore, overruled.
We approve the views expressed by the other High Courts on the meaning of section 39 of the Act and hold that a mere nomination made under section 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured.
The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy, The amount; however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.
In view of the above conclusion, the judgments and decrees of the High Court, the first appellate court and the trial court are liable to be set aside.
They are accordingly set aside.
Since it is not disputed that the plaintiffs are under the law of succession governing them each entitled to 1/3 share in the estate of the deceased, it is hereby declared that each of the plaintiffs is entitled to 1/3rd share in the amount received under the insurance policies in question and the interest which may have been earned by its investment.
The suit stands decreed accordingly.
Parties shall, however, bear their own costs throughout.
S.R. Appeal allowed.
| The appellants being mother and son of one Jagmohan Swarup who was governed by the and who died intestate on June 15, 1967 filed Civil Suit No. 122 of 1970 on the file of the first Additional Civil Judge, Dehradun for a declaration to the effect that they were together entitled to 2/3rd share of the amount due and payable under the insurance policies though the deceased assured has nominated the respondent his widow as the person to whom the amounts were payable.
The respondent contested the suit claiming that she has the absolute right to the amounts to the exclusion of her son and her mother in law.
The suit was dismissed.
The First Appeal before the Dt.
Judge, Dehradun and the Second Appeal before the High Court were dismissed.
Hence the appeal after obtaining special leave of the Court.
Allowing the appeal, the Court, ^ HELD: 1.1 A mere nomination made under Section 39 of the does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the accused.
The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy.
The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.
[1009G, 1004 B D] 1.2 An analysis of the provisions of Section 39 of the Act clearly established that the policy holder continues to hold interest in the policy during his life time and the nominee acquires no sort of interest in the policy during the life time of the holder.
If that is so, on the death of the policyholder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him.
such succession may be testamentary or intestate.
The tenuous character of the right of a nominee becomes more pronounced when one contrasts the provisions of Section 39 with that of 993 Section 38.
Section 39 of the Act was not intended to act as a third mode of succession provided by the stature and incorrectly styled as "statutory testament" by the Delhi High Court.
[998 C E] 1.3 The language of Section 39 of the Act is neither capable of altering the course of succession under law nor can be said to have equated a nominee to an heir or legatee.
[999F] section Fauza Singh vs Kuldip Singh & Ors.
AIR 1978 Delhi 276; Mrs. Uma Sehgal & Anr.
vs Dwarka Dass Sehgal and Ors.
AIR 1982 Delhi 36; overruled.
Rama Bhallav Dhandhania vs Gangadhar Nathmall AIR 1966 Cal.
275; D. Mohananardu Mudaliar and Anr.
vs Indian Insurance and Banking Corporation Ltd., Salem and Anr. ; Sarojini Amma vs Neelakanta Pillai AIR 1961 Kerala 126, Life Insurance Corporation of India vs United Bank of India Ltd. & Anr. ; Raja Ram vs Mata Prasad and Anr.
AIR 1972 All. 167; Mallidei and Anr.
vs Kanchan Prana Dei AIR 1973 Orissa 83; Lakshmi Amma and Anr.
vs Saguna Bhagathi & Ors.
ILR 1973 Karnataka 827; Atmaram Mohanlal Panchal vs Gunavantiben and Ors.
AIR 1977 Gujarat 134 approved.
Karuppa Gounder & Ors.
vs Palaniammal & Ors.
AIR 1963 Madras 245; B. M. Mundkur vs Life Insurance Corporation of India and Ors.
AIR 1977 Mad. 72, discussed and distinguished.
|
Appeals Nos. 422 & 423 of 1958.
433 Appeals from the judgment and decree dated November 22, 1957, of the Allahabad High Court (Lucknow Bench), Lucknow, in Civil Misc.
Applications Nos. 54 and 56 of 1957.
Niamatullah, section N. Andley and J. B. Dadachanji for O. N. Srivastava, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, Bishun Singh and C. P. Lal, for the respondent.
December 14.
The Judgment of section K. Das and A. K. Sarkar, JJ. was delivered by ' Sarkar, J. Subba Rao, J. delivered a separate judgment.
SARKAR J. Raja Udit Narain Singh was the proprietor of Ramnagar estate, a big taluqdari in district Barabanki in Uttar Pradesh, formerly known as the United Provinces of Agra and Oudh and for short U.P., an abbreviation still in use.
Ramnagar estate was governed by the Oudh Estates Act (1 of 1869), and in the absence of any disposition by the holder for the time being, it appears to have devolved according to the rule of primogeniture.
Raja Udit Narain died in 1927 leaving two sons of whom the older was Raja Harnam and the younger Kanwar Sarnam.
Kanwar Sarnam died in 1928 leaving the respondent his only son, and a widow, Parbati Kuer.
Raja Harnam died thereafter in 1935 without issue, leaving the appellant his sole widow.
After the death of Raja Harnam disputes arose between the respondent, who was then a minor and was represented by his certificated guardian, his mother Parbati Kuer, and the appellant, a reference to which has now to be made.
The appellant 's contentions appear to have been as follows : Raja Udit Narain left a will bequeathing certain villages of Ramnagar estate to Raja Harnam absolutely and the rest of it, as set out in a schedule to the will, to him for life and after him to Kanwar Sarnam for life and thereafter or failing the latter, to the respondent absolutely.
The will declared that village Bichelka had been given to her for life as " runumal " 434 or wedding present and that she would have a maintenance of Rs. 500, per month out of the estate.
The schedule to the will did not mention five of the villages of Ramnagar estate with regard to which Raja Udit Narain died intestate and these thereupon devolved on Raja Harnam under the rule of primogeniture that applied to the estate.
After Raja Udit Narain 's death, Raja Harnam went into possession of the estate and executed a will leaving all the properties over which he had a power of disposition, including the seven villages bequeathed to him absolutely by Raja Udit Narain and the five villages not disposed of by his will, to her in absolute right.
Thereafter, Raja Harnam executed a deed of gift in her favour giving her most of the immovable properties covered by his will and several house properties in Lucknow.
On these allegations the appellant made a claim to all the properties said to have been given to her by the, aforesaid wills and the gift of Raja Harnam.
Parbati Kuer, on behalf of her son, the respondent, challenged the factum and validity of the wills and the gift said to have been made by Raja Harnam and resisted the appellant 's claim.
And so the disputes between the parties arose.
The Deputy Commissioner of Barabanki intervened to restore peace and brought about a family arrangement, into which the parties entered on January 22, 1935, settling the disputes on the terms therein contained.
Under this family arrangement certain properties came to the appellant but it is not necessary for the purposes of these appeals to refer to them in detail.
The peace created by the family arrangement did not last long.
The respondent after attaining majority on September 12, 1940, repudiated the family arrangement on grounds to which it is unnecessary to refer.
On September 6, 1943, he filed a suit against the appellant to set aside the family arrangement and recover from her the properties of the estate in her possession.
The defence of the appellant to the suit was that the family arrangement was binding on the respondent.
However, to cover the eventuality of the 435 family arrangement being found to be void or voidable, the appellant herself filed a suit against respondent claiming title to various properties of the estate under the will of Raja Udit Narain and the will and gift of Raja Harnam.
The respondent contested this suit.
With the particulars of the claims and defences in the suits or their soundness we are not concerned in these appeals, and a reference to them will not be necessary.
While these two suits were pending, the appellant was on November 12, 1945, declared by the District Judge of Lucknow under the provisions of the Lunacy Act, 1912, to be a person of unsound mind.
Thereupon the Court of Wards assumed superintendence of the properties of the appellant under the provisions of the U.P. Court of Wards Act, hereinafter referred to as the Act, and placed them in the charge of the Deputy Commissioner of Barabanki district in which most of these properties were situate.
The Court of Wards gave to these properties the name Ganeshpur estate.
Upon such assumption of charge the cause titles of the two suits were amended and in the place of the appellant 's name, the name " Deputy Commissioner, Barabanki I/C Court of Wards, Ganeshpur estate " was substituted, such amendment being required by the provisions of section 55 of the Act the terms of which we shall presently set out.
The letters " I/C " in the substituted name were an abbreviation of the words " in charge of.
" Thereafter, the respondent 's suit was dismissed by a decree dated June 3, 1947, except as to his claim to two villages, it being found that in them Raja Harnam had only a life estate and to them the appellant had no claim after his death, and that these had been given to her by the family arrangement by mistake.
As the family arrangement was substantially upheld by the decree in the respondent 's suit, the appellant 's suit became unnecessary for it bad been founded on the basis that the family arrangement was void or could be avoided.
It had therefore to be dismissed.
Two appeals were filed from the decisions in these two suits in the High Court at Lucknow, one by the Deputy 436 Commissioner of Barabanki representing the estate of the appellant against the decree dismissing the appellant 's suit, being F.C.A. No. 99 of 1947, and the other by the respondent, being F.C.A. No. 2 of 1948, against the decree dismissing his suit.
F.C.A. No. 99 appears to have been filed merely as a matter of safety, to be proceeded with only in case the respondent 's appeal, F.C.A. No. 2 of 1948, succeeded.
While the appeals were pending, the respondent made an application under the Act to have his estate placed under the charge of the Court of Wards.
That application was accepted and the superintendence of his estate was taken over by the Court of Wards on February 8, 1950.
The respondent 's estate was also placed by the Court of Wards in the charge of the Deputy Commissioner, Barabanki, as the estate was within his jurisdiction.
The Court of Wards retained for it its old name of Ramnagar estate.
The cause titles of the appeals had again to be amended in view of section 55 of the Act and for the name of the respondent, the name " Deputy Commissioner Barabanki I/C Court of Wards Ramnagar estate " was substituted.
The cause titles of the appeals then became, Deputy Commissioner, Barabanki I/C Court of Wards Ganeshpur estate Appellant versus Deputy Commissioner, Barabanki I/C Court of Wards Ramnagar estate Respondent AND Deputy Commissioner, BarabankiI/C Court of Wards Ramnagar estate Appellant versus Deputy Commissioner, BarabankiI/C Court of Wards Ganeshpur estate . Respondent.
The position thus was that the estates of both the appellant and the respondent came under the superintendence of the same Court of Wards and were placed in the charge of the same Deputy Commissioner in whose name each party sued and was sued in the appeals.
This situation was the occasion for the 437 proceedings to be referred to presently, from which these appeals arise.
Before coming to these proceedings, certain other facts have however to be stated.
On December 3, 1951, the Court of Wards passed a resolution settling the appeals on certain terms as it thought that such settlement was in the best interests of the two contending wards, particularly in view of the heavy costs of the litigation and the then impending legislation for abolition of zemindaries.
Thereafter, under the instructions of the Court of Wards, the lawyers appearing for the parties in the appeals presented to the High Court on April 28,1952, petitions for recording compromises in the appeals and for passing decrees in accordance therewith.
On May 2, 1952, the High Court passed orders directing the compromises to be recorded and decrees to be passed in the appeals in terms thereof.
The appeals were thus disposed of and the proceedings therein terminated.
When the appeals were so compromised, the paperbooks in respect of them were in the course of preparation.
It is not necessary to encumber this judgment by setting out the terms of the compromise.
It is however of some importance to state that the petitions embodying the compromise were signed twice by Mr. K. A. P. Stevenson, once as Deputy Commissioner Barabanki, I/C Court of Wards, Ramnagar estate, district Barabanki (Appellant in F.C.A. No. 2 of 1948 and respondent in F.C.A. No. 99 of 1947)" and again as " I/C Court of Wards, Ganeshpur estate, district Barabanki (Respondent in F.C.A. No. 2 of 1948 and appellant in F.C.A. No. 99 of 1947)".
Obviously, Mr. Stevenson, the Deputy Commissioner, Barabanki, signed each petition once as representing the appellant and again as representing the respondent.
It is also of some interest to note that the petitions were presented in Court by Sri Sita Ram, Advocate for the appellant 's estate and Sri Bishun Singh, Advocate for the respondent 's estate.
Some more events happened before the proceedings out of which these appeals arise were started.
Shortly after the compromise decrees had been passed, ail Act 56 438 abolishing zemindaries came into force in U.P. and the zemindary estates of the parties vested in the Government of U.P.
Thereupon the Court of Wards ceased to function.
In anticipation of this situation the estates of the parties were released by the Court of Wards.
In view, however, of the appellant 's mental incapacity, an order was passed by the District Judge of Lucknow, on April 27, 1953, in the lunacy proceedings, placing her estate in the charge of the Deputy Commissioner, Barabanki and one Mr. M. L. Sarin and appointing them as the guardians of her person and property.
A few years later, the appellant recovered from her affliction and an order was passed by the District Judge, Lucknow on October 6, 1956, declaring her to be of sound mind.
Her aforesaid guardians were thereupon discharged and she was put in possession of her properties.
After the appellant had regained her mental competence, she began to entertain a feeling that the compromise in the appeals had not done full justice to her and she set about to find a way to get out of it.
On January 14, 1957, the appellant made two applications to the High Court at Lucknow, one in each of the said appeals Nos. 99 of 1947 and 2 of 1948, for an order that the work of the preparation of the paperbooks of the said appeals be resumed under Chapter XIII of the Rules of the High Court from the stage at which it was interrupted by the compromise decrees, as those decrees were a nullity and did not terminate the appeals which must therefore be deemed to be pending.
These applications were heard together by the High Court and dismissed by its judgment and orders dated November 22, 1957.
It is against this judgment and the orders that the present appeals have been brought.
These appeals were consolidated by an order made by the High Court and they have been heard together in this Court.
It is not the appellant 's case that the compromise was brought about by fraud or was otherwise vitiated on similar grounds and is therefore liable to be set aside.
No avoidance of the compromise is sought.
In fact, the appellant had initially alleged in her petitions 439 that the compromise had been brought about by fraud and collusion.
She however amended the petitions by deleting the paragraphs containing these allegations and chose to proceed on the purely legal basis that the compromise was a nullity.
It is for this reason that we have not referred to the terms of the compromise.
No question arises in those appeals as to their fairness or as to whether they should be avoided on any equitable ground.
If the compromise decrees were a nullity as the appellant contends, then she would no doubt be entitled to proceed on the basis as if they bad never been made and in that view her applications would be competent and should succeed.
The question is whether the compromise decrees were a nullity.
The appellant first says that the compromise decrees were a nullity as the terms of section 56 of the Act which are mandatory, had not been complied with.
That section reads thus: Section 56: When in any suit or proceeding two or more wards being parties have conflicting interests, the Court of Wards shall appoint for each such ward a representative and the said representative shall thereupon conduct or defend the case on behalf of the ward whom he represents, subject to the general control of the Court of Wards.
It is true that no representative had been appointed under this section for either party for the purposes of the two appeals.
It is said that this omission to appoint representatives made the compromise decrees a nullity as the terms of the section are imperative.
The question then is, is section 56 imperative ? In our view, it is not.
It, no doubt, says that " the Court of Wards shall appoint .
a representative.
" But it is well known that the use of the word " shall " is not conclusive of the question whether a provision is mandatory: see Hari Vishnu Kamath vs Syed Ahmad Ishaque (1).
The intention of the legislature has to be gathered from the whole statute.
Several grounds are suggested why section 56 should be held to be imperative.
First, it is said that otherwise, (1)[1955] 1 S.C.R. 1104.
440 in view of section 55, it would be otiose.
Section 55 is in these terms: Section 55: No ward shall sue or be sued nor shall any proceedings be taken in the civil court otherwise than by and in the name of the Collector in charge of his property or such other person as the Court of Wards may appoint in this behalf.
It is said that the concluding words of section 55 give the Court of Wards a discretionary power to appoint a representative and therefore if section 56 was only directory, then it would also give the same discretionary power to appoint a representative and thus become otiose.
The contention seems to us to be ill founded.
In order that one section may be rendered otiose by a certain interpretation of another, that interpretation must make the two sections deal with the same subject matter, the two must then be serving the same purpose.
The argument is founded on the basis that read as an imperative provision section 56 would not be otiose, that is, then it would be serving a purpose different from that which section 55 served.
Now, we do not appreciate how section 56 becomes otiose by being read as a directory provision while it would not be so if read as a mandatory provision.
Surely, the subject matter of a statutory provision is not changed whether it is read as directory or as mandatory.
If it was not otiose as a mandatory provision, it would no more be so as a directory provision.
Another fallacy in this argument is that it assumes that by reading section 56 as a directory provision a discretion is conferred on the Court of Wards to appoint or not to appoint representatives for the wards, as it pleases.
A provision giving a discretionary power leaves the donee of the power to use or not to use it at his discretion.
A directory provision however gives no discretionary power free to do or not to do the thing directed.
A directory provision is intended to be obeyed but a failure to obey it does not render a thing duly done in disobedience of it, a nullity.
Therefore, it seems to us to be wrong to say that by reading section 56 as merely directory any discretion is conferred on the Court of Wards.
441 It also seems clear to us that sections 55 and 56 deal with entirely different matters.
Section 55 deals only with the name in which a ward may sue or be sued.
Section 56 deals with appointment of representatives for two or more wards who are parties to a litigation and have conflicting interests, to defend or conduct the case on behalf of the wards, and section 56 would apply whether the wards were sued in the names of the Collectors in charge of their properties or in the names of persons appointed for the purpose by the Court of Wards.
There is nothing to show that the represen tatives appointed under section 56 are to be named in the record of the case as representing the wards.
The section does not say so Section 56 contemplates a stage where two or more wards are already parties to a litigation.
It therefore contemplates the wards suing or being sued in the names of the Collectors in charge of their properties or of other persons appointed under section 55.
Notwithstanding this, section 56 does not provide that the representatives appointed under it shall replace the Collector or the person appointed under section 55 on the record of the litigation.
Therefore it seems to us clear that if section 56 is read as a directory provision, section 55 would not become otiose.
Next it is said that sections 57 and 58 of the Act also deal with the appointment by the Court of Wards of representatives for the wards in certain proceedings between them but in these sections the words used are respectively "shall be lawful for the Court of Wards to appoint" and "may appoint", while the word used in section 56 is "shall" and that this distinction clearly indicates that the intention of the legislature is to make section 56 imperative.
This argument also does not appear to us to be sound.
We are not satisfied that because a statute uses in some provisions the word "shall" and in others the words "shall be lawful" or "may", it necessarily indicates thereby that the provisions containing the word "shall" are to be understood as mandatory provisions.
We think that each provision has to be considered by itself, and the context in which the word "shall" occurs in it, the object of the provision 442 and other considerations may lead to the view that in spite of the use of the word "shall", it is a directory provision.
It seems to us that sections 57 and 58 rather indicate that if the appointments there contemplated are merely directory, the appointments provided by section 56 are also directory.
Section 57 empowers the Court of Wards when any question arises between two or more wards of such nature that an adjudication upon it by a court is expedient, to appoint a representative for each ward and require the representatives so appointed to prepare a statement containing the point or points for determination and to file the statement in a civil court in the form of a case for the opinion of the court.
The section further provides that the civil court shall proceed to hear and dispose of the case in the manner prescribed by the Code of Civil Procedure for the hearing and disposal of suits and also that the case shall be conducted by the representatives appointed for the wards subject to the general control of the Court of Wards.
Section 58 empowers the Court of Wards when it thinks that a dispute which has arisen between two or more wards is a fit subject for reference to arbitration, to appoint a representative for each ward and require the representatives to submit the dispute to the arbitration of a person or persons approved by it.
It would appear therefore that the position of a ward is the same whether the case is governed by section 56, section 57 or section 58.
In each case one ward has a dispute with another; in each their interests conflict.
In the first two cases, the conflict is submitted to the decision of a civil court and in the third, to arbitration.
There is no reason to think that the legislature intended that the interests of the wards required more protection in a case falling under section 56 than in a case falling under section 57 or section 58.
If, therefore, as the argument concedes, the appointment of representatives was not intended by the legislature to be obligatory under sections 57 and 58, no more could the legislature have intended the appointment of representatives under section 56 obligatory.
This leads us to the argument based on the object of a. 56.
It is said that the object of the section is to 443 protect the interests of the wards.
Unless the terms of the section are obeyed, it is contended, the wards ' interests will suffer.
So, it is said that section 56 must be construed as a mandatory provision.
This argument overlooks that part of section 56 which makes the representatives appointed under it subject to the general control of the Court of Wards in the discharge of their functions.
It is clear, therefore, that it is the intention of the legislature that the interests of the wards should really be in the charge of the Court of Wards in spite of the appointment of the representatives and in spite of the conflicting interests of the wards.
It follows that the direction to appoint representatives has not been inserted in section 56 to protect the conflicting interests of the wards or to ensure such interests being properly looked after by taking them out of the charge of the Court of Wards.
It would indeed be against the whole concept of the Court of Wards Act to hold that it contemplated a situation where the interests of the wards would be taken out of the hands of the Court of Wards while it retained charge of their estates.
We are, therefore, inclined to agree with the view of the learned Judges of the High Court that " The reason for incorporating section 56 in the Act appears to have been with the idea of avoiding any embarrassment to the officers of the Court of Wards who may have had the task in certain cases of representing rival interests.
" There is thus nothing in the object with which section 56 was enacted to lead us to hold that its terms were intended to be imperative.
We may look at the matter from another point of view.
Under section 15 of the Act, the Court of Wards, upon assuming the superintendence of any property, is to nominate a collector or other person to be in charge of it.
Usually it is the Collector of the district, sometimes called the Deputy Commissioner, in which the largest part of the property is situate who is nominated for the purpose.
In the present case, as it happened, the estates of both the appellant and the respondent were situate in the same district of Barabanki and had, therefore, been put in charge of 444 the same officer, namely, the Deputy Commissioner of that district.
Now, it may so happen in another case that the estates of the wards are in charge of different Collectors or Deputy Commissioners.
To such a case also section 56 would be applicable if the two wards happened to be parties to a litigation with conflicting interests.
It would be strange if in such a case any decree that came to be passed had to be held to be a nullity because the terms of that section had not been complied with.
It could not, of course, then be said that the interests of the wards had been prejudiced by the omission to appoint representatives under section 56, for, there would in such a case be no difficulty for the Collectors to look after the interests of their respective wards in the best way possible.
This view of the matter also seems to indicate that section 56 is not imperative.
We have now examined all the arguments advanced in support of the view that section 56 is an imperative provision.
We find them without any force.
The question whether a statute is imperative or otherwise is after all one of intention of the legislature.
The rules of interpretation are for discovering that intention.
We have not found any rule which would lead us to hold that section 56 was intended to be an imperative provision.
The section serves no purpose except the removal of practical inconvenience in the conduct of a suit or its defence.
By providing that the representatives shall be subject to the control of the Court of Wards, the section makes it clear that in spite of the appointment of the representatives the Court of Wards retains all powers in respect of the litigation.
Such powers are given to the Court of Wards by the Act itself.
Under section 38, the Court of Wards has the right to do all things which it may judge to be for the advantage of the ward.
One of such powers is to conduct a litigation on behalf of a ward, in any manner it thinks best in the interests of the ward it could therefore compel the representatives to settle the litigation on terms decided by it.
If it could so compel the representatives, it would be insensible to suggest that it could not itself effect the settlement.
445 Clearly, the Court of Wards could itself settle a litigation in which two of its wards were involved even where representatives had been appointed under section 56.
The appointment of representatives could not hence have been intended to be obligatory.
In our view.
therefore, the section is clearly directory.
The failure to observe the provisions of the section did not render the compromise decrees in this case a nullity.
It is then said that there was in law no compromise in this case, A compromise, it is said, is a contract and in order that there may be a contract 'there must be two parties to it which there was not in this case.
It is contended that there was only one party in the present compromise, namely, the Deputy Commissioner, Barabanki.
It is true that there must be two parties to make a contract.
But it seems to us that the contention that there was only one party to the compromise proceeds on a misconception of its real nature.
It overlooks that the compromise was really between the two wards, the appellant and the respondent.
The compromise was brought about by the Court of Wards in exercise of its statutory powers.
That the Court of Wards could make a compromise on behalf of a ward is clear and not in dispute.
It does not lose its powers when it has two wards and can therefore make a compromise between them.
When it does so, it makes a contract between the two of them.
Therefore, to the present compromise there were two parties.
The act expressly contemplates a right in the Court of Wards to make a contract between two of its Wards.
Thus under section 61(1) of the Act, a contract executed by the Court of Wards for a ward may be executed in its own name or on behalf of the ward.
Under sub sec.
(3) of that section, when the transferor and transferee are both its wards, the Court of Wards shall have power to enter into convenants on behalf of the transferor and the transferee respectively.
Sub section (2) of section 61 provides that the convenants made by the Court of Wards on behalf of a ward shall be binding on the ward.
If the Court of Wards did not have the power to make a contract between two of its wards, it would 57 446 often be impossible to carry on the management of the wards ' properties beneficiently.
The power of the Court of Wards to make a contract for a ward is a statutory power.
We find nothing in the Act to indicate that such power does not exist for making a contract between two wards.
It is true that the cause titles of the appeals showed the Deputy Commissioner, Barabanki, as both the appellant and the respondent.
But that did not make the Deputy Commissioner himself a party to the appeals.
There, of course, cannot be a litigation unless there are two parties to it.
It will be remembered that in the cause titles the Deputy Commissioner, Barabanki, was described once as in charge of Ganeshpur estate and again as in charge of Ramnagar estate.
This indicates that the Deputy Commissioner was mentioned in the cause titles as representing the the two real parties, i.e., the appellant and the respondent.
Then again the Deputy Commissioner, Barabanki, was brought on the record because of section 55 of the Act.
The terms of that section have been set out earlier and they leave no doubt that the person Suing Or being sued is the ward and that the ward is suing or being sued in the name of the Collector.
Therefore also when the appeals were compromised, the compromise was between the parties to the appeals, namely, the appellant and the respondent.
It was not a compromise which the Deputy Commissioner, Barabanki, made with himself though he alone signed the compromise petition.
The contention that there was no compromise in this case because there were not two parties, must hence fail.
It is lastly said that the compromise decrees were a nullity in view of the principles embodied in Or.
XXXII of the Code of Civil Procedure.
That order deals with minors and persons of unsound mind and requires that when any such person is a party to a suit, the Court will appoint some one to be his guardian for the suit.
It is true that it is necessary that the person appointed as guardian should have no interest in the litigation against the person under disability.
It is 447 contended on behalf of the appellant that she was a person of unsound mind and so some disinterested person should have been appointed her guardian for the appeals and that the Deputy Commissioner, Barabanki, was not such a disinterested person as he was also interested in the respondent, the opposing party in the appeals.
It is said that the decrees passed in the appeals without another guardian having been appointed for the appellant are a nullity.
Now, Or.
XXXII, r.4(2) provides that where a person under disability has a guardian declared by a competent authority, no other person shall be appointed his guardian unless the Court considers for reasons to be recorded, that it is for the welfare of the person under disability that another person should be appointed as his guardian.
Section 27 of the Act gives the Court of Wards the power to appoint a guardian for a ward who is of unsound mind.
The Deputy Commissioner, Barabanki, was in fact appointed the guardian of the appellant under the Act when upon her lunacy, her estate came under the superintendence of the Court of Wards.
Her estate was in his charge.
Therefore, under the provisions of Or.
XXXII, r. 4, the Deputy Commissioner, Barabanki, was entitled to act as the appellant 's guardian for the appeals and the Court had not made any order a pointing another person to be her guardian.
The Court of Wards is a statutory body and was created to look after the interests of the wards.
Its constitution is such that it can be trusted to be impartial.
Its position is wholly different from that of a private guardian.
No fault can be found with the Court in having left the interests of the appellant in charge of the Court of Wards though it was also in charge of the interests of the respondent.
Indeed, it is at least arguable if the civil court could have by any order that it might have made, prevented the Court of Wards from discharging its statutory duty of looking after the interests of its ward.
Therefore it seems to us that the failure of the Court to appoint another person as the guardian of the appellant for the suits or the appeals did not make the compromise decrees a nullity.
448 One other point raised on behalf of the appellant remains to be considered.
It is said that in fact there was no compromise between the two wards.
Now, this is a question of fact and was not raised in the High Court.
The respondent had no chance of meeting the allegation of fact now made.
We also have not the advantage of the views of the High Court on this question of fact.
It would be unfair to the respondent to allow such a question to be raised now.
However that may be, we are satisfied that there was in fact a compromise made between the two wards by the Court of Wards.
Our attention has been drawn to the resolution passed by the Court of Wards directing the compromise to be made.
That, in our opinion, brought about the compromise between the two wards; it was the only way in which the Court of Wards could have brought about the compromise.
We may also point out that the compromise petitions were signed by the Deputy Commissioner, Barabanki, twice, once for each of the parties, and had been 'put into court by the lawyers respectively engaged for the parties for the purpose.
We, therefore, think that the contention that there was in fact no compromise is entirely without force.
In our opinion, these appeals must fail and they are therefore dismissed with costs.
SUBBA RAO J. I have had the advantage of perusing the judgment of my learned brother, Sarkar, J.
I regret my inability to agree with him.
The facts of the case and the progressive stages of the litigation are fully stated in the judgment of my learned brother, and it is not necessary to restate them here in detail.
It would suffice if the factual basis giving rise to the main controversy in the case be stated.
The appellant was the owner of Ganesbpur estate and the respondent of Ramnagar estate.
Both of them became wards of the Court of Wards and both the estates were under the management of the Deputy Commissioner, Barabanki.
Between the two estates there was litigation and at the crucial point of time, 449 two appeals, being F.C.A. No. 99 of 1947 and F.C.A. No. 2 of 1948, were pending on the file of the High Court at Allahabad.
The cause titles in the appeals give the following array of parties F.C.A. No. 99 of 1947 Deputy Commissioner, Barabanki, I/C Court of Wards, Ganeshpur estate, district Barabanki.
Appellant versus Deputy Commissioner, Barabanki, I/C Court of Wards, Ramnagar estate, district Barabanki.
Respondent F.C.A. No. 2 of 1948 Deputy Commissioner, Barabanki, I/C Court of Wards, Ramnagar estate, district Barabanki.
Appellant versus Deputy Commissioner, Barabanki, I/C Court of Wards, Ganeshpur estate, district Barabanki.
Respondent It is clear from the said array of parties in the appeals that the same person represented both the estates, and the Deputy Commissioner, Barabanki, was both the appellant and respondent.
It appears that the Court of Wards effected a settlement between the two wards in respect of the outstanding disputes between them, and, presumably as directed by the Court of Wards, the Deputy Commissioner, Barabanki, filed a petition in the High Court for recording the compromise.
The petition was signed by Sri K. A. P. Stevenson, I.A.S., Deputy Commissioner, Barabanki, on behalf of both the estates.
On May 2, 1952, the High Court passed a decree in terms of the said compromise.
The said facts give rise to a short but difficult question, namely, whether the compromise effected was a nullity entitling the appellant to ignore it and to have the appeals disposed of on merits.
The main argument of Mr. Niamatullah, the learned Counsel for the appellant, may be summarized thus: Section 56 of the U.P. Court of Wards Act, 1912 450 (hereinafter called the Act) imposes a statutory duty on the Court of Wards to appoint separate representatives when in a suit there are conflicting claims between two of its wards, and the Court has no jurisdiction to proceed with such a suit and make any order or decree on merits or on compromise unless such an appointment is made.
In the present case, admittedly no such appointment was made and the compromise petition was filed by the Deputy Commissioner, Barabanki, in his dual capacity as the appellant as well as the respondent, and, therefore, the decree made therein was a nullity.
If it was a nullity, the argument proceeds, the Court should ignore it and dispose of the appeals as if they were still on its file.
This argument, if accepted, would entail the acceptance of the appeals.
As I propose to do so, it is unnecessary to particularize the other contentions of the learned Counsel or give my findings thereon.
For the same reason, the counter argument of the learned Additional Solicitor General may conveniently be confined only to the said argument.
While conceding that the application under section 151 of the Civil Procedure Code was maintainable if the decree was a nullity, the learned Counsel for the respondent contends that notwithstanding the non compliance of the provisions of section 56 of the Act, the High Court had jurisdiction to record the compromise lawfully effected by the Court of Wards, and therefore, the decree was not a nullity and could not be ignored.
The question falls to be decided on a true interpretation of the provisions of section 56 of the Act.
Section 56 appears in Chapter VII of the Act dealing with suits.
It would be convenient at the outset to read sections 55 and 56 of the Act.
section 55: "No ward shall sue or be sued nor shall any proceedings be taken in the civil court otherwise than by and in the name of the Collector in charge of his property or such other person as the Court of Wards may appoint in this behalf.
" section 56: " When in any suit or proceeding two or more wards being parties have conflicting interests, 451 the Court of Wards shall appoint for each such ward a representative and the said representative shall thereupon conduct or defend the case on behalf the ward whom he represents, subject to the general control of the Court of Wards.
" These two sections are placed in juxtaposition and they appear to be complementary to each other.
Section 55 prescribes the mode or proceeding by or against the ward in a court.
Ordinarily, he should sue or be sued in the name of the Collector in charge of his pro.
perty.
It also visualizes the contingency when a Court of Wards may appoint in its discretion some other person instead of the Collector for the Purpose of this section.
56 deals with a particular situation, namely, when there are conflicting interests between the wards who are parties to a suit, and, in that event, a duty is cast on the Court of Wards to appoint separate representatives for each such ward.
The object of section 56 is selfevident; for, in the contingency contemplated by that section, an anomalous situation is created, if the general rule prescribed by section 55 is followed, for both the plaintiff and the defendant would be the Collector, a procedure that cannot be tolerated by any civilised jurisprudence.
That apart, the procedure is obviously detrimental to the interests of the wards, for there is every danger of their respective interests not being protected and properly represented in the court.
To avoid this anomaly and obvious prejudice to the parties, section 56 has been enacted.
A combined reading of the said provisions therefore indicates that the procedure, laid down in section 55 must, in the contingency contemplated by section 56, give way to the procedure prescribed by the latter section.
The next question is what does the word " representative " in section 56 mean ? Does it mean, as the learned, Additional Solicitor General contends, an agent who is entrusted with the duty of assisting the Collector, or., as the learned Counsel for the appellant argues, one who represents the ward in a suit by being brought on record as his representative ? The word " representative " has in law different meanings.
To represent means " to stand in place of " and a representative 452 is one, who stands in the place of another.
The word " reprsentative " with prefixes like legal ' or personal ' added or not, when used with reference to ownership of land may mean an heir, executor or legatee.
But in the context of a suit, the word is also used in the sense that, one who represents another, when the latter is a disqualified person like a minor or a lunatic.
In this category come guardians.
They are appointed by court to represent a minor or a lunatic, as the case may be, and the suit without such representative cannot legally proceed.
But a statute may confer power upon an authority other than the court to appoint a representative to a disqualified person.
That is the position in the present case.
A statutory representative acts for, and in the place of, a disqualified ward and without such valid representative on record the suit cannot legally proceed, just like in the case of a minor or a lunatic to represent whose interests no guardian is appointed.
If the intention of the legislature was only to provide for the appointment of a separate agent to help the Collector, who had a dual role to perform, it would have used the word " agent " in the section.
That apart, the Collector does not require the statutory power to appoint an agent to help him in the conduct of a suit; for, as a party to the suit, he can always appoint separate Advocates for the two wards.
That the word " representative" does not mean an agent but is intended to convey the idea of one representing a ward and as such brought on record in that capacity, is made clear by the other provisions of the Act wherein the same word appears.
Section 57 of the Act reads: " (1) Where any question arises as between two or more wards of such nature that an adjudication upon it by a civil court is expedient, it shall be lawful for the Court of Wards to appoint a representative on behalf of each ward.
The representative so appointed shall prepare a statement containing the point or points for determination and shall on behalf of the said wards file the statement in a civil court having jurisdiction in the form of a case for the opinion of the said court, 453 (2) The civil Court shall then proceed to hear and dispose of the case in the manner prescribed by the Code of Civil Procedure, 1908, for the hearing and disposal of suits.
(3) The case shall be conducted on behalf of the wards by their representatives appointed under subsection (1) of this section subject to the general control of the Court of Wards.
" It is manifest from this section that the duty of the representative under section 57 is not to act as a clerk or an assistant to the ward but to represent him in the proceedings.
He would be on record representing the ward and it is impossible to contend that the proceedings under section 57 of the Act can either be initiated or disposed of without a representative being appointed in that behalf.
Section 58 of the Act reads: "When it appears to the Court of Wards that any question or dispute arising between two or more wards is a fit subject for reference to arbitration, it may appoint a representative on behalf of each such ward and require the said representatives to submit the question or dispute to the arbitration of such person or persons as it may approve." Under this section also the appointment of a representative on behalf of each ward is a pre requisite for the initiation and conduct of arbitration proceedings.
Here also the representative is not appointed to assist the ward but to represent him in the proceedings.
It is a well known rule of construction that a similar meaning should be given to the word " representative " in the Act unless the context requires otherwise.
The object of the appointment of a representative under sections 56, 57 and 58 of the Act is the same and the same meaning should be given to that word, namely, that the representative appointed is one who represents the ward in the proceedings and is brought on record as such.
Laying emphasis on the word " conduct " or defend " in section 56 of the Act and on the omission of the word " compromise " therein, it is contended that the representative appointed thereunder has no 58 454 power to ' enter into a compromise.
The section does not, in my View, bear out this construction.
The first part of the section enjoins on the Court of Wards to appoint a representative to each of the wards and then the second part proceeds to state that such a representative should thereupon conduct or defend the case.
The later part of the section does not define the meaning of the word " representative " and limit its scope, but only brings out the idea that the suit shall not proceed till such a representative is appointed.
A person appointed to represent a disqualified person shall have all the powers of a party subject to the limitations imposed by relevant statutes and the only limitation imposed by section 56 of the Act is that the said representative is subject to the general control of the Court of Wards.
It follows that the representative can enter into a compromise subject, to the general control of the Court of Wards.
Assistance is sought to be derived by the Additional Solicitor General from decisions distinguishing between the powers of a Solicitor and a Counsel and holding that a Solicitor being only a representative cannot enter into a compromise without the consent of the client, while the latter being in charge of the entire litigation can do so.
In my view these decisions are based upon the peculiar characteristics of the two branches of the profession and cannot legitimately be invoked to construe the provisions of section 56 of the Act.
Nor the fact that the representative appointed under section 56 of the Act is subject to the general control of the, Court of Wards can be relied upon to subvert the operation of the section itself.
The question of control arises only after a representative is appointed and the appointing authority cannot obviously ignore its statutory duty and purport to exercise the duties of representatives in exercise of its power of general control over non existent representatives.
Assuming that the representative has no power to compromise the suit, it does not materially affect the ,question raised in this case.
In that view the authority empowered to do so has to effect the compromise, put the same in court through the representatives and 455 obtain a decree thereon.
But that does not dispense with the appointment of representatives to conduct and defend the suit, for without such representation the suit itself could not be proceeded with and a decree could not be obtained on the compromise.
Lastly, it is said that the provisions of the section are directory and noncompliance thereof would not affect the validity of the compromise decree, if in fact the compromise was effected bona fide by the competent authority.
The word " shall " in its ordinary import is "obligatory ", but there are many decisions wherein the courts under different situations construed the word to mean " may ".
The High Court in this case relied upon the observations of this Court in Jagan Nath vs Jaswant Singh (1) which run as follows: " It is one of the well recognized rules of interpretation that a provision like this should be held to be non mandatory unless non compliance with the provisions was visited with some penalty.
" A perusal of the judgment does not disclose that this Court has laid down any such inflexible rule of construction.
It was construing the word " shall " in section 82 of the Representation of the People Act, 1951, ' which lays down that a, petitioner shall join as respondent to his petition all the candidates who were duly nominated at the election other than himself.
Having regard to the other provisions of the Act, particularly to section 85 thereof, and the construction put upon a similar word in Order XXXIV, rule 1, of the Civil Procedure Code, this Court held that the word " shall " in section 82 was only directory.
This Court did not purport to lay down any broad proposition that whenever the word " shall " is used in a statute it should be construed as directory unless non compliance with the provision is made penal.
Nor the decision in The Queen vs Ingall (2) lays down any such wide rule of construction.
Under section 42 of Valuation (Metropolis) Act, 1869, provision is made for the performance of several acts within the times prescribed therein.
Every matter connected with the valuation must be transacted before the 31st of March, for the (1) ; , 901.
(2) , 207 456 list comes into force on the 6th April.
But there are other sections whereunder provision is made for preparing the valuation lists where there has been omission to make them according to the requirements of the Act.
The observance of times is not enforced by penalties.
The Court held that, notwithstanding the use of the word "shall " in section 42 of the Valuation (Metropolis) Act, 1869, the provision is only directory.
In construing the provisions in such a manner, Lush, J., observed: " We ought to look at the object which the legislature contemplated in passing the Valuation (Metropolis) Act, 1869 But we must, in construing the Act, strike a balance between the inconvenience of holding the list to be null and void and the risk of allowing injury to be done by the delay in making the list; the former seems to me the greater evil, and therefore in my opinion we ought to hold the list to be valid." This judgment is, therefore, an authority for the position that the intention of the legislature should be gathered from the object of the Act and also by striking a balance between the possible inconvenience that would be caused in accepting the one or other of the views.
The decision in Caldow vs Pixwell (1) deals with the provisions of section 29 of the Ecclesiastical Dilapidations Act, 1871, which says that within three calendar months after the avoidance of any benefice, the bishop shall direct the surveyor, who shall inspect the buildings of such benefice, and report to the bishop what sum, if any, is required to make good the dilapidations to which the late incumbent or his estate is liable.
It was held that the provisions as to the time within which the bishop is to direct the surveyor to inspect and report upon the buildings of a benefice after its avoidance is directory only, and not imperative; and that a direction to inspect and report made by a bishop more than three months after the avoidance of a benefice may be valid.
Denman, J., restates the following rules of guidance for construing such provisions: (i) The scope and object of a statute (1) (1876) a C.P.D. 562.
457 are the only guides in determining whether its pro.
visions are directory or imperative; (ii) in the absence of an express provision the intention of the legislature is to be ascertained by weighing the consequences of holding a statute to be directory or imperative; and (iii) the statute imposes a public duty upon the Bishop, and it does not create a power or privilege for the benefit of the new incumbent as a private person.
On those grounds, among others, the learned Judge held that the provision was only directory.
Venkatarama Ayyar, J., in Hari Vishnu Kamath vs Syed Ahmad Ishaque (1) made the following observ.
ations: " They (the rules) are well known, and there is no need to repeat them.
But they are all of them only aids for ascertaining the true intention of the legislature which is the determining factor, and that must ultimately depend on the context.
" In Craies on Statute Law, 5th Edn., the following passage appears, at p. 242: "No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience.
It is the duty of Courts of Justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.
" Bearing the aforesaid principles in mind let us look at the provisions of section 56 of the Act.
The object of section 56 of the Act is to prevent the anomaly of the same person occupying a dual role of plaintiff and defendant and to provide for an effective machinery to safeguard the interests of the wards who are placed under the supervision of the Court of Wards.
Should it be held that the appointment of a representative was at the discretion of the Court of Wards, the entire object of the section would be defeated.
A person for whose 'benefit the provision was conceived would be represented by the opposite party, a situation anomalous in the extreme.
On the other hand, no evil consequences can ordinarily be expected to flow if the provision be (1) ; , 1126.
458 construed as mandatory.
A statutory body like the Court of Wards can be relied upon to discharge the duties cast upon it by section 56 of the Act.
Even if it fails, the suit or the appeal, as the case may be, will be heard on merits or a fresh compromise may be effected after following the prescribed procedure.
The balance of convenience is on the side of the provision being construed as mandatory rather than as directory.
In the circumstances, I must hold that the intention of the legislature is to make the provision mandatory and therefore the word "shall" cannot be construed as "may" as contended by the learned Counsel for the respondent.
I cannot accept the contention of the learned Additional Solicitor General that even though section 56 is mandatory, the non compliance of the provisions of the section does not affect the validity of the compromise.
If, as I have held, the appeal could not be proceeded with without the statutory representative on record, the whole proceeding, including the passing of the compromise, without such representative, was null and void.
Before closing the discussion, a reference to the decision of the Judicial Committee in Braja Sunder Deb vs Rajendra Narayan Bhanj Deo (1) is necessary, as strong reliance is placed upon it in support of the contention that non compliance of the mandatory provision of section 56 would not affect the validity of the compromise decree.
There a suit between Raja Rajendra Narayan Bhanj Deo and Raja Braja Sunder Deb, who became the ward of the Court of Wards after the institution of the suit, was compromised.
The compromise petition was put in the Court and a decree was made thereon.
Before the High Court, for the first time, a technical objection was taken.
The Subordinate Judge decreed the suit in terms of the compromise and a formal decree dated December, 22, 1922, was drawn and in the cause title of the decree the manager of the Court of Wards was shown as second defendant while he should have been described as the representative of the first defendant.
But in (1) (1937) L.R. 65 I.A.57.
459 the body of the decree it was clearly mentioned that the manager of the Court of Wards had been substituted as guardian for the ward.
It was contended therein for the appellant that as the manager of the Court of Wards was made an additional defendant and not made a guardian ad litem of the appellant, the compromise decree in the suit was not binding on him.
The Judicial Committee negatived the contention and held that if the proper parties were on the record and were dealt with on the correct footing, the mere want of formality would not make void the bargain of the parties and the decree of the Court.
But in the present case, a mandatory provision had not been complied with and the suit proceeded with the Collector as both the plaintiff and defendant.
The wards were not represented by their separate representatives for the simple reason that no representatives were appointed.
There is no analogy between that decision and the present case.
For the aforesaid reasons I hold that the compromise decree was a nullity and the appeal must be deemed to be pending on the file of the High Court.
In this view, I am relieved of the duty of expressing my opinion on the other questions raised and seriously argued, namely, whether the Court of Wards has power to settle conflicting disputes between two wards and whether such a settlement would be a lawful agreement within the meaning of Order XXIII, rule 3 of the Code of Civil Procedure.
In the result, the order of the High Court is set aside and it is directed to dispose of the appeals in accordance with law.
The appellant will have his costs here and in the High Court.
By the Court: In accordance with the opinion of the majority, the appeals stand dismissed with costs.
| The respondent, proprietor of Ramnagar Estate, filed a suit against the appellant, proprietor of Ganeshpur Estate, for the recovery of certain properties.
The appellant filed a cross suit against the respondent.
During the pendency of the suits the appellant was declared to be a person of unsound mind and the Court of Wards assumed superintendence of her properties under the U. P. Court of Wards Act, and placed them in charge of the Deputy Commissioner of Barabanki.
Thereupon the cause titles on the suits were amended and in place of the appellant 's name the 'Deputy Commissioner, Barabanki I/C Court of Wards Ganeshpur Estate ' was substituted.
The Trial Court partly decreed the respondent 's suit and dismissed the appellant 's suit.
Both parties preferred appeals to the High Court.
While the appeals were pending the Court of Wards took over the Estate of the respondent also and placed it also in charge of the Deputy Commissioner, Barabanki.
The cause titles of the appeals were then amended and for the name of the respondent, the name 'Deputy Commissioner, Barabanki I/C Court of Wards Ramnagar Estate ' was substituted.
Thereafter, the Court of Wards passed a resolution settling the appeal on certain terms and under its instructions the lawyers for the parties presented petitions to the High Court for recording compromises in the appeals.
The High Court passed decrees in terms of the compromises.
Shortly afterwards the Court of Wards released the two estates.
Later, the appellant recovered from her affliction, and was declared to be of sound mind.
She presented two applications to the High Court alleging that the compromise decrees were a nullity and praying for a proper disposal of the appeals.
The High Court rejected the applications.
The appellant contended, that the compromise decrees were a nullity (i) as the Court of Wards had not complied with the mandatory provisions of section 56 of the Act, (ii) as there could not in law be a compromise unless there were two parties but in this case there was only one party the Deputy Commissioner, Barabanki and (iii) as the High Court failed to appoint a disinterested person.
as I guardian of the appellant who 432 was of unsound mind under 0.
XXXII of the Code of Civil Procedure.
Held, (per section K. Das and A. K. Sarkar, jj ), that the compromise decrees were not a nullity and were binding on the parties.
Section 56 of the Act which provided that when in a suit or proceeding two or more wards had conflicting interests, " the Court of Wards shall appoint for each such ward a representative " to conduct or defend the case on behalf of the ward whom he represented was clearly direct and the failure of the Court of Wards to observe the provisions thereof did not render the compromise decrees a nullity.
A directory provision did not give discretionary power to do or not to do the thing directed ; it was intended to be obeyed but a failure to obey it did not render a thing duly done in disobedience of it a nullity.
When the appeals were compromised, the compromise between the parties to the appeals, namely, the appellant and the respondent.
It was not a compromise which the Deputy Commissioner, Barabanki, made with himself though he repre sented both the parties.
There was nothing in the Act which indicated that the Court of Wards did not have the power of making a contract between two wards.
The Deputy Commissioner, Barabanki had been appointed the guardian of the appellant under the Act, and he was entitled to act as her guardian for the appeals under 0.
XXXII, r. 4 Of the Code.
The Court of Wards was different from a private guardian and could be trusted to be impartial.
The High Court was right in leaving the interests of the appellant in charge of the Court of Wards though it was also in charge of the interests of the respondent.
Per K. Subba Rao, J.
The compromise decrees were a nullity.
The provisions of section 56 of the Act were mandatory and a non compliance therewith vitiated the proceedings.
The inten tion of the legislature should be gathered from the object of the Act and from a consideration of the inconvenience that may be caused by accepting the one or the other of the views.
The object of section 56 was to prevent the anomaly of the same person representing two conflicting interests and to safeguard the interests of the wards placed under the supervision of the Court of Wards.
No inconvenience would result from holding the provisions to be mandatory.
The word " shall " in section 56 could not be read as " may ".
jagan Nath vs jaswant Singh; , , Queen vs Ingall, , Caldow vs Pixwell, , Hari Vishnu Kamath vs Syed Ahmad Ishaque, ; and Braja Sunder Deb vs Rajendra Narayan Bhanj Deo, (1937) L.R. 65 I.A. 57, referred to.
|
Appeal No. 626 of 1986 etc.
From the Judgment and Order dated the 7th June, 1984 of the Kerala High Court in O.P. No. 6642 of 1982 Soli J. Sorabji, G.V. lyer, A.S. Nambiar, section Kumar, E.M.S. Anam and R.N. Keswani for the Appellants.
T.S.K. Iyer, V.J. Francis and N.M. PopIi for the Respond ents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
All these appeals are by special leave and are directed against judgments rendered by the Kerala High Court in Writ Petitions filed before it.
The High Court in each case refused to grant relief.
656 Two Notifications/Orders issued by the State Government are relevant.
The first one is dated 11.4.
1979 and the second is.
dated 29.9.1980 which was published in the State Gazette on 21.10.1980.
For convenience, the texts of the two Notifications/Orders are extracted below: "Order dated 11.4.1979: The incentives now given to the industries in the State are too meagre and inadequate to attract industries to this State when compared to the incentives available for the industries in many other States.
Further there are cer tain inherent disincentives.
also peculiar to this State such as high wage rates, minimum wages for certain sections, lack of availabil ity of raw materials, etc.
The question of offering some incentives by the State to attract new industries has been under consid eration of the Government.
The question whether any additional incentive can be given to the industrial concern the State plans to consider in detail and it was felt that the question of strength ening the traditional industries which are labour intensive, rehabilitation of sick units and the promotional activities for the growth of new industries should be examined in depth for indentifying the problems and adoption of various measures necessary to promote indus trial growth in the State.
A Committee con sisting of the following officers was there fore set up to study the various problems and submit report . . . . . . ." The Committee finalised its report on 20th March, 1979.
The Government has considered the recommendations and sugges tions of the Committee in detail and they are pleased to approve the following package of measures for promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales Tax Concessions: New industrial Units under small scale industries set up after 1.4.1979 will be exempted from the payment of sales tax for a period of five years from the date of pro duction . . . . . 657 The relevant portion of the second notification reads thus: "In exercise of the power conferred by section 10 of the Kerala General Sales Tax Act ( 15 of 1963) the Government of Kerala have considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act on the turnover of the sale of goods produced and sold by the new industrial units under the small scale indus tries for a period of five years from the date of commencement of sale of such goods by the said units subject to the conditions that if the tax collected by any such units by way of tax on their sales shall be paid over to Government and that the sales tax, if any, already paid by such units to Government shall not be refunded.
Provided that such units shall pro duce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemp tion from sales tax.
Provided further that the cumulative sales tax concessions granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit.
EXPLANATION: For the purpose of this notifi cation new industrial unit under the Small Scale Industries shall mean undertakings set up on or after1st April, 1979 and registered with the Department of Industries and Commerce as a small scale industrial unit.
This notification shall be deemed to have come into force with effect from 1st April, 1979".
Section 10 of the Kerala General Sales Tax Act at the time the two orders were made ran thus: "Power of Government to grant exemption and reduction in rate of tax: (1) The Government may, if they consider it necessary in the public interest, by noti fication in the Gazette, make an exemption or reduction in rate (either pros 658 pectively or retrospectively) in respect of any tax payable under this Act; (i) on the sale or purchase of, any specified goods or class of goods, at all points or at a specified point or points in the series of sales or purchases by successive dealers.
or (ii) by any specified class of persons in regard to the whole or any part of their turnover.
(2) Any exemption from tax, or reduction in the rate of tax, notified under sub section (1): (a) may extend to the whole State or to any specified area or areas therein; (b) may be subject to such restrictions and conditions as may be specified in the notifi cation; (3) The Government may, by notification in the Gazette, cancel or vary any notifica tion issued under sub section (1).
" It may be possible to contend with plausibility that in the absence of an enabling provision in the statute the State Government would not have the power to give up a part of the tax due to the State and there can be no estoppel against statute.
But that question does not arise here because we have Section 10 empowering the State Government to grant exemption from tax.
During the heating of the appeals it has been contended that the notifications in question were not in exercise of the powers under section 10 of the Act.
The High Court has proceeded ' on the footing that the first order dated 11.4.
1979 was not made in exercise of statutory powers while the second order was issued in exercise of powers under section 10.
Having read the two orders and the contents, we are of the view that both the orders are covered by the provisions of section 10 of the Act though in the earlier order there is no reference to section 10.
It is a well settled princi ple of law that where the authority making an order has power conferred upon it by statute to make an order made by it and an order is made without indicating the provision under which it is made, the order would be deemed to have been made under the provision enabling the making of it, We accordingly hold that both the orders are under section 10 of the Act.
659 Under the order dated 11.4.1979, new small scale units were invited to set up their industries in the State of Kerala and with a view to boosting of industrialisation, exemption from sales tax and purchase tax for a period of five years was extended as a concession and the five year period was to run from the date of commencement of produc tion.
If in response to such an order and in consideration of the concession made available, promoters of any small scale concern have set up their industries within the State of Kerala, they would certainly be entitled to plead the rule of estoppel in their favour when the State of Kerala purports to act differently.
Several decisions of this Court were cited in support of the stand of the appellants that in similar circumstances the plea of estoppel can be and has been applied and the leading authority on this point in the case of M.P. Sugar Mills vs State of U.P., ; On the other hand, reliance has been placed on behalf of the State on a judgment of this Court in Bakul Cashew Co. vs Sales Tax Officer, Quilon, [1986] 2 SCC 365.
In Bakul Compa ny 's (supra) case this Court found: "That there was no clear material to show any definite or certain promise had been made by the Minister to the concerned persons and there was no clear material also in support of the stand that the parties had altered their position by acting upon the representations and suffered any prejudice.
On facts, there fore, no case for raising the plea of estoppel has been made out." This Court proceeded on the footing that the notification granting exemption retrospectively was not in accordance with section 10 of the State Sales Tax Act as it then stood, as there was no power to grant exemption retrospectively.
By an amendment that power has been subsequently conferred.
In these appeals there is no question of retrospective exemp tion.
We also find that no reference was made by the High Court to the decision in M.P. Sugar Mills ' case (Supra).
In our view, to the facts of the present case, the ratio of M.P. Sugar Mills ' case directly applies and the plea of estoppel is unanswerable.
It is not disputed that the first Order namely, the one dated 11.4.
1979 gave more of tax exemption than the second one.
The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the Notification.
All parties before us who in response to the Order of April 11, 1979 set up their industries prior to 21.10.1980 within the State of Kerala would thus be entitled to the exemption 660 extended and/or promised under that Order.
Such exemption would continue for the full period of five years from the date they started production.
New industries set up after 21.10.
1980 obviously would not be ,entitled to that benefit as they had noticed of the curtailment in the exemption before they came to set up their industries.
In the course of hearing and in the written submissions furnished on behalf of the State it was contended that the question as to which of the appellants are entitled to the benefit should be left to the Sales Tax Authorities to decide.
We are of the view that once the law is settled, that part of the decision may be left to the Departmental authorities and they may decide the question on merits in appropriate proceeding in accordance with the law laid down in this judgment.
Each of the appeals is allowed.
Parties are directed to bear their own costs throughout.
P.S.S. Appeal allowed.
| Section 10 of the Kerala General Sales Tax Act, 1963 empowers the Government in public interest to make an exemp tion or reduction in rates either prospectively or retro spectively in respect of any tax payable under the Act.
The State Government with a view to boost industrialisa tion, by an order dated 11th April, 1979 offered incentive to Small Scale industries, to be set up thereafter, in form of exemption from sales tax and purchase tax for a period of five years from the date of commencement of production.
By a second order dated 29th September, 1980, published in the Gazette on 21st October, 1980 purported to be made under section 10 of the Act, the Government withdrew the exemption relat ing to purchase tax and confined the exemption from sales tax to the limit specified.
The appellants who set up their industries after April 11, 1979, including those who did it after 21st October, 1980, claimed benefit of exemption from purchase tax and sales tax in terms of the first order.
They pleaded the rule of estoppel against the State Government in making the second order.
The High Court in dismissing their Writ Peti tions proceeded on the footing that the first order was not made in exercise of statutory power while the second order was issued under I0 of the Act.
Allowing the appeals by Special Leave, the Court, HELD: I. Where the authority making an order has power conferred upon it by statute to that effect, such an order if made without 655 indicating the section under which it is made, it would be deemed to have been made under the enabling provision.
In the instant case, therefore, both the orders are covered by section 10, though in the earlier order there was no reference to the statutory provision.
[658G H] 2.
The appellants who in response to the first order dated April 11, 1979 set up their industries prior to 21st October, 1980 would be entitled to exemption extended and/or promised under that order.
Such exemption would continue for the full period of five years from the date they started production.
New industries set up after 21st October, 1980 would not be entitled to that benefit as they had noticed of the curtailment in the exemption before they came to set up their industries.
They would be entitled to exemption from sales tax only to the limit specified in the second order.
[659G 600A] 3.
If in response to an order made by the Government and in consideration of the concession made available therein the promoters of any small scale concern set up their indus tries within the State, they would certainly be entitled to plead the rule of estoppel in their favour when the State purports to act differently.
In the facts of the present case, however, the plea of estoppel is unanswerable.
[659B. F] Motilal Padampat Sugar Mills Co. Ltd. vs State of U.P. ; , Bakul Cashew Co. vs Sales Tax Officer, Quilon, [1986] 2 SCC 365, referred to.
|
section 443 of 1955 and 40 41 of 1956.
Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
M. C. Setalvad, Attorney General of India, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P.L. Vohra, for the petitioners (In all the petitions).
R. H. Dhebar and T. M. Sen, for the State of Madras.
K. V. Suryanarayana Iyer, Advocate General for the State of Kerala and T. M. Sen, for the State of Kerala.
A. V. Viswanatha Sastri and M. R. Krishna Pillai, for respondents Nos. 2 to 9.
Purshottam Trikamdas and M. B. Krishna Pillai, for respondent No. 12 (In Petn.
40 41 of 56).
A. V. Viswanatha Sastri and K. R. Krishnaswami, for respondents Nos. 13 and 15 17 (In Petn.
No. 443 of 55).
K. B. Krishnaswami for respondents Nos. 11 and 14 (In all the petitions).
892 Purshottam Trikamdas and K. R. Krishnaswami, for respondent No. 12 (In Petn.
No. 443 of 55).
A.V. Viswanatha Sastri and M. R. Krishna Pillai, for Intervener No. 1.
Sardar Bahadur, for Intervener No. 2. 1960.
May 4.
The judgment of Sinha, C. J., Subba Rao and Shah, JJ., was delivered by Subba Rao, J.
The judgment of Imam and Sarkar, JJ. was delivered by Sarkar, J. SUBBA RAO, J. These three connected petitions filed under article 32 of the Constitution raise the question of the constitutional validity of the Madras Marumakkathayam (Removal of Doubts) Act, 1955, (Madras Act 32 of 1955) (hereinafter referred to as the impugned Act).
These petitions were heard by this Court on a preliminary question raised by the respondents and the judgment thereon was delivered on March 4, 1959.
This Court rejected the preliminary objection and directed the petitions to be heard on merits, and pursuant to that order, these petitions were posted for disposal on merits.
The facts have been fully stated by Das, C. J., in the preliminary judgment and it would, therefore, be sufficient if the relevant facts pertaining to the questions raised were stated here.
The petitioner in Petition No. 443 of 1955 is Kavalappara Kottarathil Kochunni Moopil Nair.
He is the holder of the Kavalappara sthanam to which is attached Kavalappara estate situate in Walluvanad Taluk in the district of South Malabar.
In pre British times the Kavalappara Moopil Nair, who was the senior most male member of Kavalappara Swaroopam (dynasty), was the ruler of Kavalappara territory.
He had sovereign rights over his territory.
Besides the Rajasthanam, the Kavalappara Moopil Nair held five other sthanams granted by the Raja of Palghat for rendering military services and two other sthanams granted to his ancestors by the Raja of Cochin for rendering similar services.
Properties are attached to each of these sthanams.
The petitioner 's immediate predecessor died in 1925 and the petitioner became the Moopil Nair of Kavalappara estate and as such the sthanee of the properties 893 attached to the various sthanams held by him.
The petitioner in Petition No. 443 of 1955 will hereafter be referred to as " the sthanee ".
Respondents 2 to 17 are the junior members of the Kavalappara tarwad, and, according to the sthanee, they have no interest in the said properties.
In 1932, the Madras Marumakkathayam Act (Mad.
Act XXII of 1932) came into force where under the members of a Malabar tarwad were given a right to enforce partition of tarwad properties or to have them registered as impartable.
After some infructuous proceedings under the provisions of the said Act, respondents 10 to 17, who then constituted the entire Kavalappara tarwad, filed O.S. No. 46 of 1934 in the court of the Subordinate Judge of Ottapalam for a declaration that all the properties under the management of the sthanee were tarwad properties belonging equally and jointly to the sthanee and the members of the tarwad.
The Subordinate Judge dismissed the suit.
On appeal, the High Court of Madras on April 9, 1943, allowed the appeal and reversed the decision of the Subordinate Judge and decreed the suit,.
On farther appeal to the Privy Council, the Board by its judgment dated July 29, 1947, restored the judgment of the Subordinate Judge.
The Privy Council found that the Kavalappara estate in Walluvanad Taluk was an impartible estate and that nothing had happened to alter the original character of the property in its relation to the members of the family.
On that finding, the Privy Council held that respondents 10 to 17 were not entitled to the declaration they sought in that case.
The result of that litigation was that all the properties in the possession of the sthanee were declared to be sthanam properties and that the members of the tarwad had no interest therein.
After the title of the sthanee was thus established, the Madras Legislature passed the impugned Act in 1955.
Under the impugned Act, every sthanam possessing one or other of the three characteristics mentioned therein it is common case that the impugned Act applies to the petitioner 's sthanam shall be deemed and shall be deemed always to have been properties belonging to the tarwad.
The sthanee 116 894 states that the impugned Act is ultra vires the Madras Legislature, void and inoperative and that the said Act cannot affect the rights of the sthanee or his estate to any extent.
The first petitioner in Petition No. 40 of 1956 is the wife of the sthanee, who has also been added as respondent 18 to this petition ; and petitioners 2 and 3 therein are their daughters.
The first respondent to the said petition is the State of Madras and respondents 2 to 17 are the members of the tarwad.
On August 3, 1955, the sthanee executed a gift deed in favour of the petitioners in the said petition in respect of properties granted to his predecessor by the Raja of Palghat.
This petition raised the same questions as Petition No. 443 of 1955 and seeks for the same reliefs.
Petition No. 41 of 1956 is filed by Ravunniarath Rajan Menon, who is the son of the sthanee.
The first respondent therein is the State of Madras and respondents 2 to 17 are the members of the tarwad and respondent 18 is the stanee.
This petitioner alleges that on August 3, 1955, the sthanee executed a gift deed in his favour in respect of the properties granted to the sthanee 's predecessor by the Raja of Cochin.
This petition contains similar allegations as the other two petitions and asks for similar reliefs.
The learned Attorney General, appearing for the petitioners in all the three petitions, raised before us the following points: (1) The impugned Act is constitutionally void, because it offends against article 14 of the Constitution.
(2) It is also void because it deprives the sthanee of his fundamental right to hold and dispose of property and thereby offends against article 19(1) (f) of the Constitution and is not saved by cl.
(5) of article 19.
(3) The impugned Act is further bad because it has been made by the Legislature not in exercise of its legislative power but in exercise of judicial power.
Learned counsel for the respondents while countering the arguments advanced by the learned Attorney General raised two further points, viz., (1) the petitioner 's sthanam is an " estate " within the meaning of article 31A of the Constitution and therefore the Act 895 extinguishing or modifying the rights pertaining to the said sthanam cannot be questioned on the ground that it infringes articles 14, 19 and 31 of the Constitution; and (2) the impugned Act purports to deprive the petitioner of his sthanam properties by authority of law within the meaning of article 31(1) of the Constitution and, as he is legally deprived of his properties, article 19(1) (f) of the Constitution has no application, for, it is said, article 19(1) (f) pre supposes the existence of the petitioner 's title to the sthanam and its properties, and, as he is deprived of his title therein by the impugned Act, he can no longer rely upon his fundamental right under article 19(1) (f).
Learned counsel for the respondents further contended that the gifts of the sthanam properties by the sthanee in favour of the petitioners in the other two petitions were void and that, therefore, they have no fundamental right to enable them to come to this Court under article 32 of the Constitution.
Before we pass on to the merits of the case, it would be convenient at the outset to clear the ground.
It cannot be disputed that the impugned Act passed by the Madras Legislature could not have had any extra territorial operation so as to affect the properties in the quondam Cochin State.
It is not disputed that, after the States Reorganization, the provisions of the Act were not extended by any legal process to the properties situate in that area of the Kerala State which originally formed part of Cochin State.
In the premises, we are not called upon to decide the fundamental right of the sthanee in respect of the sthanam properties in the said area.
We do not also propose to express any opinion on the validity or otherwise of the gift deeds executed by the sthanee in favour of his wife and daughters, and son; for, if the gifts were valid, the donees would have a right to maintain the petitions, and if they were not valid, the donor would continue to be the owner of the properties gifted.
The title inter se is not really germane to the present.
enquiry, for the validity of the Act in respect of sthanam properties other than those in the Cochin State, falls to be decided in the first petition itself.
896 We, therefore, leave open the question of the validity of the gift deeds.
We shall take first the contention of the respondents based on article 31A of the Constitution, for, if that contention was accepted, no other questions except one would arise for consideration.
Learned Attorney General contends that the question was not specifically raised in the pleadings, that it was a mixed question of fact and law, and that if it was allowed to be raised at this stage, his clients would be irreparably prejudiced.
Further, he argues that there is no material on the record on the basis of which we can decide whether the properties of the petitioners are held in janmam right or not.
In the counter affidavit filed by respondents 2 to 17, no plea on the basis of article 31A is taken.
Only in the counter filed by the State of Kerala, this contention is raised.
Paragraph 6 of the counter affidavit contains the said plea and it is: " I am advised that the impugned statute is Dot open to attack on any of the grounds set forth in the petition and further and in any view of the case that it is saved by virtue of the provisions of article 31A of the Constitution as amended by the Constitution (Fourth Amendment) Act, 1955.
" Except this bald statement, no statement is made to the effect that all the properties of the sthanee, or any portion thereof, are held in janmam right.
Learned Advocate General, appearing for the State of Kerala, while conceding that the plea could have been more precise, and supported by definite particulars, contends that there is material on the record containing the admission of the petitioner in the first petition that the properties are janmam properties, and, even apart from such admission, whatever properties the petitioner held as appertaining to the sthanam, they could not be other than janmam properties or properties held as a subordinate tenure holder under a janmi and that in either case they would form part of an it estate" within the meaning of article 31 A of the Constitution.
It is true that in the previous proceedings which went up to the Privy Council, there is a statement 897 that in regard to the properties under the management of the Court of Wards, " sthanam registration took place in Malabar and all the properties belonging to the sthanee were registered in the name of Kavalappara Moopil Nair ".
But that in itself does not conclude the matter.
Ordinarily, when a question raised depends upon elucidation of further facts not disclosed in the statements already filed, we would be very reluctant to allow a party to raise such a plea at the time of arguments.
But in this case we do not think we would be justified in not allowing the respondents to raise the contention, as the validity of the impugned Act depends upon the application of ' article 31A of the Constitution.
We would, therefore, for the purpose of this petition, assume against the petitioner that he is in possession of the properties in janmam right and proceed to consider on that basis the contention raised.
Learned counsel for the respondents contends that article 31A of the Constitution excludes the operation of Art.13 in the matter of the extinguishment or modification of any rights in an estate, that the impugned legislation either extinguishes or modifies the sthanam right in the janmam property which is an " estate as defined in the said Article and that, therefore, the impugned Act cannot be challenged on the ground that it infringes articles 14, 19 and 31 in Part III of the Constitution.
To appreciate this contention it will be convenient to read the material portions of article 31A. Article 31A. (1) Notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, . . . . . . . . . shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31. . . . . . . . (2) In this article, 898 (a) The expression " estate " shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grants and in the States of Madras and Kerala any janmam right.
(b) the expression " right ", in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder, raiyat, under raiyat or other intermediary and any rights or privileges in respect of land revenue.
" This Article was introduced in the Constitution by the Constitution (First Amendment) Act, 1951.
As it originally stood, the said Article only provided that no law affecting rights of any proprietor or intermediate holder in any estate shall be void on the ground that it is inconsistent with any of the fundamental rights Included in Part III of the Constitution.
Article 31A has been amended by the Constitution (Fourth Amendment) Act, 1955.
The object of the amendment was explained in the Statement of the Objects and Reasons and the relevant part thereof reads: "It will be recalled that the Zamindari abolition laws which came first in our programme of social welfare legislation were attacked by the interests affected mainly with reference to articles 14, 19 and 31, and that in order to put an end to the dilatory and wasteful litigation and place these laws above challenge in the courts, articles 31A and 31B and the Ninth Schedule were enacted by the Constitution (First Amendment) Act.
Subsequent judicial decisions interpreting articles 14, 19 and 31 have raised serious difficulties in the way of the Union and the States putting through other and equally important social welfare legislation on the desired lines, e.g., the following: (i) While the abolition of zamindaries and the numerous inter mediaries between the State and the tiller of the soil has been achieved for the most part, our next objectives in land reform are the fixing of limits to the extent of agricultural land that may be owned or occupied by any person, the disposal of 899 any land held in excess of the prescribed maximum and the further modification of the rights of land owners and tenants in agricultural holdings.
. . . . . . . . . . It is accordingly proposed in clause 3 of the Bill to extend the scope of article 31A so as to cover these categories of essential welfare legislation.
" The object of the amendment relevant to the present enquiry was only to enable the State to implement its next objective in the land reform, namely, the fixing of limits to the extent of agricultural lands that may be owned or occupied by any person, the disposal of any land held in excess of the prescribed maximum and the further modification of the rights of land owners and tenants in agricultural holdings.
The object was, therefore, to bring about a change in the agricultural economy but not to recognize or confer any title in the whole or a part of an estate on junior members of a family.
This Court has held in Aswini Kumar Ghose vs Arabinda Bose(1) that the statement of objects and reasons is not admissible as an aid to the construction of a statute.
But we are referring to it only for the limited purpose of ascertaining the conditions prevailing at the time the bill was introduced, and the purpose for which the amendment was made.
Unhampered by any judicial decision, let us now scrutinize the express terms of the Article to ascertain its scope and limitations.
Sub el.
(a) of article 31A(1) enables the State to acquire any estate or of any rights therein or to extinguish or modify any such rights.
" Estate " is defined in el.
(2)(a) to have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and by inclusive definition it takes in any jagir, inam, or muafi or other similar grants and in the States of Madras and Kerala any janmam right.
Clause (2)(b) defines the expression " rights ", in relation to an estate, to include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder, raiyat, under raiyat or other intermediary and any rights or privileges in respect of land revenue.
If (1) ; 900 an estate so defined is acquired by the State, no law enabling the State to acquire any such estate can be questioned as inconsistent with the rights conferred by articles 14, 19 or 31 of the Constitution.
So too, any law extinguishing or modifying any such rights mentioned in cl.
(1)(a) and defined in el.
(2)(b) cannot be questioned on the said grounds.
The broad contention that a law regulating inter se the rights of a proprietor in his estate and the junior members of his family is also covered by the wide phraseology used in cl.
(2)(b), may appear to be plausible but that argument cannot be sustained if that clause is read along with the other provisions of article 31 A.
The definition of " estate" refers to an existing law relating to land tenures in a particular area indicating thereby that the Article is concerned only with the land tenure described as an " estate ".
The inclusive definition of the rights of such an estate also enumerates the rights vested in the proprietor and his subordinate tenure holders.
The last clause in that definition, viz., that those rights also include the rights or privileges in respect of land revenue, emphasizes the fact that the Article is concerned with land tenure.
It is, therefore, manifest that the said Article deals with a tenure called "estate" and provides for its acquisition or the extinguishment or modification of the rights of the land holder or the various subordinate tenure holders in respect of their rights in relation to the estate.
The contrary view would enable the State to divest a proprietor of his estate and vest it in another without reference to any agrarian reform.
It would also enable the State to compel a proprietor to divide his properties, though self acquired, between himself and other members of his family or create interest therein in favour of persons other than tenants who had none before.
Such acts have no relation to land tenures and the.), are purely acts of expropriation of a citizen 's property without any reference to agrarian reform.
Article 31A deprives citizens of their fundamental rights and such an Article cannot be extended by interpretation to overreach the object implicit in the Article.
The unsondness of the wider interpretation will be made clear if the Article is construed with reference to the 901 janmam right.
Under the definition, any janmam right in Kerala is an " estate ".
A janmam right is the freehold interest in a property situated in Kerala.
Moor in his " Malabar Law and Custom " describes it as a hereditary proprietorship.
A janmam interest may, therefore, be described as " proprietary interest of a landlord in lands " and such a janmam right is described as "estate" in the Constitution.
Substituting janmam right " in place of "estate " in cl. 2 (b), the rights " in article 31 A (1) (a) will include the rights of a proprietor and subordinate tenure holders in respect of a janmam right.
It follows that the extinguishment or modification of a right refers to the rights of a proprietor or a subordinate tenure holder in the janmam right.
A proprietor called the janmi or his subordinate tenure holder has certain defined rights in janmam right ".
Land tenures in Malabar are established by precedents or immemorial usage.
Janmam right is a freehold interest in property and the landlord is called " janmi ".
He can create many subordinate interests or tenures therein, such as verum pattom (simple lease), kushikanom (mortgage of waste land with a view to its being planted on), kushikara pattam (mortgage of waste land for improvements, the tenant paying rent), kanom kuzhikanom (mortgage of waste land for improvements, the landlord receiving some pecuniary consideration), kanom (mortgage with possession, a fee being generally paid), mel kanom (higher mortgage), koyu panayam (mortgage of the right of cultivation), kanom poramkadani (loan advanced on the security of land already held on mort gage), otti usufructuary mortgage, the full value of the land being advanced), kaivituka otti (usufructuary mortgage, with relinquishment of the power of transfer), ottikkumpuiram (where a sum is advanced beyond the otti amount), neermuthal (where a further sum is advanced on an otti mortgage in addition to the ottikkunipuram), peruvartham (usufructuary mortgage, the land being redeemable at its value in the market at the time of redemption), anubham or anubhavam (relinquishment of land for enjoyment by the tenant in perpetuity), karankari or jamma koyu (sale 117 902 or transfer in perpetuity of the right of cultivation), kariama (right of perpetual enjoyment), cooderoopad or nelamuri (assignment of rent produce), kutti kanom (mortgage of forests, the mortgagee felling the timber for trade and paying a fee on each stump or tree to the landlord).
These rights may be extinguished or modified.
A law may regulate the rights between a janmi and his subordinate tenure holders; but it may also affect his rights unconnected with the tenure.
To illustrate: A janmi holds 10 acres of land in janmam right, out of which he may sell 2 acres each to five persons; the land is divided into 5 plots held by different holders, but each one continues to have full rights of a janmi ; the janmam right is not extinguished or modified, though the land is divided between 5 persons.
That is what the impugned Act purports to do.
It does not modify any of the rights appertaining to " janmam right ", but only confers shares in the property on other members of the tarwad.
It is said that the inclusive definition of the expression " rights " in cl.
(2) (b) takes in such a case as it extinguishes or modifies the proprietor 's right in the land.
This is a superficial reading of the Article.
We have already explained how such a modification is not a modification of a right pertaining to a " janmam right ", but only a deprivation of a particular janmi of his right in his property or a curtailment of his right therein, leaving all the characteristics of a janmam right intact.
It is said that a contrary construction has been accepted by this Court in two decisions.
The first is that in Sri Ram Ram Narain vs State of Bombay (1).
In that case, the constitutional validity of the Bombay Tenancy and Agricultural Lands (Amendment) Act, 1956 (Bom.
XIII of 1956), was canvassed.
Under that Act the title to the land which vested originally in the landlord passes to the tenant on the tiller 's day or within the alternative period prescribed in that behalf.
This title is defeasible only in the event of the tenant failing to appear or making a statement that he is not willing to purchase the land or committing default in payment of the price thereof as determined (1) [1959] SUPP.
1 S.C.R. 489.
903 by the Tribunal constituted for that purpose.
This Act was, therefore, enacted to implement the agrarian reform in that part of the country and it expressly confers certain rights on tenants in respect of their tenements which they did not have before.
The Act creates absolute rights in a tenant which was either by the extinguishment or by modification of a landlord 's rights and conferment of the same on the tenant.
This law is, therefore, one pertaining to the land tenure of the State.
The second decision is that in Atma Ram vs State of Punjab (1).
There, this Court was concerned with the provisions of the Punjab Security of Land Tenure Act (IO of 1953) (as amended by Act 11 of 1955).
Under that Act, the substantive rights of a landowner were modified in three respects, namely, (1) it modified his rights of settling his lands on any terms and to any one he chooses; (2) it modified, if it did not altogether extinguish, his right to cultivate the surplus area as understood under the Act; and (3) it modified his right of transfer in so far as it obliged him to sell lands not at his own price but at a price fixed under the statute, and not to any one but to specified persons, in accordance with the provisions of the Act.
It is clear from the said Act that the provisions thereof purport to regulate the rights in respect of lands which are estates within the meaning of the law relating to land tenures in Punjab.
It was contended therein that in the purview of article 31A, only the entire estates were included but not portions thereof, but that contention was negatived.
Sinha, J. (as he then was), who delivered the judgment of the Court, observed at p. 526 thus: "Keeping in view the fact that article 31A was enacted by two successive amendments one in 1951 (First Amendment), and the second in 1955 (Fourth Amendment) with retrospective effect, in order to save legislation effecting agrarian reforms, we have every reason to hold that those expressions have been used in their widest amplitude, consistent with the purpose behind those amend.
ments ".
(1) [1959] Supp. 1 S.C.R. 748.
904 This Court has, therefore, recognised that the amendments inserting article 31A in the Constitution and subsequently amending it were to facilitate agrarian reforms and in that case it was held that the impugned Act affected the rights of the landlords and tenants.
Neither of the two decisions, therefore, supports the contention that article 31A comprehends modification of the rights of an owner of land without reference to the law of land tenures.
The impugned Act does not purport to modify or extinguish any right in an estate.
The avowed object of it is only to declare particular sthanams to be Marumakkathayam tarwads and the property pertaining to such sthanams as the property of the said tarwads.
It declares particular sthanams to have always been tarwads and their property to have always been tarwad property.
The result is that the sole title of the sthanee is not recognised and the members of the tarwad are given rights therein.
The impugned Act does not effectuate any agrarian reform and regulate the rights inter se between landlords and tenants.
We, therefore, hold that the respondents cannot rely upon article 31A to deprive the petitioner of his fundamental rights.
Now coming to the arguments advanced by the learned Attorney General, as we propose to hold in his favour on point (2), we are relieved of the necessity to express our opinion on points (1) and (3) raised by him.
On the basis of this elimination, the question that falls to be decided is whether the impugned Act deprives the petitioner of his fundamental right to hold and dispose of property and is not protected by cl.
(5) of article 19 of the Constitution.
This question is inextricably connected with the contention raised by the respondents that article 31(1) excludes the operation of article 19(1)(f) of the Constitution.
We shall, therefore, proceed to consider both these questions.
The argument of the learned counsel for the respondents is that article 19(1)(f) must give place to article 31(1) of the Constitution.
In other words, a 905 person 's fundamental right to acquire, hold and dispose of property is conditioned by the existence of property and if he is deprived of that property by authority of law under article 31(1), his fundamental right under article 19(1)(f) disappears with it.
Fundamental rights have a transcendental position in the Constitution.
Our Constitution describes certain rights as fundamental rights and places them in a separate Part.
It provides a machinery for enforcing those rights.
Article 32 prescribes a guaranteed remedy for the enforcement of those rights and makes the remedial right itself a fundamental right.
Article 13(1) declares that " 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 "; and article 13(2) prohibits the State from making any law which takes away or abridges the rights conferred by Part III of the Constitution and declares that any law made in contravention of that clause shall, to the extent of the contravention, be void.
It is true that any other Article of the Constitution may exclude the operation of the fundamental rights in respect of a specific matter for instance, articles 31A and 31B.
It may also be that an Article embodying a fundamental right may exclude another by necessary implication, but before such a construction excluding the operation of one or other of the fundamental rights is accepted, every attempt should be made to harmonise the two Articles so as to make them co exist, and only if it is not possible to do so, one can be made to yield to the other.
Barring such exceptional circumstances, any law made would be void if it infringes any one of the fundamental rights.
The relevant Articles read: Article 19.
(1) AU citizens shall have the right . . . . . . . . . (f)acquire, hold and dispose of property. . . . . . (5) Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State 906 from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe.
" Article 31.
(1) No person shall be deprived of his property save by authority of law.
(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate.
(2A) Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a Corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property.
" Clause (2) of article 31 has been amended and cl.
(2A) has been inserted in article 31 by the Constitution (Fourth Amendment) Act, 1955.
The said cl.
(2) in its original form, i.e., before the Constitution (Fourth Amendment) Act, 1955, read as follows : " (2) No property, moveable or immoveable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorizing the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which and the manner in which, the compensation is to be determined and given.
" To have a correct appreciation of the scope of the amended clauses of article 31, it is necessary to consider, 907 in the words of Lord Coke, the following circumstances : (i) What was the law before the Act was passed; (ii) What was the mischief or defect for which the law had not provided; (iii) What remedy Parliament has appointed; and (iv) the reason of the remedy.
The unamended clauses of the Article were the subject of judicial scrutiny by this Court in the State of West Bengal vs Subodh Gopal Bose (1).
There, the respondent purchased certain property at a revenue sale and as such purchaser he acquired under section 37 of the Bengal Revenue Sales Act, 1859, the right " to avoid and annul all under tenures and forthwith to eject all under tenants " with certain exceptions.
In exercise of that right he brought a suit for eviction of certain under tenants and obtained a decree therein.
When the appeal against the said decree was pending, the Act was amended.
The amending Act substituted by section 4 the new section 37 in place of the original section 37 and it provided by section 7 that all pending suits, appeals and other proceedings which had not already resulted in delivery of possession, should abate.
It was contended on behalf of one of the respondents therein that section 7 was void as abridging his fundamental rights under article 19(1)(f) and article 31.
The Court by a majority held that the Act was void as it infringed article 31 of the Constitution.
The majority of the Judges, who constituted the bench, took the view that cls.
(1) and (2) of article 31 related to the same subject of eminent domain and that the State had no power to seriously impair the rights of a citizen in property without paying compensation.
Patanjali Sastri, C. J., expressed his view thus at p. 618: " Under the Constitution of India, however, such questions must be determined with reference to the expression " taken possession of or acquired " as interpreted above, namely, that it must be read along with the word " deprived " in clause (1) and understood as having reference to such substantial abridgement of the rights of ownership as would (1) ; 908 amount to deprivation of the owner of his property.
No cut and dried test can be formulated as to whether in a given case the owner is " deprived of his property within the meaning of article 31 each case must be decided as it arises on its own facts.
Broadly speaking it may be said that an abridgement would be so substantial as to amount to a deprivation within the meaning of article 31, if, in effect, it withheld the property from the possession and enjoyment of the owner, or seriously impaired its use and enjoyment by him, or materially reduced its value.
" Das, J. (as he then was), observed that article 31(2) dealt with only acquisition and requisition of property where under title passed to the State and that article 31(1) conferred police power on the State.
Ghulam Hasan, J., concurred with the view of the Chief Justice.
Jagannadhadas, J., did not agree with the view of Das, J., that article 31(1) conferred police power on the State, but he was not also able to agree with the view of the Chief Justice that article 31(1) has reference only to the power of eminent domain.
He also expressed his disagreement with the view of Das, J., that acquisition and taking possession in article 31(2) have to be taken as necessarily involving transfer of title or possession.
The result of the decision is that this Court by majority held that article 31(1) and (2) provided for the doctrine of eminent domain and that under cl.
(2) a person must be deemed to have been deprived of his property, if he is " substantially dispossessed " or if his right to use and enjoy his property has been "seriously impairedor the value of the property is " materially reducedby the impugned law.
This view was followed in Dwarakadas Shrinivas of Bombay vs The, Sholapur Spinning and Weaving Co. Ltd. (1) and in Saghir Ahmad vs The State of U.P. (2).
Presumably, Parliament accepted the minority view of Das, J., on the interpretation of el.
(2) of article 31 and amended the Constitution by the Constitution (Fourth Amend ment) Act, 1955.
The amendment made it clear that cl.
(2) of article 31 applies only to acquisition and requisition.
Clause (2A) of the said Article which was inserted (1) ; (2) ; 909 by the said amendment.
explains that unless a law provides for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property.
The result is that it did not accept the majority view of this Court that deprivation of property need not be by acquisition alone but also by any serious impairment of an dividual 's right to property, whether his ownership or right to possession of the property has been transferred to the State or its nominee or not.
This amendment also in effect accepted the view of Das, J., that deprivation of property in el.
(1) of article 31 covers cases other than acquisition or requisition of property by the State.
But the amendment in other respects does not give any indication as regards the interpretation of article 31(1) of the Constitution, for no change in the phraseology of that clause is made.
Therefore, we must look at the terms of that clause to ascertain its true meaning.
The words are clear and unambiguous and they do not give rise to any difficulty of construction.
The said clause says in a negative form that no person shall be deprived of his property save by authority of law.
The law must obviously be a valid law.
Article 13(2) says that " 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 ".
The law depriving a person of his property cannot,therefore, take away or abridge the right conferred by Part III of the Constitution.
In a recent decision in Deep Chand vs State of U.P. (1) this Court considered the limitations placed by the Constitution on the Parliament and the Legislatures of the States in making laws.
After reading articles 245, 246, 13 and 31 of the Constitution, this Court proceeded to state, at p. 655, thus : " The combined effect of the said provisions may be stated thus: Parliament and the Legislatures of States have power to make laws in.
respect of any (1) [1959] SUPP.
(2) S.C.R. 8.
118 910 of the matters enumerated in the relevant lists in the Seventh Schedule and that power to make laws is subject to the provisions of the Constitution including article 13 i.e., the power is made subject to the limitations imposed by Part III of the Constitution. .
When cl.
(2) of article 13 says in clear and unambiguous terms that no State shall make any law which takes away or abridges the rights conferred by Part III, it will not avail the State to contend either that the clause does not embody a curtailment of the power to legislate or that it imposes only a check but not a prohibition.
A constitutional prohibition against a State making certain laws cannot be whittled down by analogy or by drawing inspiration from decisions on the provisions of other constitutions; nor can we appreciate the argument that the words " any law " in the second line of article 13(2) posit the survival of the law made in the teeth of such prohibition.
" The same view was expressed by this Court in Basheshar Nath vs Commissioner of Income tax, Delhi Therein Das, C. J., says at p. 158 thus: " As regards the legislative organ of the State, the fundamental right is further consolidated by the provisions of article 13.
Clause (1) of that Article, provides that all laws in force in the territories of India immediately before the commencement of the Constitution, in so far as they are inconsistent with the provisions of Part III shall, to the extent of the inconsistency, be void.
Likewise cl.
(2) of ' this Article prohibits the State from making any law which takes away or abridges the rights conferred by the same Part and follows it up by saying that any law made in contravention of this clause shall, to the extent of the contravention, be void.
It will be observed that so far as this Article is concerned, there is no relaxation of the restriction imposed by it such as there are in some of the other Articles . . . " Bhagwati, J., observed much to the same effect at p. 161 thus: " It is absolutely clear on a perusal of article 13(2) of the Constitution that it is a constitutional mandate (1) [1959] SUPP.
1 S.C.R. 528.
911 to the State and no citizen can by any act or con.
duct relieve the State of the solemn obligation imposed on it by article 13(2). . . ." One of us had also stated to the same effect, after citing article 13, at p. 181 : " This Article, in clear and unambiguous terms, not only declares that all laws in force before the commencement of the Constitution and made thereafter taking away or abridging the said rights would be void to the extent of the contravention but also prohibits the State from making any law taking away or abridging the said rights.
" It is, therefore, manifest that the law must satisfy two tests before it can be a valid law, namely, (1) that the appropriate legislature has competency to make the law; and (2) that it does not take away or abridge any of the fundamental rights enumerated in Part III of the Constitution.
It follows that the law depriving a person of his property will be an invalid law if it infringes either article 19(1)(f) or any other Article of Part III.
Learned counsel, appearing for the respondents, while conceding that the validity of a law must pass the test of the foregoing two conditions, contends that in the context of article 31, we should apply the construction analogous to that put upon by this Court on the word " law " in article 21 of the Constitution in the case of A. K. Gopalan vs The State of Madras(1).
In the said case, the question was whether the provisions of the (IV of 1950), were ultra vires the Constitution.
This Court by a majority held that the said Act, with the exception of section 14 thereof, did not contravene any of the Articles of the Constitution and, therefore, the detention of the petitioner therein was not illegal.
In that context, a question was raised whether the said Act must be struck down as infringing article 19(1)(d) of the Constitution.
This Court held that the concept of the right " to move freely throughout the territory of India " referred to in article 19(1)(d) of the Constitution was entirely different from the concept of the right to "personal liberty" referred to in article 21 and that article 21 (1)[1950] S.C.R. 88.
912 should not, therefore, be read as controlled by the provisions of article 19.
Though the learned Judges excluded the operation of article 19 in considering the question of fundamental right under article 21, the judgment of the court discloses three shades of opinion.
As much of the argument is centred on the analogy drawn from this decision the relevant Articles may be summarized: Under article 21, no person shall be deprived of his life or personal liberty except in accordance with the procedure established by law.
Clauses(1) and (2) of article 22 afford protection in the matter of arrest and detention in certain cases.
Clauses 4, (5) and (6) thereof provide for preventive detention and constitutional safeguards relating thereto.
It may not be inappropriate to describe these provisions as forming an exhaustive code, as they elaborately deal with a particular subject, namely, life and personal liberty.
In construing the said provisions, Kania, C. J., said at p. 100 101 thus: " So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub clauses.
If there is a legislation directly attempting to control a citizen 's freedom of speech or expression, or his right to assemble peaceably and without arms, etc., the question whether that legislation is saved by the relevant saving clause of article 19 will arise.
If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise.
The true approach is only to consider the directness of the legislation and not what will be the result of the detention otherwise valid , on the mode of the detenue 's life.
" Mahajan, J. (as he then was), gave the reason for his conclusion at p. 226: " I am satisfied on a review of the whole scheme of the Constitution that the intention was to make article 22 self contained in respect of laws on the subject of preventive detention.
" 913 The learned Judge further elaborated the point thus at p. 228: " If the intention of the Constitution was that a law made on the subject of preventive detention had to be tested on the touchstone of reasonableness, then it would not have troubled itself by expressly making provision in article 22 about the precise scope of the limitation subject to which such a law could be made and by mentioning the procedure that the law dealing with that subject had to provide.
Some of the provisions of article 22 would then have been redundant. . . . " Mukherjea, J. (as he then was), said much to the same effect at p. 225: " In my opinion, the group of articles 20 to 22 embody the entire protection guaranteed by the Constitution in relation to deprivation of life and personal liberty both with regard to substantive as well as to procedural law.
" Patanjali Sastri, J. (as he then was), stated at p. 191 " Read as a whole and viewed in its setting among the group of provisions (articles 19 to 22) relating to " Right to Freedom ", article 19 seems to my mind to pre suppose that the citizen to whom the possession of these fundamental rights is secured retains the substratum of personal freedom on which alone the enjoyment of these rights necessarily rests." The learned Judge further dilated on the point at p. 191. " Deprivation of personal liberty in such a situation is not, in my opinion, within the purview of article 19 at all but is dealt with by the succeeding articles 20 and 21.
In other words, article 19 guarantees to the citizens the enjoyment of certain civil liberties while they are free, while articles 20 22 secure to all persons citizens and non citizenscertain constitutional guarantees in regard to punishment and prevention of crime.
" Das, J. (as he then was), stated at p. 302 thus: " The purpose of article 19(1)(d) is to guarantee that there shall be no State barrier.
It gives protection against provincialism.
It has nothing to do with the freedom of the person as such.
" 914 The learned Judge continued to state at p. 304: " Therefore, the conclusion is irresistible that the rights protected by article 19(1), in so far as they relate to rights attached to the person, i.e., the rights referred to in sub clauses (a) to (e) and (g), are rights which only a free citizen, who has the freedom of his person unimpaired, can exercise.
" The views of the learned Judges may be broadly summarized under three heads, viz., (1) to invoke article 19(1), a law shall be made directly infringing that right; (2) articles 21 and 22 constitute a self contained code; and (3) the freedoms in article 19 postulate a free man.
On the basis of the said theories, this Court, with Fazl Ali, J., dissenting, rejected the plea that a law made under article 21 shall not infringe article 19(1).
Had the question been res integra, some of us would have been inclined to agree with the dissenting view expressed by Fazl Ali, J.; but we are bound by this judgment.
Even so, there is no analogy between article 21, as interpreted by this Court, and article 31(1).
Article 21 deals with personal liberty.
Personal liberty, Kania, C.J., observed, includes " the right to eat or sleep when one likes or to work or not to work as and when one pleases and several such rights " and " deprivation of such liberty ", in the words of the learned Chief Justice, " is quite different from restriction (which is only a partial control) of the right to move freely (which is relatively a minor right of a citizen)".
" Personal Liberty " is a more comprehensive concept and has a much wider connotation than the right conferred under article 19(1)(d).
articles 19(1)(d) and 22 deal with different subjects, whereas both articles 19(1)(f) and 31(1) deal with the same subject, namely, property; while under article 19(1)(f), a citizen has the right to acquire, hold and dispose of property, article 31(1) enables the State to make a law to deprive him of that property.
Such a law directly infringes the fundamental right given under article 19(1)(f).
Further, articles 21 and 22 are linked up together; while article 21 enables the State to deprive a person of his life or personal liberty according to the procedure established by law, article 22 prescribes certain procedure in respect of both punitive and preventive detention.
They constitute, an 915 integrated code in the matter of personal liberty.
On the other hand, article 31(1), by reason of the amendment, ceases to be a part of the guarantee against acquisition or requisition of property without the authority of law and must therefore be construed on its own terms.
The said Articles are not in pari materia and they differ in their scope and content.
There is material difference not only in the phraseology but also in their setting.
Article 31(1), therefore, cannot be construed on the basis of the construction placed upon article 21.
The decision in The State of Bombay vs Bhanji Munji (1), on which reliance is placed by learned counsel for the respondents in support of their contention that article 31(1) excludes the operation of article 19(1), is one based on the pre existing law before the Constitution (Fourth Amendment) Act, 1955.
In that case it was contended that sections 5(1) and 6(4)(a) of the Bombay Land Requisition Act,, 1948 (Bom.
Act XXXIII of 1948), as amended by Bombay Act 11 of 1950 and Bombay Act XXXIX of 1950, were ultra vires articles 19(1)(f) and 31(2) of the Constitution.
The premises in question there belonging to the respondents were requisitioned by the Governor of Bombay under the said Act.
The Act also provided for compensation, and this Court found that there was a clear public purpose for the requisition, and upheld the law under article 31(2) of the Constitution.
This Court also considered the alternative argument advanced, namely, that the Act was hit by article 19(1)(f) of the Constitution inasmuch as unreasonable restrictions were imposed on the rights of the respondents to acquire, bold and dispose of property.
In rejecting that argument, Bose, J., speaking for the Court, observed at p. 780 thus : " We need not examine those differences here because it is enough to say that article 19(1)(f) read with clause (5) postulates the existence of property which can be enjoyed and over which rights can be exercised because otherwise the reasonable restrictions contemplated by clause (5) could not be brought into play.
If there is no property which can be acquired, held or disposed of, no restriction (1) [1955] 1 S.C.R. 777.
916 can be placed on the exercise of the right to acquire, hold and dispose of it, and as clause (5) contemplates the placing of reasonable restrictions on the exercise of those rights it must follow that the article postulates the existence of property over which these rights can be exercised.
" For these observations the learned Judge has drawn upon the principle laid down in A. K. Gopalan 's Case (1).
These observations prima facie appear to be against the contentions of the petitioner herein.
But a further scrutiny reveals that they have no bearing on the construction of article 31(1) of the Constitution after cl.
(2) of article 31 has been amended and el.
(2A) has been inserted in that Article by the Constitution (Fourth Amendment) Act, 1955.
Before the amendment, this Court, as we have already noticed, held by a majority in The State of West Bengal vs Subodh Gopal Bose (2) that cls.
(1) and (2) of article 31 were not mutually exclusive in scope and content, but should be read together and understood as dealing with the same subject, namely, the acquisition or taking possession of property referred to in cl.
(2) of article 31.
In that view, article 31, before the amendment, was a selfcontained Article providing for a subject different from that dealt with in article 19.
On that basis it was possible to hold, as this Court held in The State of Bombay vs Bhanji Munji (3) on the analogy drawn from article 21, that when the property therein was requisitioned within the meaning of article 31, the opera tion of article 19 was excluded.
But there is no scope for drawing such an analogy after the Constitution (Fourth Amendment) Act, 1955, as thereafter they dealt with two different subjects: article 31(2) and (2A) with acquisition and requisition and article 31(1) with deprivation of property by authority of law.
The decision of this Court in Bhanji Munji 's Case (3) no longer holds the field after the Constitution (Fourth Amendment) Act, 1955.
Strong reliance is placed upon the observations of Das, J. (as he then was), in Subodh Gopal Bose 's Case ( 2 ).
Therein the learned Judge dissented from the view of the majority on the interpretation of article 31(1) and (2) of the Constitution.
In the course (1) ; (2) ; (3) [1955] 1 S.C.R. 777, 917 of his dissenting judgment, the learned Judge made certain observations on the effect of his interpretation of article 31 on article 19.
The learned Judge said at p. 632 thus: " Such being the correct correlation between article 19(1), sub clauses (a) to (e) and (g) on the one hand and article 21 on the other, the question necessarily arises as to the correlation between article 19(1) (f) and article 31.
Article 19(1)(f) guarantees to a citizen, as one of his freedoms, the right to acquire, hold and dispose of property but reasonable restrictions may be imposed on the exercise of that right to the extent indicated in clause (5).
Article 31, as its heading shows, guarantees to all persons, citizens and non citizens, the ' right to property ' as a fundamental right to the extent therein mentioned.
What, I ask myself, is the correlation between article 19(1)(f) read with article 19(5) and article 31 ? If, as held by my Lord in A. K. Gopalan 's Case(1) at p. 191, subclauses (a) to (e)and (g) of article 19(1) read with the relevant clauses (2) to (6) ' presuppose that the citizen to whom the possession of these fundamental rights is secured retains the substratum of personal freedom on which alone the enjoyment of these rights necessarily rests ', it must follow logically that article 19(1)(f) read with article 19(5) must likewise presuppose that the person to whom that fundamental right is guaranteed retains his property over or with respect to which alone that right may be exercised.
I found myself unable to escape from this logical conclusion.
" The learned Judge earlier expressed the same opinion in Chiranjit Lal Chowdhuri vs The Union of India (2).
When it was pointed out to the learned Judge that, if his view was correct, the legislature while it cannot restrict a person 's right to property unless the restriction is reasonable and for a public purpose, it can deprive him of his property without any such limitations, the learned Judge negatived the objection in the following words at p. 654: (1) ; , (2) ; 119 918 " What is abnormal if our Constitution has trusted the legislature, as the people of Great Britain have trusted their Parliament ? Right to life and personal liberty and the right to private property still exist in Great Britain in spite of the supremacy of Parliament.
Why should we assume or apprehend that our Parliament or State legislatures should act like mad men and deprive us of our property without any rhyme or reason?" Further, the learned Judge was of the view that unless article 3 l(l) was construed in the manner he did, it would not be possible for the State to bring about a welfare State which our Constitution directs it to do.
Elaborating this point, the learned Judge observed, at p.655, thus: We must reconcile ourselves to the plain truth that emphasis has now unmistakably shifted from the individual to the community.
We cannot overlook that the avowed purpose of our Constitution is to set up a welfare State by subordinating the social interest in individual liberty or property to the larger social interest in the rights of the community.
As already observed, the police power of the State is the most essential of powers, at times most insistent, and always one of the least limitable powers of the government '. .
In the matter of deprivation of property otherwise than by the taking of posession or by the acquisition of it within the meanings of article 31(2) our Constitution has trusted our legislature and has not thought fit to impose any limitation on the legislature 's exercise of the State 's police power over private property ".
Relying upon the said observations, learned counsel for the respondents pressed on us the following three points: (1) After the Constitution (Fourth Amendment) Act, 1955, cl.
(1) of article 31 must be read independently of el.
(2) thereof and, if so read, cl.
(1) must be held to deal with police power.
(2) Without such power the State cannot usher in a welfare State which the Constitution enjoins it to do.
(3) The fact that there is no limitation on the power of the legislature to make law depriving a citizen of his property need not deter us from recognising such power, as we 919 can trust our legislatures and Parliament as the people of Great Britain have trusted their Parliament.
We cannot agree with the con tention of the learned counsel that article 31(1) deals with " police power ".
In the view expressed by Das, J. (as he then was), the legislature can make any law depriving a person of his property and the only limitation on such power is its good sense.
But " police power ", as it is understood in American Law, can never be an arbitrary power.
Willis on Constitutional Law " says at p. 727: " The United States Supreme Court has said that the police power embraces regulations designed to promote the public convenience or the general prosperity, as well as regulations designed to promote the public health, the public morals or the public safety '.
" In the Constitution of the United States of America, prepared by the Legislative Reference Service, Library of Congress (Senate Document No. 170, 82D Congress), " police power " is generally defined thus at p. 982: " The police power of a State today embraces regulations designed to promote the public convenience or the general prosperity as well as those to promote public safety, health, morals, and is not confined to the suppression of what is offensive, disorderly, or unsanitary, but extends to what is for the greatest welfare of the State ".
Prof. Willoughby states in his Constitutional Law of the United States (Vol.
III, p. 1774):. . the police power knows no definite limit.
It extends to every possible phase of what the Courts deem to be the public welfare ".
Holmes, J., in Noble State Bank vs Haskell(1) concisely defines 'police power" thus: " It may be said in a general way that the police power extends to all the great public needs ".
It is, therefore, clear that police power cannot be divorced from social control and public good.
We cannot, therefore, import the doctrine of police power in our Constitution divorced from the necessary restrictions on that power as evolved by judicial decisions of the Supreme Court of the United States.
Indeed, uninfluenced by any such doctrine, the plain meaning of the clear words (1)219 U.S. 104. 920 used in article 31(1) of the Constitution enables the State to discharge its functions in the interest of social and public welfare which the State in America can do in exercise of police power.
The limitation on the power of the State to make a law depriving a person of his property, as we have already stated, is found in the word " law " and that takes us back to article 19 and the law made can be sustained only if it imposes reasonable restrictions in the interest of the general public.
We find it also very difficult to accept the second and third aspects of the approach to the question.
The duty of this Court is only to interpret the provisions of the Constitution in a liberal spirit, but not to eradicate or modify the fundamental rights.
That apart, our constitution makers thought otherwise.
The Constitution declares the fundamental rights of a citizen and lays down that all laws made abridging or taking away such rights shall be void.
That is a clear indication that the makers of the Constitution did not think fit to give our Parliament the same powers which the Parliament of England has.
While the Constitution contemplates a welfare State, it also provides that it should be brought about by the legislature subject to the limitations imposed on its power.
If the makers of the Constitution intended to confer unbridled power on the Parliament to make any law it liked to bring about the welfare State, they would not have provided for the fundamental rights.
The Constitution gives every scope for ordered progress of society towards a welfare State.
The State is expected to bring about a welfare State within the framework of the Constitution, for it is authorized to impose reasonable restrictions, in the interests of the general public, on the fundamental rights recognized in article 19.
If the interpretation sought to be placed on article 31(1) was accepted, it would compel the importation of the entire doctrine of police power and grafting it in article 31(1) or the recognition of arbitrary power in the legislature with the hope or consolation suggested that our Parliament and legislatures may be trusted not to act arbitrarily.
The first suggestion is not legally permissible and the second does not stand to reason, 921 for the Constitution thought fit to impose limitations on the power of the legislatures even in the case of lesser infringements of the rights of a citizen.
Another argument raised by learned counsel for the respondents may also be noticed.
If the view expressed by us be correct, the argument proceeds, the law depriving a person of his property however urgent the need may be and whatever grave danger or serious vice it seeks to avert or suppress can never be a reasonable restriction on the right to enjoy property and therefore every such law would be void.
The learned Attorney General argues that in the present case the petitioner is not deprived of his property, but his right is only restricted.
It depends upon the per spective from which we look at the facts.
In one sense, the petitioner has been deprived of his shares in the property given by the statute to the respondents, but, even on that assumption, we do not think that the argument of the respondents has any substance.
The correct approach to the question is, first to ascertain what is the fundamental right of the petitioners; then to see, whether the law infringes that right.
If the law ex facie infringes that right, the State can support that law only by establishing that the law imposes reasonable restrictions on the petitioner 's fundamental right in the interests of the general public.
If so approached, the impugned Act by seeking to deprive the petitioner of his property certainly infringes his fundamental right.
There is absolutely nothing on the record to sustain the validity of the law under the said clause (5) of article 19.
The apprehension that deprivation can never be a restriction and therefore every law depriving a person of his property must necessarily be void, even if justifiable, cannot help the respondents, for if it is not saved by cl.
(5), that result must flow from the promises.
But that apprehension has no justification.
This Court has held in a recent decision that under certain circumstances a law depriving a citizen of his fundamental right to property may amount to a reasonable restriction.
In Narendra Kumar vs The Union of India (1), Das Gupta, J., observed: (1) ; 922 " It is reasonable to think that the makers of the Constitution considered the word 'restriction ' to be sufficiently wide to save laws ' inconsistent ' with article 19(1), or ' taking away the rights ' conferred by the Article, provided this inconsistency or taking away was reasonable in the interests of the different matters mentioned in the clause.
There can be no doubt therefore that they intended the word 'restriction ' to include cases of ' prohibition ' also.
The contention that a law prohibiting the exercise of a fundamental right is in no case saved, cannot therefore be accepted.
It is undoubtedly correct, however, that when, as in the present case, the restriction reaches the stage of prohibition special care has to be taken by the Court to see that the test of reasonableness is satisfied.
The greater the restriction, the more the need for strict scrutiny by the Court.
" If so, the State can establish that a law, though it purports to deprive the petitioner of his fundamental right, under certain circumstances amounts to a reasonable restriction within the meaning of cl.
(5) of article 19 of the Constitution.
We, therefore, hold that a law made depriving a citizen of his property shall be void, unless the law so made complies with the provisions of el.
(5) of article 19 of the Constitution.
This leads us to the question whether the provisions of the Act infringe article 19(1)(f) of the Constitution.
The impugned Act is The Madras Marumakkathayam (Removal of Doubts) Act, 1955 (Madras Act No. XXXII of 1955).
As the argument turns upon the provisions of the Act and as the Act itself is a short one, it will be convenient to set out all the provisions thereof.
The Madras Marumakkathayam (Removal of Doubts) Act, 1955 (Act No. XXXII of 1955).
(An Act to remove certain doubts in the Madras Marumakkathayam Act, 1932 (Madras Act XXII of 1933), in regard to sthanams and sthanam properties).
Whereas doubts have arisen about the true legal character of certain properties which are erroneously 923 claimed to be or regarded as sthanam properties, but which are properties of the tarwad, the male members of which are entitled to succeed to the sthanam and it is necessary to remove those doubts in respect of this question : Be it enacted in the Sixth Year of the Republic of India as follows 1.
This Act may be called the MADRAS MARUMAKKATHAYAM (REMOVAL OF DOUBTS) ACT,, 1955.
(2)It shall apply to all persons governed by the Madras Marumakkathayam Act, 1932 (Madras Act, XXII of 1933).
2.Notwithstanding any decision of Court, any sthanam in respect of which: (a)there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarwad, or (b)the members of the tarwad have been receiving maintenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932 (Madras Act XXII of 1933), shall apply.
Explanation: All words and expressions used in this Act shall bear the same meaning as in the Madras Marumakkathayam Act, 1932 (Madras Act XXII of 1933).
The Act presupposes the existence of a sthanam and its properties.
It says that the sthanam and its properties possessing one or more of the characteristics mentioned therein shall be deemed and shall be always deemed to have been a Marumakkathayam tarwad and its properties respectively.
The 924 impugned Act applies also to sthanams whose title to properties has been declared by courts of law.
Further the Act is given retrospective operation.
It is suggested that the provisions of the Act have not been happily worded and, if properly understood with the help of the preamble, it would be clear that the sthanams were not converted into tarwads but only tarwads which were wrongly claimed to be sthanams were declared to be not sthanams.
The preamble of a statute is " a key to the understanding of it " and it is well established that " it may legitimately be consulted to solve any ambiguity, or to fix the meaning of words which may have more than one, or to keep the effect of the Act within its real scope, whenever the enacting part is in any of these respects open to doubt ".
We do not find any ambiguity in the enacting part of the Act.
Assuming that there is some doubt, the preamble confirms our view of the construction of the Act.
According to the preamble certain properties of the tarwad are erroneously claimed to be or regarded as sthanam properties and it has become necessary to remove those doubts by making the Act.
The preamble also recognizes the existence of sthanams and the doubts related only to the title to the property of sthanams.
The enacting part purports to resolve these doubts by laying down three tests, and if any one of these tests is satisfied, the sthanam shall be deemed to be a tarwad and the properties tarwad properties.
In short, the Act, read with the preamble, takes the sthanam, lays down certain tests and proceeds to say that if one or other of the tests is satisfied in respect of any property claimed to be that of the sthanam, the sthanam by statutory fiction is treated as the tarwad and its properties as tarwad properties.
The tests, as we will presently show, are arbitrary and not germane to the question whether the properties belong to a sthanam or a tarwad.
Whatever may be the phraseology used, in effect and substance, the Act in the guise of applying certain tests seeks to convert certain sthanams into tarwards and their properties into tarwad properties.
It applies equally to sthanams governed by decrees of courts and sthanams whose character and title to the properties can be established by clear 925 evidence and to sthanams whose title is admitted.
In the said cases no question of doubt can conceivably arise.
The Act in the guise of dispelling doubts abolishes a class of sthanams and deprives them of their properties.
The question is whether the said legislation can stand the test of article 19(5) of the Constitution.
The learned Advocate General of Kerala seeks to support the legislation on the ground that under the Marumakkathayam law, the three characteristics of properties mentioned in section 2 pertain to tarwad and, therefore, when wrong decisions were given by courts introducing confusion in titles, the legislature rightly stepped in to set right the wrong and declare such sthanams possessing definite characteristics of the tarwad to be and always to have been the tarwad properties.
He further argues that, as the law was made to protect the rights of the members of the tarwad in a parti cular class of sthanams, the restrictions imposed on the sthanees ' rights in their properties would be reasonable and would be in the interests of the general public, notwithstanding the fact that the legislation indirectly affects the rights of a few decree holder sthanees, who have established their rights in a court of law.
Mr. Purshottam Tricumdas supported the learned Advocate General in this contention.
Mr. A. V. Viswanatha Sastri, who followed him, preferred to found his contention on a broader basis, namely, that the members of a tarwad and a sthanee have some interest in each other 's property and the legislation did nothing more than regulate their interest inter se to restore peace and harmony among them and to change the mutual relationship to bring it in accord with the concept of a modern welfare State.
If that be the object of the Act, the argument proceeds, the mere fact that the law incidently disturbs the rights of parties who have obtained decrees of court does not make it unreasonable.
Before we consider the validity of these arguments, it would be convenient at this stage to notice the scope of article 19(1)(f) and article 19(5) of the Constitution.
The said Articles read 120 926 Article 19.
(1) All citizens shall have the right . . . . . . . . . (f) to acquire, hold and dispose of property. . . . . . . . . . (5)Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe.
Under cl.
(5), the State can make a law imposing reasonable restrictions on the fundamental rights embodied in article 19(1)(f) in the interests of the general public.
What is " reasonable restriction " has been succinctly stated by Patanjali Sastri, C. J., in State Of Madras vs V. G. Row(1) thus at p. 607: "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
" If we may say so, with respect, this passage summarizes the law on the subject fully and precisely.
The learned Chief Justice in his description of the test of reasonableness, in our view, has not stated anything more than the obvious, for the standard of reasonableness is inextricably conditioned by the state of society and the urgency for eradicating the evil sought to be remedied.
Some of the American decisions and passages from text books cited at the Bar may be useful in ascertaining whether in the instant case the restrictions imposed by the statute are reasonable.
(1) ; 927 In Willoughby 's Constitutional Law it is stated at p. 795 thus: As between individuals, no necessity, however great, no exigency, however imminent, no improvement, however valuable, no refusal, however unneighbourly, no obstinacy, however unreasonable, no offers of compensation, however extravagant, can compel or require any man to part with an inch of his estate.
" The Supreme Court of th United States of America in Henry Webster vs Peter Cooper(1) observed: " The result of the decision is, that the constitution of the State has secured to every citizen the right of acquiring, possessing, and enjoying property and that, by the true intent and meaning of this section, property cannot, by a mere act of the Legislature, be taken from one man and vested in another directly; nor can it, by the retrospective operation of law, be indirectly transferred from one to another, or be subjected to the government of principles in a court of justice, which must necessarily produce that effect." In The Citizens ' Savings and Loan Association of Cleveland, Ohio vs Topeka City (2), the Supreme Court of the United States of America again declares the importance of individual property right thus: " The theory of our governments, state and national, is opposed to the deposit of unlimited power anywhere.
The executive, the legislative and the judicial branches of these governments are all of limited and defined powers.
There are limitations on such power which grow out of the essential nature of all free governments.
Implied reservations of individual rights, without which the social compact could not exist, and which are respected by all governments entitled to the same.
No court, for instance, would hesitate to declare void a statute which enacted that A and B who were husband and wife to each other should be so no longer, but that A should thereafter be the husband of C, and B the wife of D. Or which should enact that the homestead now owned by A should (1) ; , 517.
(2) ; , 461.
928 no longer be his, but should henceforth be the property of B." We have cited the relevant passages from the textbook and the decisions not with a view to define the scope of " reasonable restrictions " in article 19(5) of our Constitution, but only to point out that, as between citizens, the individual proprietary rights are ordinarily respected unless a clear case is made out for imposing restrictions thereon.
There must, therefore, be harmonious balancing between the fundamental rights declared by article 19(1) and the social control permitted by article 19(5).
It is implicit in the nature of restrictions that no inflexible standard can be laid down: each case must be decided on its facts.
But the restrictions sought to be imposed shall not be arbitrary but must have reasonable relation to the object sought to be achieved and shall be in the interests of the general public.
Before we proceed to consider whether the restrictions imposed by the impugned Act are reasonable within the meaning of el.
(5) of article 19, it would be necessary to ascertain precisely the law on the following three matters: (1) What is a sthanam in Marumakkathayam law?; (2) what is tarwad under the said law ? ; and (3) what is the relationship between members of a tarwad and a sthanee? Marumakkathayam law governs a large section of people inhabiting the West Coast of South India.
Marumakkathayam literally means descent through sisters ' children.
It is a body of custom and usage which have received judicial recognition.
Though Sundara Aiyar, J., in Krishnan Nair vs Damodaran Nair(1) suggested that " Malabar law is really only a school of Hindu law ", it has not been accepted by others.
There is a fundamental difference between Hindu Law and Marumakkathayam system in that the former is founded on agnatic family and the latter is based on matriarchate.
Marumakkathayam family consists of all the descendants of the family line of one common ancestor and is called a tarwad.
The incidents of a tarwad are so well settled that it is not necessary to consider the case law, but it would (1) Mad.
929 be enough if the relevant passages from the book "Malabar and Aliyasanthana Law" by Sundara Aiyar are cited.
The learned author says at p. 7 thus : " The joint family in a Marumakkathayam Nayar tarwad consists of a mother and her male and female children, and the children of those female children, and so on.
The issue of the male children do not belong to their tarwad but to the tarwad of their consorts.
The property belonging to the tarwad is the property of all the males and females that compose it.
Its affairs are administered by one of those persons, usually the eldest male, called the karnavan.
The individual members are not entitled to enforce partition, but a partition may be effected by common consent.
The rights of the union members are stated to be (1) if, males, to succeed to management in their turn, (2) to be maintained at the family house, (3) to object to an improper alienation or administration of the family property, (4) to see that the property is duly conserved, (5) to bar an adoption, and (6) to get a share at any partition that may take place.
These are what may be called effective rights.
Otherwise everyone is a proprietor and has equal rights.
" For the purpose of this case it is not necessary to go into further ramifications of the incidents of a tarwad, for nothing turns upon them.
We are concerned in this case with a sthanam.
In the book of Sundara Aiyar the origin, scope and incidents of a sthanam are discussed at p. 249: " As a technical word, ' stanom ' means a position of dignity of this kind, that is, one to which certain specific property is attached, and which passes with it, and is held by the person as the " stani. . . . .
The origin of stanom is by no means clear and is more or less a matter for speculation." The learned author proceeds to give the three modes of the origin of sthanams, namely, (1) in a ruling family " it was considered necessary in the circumstances that for the maintenance of the dignity of the ruler he should own properties in which the 930 members of the tarwad as such had no right or interest and which would pass with the Crown to his successor": sthanams in the families of Zamorin, Palghat, Wulluvanad and other Rajas are given as instances of this class of sthanams; (2) " in the case of some chieftains and public officers, sthanams were created by the ruling king, who, when he appointed the head of a particular family to an office with hereditary succession attached also certain lands for the maintenance of the officer holder ": Para Nambi is given as a prominent instance of this class; and (3) " when a family became very opulent and influential, it was sometimes deemed necessary in order to keep its social position and influence that the head should be able to maintain a certain amount of state, and for that purpose the members of the family agreed to set apart certain property for him, and such property, would descend to the head of the family for the time being ".
To some of the questions posed by the decisions or that are likely to arise, the learned author suggested some answers.
The learned author describes the position of a sthanee vis a vis the members of the tarwad thus: " It is rather that of a member of a tarwad who separates himself from it by division.
His accession to the stanom operates as a severance from the family.
In consideration of his solely becoming entitled to the stanom property it was probably considered fair that he should give up his existing right in the property of the tarwad.
But he and his tarwad will have the same right of succession to the properties of each other as if his severance from the family had been the result not of his accession to the stanom, but a voluntary division between him and the rest of the family." Another difficulty visualized and attempted to be answered by the learned author is the case of a family which has no male member to succeed to the sthanam.
He gives three possible answers, namely, (i) escheat to the Crown ; (ii) descent according to the rules of devolution applicable to the property of a divided member ; and (iii) on the assumption that 931 the property is dedicated for the purpose of the tarwad, reverting to the tarwad.
On the question, what would happen to the sthanam, if at the time of the death of the sthanee there was no male member in the tarwad, though he cited a decision of the Madras High Court where a subsequent born male infant was given a decree to recover the properties, he was of the view that the question was not an easy one to decide.
The decided cases considered the nature of this institution and also its incidents.
A division bench of the Madras High Court in Vira Rayen vs The Valia Rani of Pudia Kovilagom, Calicut (1) held that according to the custom obtaining in the family of the Zamorin Rajas of Calicut, property acquired by a sthanam holder and not merged by him in the properties of his sthanam, or otherwise disposed of by him in his lifetime, became, on his death, the property of the kovilagom in which he was born, and, if found in the possession of a member of the kovilagom, belonged presumably to the kovilagom as common property.
In the course of the judgment, the learned judges pointed out that in the family of the Zamorin of Calicut there were five sthanams or places of dignity with separate properties attached to them, which were enjoyed in succession by the senior male members of the kovilagom.
It appears from the judgment that the senior lady of the whole family also enjoyed a sthanam with separate property.
The Judicial Committee in Venkateswaralyany Shekhari Varma (2) was considering the validity of a perpetual lease of sthanam lands effected by one of the Valia Rajas of Palghat.
In that context, Sir Arthur Hobhouse, delivering the judgment of the Judicial Committee, described a sthanam thus at p. 386: " It appears that in the families of the Malabar Rajas it is customary to have a number of palaces, to each of which there is attached an establishment with lands for maintaining it, called by the name of a sthanam.
The Palghat family have no less than nine sthanams.
Each sthanam has a raja as its head or Sthanamdar.
The Sthanamdar represents (1) Mad. 141.
(2) Mad.
932 the corpus of his sthanam much in the same way as a Hindu widow represents the estates which have devolved upon her, and he may alienate the property for the benefit or proper expenses of the sthanam.
" This passage equates a sthanamdar to a Hindu widow vis a vis his rights both in the matter of representation as well as his right to alienate the property pertaining to the sthanam.
The decision in Mahomed vs Krishnan (1) dealt with a suit filed by the junior members of a tarwad, which consisted of the three sthanams, against the karnavan and others, including certain persons to whom he had alienated some tarwad property, inter alia, for a declaration that the alienations were invalid as against the tarwad and for possession of the property alienated.
One of the questions raised was whether the plaintiffs were competent to maintain the suit.
The suit was resisted on several grounds and one of them was that the tarwad was not a Malabar family in the ordinary sense of the term, but that it consisted of three sthanams and three illakur houses or subsidiary tarwads.
In considering the objections the learned Judges considered the nature of a sthanam property and made the following observations at p. 112: " According to the custom of Malabar, the nature of stanom property is such that the present holder has in it a life interest and the successor derives no benefit from it during the life of his predecessor, whereas in ordinary tarwad property each member of the tarwad has a concurrent interest and a joint beneficial enjoyment.
Although the position of a stani is analogous to that of a childless widow, in that both have a life interest, both represent the estate ate or the inheritance for the time being, and both have a disposing power only to the estate taken by reversioner.
Each male reversioner becomes under Hindu Law the full owner when the reversion falls in, whereas the person that succeeds to a stanom takes the same qualified estate that his predecessor bad.
The legal relation therefore between the Vayoth Nair and the other stanomdars and the karnavans of the three subsidiary tarwads is that (1) Mad. 106. 933 which subsists among a group of person , entitled to succeed to the stanom property in a certain order, each having only a life interest therein and qualified power of disposition over it.
The relation between the stani and the junior members of each subsidiary tarwad is that which exists between the representative of the stanom for the time beinog and the class of persons who may become karnavans of their tarwads and therefore representatives of the junior and senior stanoms in the order of seniority.
" This decision not only brings out the differences between a Hindu widow 's estate and the sthanee 's interest in a sthanam property but also points out that the interest of a member of a tarwad is only a right to succeed to the sthanam property in a certain order.
It is nothing more than a spes successionis.
Seshagiri Ayyar, J., in Krishnan Kidavu vs Raman(1) throws some light on the relationship to the tarwad of a person who had succeeded to a sthanam.
The learned Judge says at p. 920 thus: " It is clear that if in his new sphere the stani acquires property and does not dispose of it, his tarwad will be entitled to it.
The converse position is at least arguable.
If the tarwad becomes extinct, the quondam member who had become a stani may lay claim to the property.
It cannot, therefore, be said that the attainment to a sthanam severs the relationship altogether.
The person thus ceasing to be a member is not in the position of a stranger.
" The Judicial Committee in considering some of the aspects of the institution of a sthanam in K. Kochunni vs K. Kuttanunni (2 ), a case that was fought out between the petitioner and some of the respondents in the present petition, accepted the meaning given to the word " sthanam " by Sandara Aiyar in his book on " Malabar and Aliyasanthana Law ", namely, that it is a dignity to which property is attached for its maintenance and for the fulfilment of the duties attached to the position, but rejected the contention that the following two circumstances indicated that the sthanam was a tarwad: (1) maintenance was (1) Mad.
(2) I.L.R. 121 934 decreed against Moopil Nair to the junior members of the family and that maintenance was being paid to the junior members; and (2) the Court of Wards treated the sthanam property as tarwad property.
The first circumstance was explained away with the following remarks at p. 691: " The maintenance claimed was a customary one, originating in ancient times when admittedly the Muppil Nair was a sthani in possession of sthanam rights.
There is no evidence as to how the maintenance allowance arose, whether it was given in recognition of a legal claim or was only a generous provision made for the benefit of the women and younger members, which the Raja was perfectly competent to do out of property which he regarded exclusively as his own.
" In respect of the second circumstance, the Judicial Committee remarked at p. 693 thus: " It appears from the evidence that the Court of Wards throughout the entire period of their management from 1872 till 1910 treated the estate as if it was a tarwad, but this was apparently without any investigation into the true nature of the property. . .
Besides there was no adult male at that time to question the treatment by the Court of Wards of the property as tarwad property." A third circumstance was relied upon, namely, that in 1872 the only surviving member of the family was then a girl of six years of age and that, therefore, there being no male heir to succeed to the sthanam, the sthanam became extinct.
The Judicial Committee did not allow this plea to be raised for the first time before them.
That apart, quoting from Sundara Aiyar 's book, they pointed out that the question whether a sthanam becomes extinct on the extinction of the male members or is only in abeyance during the absence of the male members so as to be capable of being revived, does not admit of an easy solution. " This decision lays down that if once it has been . established that a property is a sthanam property, the mere fact that the sthanamdar was giving maintenance to the members of the family or that the Court of Wards treated the entire property as tarwad 935 property would not in itself convert what, is sthanam property into a tarwad property.
To summarize: The origin of the sthanam is lost in antiquity.
It primarily means a dignity and denotes the status of the senior Raja in a Malabar Kovilagom or palace.
It is surmised that sthaiiams were also created by the Rajas by giving certain properties to military chieftains and public officers and also by tarwads creating them and allocating certain properties for their maintenance.
Most of the the incidents of a sthanam are well settled.
Usually the seniormost male member of the family and occasionally a female member attains a sthanam.
Properties are attached to the sthanam for the maintenance of its dignity.
The legal position of a sthanee is equated to that of a Hindu widow in that he represents the estate for the time being and he can alienate the properties for necessity or for the benefit of the estate.
Unlike a Hindu widow, the successor to a sthanee is always a life estate holder.
In that respect his position is more analogous to an impartable estate holder.
He ceases to have any present interest in the tarwad properties.
Like a Hindu widow or an impartible estate holder, he has an absolute interest in the income of the sthanam properties or acquisitions therefrom.
His position is approximated to a member separated from the family and that the members of the tarwad succeed to his acquisitions unless acereted to the estate and he succeeds to the tarwad properties, if the tarwad becomes extinct.
Questions like what would happen if there is no male heir to a sthanam at any point of time whether the properties pertaining to the sthanam would escheat to the State or devolve upon the members of the tarwad or whether a subsequent birth of a male heir would revive the athanamare raised by Sundara Aiyar in his book, but there is a decision of the Madras High Court where in the case of Punnathoor family a subsequent born male heir was given a decree for the possession of the properties of a sthanam.
On the question whether a sthanam property, not being the property of a member of a tarwad, be blended with the property of the tarwad so as to make it a tarwad property, there is no direct 936 decision.
On principle if the sthanee, on attaining the sthanam is in the position of a separated member of a Hindu family, there may not be any scope for the application of the doctrine of blending.
No member of a tarwad has any right to maintenance from out of the sthanam properties and the mere fact that a sthanee for the time being, out of generosity or otherwise, gives maintenance to one or other members of the tarwad cannot legally have the effect of converting the sthanam property into a tarwad property; nor the fact that the sthanam properties are treated as tarwad properties can have such a legal effect.
Now, what is the relationship between the tarwad and the sthanee ? It is true that whatever may be the origin of the sthanam, ordinarily, the seniormost member of a tarwad succeeds to that position, but once he succeeds, lie ceases to have any proprietary interest in the tawad.
So too, the members of the tarwad have absolutely no proprietary interest in the sthanam property.
Thereafter, they continue to be only " blood relations" with perhaps a right of succession to the property of each other on the happening of some contingency.
The said right is nothing more than a spes successions the tarwad may supply future sthanees.
With this background let us look at the terms of the Act to see what it purports to do.
What is the effect of the impugned Act ? It is not the form that matters but the substance of it in its operation on the vested rights of citizens.
The Act destroys the finality of decrees of courts establishing the title of janmies to the sthanam properties.
It affects the undisputed title of sthanees in sthanam properties, though they may not have obtained decrees in respect thereof.
It statutorily confers title retrospectively on the members of the tarwad who had none before.
It arbitrarily dislocates the title of particular sthanees in respect of certain sthanam with particular characteristics, which have no relation to the title of the sthanees.
The first characteristic mentioned in the impugned Act is that there is or had been at any time an intermingling of the properties of the sthanam and the properties of 937 the tarwad.
If the word "intermingling" conveys only the idea of mere factual mixing up of the sthanam properties with the tarwad properties, it cannot, by any known legal notion of Marumakkathayam Law or on any analogy drawn from Hindu Law, convert the sthanam property into the tarwad property.
Even if it is understood in the sense of blending, the sthanee, who ceases to be a member of the tarwad and is in a position of a separated member, cannot legally blend his property with that of the tarwad, for the legal concept of blending implies that the person who blends his property with that of the family is an undivided member of the family.
The second characteristic mentioned in the impugned Act is that the members have been receiving maintenance from properties purporting to be sthanam properties as of right or in pursuance of custom or otherwise.
This characteristic is foreign to the concept of sthanam.
No member of a tarwad is entitled as of right to any maintenance from out of properties of the sthanam.
Under this clause, if maintenance is so received, the sthanam is deemed to be a tarwad on the basis that the receipt of maintenance from the sthanee out of the sthanam property brings about the said result.
If a sthanee creates any such right in favour of a tarwad, it may bind him, but it cannot certainly be binding on the sthanam properties or its successor.
If a custom be established on evidence, it may become an incident of the sthanam, but it cannot obliterate or extinguish it or convert it into a tarwad.
The word "otherwise" in the context, it is contended, must be construed by applying the rule of ejusdem generis.
The rule is that when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified.
But it is clearly laid down by decided cases that the specific words must form a distinct genus or category.
It is not an inviolable rule of law, but is only permissible inference in the absence of an indication to the contrary.
On the basis of this rule, it is contended, that the right or the custom mentioned in the clause is a distinct genus and the words " or otherwise " must be 938 confined to things analogous to right or custom such as lost grant, immemorial user, etc.
It appears to us that the word " otherwise " in the context only means " whatever may be the origin of the receipt of maintenance ".
One of the objects of the legislation is to by pass the decrees of courts and the Privy Council observed that the receipt of maintenance might even be out of bounty.
It is most likely that a word of the widest amplitude was used to cover even acts of charity and bounty.
If that be so, under the impugned Act even a payment of maintenance out of charity would destroy the character of an admitted sthanam which ex facie is expropriatory and unreasonable.
Nor does the third characteristic embody an unimpeachable test of the extinction of a sthanam or the conversion of the same into a tarwad.
Under the impugned Act, if there had been at any time a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam the sthanam would be deemed to be a tarwad.
Not only there is no justification for enacting that non existence of such a male heir at any point of time should put an end to the character of the sthanam, but the only decided case of the Madras High Court on the point recognized the right of a subsequently born male member in a tarwad to succeed to the sthanam and its properties.
Therefore, the three tests laid down by the impugned Act to enable the drawing of the statutory fiction are not only not germane but extraneous to the object sought to be achieved.
What is more, the impugned Act is made retrospective so as to make the sthanee liable to arrears of maintenance and past profits.
The contention that the impugned Act is nothing more than a readjustment of rights inter se between the members of the tarwad and the sthanee is without substance, for, before the Act, except ties of blood and a right to succeed in a particular contingency the members of the tarwad had no interest in presenti in the sthanam property nor vice versa.
The impugned Act is only a legislative device to take the property of one and vest it in another without compensation, and, therefore, on its face stamped with unreasonableness.
In short, the 939 impugned Act is expropriatory in character and is directly hit by article 19(1) (f) and is not saved by cl.
(5)of article 19.
Another condition for the application of cl.
(5) of article 19 is that the restrictions should be in the interests of the general public.
We assume for the purpose of this case that there are sthanams with characteristics similar to those of the petitioner 's sthanam and that the Act confers title on the junior members of tarwad in properties of such sthanams and that they form a defined section of the public.
If so, a question arises whether a section of the public is "general public " within the meaning of article 19(5).
This fell to be considered by a full bench of the Calcutta High Court in Iswari Prosad vs N. R. Sen (1).
It was contended before the full bench of the said High Court that the words " in the interests of the general public " mean " in the interests of the public of the whole of the Republic of India ".
Negativing this contention, Harries, C.J., observed at p. 278 thus: " The phrase ' in the interests of the general public ' means I think nothing more than 'in the public interest ', and it may well be that legislation affecting a limited class of persons or a limited area might well be legislation in the public interests, though the public of other parts of India might not be directly affected by such legislation.
If they are indirectly affected such would be quite sufficient to make such legislation in the public interest.
Legislation affecting a particular class or a particular area would only directly affect the members of that class or the inhabitants of that particular area.
But the removal of some serious abuse or grievance or discontent is a matter indirectly affecting the public generally.
It is not in the interests of the general public or in the public interest to allow any class of persons to labour under some grievance and to be genuinely discontented.
It is in the interests of the general public or in the public interest that all classes of the citizens of India are content and that their grievances should be removed.
A festering sore on the human body may eventually affect the whole (1) A.I.R. 1952 Cal.
273. 940 body though at first its effect is localised.
Grievances or discontent in some particular area or in some State or in some class of persons may eventually affect the whole Republic of India, though originally the effects might be limited.
The removal of any grievance, abuse or discontent is a matter not only where the discontent or grievance is genuine it may well be in the public interest to remove such, though the public in other parts of India may not be directly affected.
It is in the public interest that persons should be governed justly and well and removal of hardship and grievances of a particular class is I think clearly a matter of public interest.
We agree with these observations.
Relying upon these observations, it is said that the decision of the Privy Council created a stir among the members of that class of the public who are governed by the Marumakkathayam Law, either because the pre existing rights were disturbed or because there is no justification in a welfare State for one member of the tarwad succeeding to the entire sthanam property to the exclusion of the other members of the tarwad, and so, the argument proceeds, that the State has stepped in to rectify the mistake or to do justice consistent with modern trends.
It is further argued that the redress of this grievance of a section of the com munity is in the interest of the public.
This argument is purely based on surmises.
We have pointed out that the junior members of the tarwad had never any interest in the sthanam properties.
We cannot say on the materials placed before us that any public interest will be served by depriving a sthanee of his properties and conferring title in his properties so deprived on others.
Nor is there any evidence that there was a real and genuine grievance in this particular section of the public belonging to tarwads justifying the interference by the State.
We cannot on the materials placed before us hold that this reform is in the public interest.
The learned Attorney General raised a further point that no law can impose restrictions retrospectively on fundamental rights aid, in support of his contention, he relied upon the wording of cl.
(5) of article 19 of the 941 Constitution and also on the decision of the Privy Council in Punjab Province vs Daulat Singh (1).
But, as we have held that the restrictions imposed are not reasonable within the meaning of cl.
(5) of article 19 of the Constitution, this question need not be decided in this case.
We declare that Madras Act 32 of 1955 is void and ultra vires the Constitution and issue a writ of mandamus restraining the State of Kerala from enforcing the provisions of the said Act against the petitioner and his sthanams.
In the result, Petition No. 443 of 1955 is allowed with costs; Petition No. 40 of 1956 is allowed, but in the circumstances, without costs ; and Petition No. 41 of 1956 is dismissed, but in the circumstances, without costs.
SARKAR, J.
In our view these petitions fail.
The petitions challenge the validity of an Act passed by the Madras Legislature called the Madras Marumakkathayam (Removal of Doubts) Act, 1955.
The substantive provisions of the Act are contained in section 2 which is in these terms: "section 2.
Notwithstanding any decision of Court, any sthanam in respect of which (a)there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarwad, or (b)the members of the tarwad have been receiving maintenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932 (Madras Act, XXII of 1933), shall apply." (1) 122 942 Sthanams and tarwads are peculiar institutions of the Malabar area and a few words about them are necessary.
A tarwad is an undivided family governed by the Marumakkathayam Law, the customary law of Malabar.
The outstanding feature of that law is that for the purposes of inheritance, descent is traced through the female line.
The property of the tarwad or family is owned by all its members but is managed ordinarily by the eldest male member, such manager being called the karnavan.
Before the Madras Maru makkathayam Act, 1932, was passed, a member of the tarwad could not insist on a partition and a partition took place only when all the adult members agreed.
The members had, however, the right to be maintained by the karnavan and had certain other rights to which it is not necessary for us to refer.
The Madras Marumakkathayam Act, 1932, made some changes in the customary law.
The more important changes were that the junior members were given power to inspect the accounts of the karnavan and a right to ask for partition subject to certain limitations.
We turn now to sthanams.
A sthanam is a station, rank or dignity.
A sthani is the holder of a sthanam.
A sthanam usually has lands attached or granted to keep up the station, rank or dignity of the sthani and it appears to have come into existence in one or other of the manners hereinafter stated.
The ancient rulers of the Malabar coast possessed sthanams and it may be taken that the lands which they held as rulers were regarded as being sthanam lands in character.
The sthanam held by a ruler went by the name of Rajasthanam.
The Rajasthanams have continued though there are no rulers now.
Apart from Rajasthanams, there are other kinds of sthanams.
The rulers often granted sthanams with lands attached to them to their subsidiary chieftains or other persons of consequence in their States.
Sthanams with lands were also sometimes granted for rendering military service.
Again when a family became opulent and influential the members of the tarwad sometimes agreed to set aside for the karnavan certain lands in order that he might keep up his social position and influence and so again a sthanam was created.
A sthanam with the 943 lands attached thereto devolved on the death of the holder for the time being to the next senior member of his tarwad.
When a member of the tarwad becomes the sthani he loses his interest in the tarwad properties though he does not cease to be a member of the tarwad.
The members of the tarwad in their turn have no interest in the sthanam lands.
The sthani is entitled to utilize the income of the sthanam properties for his own purposes.
For a more detailed state ment of the character of a sthanam reference may be made to P. R. Sundara Ayyar 's book on Malabar and Aliyasanthana Law.
We have taken the greater part of what we have said in this paragraph from Kuttan Unni vs Kochunni (1).
The important point to note for the purposes of these petitions is that the sthani for the time being is alone entitled to the lands of his sthanam and the members of his tarwad are not enti tled to them while all members of a tarwad except the sthani are entitled jointly to all the properties of a tarwad.
There are altogether three petitions before us bearing numbers 443 of 1955 and 40 & 41 of 1956 and they have been heard together.
The petitioner in Petition No. 443 of 1955 is the Moopil Nayar or the senior member of the Kavalappara tarwad or family to which the parties to this petition other than the States of Kerala and Madras, belong.
As the head of.
the family he claimed to be entitled to eight sthanams with the lands attached to them respectively.
It appears that the Kavalappara family was a ruling dynasty in pre British times and ruled over the Kavalappara territory.
The Moopil Nayar or senior member of this family for the time being was the ruler of the Kavalappara State.
The Kavalappara territory was the Ruler 's Rajasthanam.
When Malabar was ceded by Tippu Sultan to the East India Company in 1792, the Kavalappara family lost its sovereign rights.
The Kavalappara territory, however, continued as a Rajasthanam held by the Moopil Nayar or the senior member of the family for the time being.
The petitioner in Petition No. 443 of 1955 has been the Moopil Nayar of the Kavalappara family since his elder (1) I.L.R. 914 brother 's death in 1925 and claims the lands of the Rajasthanam as such.
This is the first of the eight sthanams mentioned earlier.
The head of the Kavalappara family was entitled to five other sthanams granted from time to time by the rulers of Palghat to whom the Kavalappara State was subordinate.
Each of these sthanams also had lands attached to it.
The lands attached to the Rajasthanam and sthanams granted by the rulers of Palghat were situate in the South Malabar district which originally appertained to the State of Madras and is now part of the State of Kerala.
The head of the Kavalappara family was also entitled to two further sthanams with the lands attached to them which had been granted by the ruler of Cochin.
The lands belonging to these two sthanams were situate in the former State of Cochin now merged in the State of Kerala.
The petitioner made a gift of the lands attached to the five sthanams which had been granted by the Raja of Palghat, to his wife and daughters.
The donees under this gift are the petitioners in Petition No. 40 of 1956.
He likewise made a gift of the lands attached to the two sthanams which had been granted by the Raja of Cochin to his son who is the petitioner in Petition No. 41 of 1956.
These gifts had been made before the impugned Act bad been passed.
It is necessary now to refer to a previous litigation.
On April 10, 1934, the then junior members of the Kavalappara family filed a suit in the Court of the Subordinate Judge of Ottapalam for a declaration that all the properties managed by the Moopil Nayar were tarwad properties belonging equally and jointly to all the members of the tarwad including the Moopil Nayar and that the latter was managing them as Karnavan and not as sthani.
The defendant to this suit was the petitioner in Petition No. 443 of 1955, the Moopil Nayar or the senior member of the family.
The Moopil Nayar resisted the suit claiming to be solely entitled to the disputed lands on the basis that they were sthanam lands and he was the sthani.
The suit was dismissed by the learned Subordinate Judge but on appeal the decision of the Subordinate Judge was reversed by the High Court of Madras and a decree 945 was passed as claimed in the suit.
It is this judgment of the High Court which is reported in I.L.R. , to which reference has been made earlier.
On a further appeal to the Privy Council by the Moopil Nayar, the decision of the High Court was set aside and that of the Subordinate Judge restored.
The decision of the Judicial Committee was given on July 29, 1947.
The result was that the petitioner, Moopil Nayar, was declared to be entitled as sthani to the disputed properties and it was held that those properties were sthanam properties and not tarwad properties.
The impugned Act came into force on October 19, 1955.
At that time the South Malabar District was part of the State of Madras.
Later, with the formation of the State of Kerala, this area became part of that State and continued to be governed by the Act.
That Act was never extended to any other part of Kerala and never applied to the territories covered by the former Cochin State which had been merged in the State of Kerala.
The petitions were filed challenging the validity of the Act soon after it came into force.
We will take up Petition No. 443 of 1955 first.
In this petition we are concerned only with the Kavalappara Rajasthanam.
The petitioner, the Moopil Nayar, was entitled at the date of the petition only to the lands attached to that sthanam for he had earlier given away the lands belonging to the other sthanams to his wife, daughters and son as already stated.
He complains that as a result of the impugned Act he has been deprived of the exclusive ownership of the lands attached to the Kavalappara Rajasthanam and has to share it with the other members of his tarwad or family.
It is not in dispute that the Act applies to Kavalappara Rajasthanam.
The respondents to this petition are the junior members of the Kavalappara family and the States of Kerala and Madras.
The State of Madras has not appeared perhaps because the Act applies to lands which have since the filing of the petition, been transferred from Madras to Kerala, upon which transfer the State of Kerala had been made a party to the petition.
There are three interveners in 946 this petition two of whom support the respondents and one supports the petitioner.
The petitioner, Moopil Nayar, first says that the Act violates article 14 of the Constitution inasmuch as it applies to the stbanam held by him only and to no other sthanams.
This raises a question of fact.
He, however, also says that the Act is bad as infringing articles 19(1)(f) and 31(1) of the Constitution as it deprives him of his right to hold property and that it is not saved by cl.
(5) of article 19.
If, however, the Act enacts a law within the meaning of article 31 A of the Constitution, the petitioner cannot be heard to complain of violation of articles 14, 19(1)(f) and 31(1).
So the question arises, Is it saved by article 31A? That article so far as is material in this case is set out below: " article 31A. (1) Notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, . . . . . . . . . . shall be deemed to be void on the around that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31 : Provided that where such law is a law made by the Legislature of a State, previsions of this article shall not apply thereto unless such law having been reserved for the consideration of the President, has received his assent.
(2) In this article, (a) the expression ' estate ' shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grant and in the States of Madras and Kerala, any janmam right; (b)the expression 'rights ', in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenureholder, raiyat, under raiyat or other intermediary 947 and any rights or privileges in respect of land revenue ".
It appears that the Act had been reserved for the consideration of the President and had received his assent.
If, then, the Act provides for a modification of rights in an " estate ", it would not be void on the ground that it is inconsistent with articles 14, 19 and 3l the violation of which the petitioner complains.
Under article 31A (2) (a), an " estate " includes, in the State of Kerala, any janmam right.
This of course means lands held in janmam rights for janmam rights exist only in lands.
Again, under sub cl.
(b) of el.
(2) of article 31A the expression " rights " used in relation to an " estate " in that article includes the rights of the proprietor of the estate or others holding under him.
In regard to this sub clause it has been held by this Court in Alma Ram vs State of Punjab (1) that the expression " rights " in relation to an estate has been used in a very comprehensive sense and includes not only the interest of the proprietor or sub proprietor but also of lower grades of tenants, that is, all those who have acquired rights under him by what are called processes of sub infeudation.
The respondents contend that the rights affected by the Act are janmam rights and, therefore, the Act is one contemplated by article 31A.
The petitioner, Moopil Nayar, states that the respondents have not alleged that the sthanam properties are held in janmam right.
It appears that in the affidavit of the State of Kerala it is stated that the Act is saved by virtue of the provisions of article 31A. As we are concerned with lands in the State of Kerala, the Act could be saved by article 31A if the lands were held in janmam rights or in rights held under the holder of the janmam rights.
The allegation that the Act is saved by article 31 A, therefore, clearly implies that the lands attached to the sthanams were held in janmam rights or rights subordinate to janmam rights.
There is no statement by the petitioner anywhere on the records that the lands were not held on such rights.
On the other hand, it would appear from what we state later that (1) [1959] SUPP.
I S.C.R. 748.
948 the rights in the lands were janmam rights or rights subordinate to janmam rights.
Janmam right is really a freehold interest in land.
In section 3 (k) of the Malabar Tenancy Act, 1929, a janmi has been defined as a person entitled to the absolute proprietorship of land.
What we have earlier stated leaves no doubt that the lands, belonging to the sthanams were lands held in absolute proprietorship, that is, in freehold interest.
It has not been alleged that the freehold interest in the sthanam lands has undergone any change.
Neither has it been shown to us that in the Malabar area land can be held in any right other than janmam right or subordinate rights created by the holder of a janmam right.
Again in his written statement in the suit of 1934, earlier mentioned, which is on the record of this case, the petitioner, Moopil Nayar, stated that the lands of the sthanams situated in Madras remained in the management of the Court of Wards, Madras, from 1872 to 1916 and were registered as held in janmam rights.
Therefore, it seems to us that it has been established that the lands belonging to the sthanams in South Malabar district are held in janmam rights.
That being so, rights in such lands would be rights in an estate within the meaning of article 31 A (1) (a).
It is said on behalf of the petitioner, Moopil Nayar, that the Act compels him to share the lands with the other members of his family.
If so it seems to us that the effect of the Act is to modify the interest of a holder of a sthanam in the lands attached thereto.
His rights as sole owner of the lands are modified by making him one of the, joint owners of them along with the other members of his family.
As the lands were held in janmam rights or rights subordinate thereto, the Act would be saved by article 31A though it may infringe articles 14, 19 (1) (f) or 31(1).
The petitioner, however, contends that even if the lands were held in janmam rights, article 31A would not protect the Act.
He first says that the Act contemplated by Art,. 31A(l)(a) is an Act passed with the object of effecting agrarian reforms which the Act before us is not.
But we find nothing in the article to justify this contention.
The article does not mention 940 any agrarian reform.
Under it any janmam right may be acquired, extinguished or modified; this would be so whether the land held on janmam right was agricultural land or land which can never be used for agricultural purposes.
Article 31 A was introduced into the Constitution by the Constitution (First Amendment) Act, 1951.
It was subsequently amended by the Constitution (Fourth Amendment) Act, 1955.
Both these Acts made the amendments with retrospective effect from the commencement of the Constitution.
The petitioner seeks to support the contention that the Act contemplated by article 31A (1)(a) is an Act dealing with agrarian reforms by referring to the objects and reasons stated in the Bills by which the Acts amending the Constitution were introduced in the Parliament.
It does not seem to us that it is permissible to refer to such objects and reasons for the construction of a statute: see Aswini Kumar Ghose vs Arabinda Bose (1).
We conceive therefore, that we are not entitled to read the word " law " in article 31A (1) in relation to sub cl.
(a), only as a law intended to achieve agrarian reforms on the basis of the supposed object of the legislature in enacting article 31A. We also observe that apart from the objects and reasons found in the Bills, there is nothing on which the contention that the law contemplated by article 31 A (1)(a) is a law intended to achieve agrarian reform, can be based.
It is next said that the Act did not effect any modification of janmam rights and hence again article 31A is of no avail to protect it.
It is contended that the modification contemplated by the Article is a modification of the incidents of the janmam rights.
It is said that what the Act did was to distribute janmam rights among various persons and several owners held the same janmam rights which, before the Act, had been held by one.
That, it may be stated, is so but that does not affect the real question for decision.
When the Article talks of modification of janmam rights it does not talk of such rights in the abstract.
It contemplates the modification of the (1)[1953] S.C.R. 1. 950 rights held by a person.
It would be as much modification of janmam rights if such rights held by one person are directed to be held by a number of persons jointly, as when the incidents of such rights are altered.
Further our view receives support from two decisions of this Court, namely, Sri Ram Ram Narain Medhi vs The State of Bombay(1) and Atma Ram vs The State of Punjab (2 ).
These cases dealt with Acts one of the provisions of which compelled a landlord to sell to his tenant the whole or a portion of the land held by the latter at a price to be fixed in the manner indicated.
It was held that though this provision violated article 19(1)(f) yet it was saved by article 31A. It will be seen that here the incidents of the tenure on which the landlord held the land were not altered.
After he had been compelled to transfer the lands to his tenants, he held the remainder on the same terms as before, yet it was held that the Acts compelling the landlord to sell a part of the land held by him were saved by article 31A.
In our view, therefore, the Act now before us is saved by article 31A and it cannot be declared invalid even if it violates the provisions of articles 19(1)(f), 14 and 31 (1) of the Constitution.
In this view of the matter it is not necessary for us to consider whether the Act in fact violates articles 14, 19(1)(f) and 31(1) or any of them or is saved by el.
(5) of article 19.
Next it is said that the Act is bad as it is really an exercise by the legislature of judicial power which it does not possess and not an exercise of a legislative power at all.
We are unable to hold that this is so.
There are two things in the Act on which this contention has been based.
The first is that the Act has been given a retrospective operation.
It is quite clear to us that by itself does not make the Act a thing done in the exercise of judicial power.
The legislature has the power to give retrospective opera tion to an Act.
That of course interferes with vested rights but the legislature can interfere with such rights in the exercise of its legislative power.
That is not adjudicating between parties affected by the Act.
It is laying down the law to be followed by (1) [1959] SUPP.
I S.C.R. 489.
(2) [1959] SUPP.
1 S.C.R. 748.
951 951 courts in future.
It is so none the less that the law is altered as from a past date.
Then it is said that the Act provides that it is to have effect notwithstanding any decision of the Court contrary to its provisions.
That the Act no doubt does.
Can it be said that it thereby adjudicates and not legislates ? In Piare Dusadh vs King Emperor (1) it was pointed out that in India the legislature very often in the enactments that it makes sets aside decisions of Courts.
In America a rule appears to obtain that " Legislative action cannot be made to retroact on past controversies and to reverse decisions which the courts in the exercise of their undoubted autho rity have made ": Cooley 's Constitutional Limitations, 8th Ed., p. 190.
It was held in Piare Dusadh 's case (1) at p. 104, that this rule had no application in India.
The observation there made may be set out: It is clear from the American authorities that this limitation has been derived from the interpretation placed by the American courts on what are known as the Fifth and Fourteenth Amendments which provide against any person being " deprived of life, liberty or property without due process of law ".
The expression " due process of law" has been interpreted as referring only to ' judicial process ' and as not including legislation . .
As this requirement had been made part of the written constitution, it followed that no enactment passed by a legislature limited by that constitution could authorise anything in violation of it Hence the rule (stated by Cooley) that ' it would be incompetent for the legislature, by retrospective legislation, to make valid any proceedings which had been had in the courts but which were void for want of jurisdiction over the parties. ' The constitutional position in India is different.
" It seems to us that this observation of the Federal Court which no doubt was made with reference to the Government of India Act,., 1935, applies with equal force to the position obtaining under our Constitution.
It has been held by this Court that there is no scope (1) 952 under our Constitution for the application of the American concept of " due process of law".
The American cases cited in support of the contention that a legislation cannot override judicial decisions therefore afford no assistance in our country.
Article 31B itself provides that it would apply notwithstanding any judgment, decree or order of any court to the contrary and it had been enacted by an Act passed by the Parliament.
There have been many Acts passed since the Constitution came into force which contained similar provisions.
In no case has it ever been contended that such an Act amounted to an exercise of the judicial function by the legislature.
The Act before us lays down a law to be applied by courts in future in the adjudication of disputes between parties.
It also says that the courts shall apply the law notwithstanding that there is an earlier decision on the rights of the parties which are being litigated upon in a subsequent proceeding.
The Act does not itself annul any decision of any court.
All that it says is that the law laid down is to be applied by courts irrespective of any previous decision.
It does not in any sense adjudicate between parties.
It, therefore, seems to us that the contention that the impugned Act is really an exercise of judicial power is ill founded.
In our view, the challenge brought against the impugned Act fails.
Petition No. 443 of 1955 should, therefore, be dismissed with costs.
Coming now to the Petition No. 40 of 1956 the petitioners here are the wife and the two daughters of the petitioner in Petition No. 443 of 1955.
The respondents are the junior members of the tarwad as also the Moopil Nayar.
The petitioners claim as donees from the Moopil Nayar to be entitled to the sthanam lands in the Palghat area.
It is not necessary for us to decide whether the petitioner in Petition No. 443 of 1955 had the right to make the gift in favour of his wife and daughters.
That question has not been gone into by consent of the parties.
If the gift is valid then what we have said earlier in connection with Petition No. 443 of 1955, will apply to this petition also and it must for the same reason 953 fail.
If the gift is invalid, the petition must fail on the ground that the Act has not affected the petitioners ' rights in any lands held by them.
We would, therefore, dismiss that petition with costs except the costs of the hearing before us for all the three petitions were heard together.
Lastly, we come to Petition No. 41 of 1956.
This petition must clearly be dismissed.
It was filed by the son of the petitioner in Petition No. 443 of 1955 claiming to be entitled to the sthanam lands situate in an area which was formerly part of the Cochin State.
It is not in dispute that the impugned Act was never extended to that area.
Therefore, whether the gift to him was valid or not, as to which we say nothing, the petitioner in this petition is not affected by that Act at all.
His petition is clearly misconceived.
His petition is, therefore, dismissed and he will pay the costs excepting the costs of the hearing.
ORDER OF COURT.
In view of the judgment of the majority, Petition No. 443 of 1955, is allowed with costs, Petition No. 40 of 1956, is allowed without costs, and Petition No. 41 of 1956, is dismissed without costs.
| These petitions by the holder of Kavalappara Sthanam, his wife, daughters and soil challenged the constitutional validity of the Madras Marumakkathayam (Removal of Doubts) Act, 1955 passed by the Madras Legislature soon after the Privy Council had declared the properties in possession of the Sthanee to be Sthanam properties in which the members of the tarwad had not interest.
Section 2 Of the Act, which contained the substantive provision, was as follows: " 2.
Notwithstanding any decision of Court, any sthanam in respect of which: (a) there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarwad, or (b) the members of the tarwad have been receiving main.
tenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being, no male member of the tarwad eligible to succeed to the Sthanam, 888 shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which .he provisions of the Madras Marumakkathayam Act, 1932 (Mad. XXII of 1933), shall apply.
" The question for decision was whether the impugned Act infringed the fundamental rights of the petitioners guaranteed by articles 4, 19(1)(f) and 31 of the Constitution.
Held (per Sinha, C. J., Subba Rao and Shah, JJ.) that the three tests laid down by the Act were contrary to the well settled principles of Marumakkathayam Law with regard to which there could be no scope for doubt and as such not only not germane but extraneous to the object it sought to achieve.
They were a device to deprive the sthanam of its properties and vest them in the tarwad and as such directly hit by article 19(1)(f) and could not be saved by article 19(5).
Assuming that the Sthanam properties were held in janmam right and as such were estates within the meaning of article 31A, the impugned Act was immune from challenge.
That Article, properly construed, envisages agrarian reform and provides for the acquisition, extinguishment or modification of proprietary and various other kinds of subordinate rights in a tenure called the estate solely for that purpose and must be limited to it.
Although it may not be permissible to refer to the statement of objects and reasons of its amendment for purposes of construction, it can be referred to for the limited purpose of ascertaining the conditions prevailing at the time and purpose underlying the amendment.
Aswini Kumar Ghose vs Arabinda Bose, [19531 S.C.R. 1, con sidered.
There is no substance in the argument that since the impugned Act seeks to regulate the rights of the Sthanee and the junior members of the tarwad inter se it falls within by cl.
(2)(b) of article 31A.
That clause has to be read with cl.
(1)(a) of the Article and since the impugned Act does not contemplate any agrarian reform or seek to regulate the rights inter se between landlords and tenants or modify or extinguish any of the rights appertaining janmam right, leaving all its characteristics intact, it does not come within the purview of article 31A of the Constitution.
Sri Ram Ram Narain vs State of Bombay, [1959] SUPP.
1 S.C.R. 489, and Atma Ram vs State of Punjab, [1959] SUPP.
1 S.C.R. 748, referred to.
Fundamental rights have a transcendental position in the Constitution and before an Article embodying a fundamental right can be construed to exclude another every attempt should be made to harmonize them and not until it is found impossible to do so, can one be made to yield to the other.
Barring such exceptional cases, any law that infringes any of the fundamental rights must be void.
889 The word 'law ' in article 31(1) must mean a valid law, and such a law must satisfy two tests, (1) that the legislature must be competent to enact it and (2) that it must not infringe any fundamental rights.
A law that deprives a citizen of his property must, therefore, be invalid if it infringes article 19(1)(f) of the Constitution.
Deep Chand vs State Of U. P., [1959] SUPP.
(2) S.C.R. 8, and Basheshway Nath vs Commissioner of Income tax, Delhi, [1959] Supp. 1 S.C.R. 528, referred to.
Article 31 Of the Constitution, since its amendment by the Constitution (Fourth Amendment) Act, 1955, is no longer a selfcontained Article providing for a subject different from that dealt with by article 19, but deals with two different subjects, CIS.
(2) and (2A) dealing with acquisition and requisition and cl.
(1) with deprivation of property by authority of law, and can no longer be construed on the analogy of article 2 1 so as to exclude the operation of article 19.
The State of West Bengal vs Subodh Gopal Bose, [1954] S.C.R. 587, A. K. Gopalan vs The State of Madras, ; , referred to.
State of Bombay vs Bhanji Munji and Any., [1955] 1 S.C.R. 777, held inapplicable.
Nor does article 31(1) deal with police power.
Although such power, as understood in America, is no arbitrary power divorced from social control and public good, there can be no need of importing such a doctrine into the Indian Constitution.
The word 'law ' used by article 31(1) indicates its limitation and refers back to article 19 and any law made under article 31(1) can be sustained only if the restrictions it imposes are reasonable and in the interest of the general public.
The Constitution does not confer on the Indian Parliament the same power which the Parliament of England possesses and while it does contemplate a welfare State, that has to be brought about within its frame work of the Constitution itself.
The correct approach should, therefore, be first to ascertain the fundamental right and then to see whether the law infringes that right.
If ex facie it does so, it has to stand the test of article 19(5).
In certain circumstances, however, deprivation of fundamental right to property may also amount to a reasonable restriction under the Article.
Narendra Kumar vs The Union of India, [196O] 2 S.C.R. 375, referred to.
Individual proprietary rights being ordinarily inviolable unless a clear case is made out for restricting them, there must be a harmonious balancing between the fundamental rights declared by article 19(1) and social control permitted by article 19(5).
It is implicit in the nature of restrictions that no inflexible standard can be laid down and each case must be decided on its own facts.
But the restrictions must not be arbitrary and must have a reasonable relation to the object sought to be achieved and shall be in the interest of the general public.
890 State of Madras vs V. G. Rao, ; , Henry Webster vs Peter Cooper, ; , and The Citizens ' Savings and Loan Association and Cleaveland, Ohio vs Topeka City, ; , referred to.
Although the redress of a real and genuine grievance of a section of the community may be in public interest, it is impossible to hold that the impugned legislation was either justified or in such public interest.
Iswari Prosad vs N. R. Sen, A.I.R. 1952 Cal.
273, held in applicable.
Marumakkathayam Law is a body of customs and usages that have received judicial recognition, and is fundamentally different from Hindu Law, being a matriarchal system.
The family, called tarwad, consists of all the descendants of one common ancestor.
It consists of a mother and her male and female children and the children of those female children and so on.
Only the senior most male member can attain the sthanam, which is a position of dignity with specific properties attached to it.
When he does so and becomes the Sthanee he ceases to have any interest in the tarwad properties.
Occasionally a female member also becomes the Sthanee.
Like a Hindu widow or an impartible estate holder the Sthanee has an absolute interest in the income of the Sthanam properties or acquisitions therefrom.
A member of the tarwad has no right to maintenance from out of the Sthanam properties nor can such property be converted into tarwad property by the grant of such maintenance by custom or otherwise or intermingling of the Sthanam properties with the tarwad properties by the Sthanee.
His position approximates to that of a member separated from a Hindu family and there can be no scope for the application of the doctrine of blending.
Like the Sthanee who ceases to have any present proprietary interest in the tarwad, the members of the tarwad also can have no present proprietary interest in the sthanam property.
They continue to be blood relations with a contingent right of succession to each others ' property that is no more than a spies successions.
The right of a subsequently born male member of the tarwad to succeed to the Sthanam and its property is judicially recognised.
Case law reviewed.
Per Imam and Sarkar, JJ.
The impugned Act is protected by article 31A and is not open to question in the ground that it violates articles 14, 19(1)(f) and 31(1) Of the Constitution.
There is no basis for the contention that article 31(1)(a) contemplates a law relating to agrarian reform only.
The Article makes no mention of any such reform and there can be no doubt that under it a janmam right may be acquired, extinguished or modified whether the land held in such right is agricultural or not.
It is not permissible to refer to the objects and reasons stated in the Bills, by which the Acts amending article 31A of the Constitution were introduced, for the construction of the statute and, therefore, the word 'law ' in article 31A(1) cannot be read in relation to sub cl.
(a) only as a law intended to achieve agrarian 891 reform on the basis of the supposed object of the Legislature in enacting article 31A. Aswini Kumar Ghose vs Arabinda Bose, ; referred to.
It is not correct to say that the impugned Act does not effect any modification of janmam rights and therefore it does not come within article 31A.
When the Article speaks of modification of janmam rights, it does not speak of such rights in the abstract but contemplates the modification of such rights held by a person.
It would be as much modification of janmam rights, if such rights held by one person are directed to be held by a number of persons jointly, as when the incidents of such rights are altered.
Sri Ram Ram Narain Medhi vs The State of Bombay, [1959] Supp. 1 S.C.R. 489, and Atma Ram vs State of Punjab, [1959] Supp. 1 S.C.R. 748, relied on.
It is not correct to say that the Legislature in giving the provisions of the impugned Act retrospective operation or in providing that they should prevail notwithstanding any decision of the court to the contrary, was acting judicially and not in a legislative capacity and that the Act was on that ground invalid.
The rule obtaining in America that legislative action cannot retract on past controversies and reverse decisions of courts and the relevant American decisions can have no application in India.
Piare Dusadh 's case, , referred to.
|
minal Appeal No. 157 of 1965.
Appeal by special leave from the judgment and order dated February 1, 1965 of the Punjab High Court in Criminal Misc.
No. 8 of 1964 in Cr.
Revision No. 1375 of 1963.
Nishat Singh Grewal, Ravindra Bana and O. P. Rana, for the appellants.
R. N. Sachthey, for the respondent No. 2.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment of the High Court of Punjab dismissing Criminal Miscellaneous Petition No. 8 of 1964.
This petition arose out of the following facts.
Bhagwant Rai and Chhota Ram were tried, under section 325, I.P.C., read with section 34, I.P.C., in the Court of Shri Harish Chander Gaur, Magistrate 1st Class, Patiala.
Ajaib Singh, Sub Inspector, one of the appellants before us, had investigated the case.
The Magistrate, by his order dated April 5. 1957, acquitted both the accused and, inter alia, observed that Bhagwant Rai had been falsely implicated in the case as he was not even present on the, day of the occurrence at Patiala.
On the application of Bhagwant Rai, Shri Joginder Singh 'Karam garhia ', Magistrate 1st Class, Patiala, who succeeded Shri Harish Chander Gaur, filed a complaint under sections 193, 195, 211 and 120B, I.P.C., on October 31, 1958, against six persons including the appellants, Ajaib Singh and Malkiat Singh.
Shri O. P. Gaur.
Magistrate First Class, by his order dated June 1, 1959, discharged the accused, holding that the complaint was not competent as it was barred by sub section
(6) of section 479A, Cr.
P.C., because the, complaint had not been filed by or directed to be filed by Shri Harish Chander Gaur, who had disposed of the case ending in the acquittal of Bhagwant Rai.
In the revision filed against this order the Additional Sessions Judge upheld this view.
The High Court (Capoor, J.), on revision, found it unnecessary to consider the, scope of section 479A, Cr.
P.C., vis a vis section 476, Cr. P.C., because two of the offences mentioned in the complaint, namely.
s.211 and section 120B, I.P.C., did not fall within the purview of s.479A. Capoor, J., further held that section 42 of the Police Act.1861, had no application to a case in which a complaint was made by the Court under section 476, Cr.
P.C. Capoor, J., also held that as the order of Shri Joginder Singh, Magistrate, directing the making of the complaint against the respondents was not appealed from and had become final, the competency of the Court to make the complaint under section 211, I.P.C., against Jaswant Singh, one of the accused, could not be considered at that stage.
The High 147 Court accordingly set aside the order of the learned Additional Sessions Judge and directed that the respondents be proceeded against according to law.
On the case going back fresh objections were filed before the Magistrate trying the case but these were overruled.
Revision was filed before the Additional Sessions Judge who accepted the prayer of Kirpal Singh and recommended to the High Court that the criminal proceedings pending against him in the Court of Magistrate First Class, Patiala. might be quashed.
He, however, declined to interfere with the proceedings pending against the appellants mainly on the ground that the objections now taken by them before the Trial Magistrate had been heard and finally disposed of by Capoor, J., in his order dated April 4, 1961.
In the meantime, the appellants put in Criminal Miscellane ous Petition No. 8 of 1964, in criminal revision, in the High Court, praying that along with the recommendation made by the learned Additional Sessions Judge, Patiala, for quashing the criminal proceedings against Kirpal Singh, the grounds urged by them might also be taken into consideration.
Capoor, J., accepted the recommendation made by the learned Additional Sessions Judge, Patiala, and quashed the criminal proceedings against Kirpal Singh.
He, however, directed that Criminal Miscellaneous Petition No. 8 of 1964 should be placed before another Bench for disposal.
The matter was then placed before Sharma, J., who held that all the points urged in Criminal Miscellaneous Petition had been taken into consideration and repelled by Capoor, J., in his order dated April 4, 1961.
Sharma, J., observed : "The learned counsel, however, omitted to take note of the fact that the revision petition finally was accepted in the terms, 'As the order under revision is not legally sustainable, it must be set aside and the respondents must be proceeded with according to law. ' Therefore, what the order (said) was that the criminal case as a whole was to proceed against all the respondents and so the petitioners could not be heard now to say that the case was remanded to the trial court for trial of the respondents for offences punishable under sections 211 and 120 B of the Indian Penal Code.
In the circumstances, the trial Court cannot be said to have misconstrued the order of Capoor, J., The other grounds urged by them in the Criminal Miscellaneous as already pointed out by me were taken into consideration by Capoor, J., and findings given against the petitioners and that being so, these cannot be agitated again at this stage.
" 148 He accordingly dismissed the Criminal Miscellaneous Petition.
The appellants having obtained special leave, the appeal is now before us.
The learned counsel for the appellants contends that on the facts prosecution for offences under sections 193 and 195, I.P.C., was barred under section 479A(6), Cr.
In our opinion, this contention must be accepted in view of the ruling of this Court in Shabir Hussain Bholu vs State of Maharashtra(1) and Baban Singh vs
Jagdish Singh(2).
The learned counsel next contends that the complaint could only be filed by the Magistrate before whom the original proceedings were taken.
He says that according to section 195 (1) (b), Cr. P.C., a complaint in respect of sections 193, 195 and 211 I.P.C., can only be made by the Court in which the proceedings out of which the offences arose took place.
We see no force in this contention.
Section 559 enables a successor in office of a Magistrate to file a complaint.
The relevant portion of section 559 reads as follows : "559.
(1) Subject to the other provisions of this Code, the powers and duties of a Judge or Magistrate may be exercised or performed by his successor in office.
(2) When there is any doubt as to who is the successor in office of any Magistrate, the Chief Presidency Magistrate in a Presidency town, and the District Magistrate outside such towns, shall determine by order in writing the Magistrate who shall, for the purposes of this Code or of any.
proceedings or order thereunder, be deemed to be the successor in office of such Magistrate." This section was substituted for the original section 559 by the Code of Criminal Procedure (Amendment) Act (XVIII of 1923).
Since the amendment it has been held, and we think rightly, that a successor in office of a Magistrate can file a complaint under section 476, Cr.
P.C., in respect of an offence under section 195, I.P.C., committed before his predecessor.
(See Behram vs Emperor(3) Bara Bapen Manjhi vs Gopi Manjhi(4) and In re: Subramaniam Chettiar(5).
This section applies to all Magistrates and there is no reason why the plain terms of the section should be cut down to limit it, as suggested by the learned counsel for the appellant, to Magistrates whose courts are permanent.
It seems to us further clear that sub s.(2) has not the effect of limiting s.559(1).Section 559(2) applies when there is a doubt as (1) [1963] Supp. 1 S.C.R. 501.
(3) 108.
(2) A.I. R. (4) A. 1.
R. 1927 Pat.
(5) A. 1.
R. 149 to who the successor is, and that doubt can be resolved in the manner laid down in sub section
The sub section does not mean, as contended by the learned counsel, that until a successor is determined under sub section
(2) there is no successor for the purposes of sub section
If there is no doubt about who the successor is, then that person can exercise the powers under sub section
We accordingly hold that the complaint was properly filed by Shri Joginder Singh 'Karamgarhia ', Magistrate.
There is equally no force in the third point raised by ,,he learned counsel that section 42, Police Act, creates a bar and the prosecution is time barred under this section.
This Court held in Mulud Ahmed, vs State of U.P. (1) that section 42, Police Act, does_not apply to prosecutions under the Indian Penal Code or other Acts.
Subba Rao, J., as he then was, observed "The period of three months prescribed for commencing a prosecution under this section is only with respect to prosecution of a person for something done or intended to be done by him under the provisions of the Police Act or under general Police powers given by the Act.
Section 42 does not apply to prosecution against any person for anything done under the provisions of any other Act.
A combined reading of these provisions leads to the conclusion that section 42 only applies to a prosecution against a person for an offence committed under the Police Act. but the prosecution in the present case was for an offence under section 212 of the Indian Penal Code which is an offence under a different act and for which a much higher punishment is pres cribed.
By reason of section 36 of the Police Act, section 42 thereof cannot apply to such a prosecution.
" The fourth point which the learned counsel urges is that the complaint only discloses two offences under section 193 and section 195, I.P.C., and no other, and it was an abuse of the process of the Court.
There is no force in this contention as the complaint on its face mentions sections 193, 195, 211 and 120B.
The learned counsel finally urges that the complaint had been filed because of a private feud and it is not in the interest of justice that the complainant should be allowed to proceed with the complaint.
This point was not taken in the High Court at any stage and we do not allow it to be raised at this stage.
In the result the appeal fails and is dismissed.
Y.P. Appeal dismissed.
(1) [1963] Supp. 2 S.C.R. 38, 44 45.
| A magistrate acquitted Bhagwant Rai of the charge under sections 325/34 I.P.C. and observed that he had been falsely implicated.
The magistrate 's successor in office the respondent filed a complaint under sections 193, 195, 211 and 120B I.P.C., against the appellants.
The appellants con tended that (i) prosecution for offences under sections 193 and 195 I.P.C., was barred under section 479A(6) Cr.
P.C.; (ii) according to section 195(1)(b) Cr.
P.C., only the Magistrate before whom the original proceedings were taken could file the complaint in respect of sections 193, 195 and 211 IPC;(iii)s.
42 of the Police Act barred the prosecution as it was commenced after the period prescribed; and (iv) the complaint only disclosed two offences under sections 193 and 195 I.P.C. and no other.
HELD:The appeal must be dismissed.
(i) In view of the ruling of this Court in Shabir Husain Bholu vs State of Maharashtra and Baban Singh vs Jagdish Singh, the prosecution for offences under sections 1913 and 195 IPC was barred under section 479A(6) Cr.
P.C. [148 B] (ii) The complaint was properly filed by the successor in office of the Magistrate.
Section 559 Cr.
P.C. enables a successor in office of a Magistrate do file, a complaint.
This section applies to all Magistrates.
and there is no reason to limit it to Magistrates whose courts are perma nent.
Sub section
(2) has not the effect of limiting section 559(1).
Section 559(2) applies when there is a doubt as to who the successor is, and that doubt can be resolved in the manner laid down in sub s.(2).
The subsection does not mean that until a successor is determined under sub s.(2) there is no successor for the purpose of sub section
[148 F H;149 A] Behram vs
Emperor, 108; Bara Bapen Manihi vs Gopi Manjhi, A.I.R. 1927 Pat.
(In re: Subramanian Chettiar, A.I.R. 1957 Mad. 442, followed.
(iii) Section 42 of the police Act does not apply to prosecutions under the Indian Penal Code or other Acts.
[149 C] Mulad Ahmad vs State of U.P., [1963] Supp. 2 S.C.R. 38, 44 45 followed.
(iv) As the complaint on the face of it mentioned sections 193, 195, 211 and 120B, so there was no force.
in the contention that the complaint only disclosed two offences under sections 193 and 195 I.P.C. and no other F149 F] 146
|
nd the writ petitions of the appellants will have to be heard by the High Court on merits.
Since the appellants have applied for amendment of their respective writ petitions and the Court feels that the amendments sought to be made are of such a nature that they require to be considered and dealt with by the High Court, the same are allowed.
[400G H; 401A D; F H] 387 3(i).
It is difficult to reconcile to the decision in Trilok Singh & Co, 's case.
The Court 's attention was not drawn in that case to Rule 8 of the said Rules.
Rule 8 to which the court has adverted earlier is the one as substituted by Notification No. 1995/XXIX E 55 (A) 75 dated May 25, 1977.
The original rule, however, was to the same effect and under it also the conclusion reached by the Rent Control Inspector contained in his report of the inspection of the building was required to be posted on the notice board of the office of the District Magistrate for the information of the general public, and the order of allotment could not be passed before the expiration of three days from the date of such posting and, if in the meantime any objection was received, not before the disposal of such objection.
The District Magistrate was, therefore, not justified in immediately directing the vacancy to be notified and this act on his part was a clear violation of the statutory requirements of Rule 8 and had the result of depriving the appellant firm of an opportunity of hearing which Rule 8 conferred upon it.
On this ground alone the appellant firm should have succeeded.
The observation of this Court in Trilok Singh & Co.s Case that it was unnecessary for the District Magistrate to hear the appellants before notifying the vacancy does not, therefore, appear to be correct.
It equally does not, appear to be correct to hold that an order notifying the vacancy did not injury and caused no prejudice to the interests of any party because an order notifying the vacancy could be objected to and if any objections were filed, they would have to be decided after considering the evidence that the objector or any other person concerned might adduce and that after an order of allotment or release was passed following upon the notification of vacancy, the aggrieved person could file a review application or an appeal under s.18.
In so holding the court appears to have overlooked that the stage for objecting to a vacancy being notified was not after it was notified and that under the said Rule 8 the notification of vacancy could only be after the objections were heard and disposed of.
[398H; 399A F] 3(ii).
It is also difficult to understand how a party who has no right to appear at the original hearing of an application could be said to have a right of review or an appeal against an order passed on that application.
From the very nature of things, a right to defend an application in the first instance is a very different matter from a right to seek a review of the order on that application or a right of appeal against that order.
In its very nature and scope, an original hearing differs substantially from a review or an appeal party applying for review or an appellant cannot as of right lead evidence Further, it is he who comes before the authority challenging an order passed to his prejudice and is not in the same position as the party against whom an order is sought in the first instance.
The correctness of Trilok Singh & Co. 's case is, therefore, open to doubt.
[400 B C] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3552 of 1983 From the Judgment and order dated 5.10.1982 of the High Court of Judicature at Allahabad in Civil Misc.
Writ Petition No, 14310 of 1981.
388 Civil Appeal No. 8553 of 1983 From the Judgment and order dated 5.10.82 of the High Court of Allahabad in Civil Misc.
Writ No. 1058 of 1982.
Shanti Bhushan, R.K. Jain, R.P. Singh, Advs.
with him for the Appellants in C. A. No. 8552/83.
Mr. S.N. Kacker, Sr.
Adv., Mr. R.B. Mahrotra, Adv.
with him for the Respondents in C. A. No. 8552/83.
Mr. Soli J. Sorabjee, Sr.
Adv., Mr. E.C. Agarwala, Adv.
with him for the Appellants in C. A. No. 8553/83.
Mr. Anwar Ahmed, Sr. Adv., Mr. Ali Ahmed & Miss Halida Khatoon, Advs.
with him for the Respondents in C. A. No. 8553/83.
The following Judgment of the Court was delivered by MADON, J. The Appellants in each of the above two Appeals by Special Leave granted by this Court filed in the High Court of Allahabad a writ petition under Article 226 of the Constitution of India challenging an order notifying a deemed vacancy under sub section (2) of section 12 of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (U.P. Act No. 13 of 1972).
This Act will hereinafter be referred to in short as "the Act".
The High Court dismissed both these petitions holding that they were premature.
In coming to this conclusion the High Court relied upon a judgment of a two Judge Bench of this Court in Trilok Singh & Co. vs District Magistrate, Lucknow, & Ors.(1) The said decision of this Court was given prior to the amendment of the Act by the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) (Amendment) Act, 1976(U.P. Act No. 28 of 1976) (hereinafter in short referred to as "the 1976 Amendment Act").
The 1976 Amendment Act came into force on July 5, 1976.
It is unnecessary for the purpose of deciding these Appeals to set out the facts in great detail The subject matter of Civil Appeal (1) [1976] 3 S.C.R.942 389 No. 8552 of 1983 is a shop bearing Municipal No. 24/34, situate at Mahatma Gandhi Marg, Civil Lines Market, Allahabad.
According to the Appellants in this Appeal, the premises were let out to their father, Sheobux Roy, in 1937 and the Appellants ' father commenced carrying on business in the said premises in the name and style of Messrs B.N. Rama & Co. The Appellants ' father died on or about February 3, 1941, and according to these Appellants the tenancy was inherited by them being his sons.
Thereafter, there was a partition amongst the Appellants but in spite of it all the three brothers continued to carry on their businesses separately in the same premises though under different names.
While according to the Appellants the tenancy continued jointly with all of them, according to the contesting Respondents, who are the landlords, the tenancy rights belonged to the First Appellant, Ganpat Roy, alone, who is carrying on business in the said premises as Messrs B.N. Rama & Co. (Stores) and who paid the rent and used to recover rent from his other brothers in respect of the businesses carried on by them in the said premises.
Under section 12 (2) of the, Act, a tenant of a non residential building carrying on business in the said building is deemed to have ceased to occupy the premises on his admitting as a partner or a new partner a person who was not a member of his family.
The definition Of "family" given in clause, (g) of section 3 of the Act does not include a son in law or a daughter in law.
By a Deed of Partnership dated August 10, 1976, the First Appellant entered into a partner ship with his son, Ramesh Roy, and his son in law, Swarup Kailash, to carry on business as authorized retail dealer of the Mafatlal, Group of Mills under the firm name and style of Messrs B.N. Rama & Co. (Textiles) According to the Appellants, the said partner ship is Occupying less than one seventh area of the said premises.
Thereafter in 1979, the landlords filed a suit for eviction against the First Appellant on the ground that he had sublet the said premises to his son in law.
For some reason not apparent on record, the First Appellant 's defence in the suit was struck out.
The First Appellant filed a revision application to the Allahabad High Court and further proceedings in that suit were stayed by an interim order.
That suit was withdrawn some time before the hearing of these Appeals.
On or about March 19, 1981, one Ramesh Nath Kapoor and Radhey Shyam Kapoor, who are related to the landlords.
filed an application for allotment of the said premises to them on the ground that there was a deemed vacancy under section 12 (2) of the 390 Act in respect of the said premises.
Thereupon the Rent Control and Eviction Officer got the said premises inspected by a Rent Control Inspector who made his report on May 23, 1981, to the effect that as the matter relating to the said premises was pending in the High Court and a stay order had been granted by the High Court, there was no need to take any action.
It thereafter appears that in order to clarify the position with respect to the stay order, the Rent Controller issued notices to the parties.
The Appellants did not appear on the date fixed for hearing and the Rent Controller by his order dated August 13, 1981, held that there was a deemed vacancy in respect of the said premises and ordered such deemed vacancy to be notified and fixed the hearing of the application for allotment on September 2, 1981.
Thereafter a fresh inspection report was made on September 1, 1981, by the Rent Control Inspector to the effect that the requirement of the applicants for allotment of the said premises was genuine.
It further appears that an application for release of the said premises was also made by the landlords.
On September 2, 1981, the Rent Controller fixed September 11, 1981, for the hearing of the said application for allotment as also of the said application for release.
On September 11, the said order directing notification of deemed vacancy and for permission to urge their objections and to contest the said application for release.
By an order dated September 30, 1981, the Rent Controller set aside the order notifying the deemed vacancy but refused permission to the Appellants to contest the said application for release of the said premises on the ground that if it were held that there was no vacancy, the question of release would not arise and if it were held that there was a vacancy, the occupant would go out of the picture and thereafter the matter would lie between the District Magistrate and the landlord and that no other person could contest the release of the premises to the landlord according to a judgment of the Allahabad High Court.
Thereafter, by his order dated November 11, 1981, the Rent Controller negatived the contentions of the Appellant and held that there was a deemed vacancy in respect of the said premises and ordered such vacancy to be notified.
The Appellants thereupon filed the said writ petitions in the High Court which, as mentioned earlier, was dismissed.
During the pendency of this Appeal, further proceedings with respect to the release or allotment of the said premises have been stayed by this Court.
The subject matter of Civil Appeal No. 8553 of 1983 is also 391 non residential premises consisting of a house bearing Nos. 51 and 52, known as West Mount and West View Estates situate on Survey No. 256 in Santhat Cantonment, Ranikhet, District Almora, Uttar Pradesh.
By a registered Indenture of Lease dated November 10, 1964, the said property was leased to the First Appellant in this Appeal, Smt.
Kaushal Rekhi, for a period of few years with two options for renewal for a like period.
The First Appellant has been conducting a hotel in the said premises known as "West View Hotel".
Respondents Nos. 2 to 4 to the said Appeals are the present landlords of the said property.
On or about June 1, 1968, the First Appellant entered into a deed of partnership with her son.
Thereafter the First Appellant exercised two Options given to her.
According to the First Appellant, as her son went to the United States for advanced training in hotel managements the said partnership was dissolved and she took her daughter in law, Smt.
Sunita Rekhi, the Second Appellant in this Appeal, as a partner in the said business by a Deed of Partnership dated October 22, 1975.
According to the first Appellant, she had intimated the fact of this partnership to the District Magistrate who is the prescribed authority under the Act.
On October 4, 1980, the landlords made an application to the prescribed authority for release of the said property in their favour on the ground that there was a deemed vacancy in respect thereof.
By his order dated May 6, 1981, the Rent Controller and Eviction Officer held that there was a deemed vacancy in respect of the said premises.
According to the Appellants, the Rent Controller had earlier by his order dated January 20, 1981, held that there was no deemed vacancy in respect of the said premises but had thereafter without any jurisdiction suo moto held a fresh inquiry and passed the said order dated May 6, 1981.
According to the contesting Respondents, the earlier order was passed on some of the objections raised by the Appellants on the said application for release and the other objections were disposed of by the said order dated May 6, 1981.
The Appellants thereafter filed their said writ petition in the High Court which, as aforesaid was dismissed.
In their respective writ petitions, the Appellants had raised various contentions.
Several of them were contentions of law relating to the interpretation of the definition of the word "family" in clause (g) of Section 2 and of other Sections of the Act.
The Appellants in Civil Appeal No. 8552 of 1983 had also contended that sub sections (1) and (2) of Section 12 of the Act were discrimi 392 natory and unconstitutional as infringing Articles 14 and 19 of the Constitution of India.
None of these contentions were dealt with by the High Court because, as mentioned earlier, it held that the writ petitions were premature.
It was urged on behalf of the Appellants in Civil Appeal No. 8552 of 1983 that in any event the point of constitutionality raised by them ought to have been decided by the High Court because an authority constituted by an Act has no power to determine the constitutionality of that Act or of any provision thereof.
This does not appear to be a just criticism of the judgment of the High Court.
Apart from stating that the said sub sections were unreasonable, discriminatory and unconstitutional and, therefore, violated Articles 14 and 19 of the Constitution, no, reason was given nor any ground set out in support of the said contention and most probably either the attention of the High Court was not drawn to this ground or it was not urged before the High Court at the hearing of the writ petition.
At the hearing of these Appeals, the said Appellants have made an application to amend their writ petition setting out elaborately their grounds and reasons in support of the said contention and have applied for leave to amend their said writ petition in case their Appeal succeeds and their writ petition is sent back to the High Court for reconsideration.
They have also prayed for the State of Uttar Pradesh to be added as Respondent No. 5 to the said writ Petition.
The Appellants in the other Appeal have also similarly prayed for the amendment of their writ petition in case they succeed in their Appeal.
The question whether these applications should be granted or not falls to be considered only if these Appeals are allowed.
It will be convenient to see the relevant provisions of the Act before we turn to the Trilok Singh & Co. 's Case.
Clause (g) of Section 3 defines "family" as follows: "(g) 'family ', in relation to a landlord or tenant of a building, means, his or her (i) spouse, (ii) male lineal descendants, 393 (iii)such parents, grand parents and any unmarried or widowed or divorced or judicially separated daughter or daughter of a male lineal descendant, as may have been normally residing with him or her.
and includes, in relation to a landlord, any female having a legal right of residence in that building".
What is pertinent to note about this definition is that a son in law and a daughter in law are not expressly included in this definition.
Section 11 of the Act prohibits a person from letting any building except in pursuance of an allotment order issued under Section 16.
Sub Sections 2 and 4 of Section 12 provide as follows: "(2) In the case of a non residential building, where a tenant carrying on business in the building admits a person who is not a member of his family as a partner or a new partner, as the case may be, the tenant shall be deemed to have ceased to occupy the building. "(4) Any building or part which a landlord or tenant has ceased to occupy within the meaning of sub section (1), or sub section (2), or sub section (3), sub section (3 A) or sub section (3 B), shall, for the purposes of this Chapter, be deemed to be vacant," Section 13 provides that where a landlord or tenant ceases to occupy a building or part thereof, no person is to occupy it in any capacity on his behalf or otherwise than under an order of allotment or release under Section 16 Section 15 casts a duty on every landlord or tenant to give intimation of vacancy to the District Magistrate.
Under Section 16, the District Magistrate may, by an order, require the landlord to let any building which is or has fallen vacant or is about to fall vacant, or a part of such building, to any person specified in the order (called the allotment order) or may release the whole or any part of such building in favour of the landlord.
Under the proviso to Section 16(1), in the case of a vacancy referred to in section 12(A), the District Magistrate is to 394 give an opportunity to the landlord or the tenant, as the case may be, of showing that the said section is not attracted to his case before making an order under clause (a) of section 16(1), that is before making an allotment order.
This proviso was inserted by the 1976 Amendment Act.
Strangely enough, in the case of release of the premises to the landlord the proviso does not require any such opportunity to he given to the tenant who would be the person affected by that order.
Sub section (2) of section 16 sets out the circumstances in which a building or any part thereof may be released to the landlord Under sub section (4) of section 16, where the allottee or the landlord has not been able to obtain possession of the building allotted or released to him, as the case may be, the District Magistrate, on an application made to him in that behalf, may by order evict or cause to be evicted any person named in that order as well as every other person claiming under him or found in occupation, and may for that purpose use or cause to be used such force as may be necessary and put or cause to be put the allottee or the landlord in possession of the building or part thereof.
Sub section (5) of Section 16 provides as follows: "(5) (a) Where the landlord or any other person claiming to be a lawful occupant of the building or any part thereof comprised in the allotment or release order satisfies the District Magistrate that such order was not made in accordance with clause (a) or clause (b), as the case may be, of sub section (l), the District Magistrate may review the order: Provided that no application under this clause shall be entertained later than seven days after the eviction of such person.
(b) Where the District Magistrate on review under this sub section sets aside or modifies his order of allotment or release, he shall put or cause to be put the applicant, if already evicted, back into possession of the building, and, may for that purpose use or cause to be used such force as ; may be necessary.
" Under sub section (7) of Section 16, every order made under that Section, subject to any order made under Section 18, is to be .
final, Under Section 18, as substituted by the 1976 Amendment 395 Act, no appeal lies against any order of allotment, reallotment or release but any person aggrieved by a final order of allotment, re allotment or release may, within fifteen days from the date of such order, prefer a revision to the District Judge on any one or more of the following grounds, namely: (a) that the District Magistrate has exercised a jurisdiction not vested in him by law: (b) that the District Magistrate has failed to exercise a jurisdiction vested in him by law; (c) that the District Magistrate acted in the exercise of his jurisdiction illegally or with material irregularity.
On such application being made, the revising authority may confirm or rescind ` the final order of allotment, re allotment or release or may remand the case to the District Magistrate for rehearing and, pending revision, may stay the operation of such order on such terms as he thinks fit.
Sub section (3) of section 18 provides that where an order of allotment or reallotment or release is rescinded, the District Magistrate shall, on an application made to him in that behalf, place the parties back in the position which they would have occupied but for such order or such part thereof as has y been rescinded, and may for that purpose use or cause to be used such force as may be necessary.
Prior to the substitution of section 18 by the 1976 Amendment Act, that section provided for an appeal to the District Judge by a person aggrieved by an order of allotment, reallotment or release and where such order was varied or rescinded in appeal, the District Magistrate had the power, on an application made to him in that behalf, to place the parties back in the position which they would have occupied but for such order or such part thereof as was varied or rescinded and to use or cause to be used for that purpose such force as may be necessary.
Under section 34(8), for the purpose of any proceedings under the Act and for purposes connected therewith the authorities under the Act are to have such power and follows such procedure, principles of proof, rules of limitation and guiding principles as may be prescribed by rules made under the Act.
The Uttar Pradesh Urban Buildings (Regulation of Letting, 396 Rent and Eviction) Rules, 1972, prescribe the procedure for ascertainment of vacancy and for allotment or release of premises.
Under Rule 8, before he makes any order of allotment or release in respect of any building which is alleged to be vacant under section 12 or to be otherwise vacant or to be likely to fall vacant, the District Magistrate is required to get the building inspected.
The inspection of the building, so far as possible, is to be made in the presence of the landlord and the tenant or any other occupant.
The facts mentioned in the inspection report are, wherever practicable, to be elicited from at least two respectable persons in the locality and the conclusion of the inspection report is to be posted on the notice board of the office of the District Magistrate for the information of the general public, and an order of allotment is not to be passed before the expiration of three days from the date of such posting, and if in the meantime any objection is received, not before the disposal of such objection.
Any objection received is to be decided after consideration of any evidence, which the objector or any other person concerned may adduce.
Rule 10 prescribes the procedure for allotment of a building where an application for allotment is made.
The material portion of sub rule (6) and of proviso (a) to that subrule are relevant and may be reproduced.
These provisions are as follows: "(6). a person who is deemed to have ceased to occupy a building within the meaning of Section 12(2), shall not be allotted that or any other non residential building for a period of two years from the date of such. deemed cessation: Provided that (a) If the District Magistrate is satisfied in a case referred to in Section 12(2) that the admission of partner or new partner is bona fide transaction and not a mere cover for subletting, he shall, if any application had been made in that behalf before the admission of such partner or new partner, allot the non residential ; building in question afresh to the newly constituted or reconstituted firm; X X X 397 Under Rule 19, where an allotment or release of a building or part thereof is ordered under section 16(1) on the ground inter alia of deemed vacancy within the meaning of section 12, no such order is to be executed until after the expiration of fifteen days from the service upon the occupant of a notice to vacate that building or part thereof, as the case may be.
We will now turn to Trilok Singh & Co. 'section case.
The facts in that case were that an application for release was made by the landlords in respect of certain residential premises of which the appellant firm claimed to be the tenant.
A Senior Inspector was directed to inspect the premises and make a report.
According to the report, the premises were in occupation of three persons, two of whom claimed to be the partners of the appellant firm.
The report stated, "After hearing the parties it would be proper to take further action".
On receipt of the report, the Rent Controller passed an order "Let the vacancy be notified" without granting any hearing to the appellant firm.
The appellant firm thereupon filed a writ petition in the High Court of Allahabad challenging the said order on the ground that it was passed in violation of the principles of natural justice.
The said writ petition was rejected summarily on the ground that it was premature and the proper remedy for the appellant firm was to approach the Rent Controller under section 16(5) (a) of the Act for review of the said order.
In appeal, this Court upheld the order of the Allahabad High Court.
This Court held that by reason of section 16(2) no order bf release could be passed under clause (b) of section 16(1) unless the District Magistrate was satisfied that the building was required by the landlord bona fide for occupation by himself or any member of his family or for any of the purposes specified in sub section (2) of section 16.
The Court further stated P that under clause (a) of section 16(5), where the landlord or any other person claiming to be a lawful occupant of the building comprised in the order of allotment or release satisfied the District Magistrate that such an order was not made in accordance with clause (a) or clause (b) of section 16(1), the District Magistrate could review his order and if on review he set aside or modified the order of allotment or release, he was empowered to put the applicant, if already evicted back into possession.
The Court further observed that section 18 gave a right of appeal against an order of allotment or release and that any person aggrieved by such an order could prefer an appeal to the District Judge and if the order of allotment or release was varied or rescinded by the District Judge in appeal the 398 District Magistrate had under section 18(2) the power to place the parties back in the position which they would have occupied but for such order.
The Court further pointed out that the Act did not provide for a hearing at the stage when the District Magistrate passed an order of allotment or release but any person aggrieved by such an order was entitled to ask the District Magistrate to review his order and if in the meanwhile any person in possession of the building had been evicted, the District Magistrate had the power, if he set aside or modified the order of allotment or release, to put the applicant back in possession The Court held (at page 945): "Thus, in the first place, it was unnecessary for respondent ; I to hear the appellants before notifying the vacancy be cause ' under the scheme of the U P. Rent Act, an order notifying the vacancy does no injury and causes no prejudice to the interests of any party.
A notification of the vacancy is a step in aid of an order of allotment or release and it is only when such an order of allotment or release is passed that the landlord or the tenant, as the case may be, can have a grievance.
Orders of allotment and release are, in the first instance, reviewable by the District Magistrate himself an`d an order passed by the District Magistrate under section 16 is appealable under section 18." The Court then summarized the conclusion it had reached as follows: "The Act thus contemplates successive opportunities " being afforded to persons whose interests are likely to be affected by any order passed by the District Magistrate.
Putting it briefly, an order notifying the vacancy can be objected to and the objection has to be decided after considering the evidence that the objector or any other person concerned may adduce.
Secondly, if an order of allotment , or release is passed under section 16, following upon the notification of a vacancy, the aggrieved person can file a review application.
Thirdly, as against an order passed under section 16, there is a right of appeal under section 18.
" We find it difficult to reconcile ourselves to the decision in Trilok Singh & Co. 's Case.
The Court 's attention was not drawn 399 in that case to Rule 8 of the said Rules Rule 8 to which we have adverted earlier is the one as substituted by Notification No. 1995/XXlX E 55 (A) 75 dated May 25, 1977.
The original rule, however, was to the same effect and under it also the conclusion reached by the Rent Control Inspector contained in his report of the inspection of the building was required to be posted on the notice board of the office of the District Magistrate for the information of the general public, and the order of allotment could not be passed before the expiration of three days from the date of such posting and, if in the meantime any objection was received, not before the disposal of such objection.
The District Magistrate was, therefore, not justified in immediately directing the vacancy to be notified and this act on his part was a clear violation of the statutory requirements of Rule 8 and had the result of depriving the appellant firm of an opportunity of hearing which Rule 8 conferred upon it.
On this ground alone the appellant firm should have succeeded.
The observation of this Court in Trilok Singh & Co 's case that it was unnecessary for the District Magistrate to hear the Appellants before notifying the vacancy does not, therefore, appear to be correct.
It equally does not appear to be correct to hold that an order notifying the vacancy did no injury and caused no prejudice to the interests of any party because an order notifying the vacancy could be objected to and if any objections were filed, they would have to be decided after considering the evidence that the objector or any other person concerned might adduce and that after an order of allotment or release was passed following upon the notification of vacancy, the aggrieved person could file a review application or an appeal under section 18.
In so holding the Court appears to have overlooked that the stage for objecting to a vacancy being notified was not after it was notified but, as provided by Rule 8, before it was notified and that under the said Rule 8 the notification of vacancy could only be after the objections were heard and disposed of.
This Court itself pointed out in that case that the Act did not provide for a hearing at the stage when the District Magistrate passed an order of allotment or release.
In such an event, it can hardly be said that a review or an appeal against an order of allotment or release was an adequate remedy.
As the very provisions for review and appeal show, if the order appealed against or sought to be reviewed is varied or rescinded, the appellant or the person seeking review, if evicted is the meanwhile, is to be restored back in possession.
How the fact of being evicted or even the danger of 400 it can cause no prejudice, particularly in these days of acute shortage of accommodation, is something we are not able to appreciate.
It is also difficult to understand how a party who has no right to appear at the original hearing of an application could be said to have a right of review or an appeal against an order passed on that application.
From the very nature of things, a right to defend an application in the first instance is a very different matter from a right to seek a review of the order on that application or a right of appeal against that order.
In its very nature and scope, an original hearing differs substantially from a review or an appeal.
A party applying for review or an appellant cannot as of right lead evidence.
Further, it is he who comes before the authority challenging an order passed to his prejudice and is not in the same position as the party against whom an order is sought in the first instance.
The correctness of Trilok Singh & Co. 's case is, therefore, open to doubt.
Apart from this, the position under the Act as amended in 1976 is greatly changed and the right of appeal which was granted by section 18 has been substituted by a right of revision on the grounds set out in the substituted section 18 and which are the same as those on which a revision lies to the High Court under section 115 of the Code of Civil Procedure, 1908.
While in an appeal, findings of fact can also be challenged on the ground that the evidence was not properly appreciated, in revision the only question would be whether the District Magistrate had exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction vested in him by law or had acted in the exercise of his jurisdiction illegally or with material irregularity.
The scope of revision under section 18 is, therefore, much narrower than in the case of an appeal.
Under the proviso to section 16(1), which was inserted by the 1976 Amendment Act, the District Magistrate is required in the case of a vacancy referred to in sub section (4) which includes a deemed vacancy under section 12(2) to give an opportunity to the landlord or the tenant, as the case may be, of showing that section 12(4) is not attracted to his case before he makes an order of allotment under clause (a) of section 16(1).
Thus, this proviso gives a right of hearing to the tenant before an order of allotment is made.
The proviso, however, does not apply in the case of an 401 order of release made under clause (b) of section 16(1).
Even in the case of an application for allotment, it is doubtful whether a tenant whose objections to notification of a deemed vacancy have been negatived and thereafter the vacancy has been ordered to be notified could be permitted to reagitate the same contentions because such contentions would be barred by principles analogous to res judicata.
In such an event, it would be difficult to say that he can exercise his right of review on the ground that there was no vacancy.
This would apply equally where an order of release is made.
Further, the revision which is provided for under section 18 is against an order of allotment or release and not against a notification of vacancy and an issue, which was concluded earlier and on the basis of the finding on which the District Magistrate had proceeded to allot or release the premises, cannot be reagitated in revision.
In fact, as would appear from the order dated September 30, 1981, of the Rent Control and Eviction Officer in Civil Appeal No. 8552 of 1983, the Allahabad High Court has held that where a release of a building is sought, the matter lies only between the District Magistrate and the landlord and no other person has a right to object to the release of the premises to the landlord.
The tenant has thus no adequate or effective remedy against an order notifying a vacancy.
Further, it should be borne in mind that under Rule 10 (6) a tenant who is deemed to have ceased to occupy a building under section 12(2) is not entitled for a period of two years from the date of such deemed vacancy to the allotment of the same or any other non residential building.
In our opinion, the scheme of the Act would show that a tenant of premises in whose case it is found that there is a deemed vacancy has no efficacious or adequate remedy under the Act to challenge that finding.
A petition under Article 226 or 227 of the Constitution of India filed by such a tenant in order to challenge that finding cannot, therefore, be said to be premature.
In the view that we take, those Appeals will have to be allowed and the writ petitions of the Appellants will have to be heard by the High Court on merits.
As mentioned earlier, the Appellants have applied for amendment of their respective writ petitions.
Without expressing any opinion on the merits of the contentions sought to be raised in the proposed amendments, we feel that the amendments sought to be made are of such a nature that they require to be considered and dealt with by the High Court.
402 In the result, we allow both these Appeals and reverse the judgment and set aside the order passed by the High Court.
We further direct the High Court to rehear on merits the writ petitions filed by the Appellants.
We also allow the application for amendment of both these writ petitions.
The Appellants will amend their respective writ petitions in terms of the applications for amendment made by them within one month of the receipt by the High Court of the order of this Court.
The High Court will thereupon issue notice in each of these two writ petitions to the newly added State of Uttar Pradesh.
The State of Uttar Pradesh will be at liberty to file a counter affidavit within four weeks of the receipt of such notice.
The original respondents to the writ petitions will also be at liberty to file a supplementary counter affidavit within four weeks from the date of receipt by them of the notice that the writ petitions have been amended.
The High Court will thereafter endeavour to dispose of these writ petitions as expeditiously as possible.
Pending disposal of the writ petitions by the High Court, there will be a stay of further proceedings for allotment or release of the concerned premises and the Appellants will not be dispossessed from the premises they are occupying.
In the circumstances of the case, there will be no order as to the cost of these Appeals.
M.L.A. Appeals allowed.
| Under Section 12(2) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (for short, the Act), a tenant of a non residential building carrying on business in the said building is deemed to have ceased to occupy the premises on his admitting as a partner or a new partner a person who was not a member of his family.
The definition of "family" given in clause (g) of Section 3 of the Act does not expressly include a son in law or a daughter in law.
In each of the two appeals, the appellant/tenant admitted into his partnership firm his son in law and 'or daughter in law, as the case may be.
There upon, the landlord respondent in each appeal filed an application for release of his non residential building in his favour on the ground that there was a deemed vacancy under Section 12(2) of the Act.
The Rent controller held that there were deemed vacancies in respect of the two premises and ordered such deemed vacancies to be notified.
The appellants/tenants filed applications to set aside the said orders directing notification of deemed vacancy and for permission to urge their objections and to contest the said applications for release.
The Rent Controller negatived the contentions of the appellants and ordered such vacancies to be notified.
The appellants/tenants filed writ petitions in the High Court under Article 226 of the Constitution challenging the two orders notifying deemed vacancies under sub Section (2) of Section 12 of the Act.
The High Court, relying upon a judgment of a two Judge Bench of the Supreme 385 Court in Trilok Singh & Co. vs District Magistrate, Lucknow, the amendment of the Act by Uttar Pradesh Urban Buildings (regulation of Letting, Rent and Eviction) Amendment Act 1976 (for short, the 1976 Amendment Act), dismissed both the petitions as pre mature holding that where a release of a building is sought, the matter lies only between the District Magistrate and the landlord and no other person has a right to object to the release of the premises to the landlord.
Hence these appeals.
Allowing the appeals and directing the High Court to `rehear on merits the writ petitions filed by the appellants.
the Court.
^ HELD: 1(i) Under the proviso to Section 16(1), in the case of a vacancy referred to in Section 12(4), the District Magistrate is to give an opportunity to the landlord or the tenant, as the case may be, of showing that the said Section is not attracted to his case before making an order under clause (a) of Section 16(1), that is, before making an allotment order; This proviso was inserted by the 1976 amendment Act.
Strangely enough, in the case of release of the premises to the landlord, the proviso does not require any such opportunity to be given to the tenant who would be the person affected by that order.
Sub section (2) of Section 16 sets out the circumstances in which a building or any part thereof may be released to the landlord.
Under Sub section (7) every order made under that Section, subject to any order made under Section 18, is to be final.
Under Section 18 as substituted by the 1976 Amendment Act, no appeal lies against any order of allotment, re allotment or release but any person aggrieved by a final order of allotment, re allotment or release may, within fifteen days from the date of such order, prefer a revision to the District Judge.
On such application being made, the revising authority may confirm or rescind the final order of allotment, re allotment or release or may remand the case to the District Magistrate for rehearing and, pending revision, may stay the operation of such order on such terms as he thinks lit Prior to the substitution of Section 18 by the 1976 Amendment Act, that Section provided for an appeal to the District Judge by a person aggrieved by an order of allotment, re allotment or release and where such order was varied or rescinded in appeal, the District Magistrate had the power, on p an application made to him in that behalf, to place the parties back in the position which they would have occupied but for such order or such part thereof as was varied or rescinded and to use or cause to be used for that purpose such force as may be necessary.
[393H; 394A B; H; 395A; D P] 1(ii).
The Uttar Pradesh Urban Buildings.
(Regulation of Letting, Rent and Eviction) Rules, 1972, prescribe the procedure for ascertainment of vacancy and for allotment or release of premises.
Under Rule 8, before he makes any order of allotment or release in respect of any building which is alleged to be vacant under S.12 or to be otherwise vacant or to be likely to fall vacant, the District Magistrate is required to get the building inspected.
The facts mentioned in the inspection report are, wherever practicable, to be elicited from at least two respectable persons in the locality and the conclusion of the inspection report is to be posted on the notice board of the office of the District Magistrate for the information of the general public, and an order of allotment is not to 386 be passed before the expiration of three days from the date of such posting, and if in the meantime any objection is received, not before the disposal of suck objection.
Any objection received is to be decided after consideration of any evidence which the objector or any other person concerned may adduce [396A D] 2(i) The position under the Act as amended in 1976 is greatly changed and the right of appeal which was granted by S.18 has been substituted by a right of revision on the grounds set out in the substituted Section 18 and which are the same as those on which a revision lies to the High Court under Section 115 of the Code of Civil Procedure, 1908.
While in an appeal, findings of fact can also be challenged on the ground that the evidence was not properly appreciated, in revision the only question would be whether the District Magistrate had exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction vested in him by law or had acted in the exercise of his jurisdiction illegally or with material irregularity.
The scope of revision under Section 18 is.
therefore.
much narrower than in the case of an appeal [400E F] 2(ii).
Under the proviso to Section 16(1), which was inserted by the 1976 Amendment Act, the District Magistrate is required in the case of a vacancy referred to in sub Section (4) which includes a deemed vacancy under Section 12(2) to give an opportunity to the landlord or the tenant, as the case may be, of showing that Section 12(4) is not attracted to his case before he makes an order of allotment under clause (a) of Section 16(1).
Thus, this proviso gives a right of hearing to the tenant before an order of allotment is made.
The proviso, however, does not apply in the case of an order of release made under clause (b) of Section 16(1).
Even in the case of an application for allotment, it is doubtful whether a tenant whose objections to notification of a deemed vacancy have been negatived and thereafter the vacancy has been ordered to be notified could be permitted to reagitate the same contentions because such contentions would be barred by principles analogous to res judicata.
In such an event, it would be difficult to say that he can exercise his right of review on the ground that there was no p vacancy.
This would apply equally where an order of release is made.
Further, the revision which is provided for under Section 18 is against an order of allotment or release and not against a notification of vacancy and an issue, which was concluded earlier and on the basis of the finding on which the District Magistrate had proceeded to allot or release the premises, cannot be reagitated in revision.
Thus, the scheme of the Act would show that a tenant of premises in whose case it is found that there is a deemed vacancy has no efficacious or adequate remedy under the Act to challenge that finding.
A petition under article 226 or 227 of the constitution of India filed by such a tenant in order to challenge that finding cannot, therefore, be said to be pre mature.
|
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.
| 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]
|
Civil Appeal No. 236 of 1969.
Appeal from the Judgment and Order dated 24/25th August 1967 of the Gujarat High Court in SCA No. 585/63.
section K. Dholakia and R. C. Bhatia for the Appellant.
1026 P. Ram Reddy, Amicus Curiae for Respondent No. 2.
The Judgment of the Court was delivered by SARKARIA, J.
The appellant is the Gujarat State Cooperative Land Development Bank Ltd. (hereafter referred to as the Bank).
It is a Society registered under the Bombay Cooperative Societies Act, 1925, as applicable to the erstwhile State of Saurashtra.
According to the appellant 's writ petition, it is doing banking business.
It has 127 Branches spread all over the State of Gujarat.
One of its Branches is in Dasada, Surendranagar District.
The Head Office of the Bank is at Ahmedabad.
The second respondent, Babu Bhai Negracha, was serving as an Additional Supervisor in the Dasada Branch of the Bank.
His services were terminated by an order, dated February 21, 1962, by giving him one month 's pay in lieu of notice under Staff Regulation No. 15.
The Gujarat Cooperative Societies Act, 1961, came into force from May 1, 1962, and the appellant Bank, being a Society, under the Cooperative Societies Act, came to be governed by the said Act.
By Notification No. BIR 1362 5 H, dated March 2, 1963, published in the Gujarat Gazette in March 1963, the Government of Gujarat directed under Section 2(4) of the Bombay Industrial Relations Act, 1946 (Bombay Act 11 of 1947) that all the provisions of the said Act shall apply with effect from March 15, 1963 to the business of banking by Cooperative Banks in the Saurashtra and Kutch areas of the State, registered and deemed to be registered under the Gujarat Cooperative Societies Act, 1961.
Aggrieved by the termination of his service, the second respondent approached the appellant 's Dasada 's Branch by a letter, dated August 20, 1962, stating that since his services were terminated illegally by way of victimisation, he should be reinstated in the service.
Thereafter, the second respondent filed an application in the Labour Court at Rajkot, alleging that his service had been illegally and maliciously terminated as an act of victimisation on account of his trade union activities.
He prayed for setting aside the order of his termination of service and for reinstatement with full back wages.
The Bank filed a written statement, raising a preliminary objection that the Bombay Industrial Relations Act, 1946, under which the application was made by the respondent, was not applicable to its case, as it was a Cooperative Society governed by the Gujarat Co operative Societies Act, under which only the Registrar or his nominee 1027 had jurisdiction to decide the dispute, and the Labour Court had no jurisdiction to entertain and decide the application of the second respondent.
By its Order, dated June 11, 1963, the Labour Court overruled this objection and held that it had jurisdiction to hear the application.
The Bank then filed a writ petition under Article 226 of the Constitution in the High Court to challenge the Order of the Labour Court.
The High Court by a common judgment dated August 25, 1967 dismissed the writ petition, but in view of the importance of the question of law involved, granted a certificate of fitness for appeal to this Court.
On the strength of that certificate, the Bank has come in appeal before us against the aforesaid judgment of the High Court.
In this Court on January 22, 1969, the Bank made an application for leave to urge as additional ground, namely, that the Bank is not doing banking business, i.e. accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise as defined in Section 5, Clauses (b) and (c) of the Banking Companies Act, 1949; and that this being the true position, the Notification No. DIR 1362 IV H dated March 2, 1963, published in the Gujarat Government Gazette dated March 7, 1963, under Section 2(4) of the Bombay Industrial Relations Act, 1946 (Bombay Act XI of 1947) is not applicable to the appellant.
This application was strenuously opposed by Shri Ram Reddy, who is assisting the Court as amicus curiae on behalf of respondent 2, who has not been able to appear and defend himself in this appeal.
We have declined permission to raise this new plea for the first time in this Court, for these reasons: (i) It is much too belated; (ii) It stands in direct contradiction to the position taken by the appellant in its writ petition and the affidavit in support thereof filed in the High Court.
Therein, the appellant had categorically pleaded: "The petitioner is a Society registered under the Bombay Cooperative Societies Act, 1925 (Bombay Act VII of 1925). and is engaged in the business of banking." (iii) It is not a purely legal plea but a mixed plea of law and fact, and cannot be determined on the basis of material already on the record.
We, therefore, take it that the appellant is a Cooperative Society engaged in the business of banking and, as such, the Bombay Industrial 1028 Relations Act, 1946 is applicable to it by virtue of the aforesaid Notification dated March 2, 1963, issued by the State Government under Section 2(4) of that Act.
The arguments of Mr. Dholakia, appearing for the appellant, may be summarised as follows: (i) The case is governed by the Gujarat Cooperative Societies Act, 1961 (hereafter called the Act of 1961) and not by the Bombay Cooperative Societies Act, 1925 (hereafter referred to as the Act of 1925).
(ii) The phrase "any dispute touching. .the business of the Society", particularly the word "touching" therein, is of very wide amplitude.
It would comprehend any matter which relates to, or concerns or affects the business of the Society.
Every society, ex necessitiate employs some servants for the purpose of carrying on its business.
That being so, the payment of wages, appointment and removal of its servants under law is a part of the business or "touches" the business of the Society.
(Reliance for this argument has been placed on Farkhundali Naunhay vs V. B. Potdar (1).
(iii) Even if contention (ii) is not accepted, the dispute raised by the respondent, Babu Bhai Negracha is one "touching the management of the Society".
The expression 'management ' takes in the entire staff or establishment of servants which run the affairs of the Society.
(iv) Once it is held that the dispute between the Society and its past servant, Babu Bhai Negracha, touches the "business" or the "management" of the Society, or both, within the meaning of Section 96, the Registrar or his nominee, alone, shall have jurisdiction to adjudicate such dispute by compulsory arbitration; and the non obstante clause in the Section shall bar the determination of that dispute by the Industrial Tribunal or the Labour Court under the Bombay Industrial Relations Act.
As against the above, Mr. Rama Reddy, amicus curiae, submitted as under: (i) Since the services of the second respondent were terminated on February 21, 1962, before the Act of 1961 came into force, the Act relevant for this discussion is the Act of 1925.
(ii) Irrespective of whether the Act of 1925 or the Act of 1961 governs the appellant Society, the expression "any dispute" commonly occurring in Section 54 of the Act of 1925 and Section 96 of the 1029 Act of 1961, is restricted in its scope to a dispute of a civil nature which is capable of being resolved by the Registrar or his nominee, and does not take in an industrial dispute between the Society and its workmen which under the B.I.R. Act is triable by the Labour Court/Industrial Tribunals, only.
(iii) B.I.R. Act is a special law, dealing with the special subject of industrial disputes, which in their nature are essentially different from ordinary Civil disputes between an employer and his employee governed by the Law of Contract, B.I.R. Act provides for a special machinery for adjudication of industrial disputes.
As against this, the Cooperative Societies Act of 1925/or of 1961 is a general enactment and it must yield to the B.I.R. Act whenever the provisions of the latter by their language are clearly applicable to a dispute.
Reference has been made to Jullundur Transport Cooperative Society Ltd. vs Punjab State(1).
(iv) The scope of the expression "any dispute touching the business of the Society", occurring in Section 54 of the Act of 1925/or Section 96 of the Act of 1961 is limited to disputes directly relating to the actual trading or commercial activities of the Society.
This expression does not take in a dispute between the Society and its employee relating to the conditions of his employment, which will include the termination of his employment.
This point is concluded by the decision of this Court in Cooperative Central Bank Ltd. vs Additional Industrial Tribunal, Hyderabad(2), which follows the ratio of its earlier decision in Deccan Merchants Cooperative Bank Ltd. vs Dalichand Jungraj Jain(3).
In view of these decisions, the ratio of Farkhundali 's case (ibid) decided by the Bombay High Court, is no longer good law.
(v) The expression "management" in Section 96 of the Act of 1961, means "the Board of Directors", or "the Board of Trustees", or the "Managing Committee" or "Executive Body" which has the overall control of the affairs and business of the Society, and it does not include the individual workers or employees, individual workmen or employees of the Society who carry on the day to day administration of the Society; nor will it take in matters touching the service conditions of the servants of the Society such as their appointment to service or their discharge, removal from service and their wages.
A dispute of the kind raised by the second respondent, therefore, 1030 will not fall within the purview of the phrase "any dispute touching the management of the Society" used in Section 96.
Before appreciating the contentions canvassed on both sides, it is necessary to notice the relevant provisions of the Act of 1925 and the Act of 1961.
The relevant part of Section 54 of the Act of 1925, reads thus: "(1) (a) If any dispute touching the constitution or business of Society arises between members or past members of the Society or persons claiming through a member or a past member or between members or past members or persons so claiming and any officer, agent or servant of the Society or its Committee, and any officer, agent, member or servant of the Society past or present, it shall be referred to the Registrar for decision by himself or his nominee. " The corresponding Section 96 of the Act of 1961 lays down: "(1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, management or business of a Society shall be referred in the prescribed form. .if the parties thereto are from amongst the following: (a) a Society, its Committee, any past Committee, any past or present officer, any past or present agent, any past or present servant or nominee, heir or legal representative of any deceased officer, deceased agent or deceased servant of the Society, or the Liquidator of the Society. " A comparison between the portions of the two Sections, extracted above, brings out two points of difference.
Firstly, in Section 54, there is no non obstante clause, while Section 96(1) begins with the words "Notwithstanding anything contained in any other law for the time being in force".
Secondly, while in Section 54, the word 'management ' does not occur, in the corresponding Section 96(1) of the 1961 Act, the word 'management ' has been inserted in between the words 'constitution ' and 'business '.
It is significant to note that the phrase "any dispute touching the constitution. or business of the Society" is a common feature of both the aforesaid Sections.
We emphasise this fact, because it is this common feature, rather than the points of difference between the two Sections, that holds the key to a correct solution of the problem before us.
1031 From a conspectus of the decisions cited at the Bar, we may devise two broad tests to determine the points in controversy in the instant case.
First, whether the expression "any dispute" spoken of in Section 54 of the Act of 1925, and Section 96 of the Act of 1961, is one which is capable of being resolved by the Registrar or his nominee under the relevant Cooperative Societies Act? Second, whether a dispute raised by a servant against his employer, the Cooperative Society, for setting aside his removal from service on the ground that it was an act of victimisation and for reinstatement in service with back wages, is one "touching the management or business of the Society" within the contemplation of the said provisions? As regards the first test, it is to be noted that the expression "any dispute" has not been defined in the Acts of 1925 and 1961.
The term "dispute" means a controversy having both positive and negative aspects.
It postulates the assertion of a claim by one party and its denial by the other.
The word "any" prefixed to "dispute" may at first glance, appear to give the expression "any dispute" a very wide amplitude covering all classes of disputes, whatever be their nature.
But the context of these provisions, the object and scheme of the Acts of 1925/1961 show that the Legislatures never intended to give such a wide scope to this expression.
The related provisions and the scheme of the Acts unerringly indicate that the expression "any dispute" has been used in a narrower sense limited to contested claims of a civil nature, which could have been decided by civil or revenue courts, but for the provisions with regard to compulsory arbitration by the Registrar or his nominee, found in Section 54 of the Act of 1925/96 of the Act of 1961.
The first indication of this being the right construction, is discernible in sub section (2) of Section 96 which states that when any question arises whether for the purposes of sub section (1) a matter referred to for decision is a dispute or not, the question shall be considered by the Registrar, whose decision shall be final.
This means, it is incumbent on the Registrar to decide as a preliminary issue, whether the dispute is of a kind under sub section (1) of Section 96 falling within his jurisdiction.
If this preliminary issue is found in the negative, he will have no further jurisdiction to deal with the matter.
A further clue to the interpretation of "any dispute" used in Section 96(1) is available in Section 97(1) which prescribes periods of limitation for disputes of the kind specified in its clauses (a) and (b), referred to the Registrar under Section 96.
Sub section (2) of Section 97 which is in the nature of a residuary provision, states that the period of limitation in the case of any dispute other than those mentioned in sub section (1) which are required to be referred to the 1032 Registrar under Section 96, shall be regulated by the provisions of the Indian Limitation Act, "as if the dispute were a suit, and the Registrar as Civil Court".
The last clause of sub section (2) which has been underlined, unmistakably shows that only disputes of a civil nature which could be the subject of civil suits triable by ordinary civil courts, will fall within the scope of the expression "any dispute" used in Section 96(1).
Another definite pointer to the above being the right construction of "any dispute" is available in sub section (3) of Section 98 which provides: "Notwithstanding anything contained in Section 96, the Registrar may, if he thinks fit, suspend proceedings in regard to any dispute, if the question at issue between a society and a claimant or between different claimants, is one involving complicated question of law or fact, until the question has been tried by a regular suit instituted by one of the parties or by the society.
If any such suit is not instituted within two months from the Registrar 's order suspending proceedings, the Registrar shall take action as is provided in sub section (1).
" It is noteworthy that this sub section is substantially in the same terms as the proviso to sub section (1) of Section 54 of the Act of 1925, extracted earlier.
The proviso to sub section (1) of Section 54 of the Act of 1925 corresponding to sub section (3) of Section 98 of the Act of 1961, unmistakably shows that the compulsory arbitration by the Registrar, on a reference under Section 96, only a substitute for adjudication of disputes of a civil nature normally tried by civil courts.
Further indication regarding the nature of disputes which the Registrar may determine, is furnished by Section 166(1) which provides: "166(1).
Bar of jurisdiction of Courts : Save as expressly provided in this Act, no Civil or Revenue Court shall have any jurisdiction in respect of (a) . . (b) any dispute required to be referred to the Registrar, or his nominee, or board of nominees, for decision.
" It will be seen that Section 166, in terms, bars the jurisdiction only of Civil or Revenue Court, and not of the Labour Court or any 1033 Industrial Tribunal constituted under the B.I.R. Act or Industrial Disputes Act to adjudicate industrial disputes.
It is clear that the Legislature never intended to oust the jurisdiction of the Labour Court or the Industrial Tribunal to determine claims and industrial disputes which cannot be adjudicated by the ordinary Civil Courts.
Now, let us turn to the nature of the dispute raised by the second respondent.
Is it a dispute relating to a right which he could establish by filing a suit in a Civil Court? assuming for the moment that nothing in the relevant Cooperative Societies Act is a bar to such a suit.
The answer must be in the negative.
The respondent is not claiming a civil right arising from the contract of employment with the appellant Bank.
What he is claiming is not enforcement of any term of the contract of his employment on the part of his employer.
He is alleging that his services have been terminated unfairly and vindictively because of his legitimate trade union activities, as an act of victimisation.
The relief claimed by him is of reinstatement in service with back wages.
The rights and reliefs which he is claiming could not be determined and granted by a Civil Court in a suit.
As Luding Teller puts it, "a Court of Law proceeds on the footing that no power exists in the Courts to make contracts for people and the parties must make their own contracts.
The Courts reach their limit of power when they enforce contracts which the parties had made." (Quoted with approval in Rohtas Industries Ltd. vs Brijnandan Pandey.(1) The rights claimed by the second respondent are those which are conferred on workmen and employees under the Bombay Industrial Relations Act, to ensure social justice.
Such rights which do not stem from the contract of employment can be enforced only in the Labour Court constituted under the B.I.R. Act.
The Labour Court is competent to grant the relief of reinstatement claimed by the respondent, while in view of Section 21(b) of the Specific Relief Act, then in force, the Civil Court was not competent to grant that relief.
The dispute was raised by the second respondent by writing an approach letter to his employer, the appellant, as required by the Bombay Industrial Relations Act.
In substance, it was an industrial dispute.
It was not restricted to a claim under the contract or agreement of employment.
The Civil Court cannot grant the reliefs claimed by the second respondent.
As rightly submitted by Mr. Rama Reddy, if a Court is incapable of granting the relief claimed, normally, the proper construction would be that it is incompetent to deal with the matter.
1034 The matter can be looked at from another angle, also.
The law of industrial disputes or industrial relations is a special law dealing with rights and obligations specially created by it.
As against this, the provision in Section 54 of the Act of 1925/Section 96 of the Act of 1961 is a general provision.
In accordance with the maxim generalia specialibus non derogant, therefore, nothing in these general provisions can derogate from B.I.R. Act and the Cooperative Society Act must yield to the special provisions in the Bombay Industrial Relations Act, whenever a dispute clearly comes within the language of the latter Act.
In the light of the above discussion, the conclusion is inescapable that the expression "any dispute" referred to in Section 54 of the 1925 Act/Section 96 of the 1961 Act, does not cover a dispute of the kind raised by respondent 2 against the appellant Bank.
Coming now to the second test, it may be observed that to a part of it, the pronouncement of this Court in Cooperative Central Bank Ltd. vs Additional Industrial Tribunal, Hyderabad (ibid), furnishes a complete answer, wherein the interpretation of this very phrase "touching the business of the Society" occurring in Section 61 of Andhra Pradesh Cooperative Societies Act, 1964, which largely corresponds to Section 96 of the Gujarat Act, 1961, came up for interpretation.
The subject matter of the dispute was divided into three issues.
The first issue comprised a number of service conditions including inter alia salary, scales and adjustment or dearness allowance, conveyance charges, provident fund and gratuity, etc.
It was contended on behalf of the Bank that the effect of Section 61 and other provisions of Andhra Pradesh Cooperative Societies Act was to exclude the jurisdiction of the Industrial Tribunal to deal with such disputes under the Industrial Disputes Act.
After noticing a number of decisions and after referring to the previous decision of this Court in Deccan Cooperative Bank, the Court negatived the contention with these observations: "The dispute related to alteration of a number of conditions of service of the workmen which relief could only be granted by an Industrial Tribunal dealing with an industrial dispute.
The Registrar, it is clear from the provisions of the Act, could not possibly have granted the reliefs claimed under this issue because of the limitations placed on his powers in the Act itself.
The word "business" is equated with the actual trading or commercial or other 1035 similar business activity of the society, and since it has been held that it would be difficult to subscribe to the proposition that whatever the society does or is necessarily required to do for the purpose of carrying out its objects, such as laying down the conditions of service of its employee, can be said to be a part of its business, it would appear that a dispute relating to conditions of service of the workmen employed by the society cannot be held to be a dispute touching the business of the society.
Thus it is clear that in respect of the dispute regarding the alteration of various conditions of service, the Registrar or other person dealing with it under Section 62 of the Act is not competent to grant the relief claimed by the workmen at all.
On the principle laid down by this Court in the case of the Deccan Merchants Cooperative Bank Ltd., Civil Appeal No. 358 of 1967 dated 29 8 68, (supra) therefore, it must be held that this dispute is not a dispute covered by the provisions of Section 61 of the Act.
Such a dispute is not contemplated to be dealt with under Section 62 of the Act and must therefore, be held to be outside the scope of Section 61.
" The observations quoted above, negate contention (ii) advanced by Mr. Dholakia.
It however, remains to be considered whether the dispute raised by the second respondent in the present case, comes within the purview of the expression "touching the management of the Society" used in Section 96(c) of the Act of 1961.
In this connection, it may be noticed that just as in Section 96(1), in Section 61 of the Andhra Pradesh Corporation Societies ' Act, 1964, also, which came up for consideration in Cooperative Central Banks ' case before this Court, the term management does occur in the collocation of words "constitution, management or business".
But no specific argument seems to have been then raised that a dispute between the Society and its former servants relating to the conditions of service, comes within the purview of the expression 'touching the management of the Society '.
Perhaps, it was taken for granted that if the dispute was not comprehended by the expression "business of the Society", it would not be covered by the words "management of the Society", either.
Although there is little discussion in the judgment about the ambit and import of the expression "management", yet in conclusion, it was clearly and emphatically held 1036 that the dispute in that case was "outside the scope of Section 61.
" We will now, focus attention on the expression "management of the Society" used in Section 96(1) of the Act of 1961.
Grammatically, one meaning of the term 'management ' is: 'the Board of Directors ' or 'the apex body ' or Executive Committee at the helm which guides, regulates, supervises, directs and controls the affairs of the Society '.
In this sense, it may not include the individuals who under the over all control of that governing body or Committee, run the day to day business of the Society.
(see Words and phrases, by West Publishing Co. Permanent Edition, Vol. 26, page 357, citing, Warner & Swasey Co. vs Rusterholz D. C. Minn.(1).
Another meaning of the term 'management ', may be: 'the act or acts of managing or governing by direction, guidance, superintendence, regulation and control the affairs of a Society. ' A still wider meaning of the term which will encompass the entire staff of servants and workmen of the Society, has been canvassed for by Mr. Dholakia.
The use of the term 'management ' in such a wide sense in Section 96(1) appears to us, to be very doubtful.
Be that as it may, what has been directly bidden "out of bounds" for the Registrar by the very scheme and object of the Act, cannot be indirectly inducted by widening the connotation of 'management '.
A construction free from contexual constraints, having the effect of smuggling into the circumscribed limits of the expression "any dispute", a dispute which from its very nature is incapable of being resolved by the Registrar, has to be eschewed.
Thus considered, a dispute raised against the Society by its discharged servant claiming reliefs, such as reinstatement in service with back wages, which are not enforceable in a Civil Court, is outside the scope of the expression "touching the management of the Society" used in Section 96(1) of the Act of 1961, and the Registrar has no jurisdiction to deal with and determine it.
Such a dispute squarely falls within the jurisdiction of the Labour Court under the B.I.R. Act.
Learned counsel for the appellant tried to argue as a last resort that the relief sought by the second respondent could be granted by the Registrar by relaxing or moulding the Staff Regulations and Bye laws which lay down conditions of service governing the employees of the Society.
It is pointed out that under the Act of 1961, the Registrar has the power to amend or modify such Regulations and Bye laws.
1037 We find no merit in this contention, also.
A similar argument was advanced before this Court in Cooperative Central Bank 's Case, ibid, and was repelled inter alia, with the reasoning that the bye laws of the Bank, containing the conditions of service were in the nature of a contract between the Bank and its employees and a change of such bye laws, embodying the conditions of employment, "could not possibly be directed by the Registrar where, under section 62 (4) of the (ANDHRA) Act, he is specifically required to decide the dispute referred to him in accordance with the provisions of the bye laws".
It was further observed that a dispute referred to the Registrar can even be transferred for disposal to a person who may have been invested with powers in that behalf, or may be referred for disposal to an arbitrator.
But neither the Registrar nor his nominee will be competent to grant the relief requiring a change in the service conditions of the employees, under section 62 of the Andhra Act.
Such a relief could be granted only by the Industrial Tribunal which under the Industrial Disputes Act, has the jurisdiction even to vary contracts of service between an employer and employees.
This reasoning is applicable mutatis mutandis to the instant case.
For all the foregoing reasons, the appeal fails and is dismissed with costs.
In token of our gratitude for the valuable assistance rendered to us by Shri Rama Reddy as amicus curiae, we direct that an honorarium of Rs. 1500/ be paid to him, which shall be taxed as costs awarded against the appellant.
V.D.K. Appeal dismissed.
| The appellant Bank was a society registered under the Bombay Co operative Societies Act, 1925 and with the coming into force from May 1, 1962 of the Gujarat Co operative Societies Act, 1961, it came to be governed by the said Act.
By Notification No. BIR 1362 5 H dated March 2, 1963, the Government of Gujarat directed under section 2(4) of the Bombay Industrial Relations Act, 1946 (Bombay Act 11 of 1947) that all the provisions of the said Act shall apply with effect from March 15, 1963 to the business of banking by Co operative Banks in the Saurashtra and Kutch areas of the State, registered and deemed to be registered under the Gujarat Co operative Societies Act, 1961.
The second respondent, Babu Bhai Negracha who was working as an additional supervisor in the Dasada Branch of the appellant Bank and whose services were terminated by an order dated February 21, 1962, by giving him one month 's pay in lieu of notice under Staff Regulation No. 15, filed an application in the Labour Court Rajkot, alleging that his services had been illegally and maliciously terminated as an act of victimisation on account of his trade union activities and praying for setting aside the order of his termination of service and for reinstatement with full back wages.
The Labour Court by its order dated June 11, 1963, over ruled the preliminary objection raised by the appellant Bank, namely, that "the Bombay Industrial Relations Act, 1946 under which the application was made by the respondent was not applicable to its case, as it was a co operative society governed by the Gujarat Co operative Societies Act, under which only the Registrar or his nominee had jurisdiction to decide the dispute, and the Labour Court had no jurisdiction to entertain and decide the application".
The appellant Bank 's writ petition challenging the said order of the Labour Court was dismissed by the Gujarat High Court by its judgment dated August 25, 1967.
Dismissing the appeal by certificate, the Court ^ HELD: 1.
No new plea can be raised for the first time in the Supreme Court, as a matter of right.
In the instant case, the new plea that "the appellant is not doing banking business" was not entertained for the reasons 1024 namely (i) it was much too belated; (ii) it stood in direct contradiction to the position taken by the appellant in its writ petition and the affidavit in support thereof in the High Court wherein it had been clearly admitted that "the society is engaged in the business of banking" and (iii) it was not a purely legal plea but a mixed plea of law and fact and could not be determined on the basis of material already on the record.
[1027 F G] 2.
The expression "any dispute" referred to in Section 54 of the Bombay Cooperative Societies Act, 1925 and in Section 96 of the Gujarat Cooperative Societies Act, does not cover a dispute of the kind raised by respondent 2 against the appellant bank.
[1034 C] (a) It is clear from the object and the scheme of the Acts of 1925 and 1961 that the legislature never intended to give such a wide scope to the expression "any dispute" so as to cover all classes of disputes whatever be their nature as the prefix "any" to "dispute" appears to give.
The term "dispute" means a controversy having both positive and negative aspects.
It postulates the assertion of a claim by one party and its denial by the other.
[1031 C D] (b) The expression "any dispute" has not been defined in the Acts of 1925 and 1961.
This expression has been used in a narrower sense limited to contested claims of a civil nature, which could have been decided by civil or revenue courts, but for the provisions with regard to compulsory arbitration by the Registrar or his nominee found in Section 54 of the Bombay Act of 1925 and in Section 96 of the Gujarat Act, 1961.
The words "as if the dispute were a suit and the Registrar as Civil Court" occurring in sub section (k) of Section 97 of the Gujarat Act, also make this position clear.
[1031 C, D, E, G] (c) The compulsory arbitration by the Registrar on reference under section 96 is only a substitute for adjudication of disputes of a civil nature normally tried by the Civil Court.
It is incumbent, under sub section (2) of section 96 of the 1961 Act, on the Registrar to decide as a preliminary issue, whether the dispute is of a kind under sub section (1) of section 96 falling within his jurisdiction.
If this preliminary issue is found in the negative he will have no further jurisdiction to deal with the matter.
[1031 F, G 1032 F] (d) Thus considered, a dispute raised against the Society by its discharged servant claiming reliefs, such as, reinstatement in service with back wages, which are not enforceable in a civil court, is outside the scope of the expression "touching the management of the Society" used in section 96(1) of the Act of 1961, and the Registrar has not jurisdiction to deal with and determine it.
What has been directly bidden "out of bounds" for the Registrar by the very scheme and object of the Act, cannot be directly inducted by widening the connotation of 'management '.
Such a dispute squarely falls within the jurisdiction of the Labour Court under the Bombay Industrial Relations Act.
[1036 E G] 3.
The law of Industrial disputes or Industrial Relations is a special law dealing with rights and obligations specially created by it.
The provisions in section 54 of the Bombay Act and in section 96 of the Gujarat Act being general provisions in accordance with the maxim generalia specialibus non derogant, nothing in these general provisions can derogate from Bombay Industrial Relations Act, and the Cooperative Societies Act must yield to the special provi 1025 sions in the Bombay Industrial Relations Act, whenever a dispute clearly comes within the language of the latter Act.
Section 166(1) of the Gujarat Act, in terms, bars the jurisdiction only of Civil or Revenue Court, and not of the Labour Court or any Industrial Tribunal constituted under the Bombay Industrial Relations Act or Industrial Disputes Act.
The legislature never intended to oust the jurisdiction of the Labour Court or the Industrial Tribunal to determine claims and industrial disputes which cannot be adjudicated by the ordinary Civil Court.
[1032 H, 1033 A, 1034 A B] In the instant case : (a) The Labour Court is competent to grant the relief of reinstatement while in view of section 21(b) of the Specific Relief Act, then in force, the Civil Court was not competent to grant that relief.
If a Court is incapable of granting the relief claimed, normally the proper construction would be that it is incompetent to deal with the matter.
[1033 F, H] (b) The dispute was raised by the second respondent by writing an approach letter to his employee, the appellant, as required by the Bombay Industrial Relations Act.
In substance, it was an industrial dispute.
It was not restricted to a claim under the contract or agreement of employment.
[1033 F G] (c) The rights and reliefs claimed by the second respondent could not be determined and granted by a Civil Court in a suit.
His allegation was that his services were terminated unfairly and vindictively because of his legitimate trade union activities, as an act of victimisation.
The relief claimed is reinstatement in services with back wages.
The rights claimed are those which are conferred on workmen and employees under the Bombay Industrial Relations Act to ensure social justice.
Such rights which do not stem from the contract of employment can be enforced only in the Labour Court constituted under B.I.R. Act.
[1033 B F] Jullundur Transport Cooperative Societies Ltd. vs Punjab State, AIR 1959 Pun. 34; approved.
Rohtas Industries Ltd. vs Brijnandan Pandey, ; ; referred to.
(d) Neither the Registrar nor his nominee will be competent to grant the relief of requiring change in the service conditions of the employee.
Such a relief could be granted by the Industrial Tribunal which under the Industrial Disputes Act, has the jurisdiction even to vary contracts of service between an employer and employees.
[1037 C D] Co operative Central Bank Ltd. vs Additional Industrial Tribunal, Hyderabad ; applied.
Farkhundali Naunhay vs V. B. Potdar, AIR 1962 Bom.
362 over ruled.
|
minal Appeal No. 107 of 1961.
Appeal by special leave from the judgment and order dated June 16, 1961, of the Bombay High Court in Cr. A. No. 21 of 1961.
345 Rajni Patel, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant.
H.R. Khanna, R. H. Dhebar and R. N. Sachthey, for the respondents.
September 26.
The judgment of the Court was delivered by SUBBA RAO, J.
This appeal by special leave against the judgment of the High Court of judicature at Bombay raises the question of construction of s.3(b) of the Drugs Act, 1940, as amended by the Drugs (Amendment) Act, 1955, hereinafter called the Act.
This appeal has been argued on the basis of facts found by the High Court.
The appellant was carrying on business in the name of Deepak Trading Corporation at Bulakhidas Building, Vithaldas Road, Bombay.
On December 27, 1958, the Sub Inspector of Police, accompanied by the Drug Inspector, raided the said building and found large quantities of absorbent cotton wool, roller bandages, gauze and other things.
It was found that the appellant was not only storing these goods in large quantities but was actually manufacturing them in Bombay and passing them off as though they were manufactured by a firm of repute in Secunderabad.
The samples of the aforesaid articles and lint were sent to the Government Analyst, who reported that out of the samples sent to him only the lint was of standard quality and the other articles were not of standard quality.
The appellant was ' prosecuted before the Presidency Magistrate, 16th Court Bombay, for an offence under section 18 of the Act, inter alia, for manufacturing drugs which were not of standard quality.
The learned Presidency.
Magistrate acquitted the appellant on the ground that the prosecution had failed to prove that the articles were in the possession of the appellant.
The High Court on a resurvey of the evidence came to a different conclusion and found that the said articles 346 were not only found in the possession of the appellant but also were manufactured by him and that they were below the standard prescribed.
On the finding ', it convicted the.
appellant and sentenced him to undergo rigorous imprisonment for three months and to pay a fine of Rs. 500/ under each count.
Hence the appeal.
Though an attempt was made to argue that the said articles had not been proved to be below the prescribed standard, it was subsequently given up ' The only question that was argued is whether the said articles are drugs within the meaning of section 3(b) of the Act.
The said section reads ""drug" includes (i)all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the treatment mitigation or prevention of disease in human beings or animals other than medicines and substances exclusively used or prepared for use in accordance with the Ayur vedic or Unani systems of medicine, and (ii)such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals as may be specified from time to time by the Central Government by notification in the Official Gazette.
The said definition of ""drug" is comprehensive enough to take in not only medicines but also substances intended to be used for or in the treatment of diseases of human beings or animals.
This artificial definition 347 introduces a distinction between medicines and substances which are not medicines strictly so called.
The expression "substances", therefore, must be something other than medicines but which are used for treatment.
The part of the definition which is material for the present case is " 'substances invented to be used for or in the treatment".
The appropriate meaning of the expression "substances" in the section is "things".
It cannot be disputed, and indeed it is not disputed, that absorbent cotton wool, roller bandages and gauze are "substances" within the meaning of the said expression.
If so, the next question is whether they are used for or in "treatment".
The said articles are sterilized or otherwise treated to make them disinfectant and then used for surgical dressing; they are essential materials for treatment in surgical cases.
Besides being aseptic these articles have to possess those qualities which are utilized in the treatment of diseases.
Thus for instance, in the case of gauze one of the articles concerned in this appeal it has to conform to a standard of absorbency in order that it might serve its purpose: otherwise the fluid which oozes is left to accumulate at the site of the wound or sore.
The Legislature designedly extended the definition of " 'drug" so as to take in substances which are necessary aids for treating surgical or other cases.
The main object of the Act is to prevent substandard in drugs, presumably for maintaining high standards of medical treatment.
That would certainly be defeated if the necessary concomitants of medical or surgical treatment were allowed to be diluted: the very same evil which the Act intends to eradicate would continue to subsist.
Learned counsel submitted that surgical instruments would not fall within the definition and that gauze and lint would fall within the same class.
It is not necessary for the purpose of this appeal to definite exhaustively "the 'substances" falling within the definition of " 'drugs"; and we consider that whether or not surgical instruments are drugs", the articles concerned in this case are.
348 Learned counsel for the appellant sought to rely upon a report of a high powered committee consisting of expert doctors, who expressed the opinion in the report that as the surgical dressings did not come under the purview of the Drugs Act, no control on their quality was being exercised.
Obviously, the opinion of the medical experts would not help us in construing a statutory provision.
We, therefore, hold, agreeing with the High.
Court, that the said articles are substances used for or in the "treatment" within the meaning of section 3(b) of the Act.
An impassioned appeal was made for reducing the sentences imposed upon the appellant.
When a similar argument was advanced in the High Court, it pointed out that this was a gross case where large quantities of spurious drugs had been manufactured by the appellant and passed off as goods manufactured by a firm of repute.
The appellant was guilty of an anti social act of a very serious nature.
In our view, the punishment of rigorous imprisonment for three months was more lenient than severe.
There is no case for interference with the sentences.
The appeal fails and is dismissed.
Appeal dismissed.
| The appellant was found in possession of large quantities of absorbent cotton wool, roller bandages and gauze which he had manufactured.
On analysis these were found to be sub standard and the appellant was prosecuted under section 18 of the Drugs Act, 1940, for manufacturing sub standard drugs.
He was convicted and sentenced to undergo rigorous imprisonment for three months and to pay a fine of Rs. 500/.
The appellant contended that these articles were not drugs as defined in section 3(b) of the Act and that the sentence imposed was too severe.
Held, that absorbent cotton wool, roller bandages and gauze were "drugs" within the meaning of section 3(b) and the appellant was rightly convicted.
In the definition "drugs" "included substances intended to be used for or in treatment of diseases".
"Substances" was something other than "medicines" and meant "things".
The said articles were sterilized or otherwise treated to make them disinfectant; they were used for surgical dressings and were essential materials for treatment in surgical cases.
The object of the Act of maintaining high standards of medical treatment would be defeated if the necessary concomitants of medical or surgical treatment were allowed to be diluted.
Held, further,that the sentence erred on the side of leniency rather than severity and could not be reduced.
It was a case where large quantities of spurious and sub standard drugs had been manufactured by the appellant.
He was guilty of an antisocial act of a very serious nature.
|
: Civil Appeal No. 788 of 1957.
Appeal by special leave from the judgment and order dated February 16, 1955, of the Bombay High Court in Income tax Reference No. 38/x of 1954.
C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and D. Gupta, for the appellant.
R.J. Kolah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent.
April 21.
The Judgment of section K. Das and Kapur, JJ., was delivered by section K. Das, J. Hidayatullah, J., delivered a separate Judgment.
S.K. DAS, J. This is an appeal by special leave from the judgment and orders of the High Court of Bombay dated February 16, 1955, in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter called the Act.
The reference was made in the following circumstances : The Hindu undivided family of one Gandalal carried on business in cloth in Wadhwan in Kathiawar, which at the relevant time was outside British India.
The family consisted of Gandalal and his four sons, (1) Girdharlal, (2) Hansraj, (3) Nandlal and (4) Ramniklal.
In 1944 Nandlal came to Bombay and started a cloth business in partnership with other persons, the partnership being known as Amulakh Amichand & Co. 623 Nandlal 's share in the partnership was ten annas and that of his three partners, who belonged to the family of Amulakh Amichand, six annas.
It was stated that the family of Amulakh Amichand which was a well known business family of Bombay, did not supply any capital to the partnership and Nandlal alone was the financing partner.
On April 13, 1944, Nandlal received a sum of Rs. 50,000 from the Hindu undivided family of which he was a member, and a further sum of Rs. 50,000 on April 27, 1944.
Two other sums aggregating to Rs. 50,000 were also received from the Hindu undivided family on June 8, 1944, and June 29, 1944.
The case of the assessee was that a sum of Rs. 1,00,000 was given to each son by the father and the sums of money received on June 8, 1944, and June 29, 1944, were a loan by the Hindu undivided family to Nandlal.
Therefore, the case of the assessee was that Nandlal became the partner of the firm of Amulakh Amichand in his individual capacity.
The case of the Department, however, was that the total sum of Rs. 1,50,000 sent to Nandlal by the Hindu undivided family was utilised as capital in the cloth business of the partnership known as Amulakh Amichand & Co. Subsequently, Girdharlal, another brother of Nandlal, came to Bombay and joined the firm.
Out of the share of ten annas of Nandlal, Girdharlal was given a share of five annas.
The partnership firm of Ainulakh Amichand & Co. then started a cloth business at Banaras, and the partners of the firm at Banaras were the partners of the Bombay firm of Amulakh Amichand & Co. and an outsider from Banaras.
A third brother of Nandlal also joined the Banaras firm, but he did not bring any capital.
For the assessment year 1945 46 the Income tax Officer held that the Hindu undivided family of Gandalal was resident in the taxable territories (namely, British India), and hence he included the sum of Rs. 1,50,000 in the income of the family under section 4(1) (b)(iii) of the Act as having been brought into or received in British India in the relevant year and made an assessment on that basis.
The assessee appealed to the Appellate Assistant Commissioner, Bombay, but without success.
Then, there " as an, 624 appeal to the Income tax Appellate Tribunal, Bombay.
Two questions were raised before the Tribunal: " (1) Whether Nandlal represented the Hindu undivided family of Gandalal of Wadhwan now in Saurashtra, in the firm Amulakh Amichand & Co., Bombay, and later on in the firms Amulakh Amichand & Co., Bombay and Banaras.
(2)Whether the Hindu undivided family of Gandalal was resident in the taxable territories in the relevant years of account.
" The Tribunal held on the first question that Nandlal and later Girdharlal joined the Bombay firm and also the Banaras firm of Amulakh Amichand & Co. as representing the Hindu undivided family of Gandalal and the money for starting the Bombay business came from the Hindu undivided family.
Accordingly, the Tribunal held that Nandlal was properly assessed in the status of a Hindu undivided family.
On the second question the Tribunal held in favour of the assessee and came to the following conclusion: " The business at Bombay and later on the business at Banaras cannot, in our opinion, be considered to be the affairs of the Hindu undivided family of Gandalal.
These two businesses belonged to two separate entities, namely, the Bombay firm of Amulakh Amichand & Co., and the Banaras firm of Amulakh Amichand & Co. True, the Hindu undivided family would in due course of time receive a share of profit from these two firms, but all the same we do not think that it could be said that the firms of Bombay and Banaras constituted the affairs of the Hindu undivided family.
The businesses in Bombay and Banaras, according to the Partnership Act, belonged to Nandlal and others.
We are, therefore, of opinion that for assessment years 1945 46 . the Hindu undivided family was not resident in the taxable territories." The actual relief which the Tribunal gave to the assessee was expressed in the following words: " For the assessment year 1945 46, the assessee 's status would be Hindu undivided family but non resident.
In so far as the assessed income is concerned the sum of Rs. 1,50,000 which was included under section 4(1)(b)(iii) has to be deleted.
The rest of the 625 income accrued to the Hindu undivided family in the taxable territories.
" At the instance of the Commissioner of Income tax, Bombay, who is the appellant before us, the Tribunal stated a case and referred the following question of law to the High Court of Bombay for its decision under section 66(1) of the Act.
The question was in these terms : "Whether the Hindu undivided family of Gandalal represented by Nandlal in the firm of Amulakh Amichand & Co. of Bombay was resident in the taxable territories in the year of account relevant for the assessment year 1945 46.
" The answer to the question depended on the true scope and effect of section 4A(b) of the Act.
The High Court held that the expression " the affairs of the Hindu undivided family " in section 4A(b) did not have reference to the private or domestic affairs of the family, but referred to affairs concerned with income and taxation thereon.
It said: " We might put the matter in this way that when a coparcener carries on business in partnership on behalf of the Hindu undivided family, the affair is of the coparcener and not of the family, but when the business is carried on by the family itself then it is the affair of the family and not of the coparceners." "The result is that we must agree with the view taken by the Tribunal and we must answer the question submitted to us in the negative." After the decision of the High Court the appellant obtained special leave and has come to us in pursuance of special leave granted by this Court.
We must make it clear at the very outset that the first question raised before the Tribunal and decided by it against the assessee does not now fall for consideration.
Whatever income Nandlal and Girdharlal received from the two businesses at Bombay and Banaras was income in their hands of the Hindu undivided family.
With that income we are not now concerned.
We are concerned with the second question, namely, whether the Hindu undivided family of Gandalal was resident in the taxable territories in the 626 relevant year so as to make the sum of Rs. 1,50,000 taxable under section 4 (1) (b) (iii) of the Act on the basis of such residence.
Clearly enough, if the Hindu undivided family of Gandalal was not resident in the taxable territories in the relevant year, the sum of Rs. 1,50,000 would not be taxable under section 4 (1) (b) (iii) of the Act.
We must, therefore, keep in mind the narrow scope of the question before us, which is whether the Hindu undivided family of Gandalal could be said to be resident in the taxable territories (i. e., British India) in the relevant year under the provisions of section 4A(b) of the Act, even though the family carried on its own cloth business wholly outside the taxable territories.
It is necessary as well as convenient to read section 4A(b) at this stage : "4A.
For the purposes of this Act (b)a Hindu undivided family, firm or other association of persons is resident in the taxable territories unless the control and management of its affairs is situated wholly without the taxable territories." In V. V. R. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras(1) this Court held that the test for deciding the residence of a Hindu undivided family laid down in section 4A (b) of the Act was based very largely on the rule which had been applied in England to cases of corporations, and though normally a Hindu undivided family would be taken to be resident in British India, such presumption would not apply if the case could be brought under the second part of the provision.
It was also observed therein that the word " affairs " must mean affairs which are relevant for the purpose of the Income tax Act and which have some relation to income ; it was stated that in order to bring the case under the exception, the court has to ask whether the seat of the direction and control of the affairs of the family is inside or outside British India, and the word " wholly " suggests that a Hindu undivided family may have more than one "residence" in the same way as a corporation may have.
The position in Hindu law with regard to a coparcener, even when he is the Karta, entering into partnership (1) ; 627 with others in carrying on a business is equally well settled.
The partnership that is created is a contractual partnership and will be governed by the pro .
visions of the .
The partnership is not between the family and the other partners; it is a partnership between the coparcener individually and his other partners (see Kshetra Mohan Sannyasi Charan Sadhukhan vs Commissioner of Excess Profits Tax, West Bengal) (1).
The coparcener is undoubtedly accountable to the family for the income received, but the partnership is exclusively one between the contracting members, including the individual coparceners and the strangers to the family.
On the death of the coparcener the surviving members of the family cannot claim to continue as partners with strangers nor can they institute a suit for dissolution of partnership ; nor can the stranger partners sue the surviving members as partners for the coparcener 's share of the loss.
Therefore, so far as the partnership is concerned, both under Partnership law and under Hindu law, the control and management is in the hands of the individual coparcener who is the partner and not in the family.
Now, it is undisputed that but for the partnership business at Bombay or Banaras the Hindu undivided family of Gandalal was not resident in the taxable territories in the relevant year.
The point for decision, therefore, is does the existence of the said partnership establish the residence of the family ? This raises two questions before us: firstly, whether the firm of Amulakh Amichand & Co. is one of the affairs of the Hindu undivided family of Gandalal because that is the only affair which has relation to the income sought to be taxed and on which the appellant relies for determining the residence of the family; secondly, where the control and management of the said affair, looked at from the point of view of the Hindu undivided family, is situate.
We think that in the context of the facts found in the case, these two questions are interlinked.
The expression " control and management " under section 4A(b) signifies controlling and directive power, "the head and brain" 628 as it is sometimes called.
Furthermore, it is settled, we think, that the expression control and management " means de facto control and management and not merely the right or power to control and manage (see B. R. Naik vs Commissioner of Income tax (1)).
It is also quite clear, we think, that if a coparcener becomes a partner (on behalf of the joint family) with strangers in a firm which carries on business in the taxable territories, that by itself will not determine the residence of the family unless the control and management of the firm is at least, in part, in the Hindu undivided family.
On the facts of this case, the Hindu undivided family or for that matter, the Karta of that family, that is Gandalal, could exercise no power of controlling management over the partnership firm, either under Partnership law or under Hindu law.
It seems to us that the word " affairs " in section 4A(b) must mean affairs of a Hindu undivided family which are capable of being controlled and managed by the said Hindu undivided family as such.
Where a coparcener enters into partnership with strangers, the Hindu undivided family exercises no controlling power of management over the partnership firm.
In that view of the matter the partnership firm cannot be an " affair " of the Hindu undivided family capable of being controlled and managed by the Hindu undivided family as such.
It may be here observed that the decision in V. V. R. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras (2) proceeded on the basis of onus only and as was specifically stated therein, it was confined to the year of assessment to which the case related and it was left open to the appellant of that case to show in future years by proper evidence that the seat of control and management of the affairs of the family was wholly outside British India.
In the case before us the Tribunal no doubt found on the first question raised before it that Nandlal and Girdharlal joined the Bombay and Banaras firms as coparceners of the Hindu undivided family and the money for starting the business came from the Hindu undivided family.
That finding by itself however does not determine the residence of the (1) [1946]4 1.T.R. 324.
(2) ; 629 Hindu undivided family of Gandalal.
Both under Hindu law and Partnership law the Hindu undivided family as such could exercise no control and management over the two businesses at Bombay and Banaras.
These businesses belonged to the partners and on the facts found in this case, it cannot be said that the businesses were the affairs of the Hindu undivided family of Gandalal within the meaning of section 4A(b) of the Act.
We agree with the High Court that the position would be different if the Hindu undivided family itself carried on the business as its own business.
In that case the business would be an affair of the family, because the family would be in control and management of the business.
At first sight it may appear paradoxical that the income from the two businesses at Bombay and Banaras in the hands of Nandlal and Girdharlal should be treated as income of the Hindu undivided family and at the same time it should be hold that the two businesses were not the affairs of the Hindu undivided family within the meaning of section 4A(b) of the Act.
There is really no paradox because the place of accrual of income of such family and the place of its residence need not necessarily be the same under the Act.
Residence under section 4A(b) of a Hindu undivided family is determined by the seat of control and management of its affairs, and in the matter of partnership business in British India the Hindu undivided family as such had no connexion whatsoever with its control and management.
If the seat of control is divided, the family may have more than one place of residence; and unless it is wholly outside the taxable territories, the family will be taken to be resident in such territories for the purposes of the Act.
But whereas in this case in respect of the partnership business, the family as such has nothing to do with its control and management, we fail to see how the existence of such a partnership will determine residence of the family within the meaning of section 4A(b), Therefore, we are of the opinion that the High Court correctly answered the question, The appeal fails and is dismissed with costs, 82 630 HlDAYATULLAH, J. The Commissioner of Incometax, Bombay City, has filed this appeal, after obtaining special leave from this Court, against the judgment and order of the High Court of Bombay dated February 16, 1955, in a Reference under section 66(1) of the Indian Income tax Act.
By the judgment under appeal, the High Court (in agreement with the decision of the Income tax Appellate Tribunal, Bombay, given earlier) answered in the negative the following question: " Whether the Hindu undivided family of Gandalal represented by Nandlal in the firm of Amulakh Amichand & Co. of Bombay was resident in the taxable territories in the year of account relevant for the assessment year 1945 46. " The facts briefly stated are as follows: There was in Wadhwan State in Kathiawar a Hindu undivided family consisting of Gandalal and his four sons, Girdharlal, Hangraj, Nandlal and Ramniklal.
This family was doing business in cloth.
In 1944 Nandlal went to Bombay and started on April 25, 1944, a cloth business in partnership with three strangers, known as Amulakh Amichand & Co. Nandlal 's s`are was ten annas, and that of his three partners, six annas.
All the capital of the new firm was supplied by Nand lal, and for this purpose he received two remittances of Rs. 50,000 each on April 13 and 27 in the year 1944 and two other remittances aggregating to Rs. 50,000 on June 8 and 29 in the same year.
Thus, a total sum of Rs. 1,50,000 was sent from Wadhwan to Bombay.
Subsequently, Girdharlal also went to Bombay and joined Amulakh Amichand & Co. and he was given five annas ' share out of Nandlal 's share of ten annas.
In 1946 Amulakh Amichand & Co. started another firm at Banaras under the same name.
The partners of the Banaras firm were the partners of the firm at Bombay, an outsider from Banaras and a third brother of Nandlal.
He did not bring any capital, and presumably received a share along with his other two brothers.
For the assessment year 1945 46 the Income tax Officer treated the Hindu undivided family as resident in British India under section 4A(b) of the Indian Incometax Act, and assessed the family after adding the sum of Rs. 1,50,000 to the income from the firm of 631 Amulakh Amichand & Co., Bombay.
The appeal to the Appellate Assistant Commissioner failed.
On further appeal, the Appellate Tribunal, Bombay, held that Nandlal was still a coparcener and not a separated member, because the partition which was set up by him was not meant to be acted upon.
The Tribunal, however, held that the decision of the Income tax Officer and the Appellate Assistant Commissioner that the Hindu undivided family was resident in British India in the relevant account year was not sound.
The Appellate Tribunal therefore, ordered that the sum of Rs. 1,50,000 included under section 4(1)(b) (iii) of the Income tax Act could not be included and must be deleted.
According to the Tribunal, the business at Bombay and later the business at Banaras could not be considered to be I the affairs of the Hindu undivided family of Gandalal ', so as to bring the matter within section 4A(b) of the Act.
The Appellate Tribunal held that these two businesses belonged to 'different entities ', namely, the Bombay and Banaras firms, and that these firms could not be said to be " the affairs of the Hindu undivided family " but the affairs of Nandlal and his brothers under the law of Partnership.
At the instance of the assessee, the Tribunal referred the above question for the opinion of the High Court.
The Bombay High Court referred to the decision of this Court in V. V. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras (1), and pointed out that by the expression " the affairs of the Hindu undivided family " was meant not the private or domestic affairs of the family but some affairs, which had some reference to the Income tax Act.
The word " affairs " must, it was held, be construed in relation to taxation.
The learned Judges then referred to the position of a coparcener entering into partnership with strangers, and observed that when a coparcener carried on such business in partnership on behalf of the Hindu family, " the affair " was of the coparcener and not of the family, but when the business was carried on by the family itself, then it was " the affair " of the family and not of the coparcener or coparceners.
They pointed out that in the cited case Fazl Ali, J., seemed to have held that even though a partnership (1) ; 632 business might be an 'activity ' of the Hindu family, it would not be " the affair " of the Hindu family in the sense in which the expression was used in the Indian Income tax Act.
They, however, held that it did not follow that every activity of a coparcener or of a Karta, even if the activity resulted in profit, became " the affair " of the Hindu undivided family.
Thus, treating the business of Amulakh Amichand & Co. as " the affair " of the coparceners concerned and not of the Hindu undivided family, the High Court in agreement with the opinion of the Appellate Tribunal, answered the question in the negative.
Before dealing with the arguments addressed in the case and the interpretation of the relevant provision, it will be useful to summarise the findings.
It is found that the Hindu undivided family did riot disrupt and partition the assets.
Nandlal and Girdharlal continued to be coparceners, and the sum of Rs. 1,50,000 represented the funds of the Hindu undivided family.
There is no finding that besides the entering into partnership by some of the coparceners with outsiders, there was, in the taxable territories, any other business.
There is also no finding by the Tribunal that no part of the control and management was exercised in British India, though the High Court did find this to be so.
We are concerned in this case with the application of section 4A(b), which deals with 'residence ' in the taxable territories, of Hindu undivided family, firm or other association of persons.
Before the present amendment, the section read as follows: 4A.
For the purposes of this Act . . . . . (b)a Hindu undivided family , firm or other association of persons is resident in British India unless the control and management of its affairs is situated wholly without British India.
The words " British India " have now been replaced by the words " taxable territories " ; but the reasoning applicable to them is the same.
The section was plain in so far as its intent and purpose was concerned.
It made a Hindu undivided family resident in British India, unless the control and management of its affairs 633 was situated wholly without British India.
If the control and management was wholly or partly situated in British India, then the family was treated as a resident.
The words " wholly without British India " showed that even if a part of the control and management, be it ever so small a part, was exercised in British India, the provision was satisfied.
So far, there is no dispute, and it is further clear that the St affairs " of the Hindu undivided family refer to something connected with the law of Income tax.
The section does not refer to the domestic or private affairs of the Hindu undivided family.
It refers to an activity resulting in the making of income.
Parties are agreed and I think rightly that this aspect of the law is clear and unambiguous.
It is also settled after the decision of this Court in Subbayya Chettiar 's case (1).
Parties are, however, at variance, when one comes to the interpretation of the words " its affairs " in the section, and tries to find the situs of the control and management.
In cases where the Hindu undivided family itself or through its Karta controls and manages business in the taxable territories, no difficulty arises; but where, as here, the Hindu undivided family is represented by one of its coparceners as a partner in a firm, one faces some difficulties.
Two questions then arise, which are: (a)Is there any " affair" of the Hindu undivided family in the taxable territories in such circumstances;. and (b)Is the fact that the coparcener controls and manages the partnership, wholly or partly, sufficient to enable one to say that the control and management of the family is located in the taxable territories ? Now, it is settled law that a Hindu undivided family cannot be a partner under the law of Partnership.
Such of the coparceners who join the partnership are regarded quoad the other partners, as individuals in their own names and rights.
Yet, the benefits that arise to them from the partnership belong to the family, and their rights are the asset of the family.
We have recently held in Charandas Haridas V. com missioner of Income tax, Bombay (2) that in such a situation the matter has to be looked at in the light of three (1) ; (2) [196O] 3 S.C.R. 296.
634 separate and independent branches of law.
They are the law of Partnership, the Hindu law and the law relating to Income tax.
The implications of a coparcener joining as partner with strangers are different when one views the matter from the angle of the law of Partnership or from the angle of the Hindu law or the law of Income tax.
In so far as the law of Partnership is concerned, the coparcenary has no place in the partnership, and the coparcener partner is everything.
But, viewed from the angle of Hindu law, the position is entirely different.
In this connection, we have to bear in mind two principles of the law relating to a coparcenary, which are well settled.
The first is contained in a well known passage in the judgment of Lord Westbury in Appovier vs Rama Subba Aiyan which reads: " According to the true notion of an undivided family in Hindu law, no individual member of that family, whilst it remains undivided, can predicate of the joint and undivided property, that he, that particular member, has a certain definite share.
The proceeds of undivided property must be brought, according to the theory of an undivided family, to the common chest or purse, and then dealt with according to the modes of enjoyment by the members of an undivided family.
" The second is equally well known, and is found stated in the judgment of Turner, L. J., in Katama Natchiar vs Rajah of Shivaganga (2) in the following words: " There is community of interest and unity of possession between all the members of the family, and upon the death of any one of them the others may well take by survivorship that in which they had during the deceased 's life time a common interest and a common possession.
" No doubt, there are other principles also which qualify those quoted, as, for example, the right of a coparcener to claim a partition, or, where such usage obtains, to alienate his interest, which give rise to the expression that the coparcener has a share.
In point of Hindu law, however, a coparcener cannot claim (1) [1866] 11 M.I.A. 75, 89.
(2) , 61 1. 635 any item of property or even a share of it as his own, and his dealings with the assets are, in so far as he is concerned, for the benefit of the family.
The law of Income tax makes the sole test for purpose of residence of a Hindu undivided family, the existence of an a affair ' and its control and management even partly in the taxable territories.
For this purpose, one may look at the actual facts, and an inference from facts in the light of Hindu law is equally open.
It is thus plain that whilst in the eye of the law of Partnership the coparcener who is a co partner is everything, in the eye of Hindu law he is no more than a member of a body of owners.
In attempting to find out if there is any 'affair ' of the Hindu undivided family, we can consider the matter from the point of view of Hindu law.
If this is the true position of a coparcener in Hindu law, it is difficult to accept the view of the High Court and of the Tribunal that there was no 'affair ' of the family in British India.
The High Court, with respect, posed the wrong question when it asked itself, " was Amulakh Amichand & Co., an affair of the family ?".
That question is self evident, and the answer is 'no ' from the point of view of the law of Partnership.
The proper question to ask was, as I have framed it, viz., " was there an affair of the Hindu undivided family in British India?".
To search and find this 'affair ', it is not necessary to look for it within the partnership any more than to look for it in the affairs of a bank where the family keeps its money with which it does business.
That this was not a mere 'activity ' but an activity involving expenditure of family funds in British India and resulting in the earning of money is admitted on all hands.
The income received from the partnership belonged to the family, as is wellsettled.
See Mangalchand Mohanlal, In re (1), Murugappa Chetty & Sons vs Commissioner of Income tax (2) and Kaniram Hazarimull vs Commissioner of Incometax (3 ) and the numerous cases cited there.
The affair, if any, which we have to find, is not to be found within the four corners of the partnership but outside (1) (2) (3) 636 it.
The partnership was only the result of the business activity of the family and evidence of it.
The affair we have to find must be regulated by Hindu law and not by the law of Partnership, because a partnership is regulated by the two laws considered the other way round.
The section we have to interpret speaks of the affairs of the Hindu undivided family whatever shape it may take, and the enquiry is thus limited to what is the dictate of Hindu law.
It is an error to think that one can ignore a palpable conclusion of that law, and go to find the answer from the law of Partnership.
Nor do I think that the decision of this Court in Subbayya Chettiar 's case (1) laid down any contrary proposition.
There, the karta who visited India for a short period dealt with some matters including the starting of certain businesses.
The Hindu undivided family was all the time in Ceylon, and it was held that his actions could be described as ' activities '.
Indeed, the matter was not decided as to whether the " affair ', if there was one, was of the family or of the coparceners, and the case went against the assessee on the burden of proof which he had failed to discharge, to bring his case within the exception.
If the karta had lived in India or some other coparcener or coparceners had stayed on permanently to manage the ' affairs ', then the question would have been considered, perhaps, differently.
In this case, we are not concerned with the 'affairs ', of the firm of Amulakh Amichand & Co., but with the ' affairs ' of the Hindu undivided family.
The coparceners who became partners could not say that they were not concerned with the Hindu undivided family to which they belonged and an undivided asset of which they owned in common with others.
Their investing moneys, becoming partners and running the partnership, starting other partnerships were, from the view point of the coparcenary according to Hindu law, as much the affair of the rest of the family as their own.
In view of what I have said, the first of the two questions posed earlier must be answered in the affirmative, that is to say, that there was an (1) ; 637 'affair ' of the Hindu undivided family in the taxable territories (then British India) in the circumstances of this case.
The question then is: where was the control and management of the Hindu undivided family located ? If it was wholly located without the taxable territories (then British India), then the family would be nonresident.
The burden was on the assessee to establish this, and we were not shown any evidence in this behalf.
The question can be decided here also on the burden of proof alone, as was done in Subbayya Chettiar 's case (1).
It need not, however, be decided on that narrow issue for reasons ' which will presently appear.
Section 4A deals with residence of an individual at one end and of a corporation like the company at the other.
It also deals with the residence of three entities, viz., Hindu undivided family, firm and association of persons in the remaining part.
The tests for these three categories are different.
Special tests have been provided for individuals, based on residence for a certain number of days.
Two alternative tests have been provided for companies, the first being that the control and management of their affairs must be situated wholly within the taxable territories.
Where the control is without, a company can still be taxed if its income within the taxable territories in the year of account (omitting, capital gains) is greater than its income without the taxable territories, with the same omission.
The first provision is necessary, because a company can have more than one residence, its residence being where it ' keeps house and does business '.
The test is reversed for a Hindu undivided family, which is non resident only if the whole of its control and management is situate without the taxable territories.
The residence of the members of the coparcenary is not a relevant factor, but if control and management is exercised by them within the taxable territory, the family as a whole is treated as resident.
In Subbayya Chettiar 's case (1), this Court observed that ' situated ' implies functioning somewhat permanently, though the management and control may be exercised (1) ; 83 638 in more than one place.
To prove that management and control is within the taxable territories, something more than a casual 'activity ' is needed.
The same tests also apply to a firm and an association of persons.
The words 'control and management ' have been figuratively described as ' the head and brain '.
In the case of an individual, the test is not necessary, because his residence for a certain period is enough, it being clear that within the taxable territories be would necessarily bring his ' head and brain ' with him.
The ' head and brain ' of a company is the Board of Directors, and if the Board of Directors exercised complete local control, then the company is also deemed to be resident.
In the case of firms, association of persons and Hindu undivided family, the control and management can be exercised by one or more of the group.
So long as this control and management (even partly) is found, and it must be so when some coparceners reside in British India and manage the affair, the family must be treated as resident.
The necessity for the test is thus obvious.
The Income tax law anticipated that control and management of the affairs of Hindu undivided families (firms and association of persons), might easily be in two or more places, one or more coparceners being within the taxable territories and the other or others, without.
To prevent the escape of tax and to get at the income of such families having multiple places of control and management, it was provided that the whole of the control and management must be without the taxable territories to avoid the implication of residence.
Otherwise, different coparceners can manage different businesses in the taxable territories and the family cannot be regarded as resident if the karta lived outside, an anomaly which does not really arise.
In the present case, can one say that the control and management was wholly without the taxable territories (then, British India,) ? If one goes by the case set up by the assessee, one finds that the clam was that there was a partition in the family and that Nandlal came to 639 Bombay as a separated member.
This claim involves the admission that the affairs, such as they were, were not controlled from Wadhwan.
Since, however, the case of partition pleaded by the assessee was not accepted, it might be held that the family at Wadhwan was, perhaps, also in control.
But it is equally clear that a part of the control of the affairs of the family was done in British India by those coparceners, who became partners in the business and through whom and not directly from Wadhwan the partnership business at Bombay was run to the benefit of the family.
Those partners who were also coparceners of the family arranged to start this business at Bombay and stayed on and managed it; they started a fresh business at Banaras, admitted a stranger as partner at the new place and presumably supplied capital from the Bombay firm or from the family ' coffers.
There is no claim at all that they supplied their own separate funds.
All these actions were acts of control and management.
They were not casual but permanent in character.
Thus,the control and management of family affairs vis a vis the partnership was being done by them.
The coparceners who Januslike face two ways, cannot shelter behind the law of Partnership, and claim that their action had no reference to the 'affairs ' of the family, which was at their back.
I am not equating the affairs of the partnership with the affairs of the family.
But the entire business involved a family undertaking, and those affairs were being managed in British India.
This control and management of the businesses was, in fact, and for purposes of the law of Income tax, control and management of the ' affairs ' of the Hindu undivided family within British India, and the family must, therefore, be regarded as resident in the accounting year within British India.
In my judgment, the decision of the Bombay High Court, with respect, was erroneous.
The answer to the question ought to have been in the affirmative.
I would, therefore, dissolve the answer given by the Bombay High Court, and instead, would answer the question in the affirmative.
I would also order that 640 the respondent bear his own costs and pay those of the appellant here and throughout.
ORDER OF COURT.
In accordance with the majority judgment of the Court, the appeal is dismissed with costs.
Appeal dismissed.
| N, a coparcener of the Hindu undivided family of G, carrying on business in Kathiwar, then outside British India, entered into a partnership with strangers in Bombay in 1944.
A total sum of Rs. 1,,50,000 was remitted to N from the undivided family 621 funds and utilised as capital in the partnership business.
N 's brother joined the partnership in Bombay.
The partnership started another firm in Banaras and a third brother of N joined the firm.
For the year of assessment 1945 46 the Income tax Officer held that the Hindu undivided family of G was resident in the taxable territories and included the said sum in the income of the family under section 4(1)(b)(iii) of the Indian Income tax Act, 1922, as having been brought into or received in British India in the relevant year and made the assessment on that basis.
On appeal by the assessee the Appellate Assistant Commissioner affirmed the assessment but the Income tax Appellate Tribunal holding that in the year of assessment the family was not resident in the taxable territories deleted the said sum from the assessed income.
The decision of the Appellate Tribunal was upheld by the High Court in a reference under section 66(1) of the Act made at the instance of the appellant: Held (per section K. Das and J. L. Kapur, jj.), that the expres sion 'control and management ' occurring in section 4A(b) of the Indian Income tax Act means de facto control and management and the word " affairs " means the affairs of the Hindu un divided family capable of being controlled and managed by the said family as such.
It is well settled that a Hindu undivided family cannot exercise any controlling power of management of a partnership entered into by a coparcener with strangers either under the , or under the Hindu law.
The partnerships in the instant case could not, therefore, constitute affairs of the Hindu undivided family within the meaning of section 4A(b) of the Act, although the incomes from the said partnerships might belong to the said family, and could not determine its residence.
The place of accrual of income of a Hindu undivided family and the place of its residence need not necessarily be the same under the Indian Income tax Act, 1922.
V.V. R. N. M. Subbayya Chettiar vs Commissioner of Incometax, Madras, ; , Kshetra Mohan Sannyasi Charan Sadhukhan vs Commissioner of Excess Profits Tax, West Bengal, and B. R. Naik vs Commissioner of Income.
tax, , referred to.
Per Hidayatullah, J. Under section 4A(b) of the Indian Incometax Act, what are really affairs of the Hindu undivided family must be decided in the light of the Hindu law, and not the law of Partnership.
It is well settled that a coparcener of a Hindu undivided family cannot claim any item of property or share of his own and, consequently, where certain coparceners enter into partnerships with strangers by investing capital from out of the undivided family funds, as in the instant case, the income from the business must belong to the undivided family.
Where the Hindu undivided family enters into a business activity in the taxable territories through its coparceners, invests money and earns income, even though the partnership which results may not be an 81 622 " affair " of the family, there is still a business activity resulting in the partnership and the partnership is the evidence of that business activity.
This activity of a permanent character is sufficient for purposes of income tax law to constitute an ,,affair" of the family within the meaning of section 4A(b) of the Indian Income tax Act.
Approvier vs Rama Subba Aiyan, [1866] 11 M.I.A. 75, Katama Natchiar vs Rajah of Shivaganga, , Mangalchand Mohanlal, Inre, , Murugappa Chetty & Sons vs Commissioner of Income tax, and Kaniram Hazarimull vs Commissioner of Income tax, , referred to.
V.V. R. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras, ; , considered.
Control and management, in the case of a Hindu undivided family, can be exercised by one or more of its coparceners, even though partly, and if such coparceners reside in the taxable territories and manage its affairs, the family must be treated as resident in such territory.
|
(C) No. 1237 of 1988.
(Under Article 32 of the Constitution of India).
P.P. Rao and Ms. K Amreshwari, B. Rajeshwar Rao and Vimal Dave for the Petitioners.
V.R. Reddy, Addl.
Solicitor General, K. Madhaya Reddy, G. Prabhakar, B. Kanta Rao, A. Ranganathan and A.V. Rangam for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The petitioners and respondents 4 to 16 are District and Sessions Judges in the State of Andhra Pradesh.
The petitioners are direct recruits whereas the respondents were promoted from the Subordinate judiciary.
The respondents were initially appointed on temporary basis in the year 1978/1979 but they were made substantive in the year 1983.
The petitioners who were appointed substantively in the year 1981 claim seniority over the respondents by way of this petition under Article 32 of the Constitution of India.
The recruitment to the Andhra Pradesh Higher Judicial Service (the Service) is governed by the Rules called "The Andhra Pradesh State Higher Judicial Service Special Rules" (the Special Rules).
Rules 1, 2, 4 and 6 of the Special Rules which are relevant are as under: "Rule 1.
Constitution: The service shall consist of the following categories: 550 Category 1 : District and Sessions Judges 1st Grade.
Category II : District and Sessions Judges, Second Grade including Chairman, Andhra Pradesh Sales Tax Appellate Tribunal, Chief Judge, City Civil Court, Additional Chief Judge, City Civil Court, Chief Judge, Court of small Causes, Chief City Magistrate, Chairman, Tribunal for Disciplinary Proceedings, Presiding Officers, Labour Courts and Addl.
District and Sessions Judges.
Rules 2.
Appointment : (a) Appointment to Category 1 shall be made by promotion from Category II and appointment to Category II shall be made: (i) by transfer from among: (a) Sub Judges in the Andhra State Judicial Service; or in the Hyderabad State Judicial Service; and (ii) by direct recruitment from the Bar: Provided that 33 1/3% of the total number of permanent posts shall be filed or reserved to be filled by direct recruitment.
Explanation: In the determination of 33 1/3% of the total number of permanent posts, fractions exceeding one half shall be counted as one and other fractions shall be disregarded.
(b) All promotions shall be made on grounds of merit and ability, seniority being considered only when merit and ability are approximately equal.
Rule 4.
Probation: Every person appointed to Category II otherwise than by transfer, shall, from the date on which he joins duty be on probation for a total period of one year on duty.
Rule 6.
Seniority: The seniority of a person appointed to Category 1 or Category 2 shall be determined with refer 551 ence to the date from which he was continuously on duty in that category.
" We may briefly notice the scheme of the Special Rules.
Rule 1 constitutes the Service.
Category 1 consists of District and Sessions Judges ' 1st grade and Category II consists of District and Sessions Judges Second grade.
Rule 1 does not say that Service shall consist of only permanent posts.
All the posts designated as District and Sessions Judges Second grade under Category II are part of the service under Rule 1.
In other words, as and when a post of District and Sessions Judge Second grade is created permanent or temporary it becomes part of the Service under Rule 1 of the special Rules.
Rule 2 provides the method of appointment.
Appointment to Category 1 is from Category II.
Appointment to Category II is from two sources.
By transfer from amongst the Subordinate Judges and by direct recruitment from the Bar.
Proviso to Rule 2 states that 33 1/3% of the total number of permanent posts shall be filled or reserved to be filled by direct recruitment.
All the posts of District and Sessions Judges Second grade are part of the Service but quota for the direct recruits is provided only in the permanent posts.
Rule 6 of the Rules provides for the fixation of seniority.
Under Rule 6 the seniority of persons appointed to Category 1 or Category II posts is fixed on the basis of continuous length of service in their respective posts.
On the plain reading of the Special Rules the salient features of the Service can be culled out as under: 1.
Rule 1 provides for the constitution of the Service.
All the posts of District and Sessions Judges Second grade created from time to time are part of the Service.
The natural corollary is that the Service consists of permanent as well as temporary posts.
The recruitment to Category II of the service is by transfer from amongst the Subordinate Judges and also by direct recruits from the Bar.
33 1/3% of the total number of permanent posts in Category II of the Service are to be filled by way of direct recruitment.
The seniority under Rule 6 is to be determined with reference to the date from which a person is continuously on duty.
Whether the person 552 is continuously on duty against a temporary post or permanent post is of no consequence.
A person is entitled to the fixation of his seniority on the basis of continuous length of service rendered either against permanent post or temporary post.
The three petitioners were appointed as District and Sessions Judges Second grade by direct recruitment on October 12, 1981.
Petitioners 1 and 2 joined service on October 23, 1981 and petitioner 3 on October 30, 1981.
Respondents 4 to 16 were appointed District and Sessions Judges Second grade by transfer from amongst the Subordinate Judges during the years 1978/79.
It is not disputed that permanent vacancies in their quota became available in the year 1983.
We, therefore, proceed on the basis that the petitioners were appointed substantive members of the Service earlier to respondents 4 to 16.
We may at this stage notice Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules (the State Rules).
The State Rules are general rules which are applicable to all the services in the State of Andhra Pradesh.
Needless to say that to the extent the Special Rules are applicable to the Service the State Rules are excluded.
Rule 10(a)(i) of the State Rules is as under: "10.
Temporary appointment.
(a)(i) Where it is necessary in the public interest to fill emergently a vacancy in the post borne on the cadre of a service, class or category and if the filling of such vacancy in accordance with the rules is likely to result in undue delay, the appointing authority may appoint a person temporarily otherwise than in accordance with the said rules.
" Mr. P.P. Rao, learned counsel for the petitioners has raised the following contentions for our consideration: 1.
That the Service consists of only permanent posts under the Special Rules.
There is no provision under the Special Rules for adding temporary posts to the cadre.
The appointment of respondents to the posts of District and Sessions Judges Second grade on temporary basis can at best be treated under rule 10(a)(i) of the State Rules.
553 2.
The temporary service rendered by respondents.4 to 16 being outside the cadre cannot be counted towards seniority.
Proviso to Rule 2 and Rule 6 of the Special Rules have to be read together and doing so the permanent vacancies having been made available for respondents 4 to 16 in the year 1983 their service prior to that date cannot be counted towards seniority.
Before dealing with Mr. Rao 's contentions, we may notice two preliminary contentions raised by Mr. K. Madava Reddy, learned counsel for the respondents.
Mr. Madava Reddy has invited our attention to the judgment of a Division Bench of Andhra Pradesh High Court in T.H.B. Chalapathi and others vs High Court of Andhra Pradesh and others, Writ Petition Nos.
1968/82, 52/83 and 12282/85 decided on December 28, 1985.
Those writ petitions were filed before the Andhra Pradesh High Court by the direct recruits to Category II of the Service claiming seniority over the persons who were appointed to category 11 on temporary basis earlier to them.
Similar questions were raised as are being raised by Mr. P.P. Rao before us.
By a well reasoned judgment the High Court rejected all the contentions of the direct recruits and dismissed the writ petitions.
It is not disputed that Special Leave Petition No.1035 of 1986 against the said judgment was dismissed by this Court on January 30, 1988.
Mr. Madava Reddy plausibly contends that all the contentions which are being raised by the petitioners in this Court, having been rejected by the High Court and special leave petition against the judgment of the High Court having been dismissed by this Court the same cannot be agitated once over again.
Mr. Madava Reddy then contended that the petitioners were appointed in the years 1981 and since then till the year 1988 twelve seniority lists have been published showing the petitioners below respondents 4 to 16.
At no point of time they challenged the seniority lists in the Court.
Even when the writ petitions filed by Chalapathi and others were pending they did not intervene before the High Court.
The petitioners, according to Mr. Madava Reddy, are guilty of gross delay and latches and as such are not entitled to get relief by way of this petition under Article 32 of the Constitution of India.
554 We see considerable force in both the contentions raised by Mr. Madava Reddy.
We are, however, of the view that it would be in the larger interest of the Service to dispose of this petition on merits.
We see no force.
in the contention of Mr. Rao that the Service consists of only permanent posts under the Special Rules.
We have already interpreted Rule 1 to mean that the Service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judges Second grade.
Even otherwise in the absence of any prohibition under the Special Rules the State Government can always create temporary posts as additions to the cadre.
Rule 10(a)(i) of the State Rules has no application to the Service which is governed by the Special Rules.
Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency.
Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant service.
The appointments of respondents 4 to 16, on the other hand, Were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court.
We are of the view that the Special Rules provide a complete scheme for the appointment and seniority of the members of the Service.
Rule 10(a)(i) of the State Rules has no application to the Service Constituted under the Special Rules.
We, therefore, reject the contention raised by Mr. Rao.
Having taken the view that the Service under the Special Rules consists of permanent as well as temporary posts the second contention of Mr. Rao looses its ground.
Temporary, posts of District and Sessions Judges Second grade being part of the Service the seniority has to be counted on the basis of length of service including the service against a temporary post.
The third contention of Mr. Rao is mentioned to be rejected in view of Rule 6 of the Special Rules.
Rule 6 of the Special Rules is in no way dependent on proviso to Rule 2 of the Special Rules.
Both are to be operative independently.
In the scheme of the rules the seniority rule is not dependent on the quota Rule.
Quota has been provided for the direct recruits only against permanent posts.
The seniority rule permits the counting of total period of service from the date a person is on duty against a 555 post in the category.
Even though, the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service against temp orary as well as permanent posts respondents 4 to 16 have been rightly given seniority above the petitioners.
We, therefore, find no force in any of the contentions raised by Mr. Rao.
The writ petition is consequently dismissed.
No costs.
N.V.K. Petition dismissed.
| Recruitment to the Andhra Pradesh Higher Judicial Service is governed by "The Andhra Pradesh State Higher Judicial Service Special Rules".
Rule 1 constitutes the service.
Category 1 consists of District and Sessions Judges 1st grade and Category 11 consists of District and Sessions Judges, Second Grade.
Appointment to Category 1 is from Category 11.
Appointment to Category 11 is from two sources by transfer from amongst the Subordinate Judges and by direct recruitment from the Bar.
The petitioner were direct recruits whereas respondents 4 to 16 were promoted from the Subordinate judiciary.
The respondents were Initially appointed on temporary basis in the yew 1978/1979 but they were made substantive in the year 1983.
The petitioners who were appointed substantively in the year 1981 claimed seniority over the said respondents, and riled the Writ Petition under Article 32 of the Constitution of India for relief.
It was contended on their behalf that: (1) The Service consists of only permanent posts, there is no provision under the Special Rules for adding temporary posts to the cadre, consequently the appointment of respondents 4 to 16 to the post of District and Sessions Judges, Second Grade on temporary basis can at best be treated under Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules.
(2) The temporary service rendered by the respondents 4 to 16 being outside the cadre cannot be counted towards seniority.
(3) Porviso to Rule 2 and Rule 6 of the Special Rules have to be read together, and as such the permanent vacancies having been made available for them in the year 1983 their service 548 prior to that date cannot be counted towards seniority.
The respondents constested the writ petition by contending that the petitioners were appointed in the year 1981 and since then till the year 1988, twelve seniority lists have been published showing the petitioners below respondents 4 to 16, and at no point of time they challenged the seniority lists in the Court.
Even when the Writ Petition T.H.B. Chalapathi & Ors.
vs High Court of Andhra Pradesh & Ors., was pending in the High Court they did not intervene.
The petitioners were thus guilty of gross delay and latches and as such are not entitled to get relief in the Writ Petition.
Dismissing the writ petition, this Court, HELD: 1.
(i) Rule 1 has to be interpreted to mean that the service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judge Second Grade.
Even otherwise in the absence of any prohibition under the Special Rules, the State Government can always create temporary posts as addi tions to the cadre.
[554 B] (ii) Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules has no application to the Andhra Pradesh Higher Judicial Service which is governed by the Special Rules.
Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency.
Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant Service.
[554 C D] In the instant case, the appointments of respondents 4 to 16 were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court.
The Special Rules provide a complete scheme for the appointment and seniority of the members of the Service.
[554 D] 2.
Temporary posts of District and Sessions Judges Second Grade being part of the Service, the seniority has to be counted on the basis of length of service including the service against the temporary posts.
[554 F] 3.
Rule 6 of the Special Rules is in no way dependent on the proviso to Rule 2 of the Special Rules.
Both are to be operative independently.
In 549 the scheme of the rules, the seniority rule is not dependent on the quota Rule.
Quota has been provided for the direct recruits only against permanent posts.
The seniority rule permits the counting of total period of service from the date a person is on duty against a post in the category.
[554 G H] In the instant case, even though the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service.
Respondents 4 to 16 have been rightly given seniority above the petitioners.
[555 A]
|
Appeal No. 399 of 1957.
Appeal from the judgment and decree dated July 27, 1954 of the High Court of Judicature at Hyderabad in Civil Appeals Nos.
I and 2 of 1954 55.
619 section T. Desai, C. Krishna Reddi, T. Ramachandra Rao and M. section K. Sastri, for the appellants.
Sadashiv Rao, J. B. Dadachanji and section N. Andley, for the respondent.
March 28.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal on a certificate granted by the former High Court of Hyderabad.
A suit was brought by the respondent in 1920 with respect to village Timmapet.
The case of the respondent was that the village had been granted to his ancestor Harinarayan alias Raja Nemiwant Bahadur by the Nizam in 1787.
On the death of Raja Harinarayan, the village was conferred by another sanad on his son Raja Govind Narayan in 1811.
Ever since then the village had continued in the possession of the descendants of Raja Govind Narayan.
In 1817, Raja Govind Narayan granted this village on Tahud (i.e., lease) to Raja Rama Krishna Rao, ancestor of the defendants.
Inam inquiries with respect to this village started in 1901 and then an objection was made on behalf of the appellants that the village had been granted to their ancestors by the Nizam and the respondent was only entitled to the pan mukta of the village and no more.
Pan mukta means a fixed sum which is payable in perpetuity for any land granted by the Ruler or the jagirdar to any person.
The respondent 's case further was that the lease money was being regularly paid, though some time before the suit there was some default.
The respondent had to file a suit to recover the lease money which was decreed and the decretal amount was recovered.
In 1917 disputes arose between the parties and consequently in 1918 the respondent asked the appellants to vacate the village.
They, however, refused to do so.
Thereupon the present suit was filed in 1920 and the respondent 's case was that the lease granted to the appellants was not a permanent lease and could only enure for the lifetime of the grantor and therefore the respondent was entitled to possession of the 620 village, particularly as the appellants had begun to assert a title adverse to the respondent.
The suit was resisted by the appellants, and their main defence was that the village had been granted as bilmakta with a fixed pan makta in their favour by the Nizam and therefore the respondent was only entitled to the fixed pan makta per year and could not claim to dispossess them from the village.
As an alternative, defence of limitation was also pleaded, though the written statement did not make it clear whether the bar of limitation was under article 142 or article 144 of the Limitation Act.
There were other defenses also with which we are however not concerned in the present appeal.
The trial court framed a large number of issues, which were answered in favour of the respondent and the suit was decreed and the plaintiff was held entitled to obtain possession of the village as well as to recover mesne profits at the rate of Rs. 931 12 0 0.
section per year.
On the two main defenses, the trial court held that the village had not been granted by the Nizam to the appellants as claimed by them and the appellants were liable to ejectment as they could not claim the rights of a permanent losses under the lease granted to their ancestor by the respondent 's ances tor.
Further on the question of limitation, the trial court held that the suit was not barred by article 142.
It does not appear that the case of adverse possession was put forward in the trial court.
There were two appeals to the High Court; one of them was by the appellants and the other by the respondent.
The respondent 's appeal was confined only to the rate of mesne profits while the appellants reiterated their two main contentions as to the nature of their right and limitation.
The appeals were heard by a Division Bench of the High Court, the Judges composing Which however differed.
Schri Ran, J., agreed with the trial court as to the nature of the rights of the 'respondent as well as on the question of limitation and was of the opinion that the appeal of the appellants should be dismissed.
It appears that in the High Court a plea 621 of adverse possession was also raised in the matter of limitation; but that plea was also negatived by Schripat Rau, J. Further Schripat Rau, J., was of the View that the appeal of the respondent should be allowed and the amount of mesne profits per year should be _ raised to Rs. 4,381 12 11.
The other learned Judge, Khalilulzaman Siddiqu, J., seems Lo have held in favour of the appellants both on the questions of title and adverse possession and was of the view that the suit should be dismissed in toto.
There was then a reference to a third learned Judge, Ansari, J. He agreed with Schripat Rau, J., on the questions of title and limitation; but as by the time he came to deliver judgment the Hyderabad (Abolition of Jagirs) Regulation, No. LXIX of 1358 F had come into force from 1951 and possession could not be granted to the respondent, Ansari, J., held that the respondent would be entitled to the compensation payable on the abolition of jagirs.
As Ansari, J., had per force to differ from Schripat Rau, J., as to the part of the relief to be granted to the respondent because of the abolition of jagirs, the case was referred to a Full Bench of three Judges in view of section 8 of the Hyderabad High Court Act.
The Full Bench held that as Ansari and Schripat Rau, JJ., were in agreement on the questions of title and limitation these matters did riot fall to be decided before them and would be concluded by the judgment of Ansari, J.
But on the nature of relief on which Ansari, J., per force had to differ from the view of Schripat Rau, J., the Full Bench upheld the view of Ansari, J. Thereafter the appellants applied for a certificate for leave to appeal to this Court, which was granted; and that is how the matter has come up before us.
Learned counsel for the appellants has urged only two points before us.
In the first place, lie submits that on the evidence it has been proved that the Nizam granted a bilmakta sanad to the appellants which included this village also and therefore the appellants were entitled to the possession of the village permanently subject only to the payment of pan 622 makta to the respondent.
In the second place, he submits that even if it be held that the Nizam did not grant a bilmakta sanad including this village, the appellants had perfected their title by adverse possession to the limited right of being permanent lessees under the respondent subject to payment of a fixed amount of rent per year.
The first question therefore that arises is whether the appellants ' case that this village is included in the bilmakta sanad granted to them by the Nizam and therefore by virtue of that sanad they are entitled to hold this village permanently subject only to the payment of a certain sum annually to the respondent, is proved.
It is now no longer in dispute that the village was granted in jagir to the ancestors of the respondent.
It is also not in dispute that in 1817 Raja Govind Narayan granted a kowl in favour of the appellants ' ancestor.
Under the terms of that kowl the village was granted on Tahud (lease) for the fixed sum of Rs. 1027 10 0 per year to the appellants ' ancestor.
No term is mentioned in the kowl as to its duration; but after reciting that the village had been granted on Tahud for a certain fixed amount annually, the kowl goes on to say that the grantee should with entire confidence rehabilitate old and new riots and pay the amount of Tabud annually as per fixed installments, in every crop season.
As one reads the kowl, on its plain terms it cannot be read to confer on the appellants ' ancestor a permanent lease on a fixed sum which was not liable to be varied at all.
But the appellants claim that they had been in uninterrupted possession since 1817 for over 100 years.
on the same rent when the suit was filed and this shows that the village must have been granted to them as a permanent lease.
We cannot accept this contention and the fact that the appellants and their ancestors have continued in possession over 100 years on the same rent would not make the kowl of 1817 a permanent, lease in the face of its plain terms.
The courts below were therefore right in the view that the kowl does not show a grant of a permanent lease on a fixed annual payment to the appellants.
623 The appellants however relied on what happened soon after the kowl was granted to them.
It appears that soon after 1817 the appellants ' ancestor made a vajab ul arz (i.e., application to the Nizam) with various prayers.
One of the prayers was for grant of bilmakta sanad.
This was obviously with respect to certain Government lands, which the ancestors of the appellants held.
In para 6 of the vajab ul arz it is said that "in these days your devotee has regularly paid Government dues and expects that he should receive sanads of bilmakta with the seal of Diwani".
In para 3 it is said that "from out of the Government Talukas whichever is entrusted on Tahud, your petitioner will pay the Tahud amount and will look after and improve the Taluka".
On a fair reading of the vajabul arz there can be little doubt that the ancestor of the appellants was praying that he should be granted a bilmakta sanad of lands held by him from the Government.
To this vajab ul arz was appended a list of villages which apparently the ancestor of the appellants hold.
This list contained 88 villages.
There is no difficulty about 85 of these villages which were apparently field by the ancestor of the appellants from the Government; but about three villages there was a special mention in the list.
These were:(1) Timmapet, Jagir Raja Nemivant, Makta of Zamindar of Sugur.
It may be mentioned that the ancestor of the appellants was the Zamindar of Sugur and that is how he prayed for a sanad of bilmakta; (2) the village Korotkal, attached to Jagir Bahrami, makta Zamindar Sugur; and (3) Palmur, including hamlet Gattalpalli.
These three villages were obviously not of the same kind as the other 85 villages.
Village Timmapet was in the jagir of the ancestor of the respondent and Could not therefore ordinarily be granted to the ancestor of the appellants.
Village Korotkal was an attached jagir which has handed over to one Bakhshi Ismail Khan while village Palmur had been granted to the ancestor of the appellants.
Village himself in lieu of seri.
Strictly speaking these three villages which stood apart should not have been included in the list of villages for which bilmakta 624 sanad was prayed for.
Anyhow the order of the Government on this vajab ul arz was that a sanad with seal of Niabat Diwani be granted.
The actual sanad which was granted by virtue of this order has not been strictly proved, though a copy of it appears in a judgment copy of which has been filed.
We do not therefore propose to refer to this copy.
It appears however that in 1880 a bilmkta sanad was again granted by the Nizam himself to the ancestor of the appellants on the death of the previous holder.
The amount of bilmakta (i.e., fixed annual payment) was fixed at Rs. 1,05,412.
This amount is made up of the revenue of 85 villages out of the 88 villages which were included in the list along with the vajab ul arz.
The remaining three villages which we have mentioned above, were also shown in the schedule to this sanad under the heading "Deduct 3 villages of separate Jagir".
The three villages under this heading are Timmapet, Korotkal and Palmur.
It is the meaning of these words under the heading of which these villages appear which; required interpretation in the present suit.
The contention of the respondent was that the heading showed that the bilmakta sanad granted by the Nizam excluded these villages, for the revenue of these villages amounting to Rs. 2,101 was not included in the bilmakta amount of Rs. 1,05,412.
It is further contended on behalf of the respondent that the, reason why these three villages were mentioned in this manner in the schedule attached to the bilmakta sanad was that the appellants ' ancestor had wrongly included these ' villages in his list filed with the vajab ul arz and ever, since then these villages were included in the schedule to the sanads but were always shown as deducted from the bilmakta.
We are of opinion that this contention of the respondent is correct and the courts below were right in accepting the respondent 's contention in this behalf.
The very fact that the revenue of these villages is not included in the bilmakta amount of Rs. 1,05,412 shows that they could not be part of the bilmakta grant by the Nizam.
We cannot accept the argument on behalf of the appellants that the revenue of these villages was 625 not included because the ancestor of the appellants had to pay the amount of this revenue in the case of Timmapet and Korotkal to the jagirdars and the revenue of Palmur was given to him free in seri.
The very fact that these three villages appear under the heading " 'deduct three villages of separate jagir" along with the fact that their revenue is not included in the bilmakta grant of Rs. 1,05,412 shows that they were not part of the bilmakta sanad.
It is true that they have been mentioned in the schedule, and strictly speaking they should not have been so mentioned there; but the reason for that in our opinion is that the appellants ' ancestor had included them in his list and they seem to have been put down in the schedule to the sanad from that list.
But the way in which they were put in the schedule to the sanad shows that they were not part of the sanad granted by the Nizam.
Our attention was also drawn to the Avarja said to have been prepared in 1836 in which also these three villages are included.
But Avarja is merely a paper in which a note of the sanads issued each day is mentioned.
The fact therefore that these; three villages were mentioned in the Avarja can be easily explained by the fact that they were mentioned in the sanads which were prepared from the list of villages supplied by the appellants ' ancestor along with his vajab ul arz.
The presence of these three villages in the Avarja would not establish that the villages were granted as bilmakta by the Nizam to the appellants ' ancestor, unless the sanads granted by the Nizam establish it.
We have already examined the sanad of 1880 which is on the record and have no difficulty in agreeing with the courts below that the bilmakta sanad excluded these villages and was only confined to the remaining villages for which the appellants ' ancestor paid Rs. 1,05,412 to the Nizam as the fixed annual amount.
It was urged on behalf of the appellants that the Nizam was an absolute Ruler and it Was open to him to take away any land from a jagirdar and grant it to any other person.
That is undoubtedly so; but even where an absolute Ruler takes away some land from 79 626 a jagirdar and gives it to another person, it seems to us clear that he would inform the jagirdar that he had taken away in whole or in part what he had granted to him and would also make it clear by proper words in the sanad granted to the other person that he was giving him the land taken away from the jagirdar.
In any case where the land was granted earlier to the jagirdar, there must be a clear indication in the sanad to another person that what had been granted to the jagirdar had been taken away and was being granted to this other person.
As we read the sanad of 1880 we find no clear indication in it that the village of Timmapet which was granted along with other villages as jagir to the respondent 's ancestor was being taken away at any rate in part and that in future the respondent 's ancestor would only be entitled to a fixed sum from the appellants ' ancestor with respect to this village and no more.
On the other hand, in the recital of the sanad unfortunately there is nothing clear for the words "etc.
" appear therein in more than one place as to the land granted.
We have therefore to turn to the schedule for whatever help we can get from it.
The schedule shows that these three villages were under the heading "deduct three villages of separate jagir".
From that the only inference can be that these three villages were not being included in the bilmakta sanad.
In any case we cannot infer from that the Nizam was intending to take away a part of the rights of the respondent 's ancestor in village Timmapet and confer them on the appellants ' ancestor.
Further there is nothing to show that the respondent 's ancestors were ever informed that the Nizam had taken away part of their rights in village Timmapet.
If anything, as late as 1918 village Timmapet along with others was conferred perpetually in favour of the respondent as zat jagir subject to the payment of 2 per centum of haq malkana.
At that time the appellants ' ancestor had raised some dispute about his right as bilmaktadar of Timmapet but that was left undecided.
On a review therefore of the evidence in this case the conclusion is inescapable that the appellants ' ancestor was never granted bilmakata sanad by the Nizam which 627 included the village of Timmapet.
Their rights in this village therefore depend entirely on the kowl of 1817, which, as we have already pointed out, did not confer a permanent lease.
The case of the appellants therefore based on their title on the sanads granted to them by the Nizam must fail.
We now turn to the question of limitation.
The case put forward before us in that connection is that the appellants have prescribed for the limited right of being permanent lessees of this land by adverse possession and the genesis of this is traced to what happened in 1875.
It appears that there was trouble between the then ancestors of the parties about this village about that time.
The ancestor of the respondent appears to have made an application to the Government and the Revenue Member had issued orders for delivery of possession of this village to him.
Thereupon the ancestor of the appellants made a representation to the Prime Minister against that order in which it was said that the ancestor of the respondent had conferred the said village on the ancestor of the appellants by way of bilmakta (i.e., on a fixed amount) more than eighty years ago and the ancestor of the appellants had been in possession all along and had been regularly paying the amount due; the ancestor of the appellants therefore prayed that the order of delivery of possession of the land to the respondent 's ancestor be set aside.
It is remarkable that in this representation the case put forward was that the village had been granted bilmakta,by the ancestor of the respondent to the appellants ' ancestor and not by the Nizam or the Government to the appellants ' ancestor.
However that may be, the Prime Minister ordered that as the ancestor of the appellants had been in possession for a long time, no order could be passed dispossessing him.
The ancestor of the res pondent then tried to get this order of the Prime Minister changed but failed and in consequence the appellants ' ancestor remained in possession thereof.
It is urged that this shows that the ancestor of the appellants asserted that he was entitled to possession as a permanent lessee against the respondent 's ancestor and this claim was resisted by the respondents 628 ancestor and the resistance failed.
Therefore it must be held that adverse possession of this limited kind was asserted to the knowledge of the respondent 's ancestor and in consequence twelve years after 1875 the adverse title would be perfected and article 144 would bar the present suit for ejectment.
There is no doubt that there can be adverse possession of a limited interest in property as well as of the full title as owner: see Sankaran vs Periasami(1); Thakore Fatehsingji Dipsangji vs Bamanji Ardeshir Dalal (2); and Shrimat Daivasikhamani Ponnambala Desikar vs Periayanan Chetti (9).
The present however is a case where the original kowl was granted by a jagirdar and the question arises whether in the case of a jagir there can be adverse possession of a limited interest in the nature of a permanent lease.
In that connection one has to look to the incidents of a jagir, and the first incident of a jagir is that it must be taken Prima facie as an estate granted, for life: Gulabdas Jugjivandas vs The Collector of Surat.
(4) In the present.
case also the indication is that the jagir that was granted to Raja Harinarayan in 1787, was for life, for we find that on the death of Raja Harinarayan a fresh sanad was granted to his son Raja Govind Narayan in 181 1.
Similar conclusion can be drawn from the fact that as late as 1880 a bilmakta sanad was granted to Raja Rameshwar Rao, an ancestor of the appellants on the death of his father in spite of certain sanads in favour of previous holders of bilmakta.
But the appellants contend that after 1811 no fresh sanads were granted to the descendants of Raja Govind Narayan and therefore it must be held that the jagir became hereditary and was not merely for the lifetime of the grantee after Raja Govind Narayan 's death.
There is no doubt that there are no sanads on the record which might have been granted to the descendants of Raja Govind Narayan; but there is equally no evidence on behalf of the appellants that no such sanads were in fact granted to the descendants of Raja Govind Nara yan, due to change in State Policy.
Reliance has been (1) Mad. 467.
(2) Bom.
(3) (1936) L.R. 63 I.A. Mad.
(4) (1878) L.R. 6 1.A. 54.
629 placed on behalf of the appellants on a publication of the Government of Hyderabad called "Jagir Administration", Vol.
I, at P. 3, where the following passage appears. "Zaot or personal grants were originally tenable for lifetime only.
If, however, the Sanad conferring such grant contains any words indicative of permanency the grant was treated as one in perpetuity.
Formerly on the death of the grantee, the Jagir was attached and re issued in favour of his eldest son by another Sanad.
" It is urged on the basis of this that the system of attachment of jagir and reissue of new sanads in favour of the eldest son fell into disuse in Hyderabad and therefore jagirs became hereditary.
In the first place this passage does not show when the system of attachment of jagir and re issue of another sanad came to an end.
In the second place, even this passage shows that jagirs were tenable only for life unless there was something in the terms of jagir grant to show that it was perpetual.
The jagir grant of Raja Govind Narayan is on the record and there is nothing in it to show that it was granted perpetually, Therefore, it must be held to be a grant for life time only; at any rate it is clear that the system of granting sanads on each succession was certainly in force when Raja Govind Narayan succeeded, for he was granted a fresh sanad.
In his case it must therefore be held that the jagir was granted to him only for life.
Reliance was also placed on Raje Vinaykrao Nemiwant Brahmin vs Raje Shriniwasrao Nemiwant Brahmin (1) where a letter of 1877 from the Government of India, Foreign Department,, is quoted as saying that "The Governor General in Council also accepts the view that these inams are held in accordance with the custom of the Hyderabad State, which permits the continuance of such jagheers to posterity, notwithstanding the absence of specific provision on the point, but at the same time reserves to the State the right of resuming such grants at pleasure.
" (1) I.L.R. 630 But even this letter shows that the State has got the right to resume the grant at pleasure and if that is so it cannot be said that the jagirs granted in Hyderabad were permanent and hereditary, though it may be that a son was allowed to succeed to " 'the father in the normal course.
The State however had always the right to resume the grant at pleasure.
The nature of jagirs in Hyderabad came to be considered by a bench of five judges of the former High Court of Hyderabad in Ahmad un Nissa Begum vs State ( ').
Ansari, J., after referring to two cases of the Privy Council of the former State of Hyderabad as it was before 1947 and certain firmans of the Ruler observed as follows as to the nature of jagirs in Hyderabad: "The cumulative effect of the authorities referred to above is that the jagir tenures in this State consisted of usufructuary rights in lands which were terminable on the death of each grantee, were inalienable during his life, the heirs of the deceased holder got the estate as fresh grantees and the right to confer the estate was vested in the Ruler and exercisable in his absolute discretion.
Nevertheless, the Jagirdars had during their lives valuable rights of managing their estates, enjoying the usufructs and other important privileges which conferred considerable monetary benefits on them." This view of Ansari, J., as to the nature of jagirdari tenure was accepted by the other learned Judges composing the Bench.
Therefore the mere fact that sanads granted to the successors of Raja Govind Narayan have not been produced in this case or even the fact that no such sanads were granted lo them would make no difference to the nature of the jagirdari tenure in Hyderabad.
It is only in 1918 for the first time that we know that this village along with other villages was conferred in perpetuity on the respon dent.
There is nothing to show that before that the respondent 's ancestors had permanent hereditary rights in the jagir.
The initial presumption therefore that jagirs are only for the lifetime of the grantee must prevail in the present case till we come to the sanad of 1918.
Therefore upto that time it must be (1) A.I.R. 1952 Hyd. 163, 167.
631 held that the jagirs were held by various ancestors of the respondent only for their lives.
In such a case where a grant is continued in a family from generation to generation and each grantee holds it for his life the limitation against any one grantee starts to run from the date his title arose.
This was recognized by the Privy Council in Jagdish Narayan vs Nawab Saeed Ahmed Khan (1), where it was observed that where each grantee holds an estate for his lifetime the limitation would start to run against an heir from the date when his title accrued on the death of the previous heir.
From the very fact that the grant of a jagir is only for the life time of the grantee and that his son when he gets the jagir gets a fresh grant, it follows that it was not open to a jagirdar to make an alienation which would enure beyond his lifetime and thus a jagirdar could not grant a permanent lease, unless he was specifically entitled to do so, under the sanad or the law of the State.
Similarly in such cases limitation would only run against an heir from the date when his title accrued on the death of the previous heir.
Consequently the appellants cannot take advantage of what happened in 1875 in the time of Raja Ramarao as the starting point of adverse possession against the respondent.
So far as the respondent is concerned, he apparently succeeded to the jagir in 1910 and in his case limitation would start from 1910.
The present suit was brought in 1920 and therefore so far as the respondent is concerned, there is no question of perfecting even the limited title by adverse possession as against him. ' Learned counsel for the appellant drew our attention in this connection to the case of Daivasikhamani (2), where the Privy Council held that the suits were barred under article 144 of the Limitation Act.
That was however a case where a permanent kowl of temple lands was granted by a manager.
It was held in view of certain facts proved in that case that the lessee had acquired permanent rights by adverse pos session, even though the manager of a temple has no authority, except in certain circumstances, to grant a permanent lease.
That case is in our opinion clearly (1) A.I.R. 1946 P.C. 59.
(2) (1935)) 1 [I.L. R 632 distinguishable from the facts of the present case.
It is true that the manager of a temple has generally speaking no authority except in certain circumstances to grant a permanent lease of temple property; there fore a permanent lease granted by the manager of a temple may be voidable but is not void ab initio and so unless it is avoided by the succeeding manager, it may not be rendered inoperative.
Further the temple in that case was the owner of the property and there was no question of any succession from father to son.
In the case of a jagir on the other hand, the holder for the time being is not the owner of the property; his son when he succeeds holds the property as a fresh grantee and not on the basis of hereditary succession.
A jagirdar has no right to make a permanent alienation of any part of the jagir granted to him; if he makes a permanent alienation even by way of permanent lease the same may be good in his lifetime, but it is void and inoperative after his death; the succeeding jagirdar need not avoid it; he can just ignore it as void.
Therefore, while it may be possible in the case of a permanent lease granted by a manager of a temple which is the owner of the property to prescribe for a limited permanent interest by adverse possession it would be impossible to do so in the case of a jagir, for the limitation in such a case would start to run against the heir from the date when his title accrues on the death of the previous heir and no advantage can be taken of any running of time against the previous holder of the jagir.
Besides, in the case of such temple grants, long lapse of time may sometimes give rise to the inference that the alienation was in such circumstances as would justify a permanent lease.
No such inference is however possible in the case of permanent leases granted by jagirdars.
In this view therefore the case of the appellants that they have prescribed for the limited interest of a permanent lessee against the respondent must fail.
The appeal therefore.
fails and is hereby dismissed with costs.
Appeal dismissed.
| Although title to a limited interest in property can be acquired by adverse possession, no limited interest in the nature of a permanent lease can be ordinarily acquired in a jagir which must initially be presumed to enure for the life time of the grantee unless the grant itself shows otherwise.
Sankaran vs Periasami, Mad. 467, Thakore Fatehsingji Dipsangji vs Bamanji Ardeshir Dalal, Bom.
5I5, Shrimat Daivasikhamani Ponnambala Desikar vs Periayanan Chetti, (1936) L.R. 63 I.A. 261 and Gulabdas,Jugjivandas vs The Collector of Surat, (1878) L.R. 6 I A 54, referred to.
Although in the former State of Hyderabad a son might in normal course be allowed to succeed to the father 's jagir, it could not be said that jagirs granted by the State were therefore permanent and hereditary in character, for the State generally .had the right to resume the grant.
Raje Vinaykrao Nemiwant Brahmin vs Raje Shriniwasrao Nemiwant Brahmin, I.L.R. and Ahmad un Nissa Begum vs State, A.I.R. 1952 Hyd. 163, referred to.
Where, therefore, a grant was continued in a family from generation to generation, each grantee must be taken to hold it for his life and limitation against each must start from the date of his title.
Since a jagirdar could not grant a lease beyond his lifetime unless specifically empowered by the sanad or the law of the State, the period of adverse possession against one jagirdar could not be tacked to that against another for the purpose of article I44 Of the Indian Limitation Act.
In this respect a jagirdar stood on a different footing from that of the manager of a temple.
Jagdish Narayan vs Nawab Saeed Ahmed Khan, A.I.R. 1946 P.C. 59, referred to.
Shrimat Daivasikhamani Ponnambala Desikay vs Periyannan Chetti, (1936) L.R. 63 I.A. 26i, distinguished.
|
Appeal No. 94 of 1954.
Appeal from the judgment and order dated August 17, 1951 of the Calcutta High Court in Appeal from Original Order No. 81 of 1959.
A.V. Viswanatha Sastri and P.K. Ghosh, for the appellant.
P.K. Chatterjee and P.K. Bose, for the respondents.
The Judgment of the Court was delivered by Subba Rao, J.
This appeal on a certificate granted by the High Court of Calcutta raises the question of the interpretation of section 5(2)(a) (ii) of the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), hereinafter called the Act.
The material facts are as follows: The appellant is a public limited ' company registered as a dealer under the Act, having its registered place of business at Calcutta.
In respect of the accounting year ending with 31st December 1954, in the return for the year the assessee had shown its gross turnover at Rs. 70,99,928 10 0 and claimed exemption under two heads, namely, (i) under section 5(2)(a)(i) of the Act Rs. 1,33,730 6 6; and (ii) under section 5(2)(a)(ii) thereof Rs. 69,65,979 9 6.
After deducting the said amounts from the gross turnover the assessee showed its taxable turnover at Rs. 218 9 0 and deposited the tax of Rs. 9 12 6 on the said amount in the treasury.
The Commercial Tax Officer by notice dated April 22, 1955, fixed August 4, 1955, for hearing the assessee in respect of its return.
Under section 5(2)(a)(ii), the appellant in order to claim exemption thereunder had to furnish declaration forms duly filled in and ' signed by registered dealers to whom the goods were sold by it.
After taking some adjournments of the enquiry it appears that in the second week 'of January 1957 the assessee found that its file containing 147 declaration forms received ' from its dealers in respect of the goods received from it was missing.
The assessee, it is said, made various attempts to get duplicate forms of declaration from the dealers, but, on account of circumstances over which it had no 628 control and because of the unhelpful and hostile attitude of the Commercial Tax Officer within whose jurisdiction the said dealers functioned, it was not able to furnish the duplicate forms for all the declarations that were lost.
On August 8, 1957, the assessee applied to the Commercial Tax Officer under section 21A of the Act for summoning the dealers to produce the necessary documents in order to prove that they had issued the declaration forms to it, but the said ' officer did not issue the requisite summons to the parties concerned.
The assessee then flied an application to the Commissioner of Commercial Taxes, West Bengal, for directions to issue duplicate declaration forms, but that application was rejected.
The revision filed to the Revenue Board was also dismissed.
On November 21, 1957, the Commercial Tax Officer made an order of assessment disallowing the assessee 's claim for exemption in respect of the said sales made to the purchasing registered dealers amounting to Rs. 22,46,006 0 6 and levied on it additional tax of Rs. 1,49,778 4 6.
The assessee thereafter flied a petition under article 226 of the Constitution in the High Court of Calcutta for issuing an order directing the respondents, i.e., the Commercial Tax Officer and the Commissioner of Commercial Taxes.
West Bengal, not to implement the said assessment order.
The said application came up, at the first instance, before Sinha, J., who dismissed the same.
On appeal, a Division Bench of the said High Court confirmed the order of Sinha, J. Hence the present appeal.
At the outset we must make it clear that in the view we are taking on the construction of section 5 of the Act we do not propose to go into the question whether the department was responsible for preventing the assessee from furnishing duplicate forms of the declarations alleged to have been lost or on the question whether the department went wrong in not summoning the dealers to produce the relevant documents to establish that the declaration forms alleged to have been lost were in fact issued ' by them.
The only question, therefore, that arises is whether under section 5(2)(a)(ii) of the Act the furnishing of the declaration forms issued by the purchasing dealers was a condition for claiming the exemption thereunder.
In substance section 5(2)(a)(ii) exempts from taxable turnover all sales to a registered dealer of goods of the class or classes specified in the certificate of registration of the dealer as being intended for the purposes mentioned, therein.
But the said exemption is made subject to a proviso.
Under that proviso, in the case of such sales a declaration form duly filled up and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars on a prescribed form obtainable from the prescribed authority has to be furnished ' in the prescribed manner by the dealer who sells the goods.
Under r. 27A of the Bengal Sales Tax Rules, 1941, hereinafter called the Rules, a dealer who wishes to claim the said exemption shall on demand produce such a declaration in writing 629 signed by the purchasing dealer.
Sub r.
(2) thereof enjoins on a dealer not to accept and on the purchasing dealer not to give a declaration except in the form prescribed.
The other rules make stringent provisions to prevent the misuse of the said forms.
The argument of Mr. A.V. Viswanatha Sastri, learned counsel for the appellant, may be briefly stated thus: The substantive part of section 5(2)(a)(ii) of the Act provides for the exemption in respect of certain sales to a dealer if the sales are made to a registered dealer for the purposes mentioned thereunder.
The proviso to the said subclause prescribes in effect that the declaration form in the manner prescribed is the best evidence to prove that the sales were for the said purposes.
The proviso cannot be construed as laying down a condition for giving the exemption, but only as a directory provision to subserve the substantive provision in a reasonable way.
If so construed, a dealer is not precluded in a case where the proviso cannot be strictly complied with from producing other relevant evidence to prove that the sales to the registered dealers were for the purposes mentioned in the said sub clause.
This conclusion is sought to be supported on the basis of the expression "on demand" in r. 27A which, according to the learned counsel, indicates that the production of the prescribed declaration is not obligatory but only to be made if a demand is made by the authority concerned.
The learned Solicitor General, on the other hand, contends on behalf of the respondents that a dealer can claim exemption under the said sub clause, but if he seeks exemption he must comply strictly with the conditions under which the exemption can be granted.
He argues that the clear terms of the clause, read with the proviso, impose a condition on a dealer for claiming exemption.
Section 5(2)(a)(ii) of the Act in effect exempts a specified turnover of a dealer from sales tax.
The provision prescribing the exemption shall, therefore, be strictly construed.
The substantive clause gives the exemption and the proviso qualifies the substantive clause.
In effect the proviso says that part of the turnover of the selling dealer covered by the terms of sub cl.
(ii) will be exempted provided a declaration in the form prescribed is furnished.
To put it in other words, a dealer cannot get the exemption unless he furnishes the declaration in the prescribed form.
It is well settled that "the effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it": see "Craies on Statute Law", 6th Edn., p. 217.
If the intention of the Legislature was to give exemption if the terms of the substantive part of sub cl.
(ii) alone are complied ' with, the proviso becomes redundant and otiose.
To accept the argument of the learned counsel for the appellant is to ignore the proviso altogether, for if his contention be correct it will lead to the position that if the declaration form is furnished, well and good; but, if not furnished, other evidence can be 630 produced.
That is to rewrite the clause and to omit the proviso.
That will defeat the express intention of the Legislature.
Nor does r. 27A support the contrary construction.
The expression "on demand" ' only fixes the point of time when the declaration forms are to be produced; otherwise the rule would be inconsistent with the section.
Section 5(2)(a)(ii) says that the declaration form is to be furnished by the dealer and r. 27A says that it shall be furnished on demand, that is to say it fixes the time when the form is to be furnished.
This reconciles the provisions of r. 27A with those of section 5 (2)(a)(ii) of the Act, whereas the construction suggested by the learned ' counsel introduces an incongruity which shall be avoided.
Section 21A on which reliance is placed has no bearing on the question to be decided.
It only empowers the Commissioner or any person appointed to assist him under sub s (1) of section 3 to take evidence on oath etc.
It can be invoked only in a case where the authority concerned is empowered to take evidence in respect of any particular matter; but that does not enable him to ignore a statutory condition to claim exemption.
Sub rules (3) and (4) of r. 27A are not helpful to the appellant.
They provide only safeguards against abuse of the declaration forms by the purchasing dealers; they do not enable the selling dealer to either directly apply or to compel the purchasing dealers to apply for duplicate forms; nor do they enjoin on the appropriate authority to give the selling dealer a duplicate form to replace lost one.
We realise that the section and the rules as they stand may conceivably cause unmerited hardship to an honest dealer.
He may have lost the declaration forms by a pure accident, such as fire, theft etc., and yet he will be penalised for something for which he is not responsible.
But it is for the Legislature or for the rule making authority to intervene to soften the rigour of the provisions and it is not for this Court to do so where the provisions are clear and unambiguous.
There is an understandable reason for the stringency of the provisions.
The object of section 5(2)(a)(ii) of the Act and the rules made thereunder is self evident.
While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and ' collusion in an attempt to evade tax.
In the nature of things, in view of innumerable transactions that may be entered into between dealers.
it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section.
Therefore, presumably to achieve the twofold object, namely, prevention of fraud and ' facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section.
The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid.
631 The decision of this Court in The State of Orissa vs M.A. Tulloch and Co. Ltd.(1) does not help the appellant.
That decision was concerned with section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947.
That section was similar in terms to section 5(2)(a)(ii) of the Act in question, but there was no proviso to that section in the Orissa Act similar to the one found in the present section.
That makes all the difference, for it is the proviso that imposes the condition.
But under r. 27(2) made under the Orissa Act "a dealer shall produce a true declaration in writing by the purchasing dealer or by such responsible person as may be authorized in writing in this behalf by such dealer that the goods in question are specified in the purchasing dealer 's certificate of registration as being required for resale by him or in the execution of any contract." This Court held that the said mandatory provision was inconsistent with section 5(2) (a)(ii) of the Orissa Sales Tax Act; and to avoid that conflict it reconciled both the provisions by holding that the rule was only directory and, therefore, it would be enough and if it was substantially compiled with.
The said provisions may afford a guide for amending the relevant provisions of the Act and the rules made thereunder, but do not furnish any help for construing them.
Before parting with the case we must make it clear that we are not expressing any opinion on the bona fides of the appellant or the appropriate sales tax authorities, for we have not scrutinized the evidence in that regard.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
[1964] 7S.C.R.810.
| The appellant a public limited company sought exemption under section 5(2)(a)(ii) of the Bengal Finance (S.ales Tax) Act, 1941 in respect of certain sales.
However, it could not produce before the commercial tax officer the declaration forms from the purchasing dealers required to be produced under the proviso to that sub clause because the said forms were lost.
The appellant tried to set duplicate forms from the purchasing dealers but without success.
His application under section 21A to summon the dealers with the relevant documents was rejected by the Commercial Tax Officer and the higher authorities also refused to issue directions for the issue of duplicate declaration forms.
The Commercial Tax Officer thereafter passed an assessment order without allowing.
the said exemption.
Against that order the appellant filed a writ petition under article 226 and thereafter a Letters Patent appeal but failed to get redress.
It then appealed to this Court with certificate.
It was contended on behalf of the appellant that the exemption granted under the substantive sub clause (ii) could be claimed by the production of other relevant evidence if the declaration forms could not be produced; the proviso to that sub clause requiring the production of the said forms was only directory as was also proved by the use of the words "on demand" in section 27A. HELD: The exemption could be claimed only by the production the declaration forms as laid down in the proviso.
(i) The effect of an excepting proviso is to except from the main clause something.
which but for the proviso would be within it.
Craies on Statute Law quoted: If the intention of the Legislature was to give exemption if the terms of the substantive part of sub clause (ii) above are complied with, the proviso.
becomes redundant and otiose.
If the proviso is treated as merely directory it will lead to the position that if the declaration form is furnished well and good; but if not furnished other evidence can be produced.
That is to rewrite the clause and to omit the proviso.
That will defeat the express intention of the legislature.
[622H 630A] There is an understandable reason for the stringency of the provisions.
The object of section 5(2)(a)(ii) of the Act and the rules made thereunder is self evident.
While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax.
[630G] 627 State of Orissa vs
M.A. Tulloch & Co. Ltd. (1964) 15 S.T.C. 641, distinguished.
(ii) The words "on demand" in r. 27A only fix the time when the declaration forms are to be produced; they do not mean that their production is not obligatory.
[630A B] (iii) Section 21A only empowers the Commissioner or any person appointed by him to take evidence on oath etc.
It can be invoked only in a case where the authority concerned is empowered to take evidence in respect of a particular matter, but that does not enable him to ignore a statutory condition to claim exemption.
[630C D] (iv) Sub rules (3) and (4) of section 27A do not enable the selling dealer to either directly apply or to compel the purchasing dealers to apply for duplicate forms nor do they enjoin on the appropriate authority to give the selling dealer a duplicate form to replace the lost one.
This may cause hardship but the remedy lies with the Legislature only.
[630E, F]
|
vil Appeal No. 2 193 of 1982.
From the Judgment and Order dated 29.5.1980 of the Punjab and Haryana High Court in Regular Second Appeal No. 706 of 1973.
Dr. Y.S. Chitale and Ashok Grover for the Appellant.
R.K. Garg and D.K. Garg for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the judgment of the High Court of Punjab and Haryana in the appellant 's regular second appeal No. 706 of 1973 dismissing the appeal and allowing the respondent 's civil writ petition against the order passed by the Assistant Collector.
Late Wg.
K.K. Majumdar, of the Indian Air Force, father of the appellant laid down his life during the second world war.
He was conferred a gallantary award posthumously by the Government wherewith 442 Kanals and 10 Marlas of land bearing Chak Nos.
535 G V situated in Tehsil and District Layallpur was granted to him and was allotted to the appel lant Shri S.K. Majumdar who took possession on July 24, 1947.
Consequent to the partition of the country the family of 820 late Wg.
K.K. Majumdar had to migrate to India where the Government allotted 69 standard acres and 2 units of land to the appellant in Village Dhogri, Tehsil and District Jullundhur as compensation for the land left behind at Layallpur, Pakistan.
Out of this land 19 standard acres came under possession of the respondent Malik Labhu Masih (now deceased) as a tenant.
On February 26, 1961 Malik Labhu Masih filed an applica tion under section 18 of the Punjab Security of Land Tenures Act, 1953, hereinafter referred to as 'the Act ', to the Assistant Collector stating that he was a tenant in respect of the land in question and should be granted permission to purchase it.
As per order of the Assistant Collector Grade I, Jullundhur dated 15th January, 1962 the said Labhu Masih was granted the requisite permission subject to the payment of Rs.21,007.88 P. in 10 equal half yearly instalments of Rs.2100.80 P. each.
The appellant appealed therefrom to the Collector Jullundhur who upheld the permission to purchase but enhanced the amount payable to the appellant as landlord to Rs.23,133.53 P.
During the pendency of the said proceed ings the appellant moved an application under section 9 read with section 14A of the Act for ejectment of the respondent and obtained an order on 27th September, 1961.
The respond ent moved a revision petition before the Commissioner in the proceedings initiated under section 18 of the Act and the Commissioner made recommendation to the Financial Commis sioner for setting aside the orders of the Assistant Collec tor and the ColleCtor allowing the purchase of land by the respondent on the ground that the application of the appel lant for ejectment of the respondent had since been allowed.
The Financial Commissioner accordingly set aside the order of purchase.
The respondent impugned that order in the High Court of Punjab and Haryana in writ petition No. 1158 of 1963 and the High Court quashed that order on 30th August, 1966.
On July 3, 1970 the appellant filed a suit against the respondent for possession of the lands contending that the respondent had entered on a part of the land as tenant and subsequently applied for purchase of the land under section 18 of the Act but by virtue of section 19 DD of the Act, which was inserted on August 3, 1968 with retrospective effect, the suit property of gallantry award was exempted from the provisions of the ' Act and as such the respondent could not purchase the land under section 18 of the Act and the orders passed by the Assistant Collector as also of High Court were nullity and the respondent was consequently liable to be ejected.
The trial court dismissed the suit.
The appellant 's appeal therefrom was also having been dis missed by the Additional District Judge Jullundhur, the appellant preferred second appeal to the High 821 Court of Punjab and Haryana which also dismissed the appeal holding that section 19 DD of the Act was not applicable to the suit land and the tenant could purchase it under section 18.
Dr. Y.S. Chitale the learned counsel for the appellant submits that the High Court was in error in holding that the land in question having been granted to the appellant S.K. Majumdar, the landlord, in the year 1946 the same could not be said to be covered by the provisions of section 19 DD of the Act.
We are inclined to agree.
Though the Memorandum No. 2354 C Lahore, dated the 30th March, 1946 from D.S.D. to the Commissioner, Lahore, Rawalpindi and Multan Divisions on the subject Award of land in the Punjab for acts of gallantry in the field ' with reference to Punjab Government Memorandum No. 3583 C dated 30th November, 1944 contained the instruc tions to allot two squares rectangles of land to the heir of the grantee noted in the margin in accordance with the orders contained in the aforesaid Memorandum, and showed the appellant Shri S.K. Majumdar, it could not been said that the grant itself was to the appellant.
The said Memorandum No. 3583 C dated 30th November, 1944 clearly showed that the Government had decided that in the case of posthumous grants allotments would be made to the heirs in the following order: "(a) the male lineal descendants of the de ceased in the male line of descent.
" I, having not been in dispute that the appellant S.K. Majum dar was the male lineal descendant of the deceased Wg.
K.K. Majumdar, the allotment was to be made in his name and hence it was done so.
Section 19 DD of the Act which was inserted by the Punjab Act No. 12 of 1968 and was to be deemed always to have been inserted said: "Notwithstanding anything contained in this Act, where any land is granted for gallantry at any time before the 26th day of January, 1950 to any member of the armed forces, wheth er maintained by the Central Government or by any Indian State, then, so long as such land or, any portion thereof, as the case may be, has not passed from the original grantee into more than three successive hands by inheri tance or bequest, and is held by the grantee, or any of such hands, such land or portion, as the case may be, shall 822 not be taken into account on computing the surplus area under this Act, nor shall any tenant of such land or portion have the right to purchase it under section 18.
Provided that where such land or portion has passed into more than three such hands and the person holding such land or portion, immediately before the 3rd August, 1967, is a person to whom it has passed by inheritance or bequest, the exemption under this section shall apply, to such land or portion thereof, as the case may be, during the life time of such person.
" From the language of this section and from the fact that the date of the award of the grant of the land for gallantry having been before the 26th day of January, 1950 so long as such land or, any portion thereof, as the case may be, had not passed from the original grantee into more than three successive hands by inheritance or bequest and was held by the grantee, or any of such hands, such land or portion, as the case may be, should not be taken into account on comput ing the surplus area under the Act.
nor shall any tenant of such land or portion have the right to purchase it under section 18.
Mr. R.K. Garg the learned counsel for the respondents, while not refuting the proposition of law, points out that the land in respect of which the respondent has obtained the order of purchase as tenant is not the land granted to Wg.
K.K. Majumdar for gallantry award.
That land was in Layallpur and the suit land in respect of which the respond ent acquired socially beneficial right of purchase is situ ate at village Dhogri Tehsil and District Jullundhur in the State of Punjab and as such it cannot be exempted under section 19 DD.
Dr. Chitale answers that this land was given as compensation for the gallantry award land left behind by the awardee family at Layallpur as a result of partition of the country and as such equity demands that privilege of exemption should be acquired by the compensation land.
Besides, Dr. Chitale submits, that equity is in favour of the appellant who has acquired the right to purchase as tenant in occupation after a long time.
We are referred to the provisions of the .
It is an Act to provide for the payment of compensation and reha bilitation grants to displaced persons and for matters connected therewith.
We have not been shown in it any provi sion to the effect that any land given as compensation to 823 a displaced person for loss of gallantry award land may imbibe the convent of exemption available under section 19 DD of the Act.
We are consequently of the view that there is no basis for holding that the exemption in respect of the gallantry award land will be available in respect of the land given under the as compensation for the loss thereof.
We find no infirmity in the High Court judgment on this count.
Equity is being claimed by both the parties.
Under the circumstances we have no other alternative but to let the loss lie where it falls.
As the maxim is, 'in aequali jure, melior est conditio possidentis '.
Where the equities are equal, the law should prevail.
The respondent 's right to purchase must, therefore, prevail.
In the result, this appeal fails and hence dismissed, but without any order as to costs.
The stay order stands vacated.
N.V.K. Appeal dismissed.
| The father of the appellant was conferred a gallantry award posthumously by the Government wherewith a piece of land situated in Lyallpur district was granted to him, and was allotted to the appellant who took possession on July 24, 1947.
Consequent to the partition of the country the family migrated to India where the Government allotted about 69 standard acres of land in Jullundur district as compensa tion for the land left behind in Pakistan.
Out of this land 19 standard acres came under the possession of the respond ent as a tenant.
On February, 1961 the respondent filed an application under section 18 of the Punjab Security of Land Tenures Act, 1953 to the Assistant Collector stating that he was a tenant in respect of the aforesaid land and should be granted permis sion to purchase the same.
The Assistant Collector granted the requisite permission subject to the payment of Rs.21,007.88P in ten equal half yearly instalments.
The appellant appealed to the Collector who upheld the permis sion to purchase, but enhanced the amount payable to the appellant as landlord.
During the pendency of these proceedings the appellant moved an application under section 9 read with section 14A of the Act for ejectment of the 818 respondent and obtained an order an 27th September, 1961.
The respondent moved a revision petition before the Commissioner in the proceedings initiated under section 18 of the Act, and the Commissioner made a recommendation to the Financial Commissioner for setting aside the orders of the Assistant Collector and the Collector allowing the purchase of land by the respondent on the ground that the application of the appellant for the ejectment of the respondent had since been allowed.
The Financial Commissioner, set aside the order of purchase.
The respondents ' writ petition chal lenging this order was allowed and the High Court quashed that order on 30th August, 1966.
On July 3, 1970 the appellant filed a suit against the respondent for possession of the land contending that the respondent had entered on a part of land as tenant and subsequently applied for the purchase of the land under section 18, but by virtue of section 19 DD of the Act inserted on August 3, 1968 with retrospective effect, the suit property of gallantry award was exempted from the provisions of the Act.
The Trial court dismissed the suit.
The order was affirmed in appeal by the Additional District Judge, and the second appeal to the High Court was also dismissed holding that section 19 DD of the Act was applicable to the suit land and the tenant could purchase it under section 18.
In the appeal to this Court, it was contended on behalf of the appellant that the High Court was in error in holding that the land in question having been granted to the appel lant, the landlord in the year 1946 the same could not be said to be covered by the provisions of section 19 DD of the Punjab Security of Land Tenures Act, 1953.
It was also contended that equity is in favour of the appellant as the land was as compensation for the gallantry award land left by the awardee family at Layallpur as a result of partition of the country, and that the privilege of exemption should be acquired by the compensation land, and that the appellant has acquired the right to purchase as a tenant in occupation after a long time.
Dismissing the appeal, the Court, HELD: 1.1.
From the language of section 19 DD of the Punjab Security of Land Tenures Act, 1953 which was inserted by the Punjab Act No. 12 of 1968 and from the fact that the date of the award of the grant of the land for gallantry having been before the 26th day of January, 1950 so long as such land or, any portion thereof, had not passed from the original grantee into more than three successive 819 hands by inheritance or bequest, and was held by the gran tee, or any of such hands, such land or portion, as the case may be, should not be taken into account in computing the surplus area under the Act, nor shall any tenant of such land or portion have the right to purchase it under section 18.
[822C D] 1.2.
There is no basis for holding that the exemption in respect of the gallantry award land will be available in respect of the land given under the as compensation for the loss thereof.
There is no infirmity in the High Court judgment on this Court.
[823A B] 1.3.
Equity is being claimed by both the parties.
Under the circumstances there is no other alternative but to let the loss lie where it fails.
As the maxim is, 'in aequali jure, melior est conditio possidentis ' Where the equities are equal, the law should prevail the respondent 's right to purchase must, therefore, prevail.
[823B C]
|
Appeals Nos. 187 and 190 of 1960.
Appeals from the judgment dated 22nd January, 1957, of the Punjab High Court (Circuit Bench), Delhi, in Civil Reference No. 6 of 1953.
Veda Vyasa, section K. Kapur and K. K. Jain, for the appellant.
B. Ganapathi Iyer and D. Gupta, for the respondent.
November 30.
The Judgment of the Court was delivered by KAPUR, J.
These appeals are brought by the assessee company against a common judgment and order of the Punjab High Court by which four appeals were decided in Civil Reference No. 6 of 1953.
The appeals relate to four assessment years, 1947 48, 1948 49, 1949 50 and 1950 51.
Two of these assessments, i.e., for the years 1947 48 and 1948 49 were made on the 800 appellant as successor to the two limited companies hereinafter mentioned.
Briefly stated the facts of the case are that the appellant company was incorporated in the year 1947.
Its objects inter alia were to acquire as a going concern activities, functions and business of the Delhi Stock & Share Exchange Limited and the Delhi Stock and Share Brokers Association Limited and to promote and regulate the business of exchange of stocks and shares, debentures and debenture stocks, Government securities, bonds and equities of any description and with a view thereto, to establish and conduct Stock Exchange in Delhi and/or elsewhere.
Its capital is Rs. 5,00,000 divided into 250 shares of Rs. 2,000 each on which dividend could be earned.
The appellant company provided a building and a hall wherein the business was to be transacted under the supervision and control of the appellant.
The appellant company also made rules for the conduct of business of sale and purchase of shares in the Exchange premises.
The total income for the year 1947 48 was Rs. 29,363 out of which a sum of Rs. 15,975 shown as admission fees was deducted and the income returned was Rs. 13,388.
In the profit and loss account of that year Members ' admission fees were shown as Rs. 9,000 and on account of Authorised Assistants admission fees Rs. 6,875.
The Income tax Officer who made the assessment for the year 1947 48 disallowed this deduction.
The return for the following year also was made on a similar basis but the return for the years 1949 50 and 1950 51 did not take into account the admission fees received but in the Director 's report the amounts so received were shown as having been taken directly into the balance sheet.
The Income tax Officer, however, disallowed and added back the amount so received to the income returned by the appellant.
Against these orders appeals were taken to the Appellate Assistant Commissioner who set aside the additional assessments made under section 34 in regard to the assessment years 1947 48, 1948 49 and 1949 50 and the 4th appeal in regard to the year 1950 51 was decided against the appellant.
Both sides appealed 801 to the Income tax Appellate Tribunal against the respective orders of the Appellate Assistant Commissioner and the Tribunal decided all the appeals in favour of the appellant.
It was held by one of the members of the Tribunal that the amounts received as entrance fees were intended to be and were in fact treated as capital receipts and were therefore excluded from assessment and by the other that as there was no requisite periodicity, those amounts were not taxable.
At the instance of the respondent a case was stated to the High Court on the following question: "Whether the admission fees of Members or Authorised Assistants received by the assessee is taxable income in its hands?" The High Court answered the question in favour of the respondent.
The High Court held that the appellant was not a mutual society and therefore was not exempt from the payment of income tax; that it had a share capital on which dividend could be earned and any person could become a shareholder of the company by purchasing a share but every shareholder could not become a member unless he was enrolled, admitted or elected as a member and paid a sum of Rs. 250 as admission fee.
On becoming a member he was entitled to exercise all rights and privileges of membership.
It also found that the real object of the company was to carry on business as a Stock Exchange and the earning of profits.
It was held therefore that the admission fees fell within the ambit of the expression "profits and gains of business, profession or vocation".
The further alternative argument which was raised, i.e., that the income fell under section 10(6) of the Act, was therefore not decided.
Mr. Veda Vyasa contended on behalf of the appellant that there were only 250 members of the appellant company; that the amount received as membership fees was shown as capital in the books of the company and there was no periodicity and therefore the amounts which had been treated as income should have been treated as capital receipts and therefore exempt from assessment.
It was firstly contended that the question did not arise out of the order of the 802 Tribunal and that a new question had been raised but the objection is futile not only because of the absence of any such objection at the stage of the drawing up the statement of the case but also because of failure to object in the High Court; nor do we see any validity in the objection raised.
That was the only matter in controversy requiring the decision of the court and was properly referred by the Tribunal.
It was then contended that the question had to be answered in the light of facts admitted or found by the Tribunal and that the nature of the appellant 's business or the rules in regard to membership could not be taken into consideration in answering the question.
That again is an unsustainable argument.
The statement of the case itself shows that all these matters were taken into consideration by one of the members of the Tribunal and the learned judges of the High Court also decided the matter on that material which had been placed before the Income tax authorities and which was expressly referred to in their orders and which again was placed before the High Court in the argument presented there on behalf of the appellant company.
It is wholly immaterial in the circumstances of the present case to take into consideration as to how the appellant treated the amounts in question.
It is not how an assessee treats any monies received but what is the nature of the receipts which is decisive of its being taxable.
These amounts were received by the appellant as membership admission fees and as admission fees paid by the members on account of Authorised Assistants.
As far as the latter payment is concerned that would fall within the decision of this Court in Commissioner of Income tax.
vs Calcutta Stock Exchange Association Ltd. (1) and therefore is taxable income.
The former, i.e., members admission fees has to be decided in accordance with the nature of the business of the appellant company, its Memorandum and Articles of Association and the Rules made for the conduct of business.
The appellant company was an association which carried on a trade and its profits were divisible as dividend amongst the shareholders.
(1) 803 The object with which the company was formed was to promote and regulate the business in shares, stocks and securities etc., and to establish and conduct the business of a Stock Exchange in Delhi and to facilitate the transaction of such business.
The business was more like that in Liverpool Corn Trade Association vs Monks (1).
In that case an association was formed with the object of promoting the interest of corn trade with a share capital upon which the association was empowered to declare a dividend.
The Association provided a Corn Exchange market, newsroom and facilities for carrying on business and membership was confined to persons engaged in the corn trade and every member was required to be a shareholder and had to pay an entrance fee.
The Association also charged the members and every person making use of facilities a subscription which varied according to the use made by them.
The bulk of the receipts of the Association was derived from entrance fees and subscriptions.
It was therefore contended that the Association did not carry on a trade and that it was a mutual association and entrance fees and subscriptions should be disregarded in computing assessment of the assessable profits.
It was held that it was not a mutual association whose transactions were inca pable of producing a profit; that it carried on a trade and the entrance fee paid by members ought to be included in the associations receipts for purposes of computing the profit.
Rowlatt, J. said at p. 121: "I do not see why that amount is not a profit.
The company has a capital upon which dividends may be earned, and the company has assets which can be used for the purpose of obtaining payments from its 'members for the advantages of such use, and one is tempted to ask why a profit is not so made exactly on the same footing as a profit is made by a railway company who issues a traveling ticket at a price to one of its own shareholders, or at any rate as much a profit as a profit made by a company from a dealing with its own shareholders in a line of business which is restricted to the shareholders." (1) 804 In Commissioner of Income tax, Bombay City vs Royal Western India Turf Club Ltd. (1) this Court rejected the applicability of the principle of mutuality because there was no mutual dealing between members inter se.
There was no putting up a common fund for discharging a common obligation undertaken by the contributors for their mutual benefit and for this reason the case decided by the House of Lords in Styles V. New York Life Insurance Company (2) was held not applicable.
In the present case the Memorandum of Association shows that the object with which the company was formed was to promote and regulate the business of exchange of stocks, shares, debentures, debenture stocks etc.
The income, if any, which accrued from the business of the appellant company was distributable amongst the shareholders like in every joint stock company.
According to the Articles of Association the members included shareholders and members of the Exchange and according to the rules and bye laws of the appellant company 'member ' means an individual, body of individuals, firms, companies, corporations or any corporate body as may be on the list of working members of the Stock Exchange for the time being.
In the Articles of Association cls.
7 & 8, provision was made for the election of members by the Board of Directors and Rules 9 & 10 laid down the procedure for the election of these members.
The entrance fees were payable by the trading members elected under the Rules and Bylaws of the Association, who alone with their Associates, could transact business in stocks and shares in the Association.
Therefore, the body of trading members who paid the entrance fees, and the shareholders among whom the profits were distributed were not identical and thus the element of mutuality was lacking.
It is the nature of the business of the company and the profits and the distribution thereof which are the determining factors and in this case it has not been shown that the appellants business was in any way different from that which was carried on in the (1) ; , 308.
(2) ; 805 case reported as Liverpool Corn Trade Association vs Monks (1).
In our opinion the judgment of the High Court is right and the appeals are therefore dismissed with costs.
One hearing fee.
Appeals dismissed.
| The object with which the appellant company was formed was to promote and regulate the business in shares, stocks and securities etc., and to establish and conduct a Stock Exchange in order to facilitate the transaction of such business.
Its capital was divided into shares on which dividend could be earned.
it provided a building wherein business was to be transacted under its supervision and control.
It made rules for the conduct of business of sale and purchase of shares in the Exchange premises.
During the assessment year in question the company 's receipts consisted of certain amounts received as admission fee from Members and Authorised Assistants and the question stated to the High Court for its opinion was whether these fees in the hands of the appellant were taxable income.
The High Court answered the question in the affirmative.
It held that the appellant was not a mutual society, that dividends could be earned on its share capital, that any person could become a share holder but every share holder was not a member unless he paid the admission fee and the real object of the company was to carry on business of exchange of stocks and earn profits.
The case of the appellant, inter alia, was that as the amount received as membership fee was shown as capital in the books of the company and there was no periodicity, it should be treated as capital receipt exempt from assessment.
799 Held, that the High Court was right in its decision and the appeals must be dismissed.
It was wholly immaterial how the appellant treated the amounts in question.
It is the nature of the receipt and not how the assessee treated it that must determine its taxability.
AS: Since the fee received on account of Authorised Assisstants fall within the decision of this Court in Commissioner of Income tax vs Calcutta Stock Exchange Association Ltd., , it must be held to be taxable income.
The question as to whether the Members ' admission fee was taxable income was to be determined by the nature of the business of the company, its profits and the distribution thereof as disclosed by its Memorandum and Articles of Association and the rules made for the conduct of business.
They showed that the income of the company was distributable amongst its shareholders ;is in any other joint stock company, and the body of trading members who paid the entrance fees and share holders were not identical.
The element of mutuality was, therefore, lacking.
Liverpool Corn Trade Association vs Monks, (1926) 2 K. B. 110, applied.
Commissioner of Income tax, Bombay City vs Royal Western India Turf Club Ltd., ; and Styles vs New York Life Insurance Co., ; , referred to.
|
ivil Appeal No. 1465 of 1990.
From the Judgment and Order dated 13.3.
1987 & 27.2.1989 of the Allahabad High Court in S.T.R. Nos.
522/86, 202/89 & 203 of 1989.
S.C. Manchanda and A.K. Srivastava for the Appellant.
The Judgment of the Court was delivered by RANGANATHAN, J.
These three Special Leave Petitions can be disposed of together as they involve a common point.
Notices of these petitions have been duly sent but there is no appearance on behalf of the respondents.
After hearing the counsel for the petitioner we grant leave and also proceed to dispose of the appeals.
The respondents in each of these cases was subjected to assessment under the U.P. Sales Tax Act.
The assessment years are different for the three cases being assessment years 1981 82, 1983 84 and 198283 respectively but this does not make any material difference.
In each of the cases, the assessee preferred an appeal to the first appellate authori ty and, along with the appeal, moved an application praying for the waiver of any deposit of tax which was necessary before the appeal could be entertained.
But the first appel late authority, in two of the cases, dismissed the applica tion.
In the third he directed the assessee to deposit 10% of the disputed tax within ten days from the, date of the order.
Dis satisfied with the orders of the first appellate authority, 1033 each of the assessees preferred an appeal to the Tribunal.
The Tribunal, in all the three cases, directed the assessee to pay 10% of the assessed tax before the appeal could be entertained.
Each of the assessees preferred a revision petition before the High Court.
The learned Single Judge who heard the revision petition in the main appeal preferred by Atma Ram Misra distinguished the earlier judgment of the Court in Vishamber Nath vs Commissioner of 'Sales Tax, U.P., [1979] U.P.T.C. 1276 and held that the condition requiring deposit of tax was not applicable in the instant case as no returns at all had been filed by the assessee for the relevant assessment year and no turnover stood admitted by the asses sees at any stage of the assessment proceedings.
This was followed in the other two cases with the result that the first appellate authority was held bound to entertain the appeals of the assessee without calling upon it for deposit of any portion of the tax.
It is this conclusion of the learned Single Judge that is the subject matter of the present appeals.
The question at issue turns upon the language of section 9 of the U.P. Sales Tax Act.
Since this section has been amended from time to time, it is necessary to extract the provisions of this section, in so far as it is relevant for the present purposes, as it stood from time to time: The section, when originally enacted read as follows: "Sec. 9 Appeals.
(1) Any assessee objecting to an assessment made on him may, within thirty days from the date on which he was served with notice of the assessment, appeal to such authority as may be prescribed: Provided that no appeal shall be entertained under this sub section unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable as the case may be." This provision made it obligatory on an assessee to pay up the admitted tax before his appeal against the assessment could be entertained.
1034 There were amendments to the above sub section by Amend ment Act No. 8 of 1954, Amendment Act No. 7 of 1959 and Amendment Act No. 11 of 1968.
These are not material for the present purposes.
Next came an amendment by Amendment Act No. 3 of 1971 which took effect from 1.10.1970.
This substi tuted the following provision in place of the original sub section (1): "(1) Any dealer objecting to any order made by the assessing authority other than an order mentioned in section 10 A, may within thirty days from the date of service of the copy of order, appeal to such authority as may be prescribed: Provided that no appeal against an assessment order under this Act shall be entertained unless the appel lant has furnished satisfactory proof of the payment of not less than: (a) When return is filed the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the return filed by him or at a later stage in proceeding before the assessing authority, whichever is greater.
(b) Where no return is filed the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be admitted at any stage in proceedings before the assessing authority, or 20 per cent, of the amount of tax of fee assessed whichever is greater.
Provided further that the appellate authority may, for special and adequate reasons to be recorded in writing, waive or relax the requirements of clause (b) of the pro ceeding proviso.
" This provision, it will be observed, effected two important changes: (a) The assessee had to deposit the highest amount of tax due on his admitted turnover.
However, if he had filed no return and had been assessed to tax, he had to deposit 20% of the assessed tax, if that was higher than the admitted tax; and 1035 (b) A discretion was conferred on the appellate authority to waive or relax the above requirement in appropriate cases.
The next amendment was by U.P. Act No. 12 of 1979 with effect from 1 11 1978.
The provision, as now amended, stood as follows: "(1) Any dealer or other person aggrieved by an order made by the assessing authority, other than an order mentioned in section 10 A may, within thirty days from the date of serv ice of the copy of the order, appeal to such authority as may be prescribed: Provided that no appeal against an assessment order under this Act shall be entertained unless the appel lant has furnished satisfactory proof of the payment of not less than (a) Where all the returns for the assessment year have been filed, the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater; or (b) Where some the returns for the assessment year have not been filed or no return has been filed for such year, the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns, if any, filed by him or at any stage in any proceedings under this Act or 20 per cent of the amount of tax or fee assessed whichever is greater; and Provided further that the appellate authority may, for special and the adequate reasons to be recorded in writing,.
waive or relax the requirements of clause (b) of the preceding proviso.
XXX XXX XXX This provision was in substance the same as the earlier one, but a change in language was necessitated by the fact that the Act contemplated not one but several returns from an assessee in the course of an assessment year and the earlier provision, which proceeded on the 1036 basis of a single return due from an assessee for the year having been filed or not filed, needed to be clarified.
Finally came Amendment Act No. 22 of 1984 on the heels of earlier ordinances which effected an amendment in Section 9 with effect from 12.2.1983.
The new sub section reads as follows: "(1) Any dealer or other person aggrieved by an order made by the Assessing Authority, other than an order mentioned in Section 10 A, may, within thirty days from the date of service of the copy of the order, appeal to such authority as may be prescribed: Provided that where the disputed amount of tax, fee or penalty does not exceed one thousand rupees, the appel lant may, at his option, request the Appellate Authority in writing for summary disposal of his appeal, whereupon the Appellate Authority may decide the appeal accordingly.
(I A) The manner and procedure of summary disposal of appeal shall be such as may be prescribed.
(I B) No appeal against an assessment order under this Act shall be entertained unless the appellant has furnished satisfactory proof of the payment of not less than (a) the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceedings under this Act, whichever is greater, where all the returns for the assessment year have been filed, or (b) the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns, if any, filed by him or at any stage in any proceedings under this Act, or twenty per cent, of the amount of tax or fee assessed, whichever is greater, where some of the returns for the assessment year have not been filed or no return has been filed for such year: 1037 Provided that the Appellate Authority may, for special and adequate reason to be recorded in writing, waive or relax the requirement of the Clause (b) of this sub section in so far as it relates to deposit of twenty per cent of the amount of tax or fee assessed.
" Except for shifting the contents of the relevant provision to new subsection (1 B) and for a recasting of the section, the new provision has brought about no material change in the position so far as the issue before us is concerned.
It may be mentioned here that the assessment years before us being 1981 82 to 1983 84 appear to be governed by the provisions of the Act as they stood before the amendment in 1983.
However this does not make much of a difference since, as already pointed out, the effect of the provisions before and after amendment is the same.
The section, as it stands since 1 11 78, provides for two sets of situations.
Clause (a) deals with a case where all the returns for the assessment year have been filed by the assessee.
This means that there is a figure of turnover admitted by the assessee.
Again, in the course of the as sessment proceedings, it is possible that he may have admit ted a different figure of turnover from that disclosed in his returns.
In such a situation the provision requires the assessee to deposit the amount of the tax admitted by him (either in the returns or at any subsequent stage of the proceedings before the officer, whichever is greater).
Clause (b) deals with the situation where (a) some, though not all, the returns due from the assessee have been filed and (b) no return at a11 has been filed.
In this eventuali ty, the requirement of deposit turns not merely on the admitted amount of tax (as there may be no such admitted tax where no return at all has been filed) but is also made to turn on the assessed tax.
The provision requires the asses see to deposit the amount of tax admitted in the returns or at any stage of the proceedings under the Act or 20% of the amount of tax assessed whichever was greater.
In other words, the provision contemplates a comparison of (i) the admitted tax and (ii) 20% of the assessed tax.
Whichever of these two figures is higher has to be deposited by the assessee before his appeal against the assessment can be entertained.
There are perhaps two ways of reading clause (b).
One is that, in a case where no return at all has been filed and no admission had at all has been made by the assessee of any figure of turnover, then the first figure to be computed under clause (b) will be zero.
If, however, there is an assessment made on the assessee of any tax higher than nil, that 1038 will be the greater of the two figures to be computed under the clause and the assessee will have to deposit 20% of the assessed tax.
The other way of interpreting the sub section, which appears to have commended itself to the High Court, is to say that clause (b) will be attracted only if two figures are available for comparison: (1) a figure of turnover admitted in a return or in subsequent proceedings; and (2) a figure of assessed tax.
If the assessee has filed no return at all and if he has made no admission regarding his turn over at any stage of the proceedings, then figure (1) above cannot be computed.
Hence it is not possible to make a comparison between the two figures indicated above and therefore the provisions of deposit contained in clause (b) will not at all apply.
We think it is manifest that the first of the two con structions referred to above is the correct one.
The inter pretation accepted by the High Court, is, in our view, erroneous for two reasons.
In the first place, it does not give full effect to the last few words of clause (b) which clearly cover a case where no return at all has been filed for the assessment year in question.
True, even on this interpretation, the provision will govern a case where no return has been filed but the assessee has, in the course of the assessment proceedings, made some admission regarding his turnover but such cases are likely to be very few.
When the provision clearly contemplates a deposit of tax in cases where no return has been filed or where only some returns have been filed, it would be running in the teeth of the provision to interpret it in such a manner as to exclude the majority of such cases.
Secondly, the High Court 's interpre tation leads to a clear anomaly.
For, it would indeed be odd to suggest that a deposit is necessary where an assessee has filed his returns or admitted his turnover in the course of assessment proceedings but that an assessee who has not filed any return at all or made any admission at all can be allowed the privilege of an appeal even without making any deposit at all.
Such an interpretation will only result in putting a premium upon recalcitrant and dishonest assessees.
We do not think that this is the correct and proper way of interpreting the statutory provision.
The clear intent of the clause is that an assessee should be asked to pay up the admitted tax or 20% of the assessed tax, whichever is great er, before an appeal could 'be entertained and the provision should be interpreted in such a way as to give effect to this intent.
In this context, it is significant that the provision does not call upon the assessee to pay up the entire amount of assessed tax.
The Legislature fully appreciates that an assessment made, in the absence 1039 of any return or admission, may not always reflect the correct figure of tax leviable on the assessee.
It could be that the assessed figure involves an estimate which takes it beyond the figure which may be ultimately determined in the case.
But, at the same time, it cannot be said, merely because an assessee has not filed any return or made any admission expressly, that he necessarily disputes the en tirety of the assessed tax.
It could well be that he has not done either of these things just to postpone the payment of even the tax which he may not be in a position to contest.
Realising this situation, the provision in question makes two relaxations.
It does not make it obligatory on the assessee to deposit the entire amount of assessed tax.
It restricts the deposit of 20% of the assessed tax (a figure which can be treated as an ad hoc statutory quantification, on an average, of the tax demand in such cases on which there could be no quarrel).
Added to this, it empowers the appellate authority to waive or relax the requirements of clause (b).
This is because the appellate authority will be in a position to, prima facie, judge the extent to which, in the circumstances of a particular case, there is a real dispute in the appeal and to insist upon the deposit of such percentage of the assessed tax (not exceeding 20%) as it may consider appropriate.
If the intention of the legislature were only that the deposit should be confined only to the admitted tax in all cases, the second part of clause (b) referring to deposit of 20% of the assessed tax and, indeed, even the bifurcation made in clauses (a) and (b) would be redundant.
We are, therefore, of opinion that the deposit contemplated under clause (b) also covers cases where no returns have been filed and no admission of any turnover has come from the assessee.
We would like to make it clear that we modify the judg ment of the High Court only in so far as it directs that an assessee who has not made any return at all and has not admitted any figure of turn over in the course of the as sessment proceeding is relieved of the requirement to depos it 20% of the assessed tax under section 9(1) or 9(1 B), as the case may be.
What we have held, however, does not in any way affect the power of the appellate authority to waive or reduce the amount to be deposited, depending on the circum stances of the each case, under the proviso to the above sub section.
We should also like to make it clear that, despite our above conclusion, we do not propose to interfere in any of the three appeals, with the ultimate result of the High Court 's decision.
This is because 1040 the High Court has already permitted the appeals to be disposed of without requiring any deposits.
The learned counsel for the appellants is not in a position to state whether the appeals are still pending or whether they have since been disposed of pursuant to the directions of the High Court.
It would not be proper, in this situation, to modify the decretal position of the High Court 's order.
We, therefore, dismiss these appeals but make it clear that we do not agree with the High Court 's interpretation of the statutory provisions for the reasons set out above.
We make no order as to costs in the circumstances of the case.
R.N .J.
Appeals dis missed.
| The respondents in each of these three cases was sub jected to assessment under the U.P. Sales Tax Act.
In each of these cases the assessee preferred an appeal to the first appellate authority and moved an application for the waiver of any deposit of the tax which was necessary before the appeal could be entertained.
The first appellate authority in two of the cases dismissed the application and in the third directed the assessee to deposit 10% of the disputed tax within ten days from the date of the order.
Dis satis fied with the orders of the first appellate authority each of the assessees preferred an appeal to the Tribunal.
The Tribunal in all the three cases directed the assessee to pay 10% of the assessed tax before the appeal could be enter tained.
Each of the assessees preferred a revision petition before the High Court.
The High Court held that the condition requiring deposit of tax was not applicable in the instant case of M/s Atma Ram Misra as no returns at all had been filed by the asses see for the relevant assessment year and no turnover stood admitted by the assessee at any stage of the assessment proceedings which was followed in the other two cases with the result that the first appellate authority was held bound to entertain the appeals of the assessee without calling upon it for deposit of any portion of tax.
The department has preferred these appeals by special leave against the decision of the single judge of the High Court in all the three cases.
This Court while dismissing the appeals made it clear that it did not agree with the High Court 's interpretation of the statutory provisions and, HELD: The provision in question makes two relaxations.
It does not make it obligatory on the assessee to deposit the entire amount of assessed tax.
It restricts the deposit to 20% of the assessed tax.
[1039C] 1032 It empowers the appellate authority to waive or relax the requirements of clause (b).
[1039C] The deposit contemplated under clause (b) also covers cases where no returns have been filed and no admission of any turnover has come from the assessee.
[1039E] This, however, does not in any way affect the power of the appellate authority to waive or reduce the amount to be deposited, depending on the circumstances of each case, under the proviso to the above subsection.
[1039G] Vishamber Nath vs Commissioner of Sales Tax, U.P., [1979] U.P.T.C. 1276.
|
Appeal Nos.
4452 53 of 1986 463 From the Judgment and Order dated 16.6.1986 of the Bombay High Court in Appeal No. 216 of 1986.
D.R. Dhanuka, V.M Tarkunde, and Dr. L.M. Singhvi, Pramod Swarup, Milind Sathe, P.N. Gupta, P.C. Srivastava, U.S. Prasad, A.M. Singhvi, C. Mughopadhaya, Raian Karanjawala, Mrs. Manik Karanjawala, Hardeep section Anand, Ejaz Moqbool, section Radhakrishn anand Surya Kant for the appearing parties.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These two special leave peti tions arise out of the decision of the Bombay High Court in the appeal No. 216 of 1986.
Leave as asked for is granted in both and appeals arising therefrom are disposed of by this judgment.
The first appeal was filed by the appellant Shivajirao Nilangekar Patil who was at the.
relevant time the Chief Minister of the State Maharashtra and the second one was filed by Dr. Mahesh Madhav Gosavi, the applicant in the original writ petition out of which appeal ultimately came to the Division Bench of the Bombay High Court resulting in Civil Appeal No. 216 of 1986.
The controversy in this case centers round the conduct, if any, of the appellant in the first appeal in the M.D. Theory examination in the discipline of Gynaecology and Obstetrics held by the University of Bombay on 14th to 17th October, 1985.
In that subject, the practical examination was held by the University at K.E.M. Hospital, Bombay.
This is a well known hospital in Bombay and we are told that it is run by the Municipality.
The total number of candidates registered for the examination was 52 of which 5 remained absent.
One Dr. Mahesh Madhav Gosavi, original petitioner, who was at the relevant time Assistant Medical Officer of K.E.M. Hospital, Bombay was the petitioner.
He and Smt.
Dr. Chandrakala Patil alias Dawale, a Junior Assistant Medical Officer in the said K.E.M. Hospital, Bombay, who was re spondent No. 4 to the original petition and one Dr. Mrs. Smita Thakkar who was respondent No. 5 were three candidates amongst others who had appeared for the examination.
One Dr. M.Y. Rawal was the head of the Department of Gynaecology and Obstetrics in the said hospital and was the convener of the Board for the said examination.
Respondent No. 4 of the original petition, Smt.
Chandrakala Patil is the daughter of the appellant, the erstwhile Chief Minister of Maharashtra.
The appellant was at the relevant time the Chief Minister of Maharashtra.
On 15th November, 1985, a circular was issued by the Univer sity of 464 Bombay convening a meeting of local examiners for the final isation of M.D. results on 18th November, 1985.
On the said 18th November, 1985, the meeting was attended only by Dr. Rawal as Dr. Mukherjee, another coexaminer was not available at Bombay.
On 30th November, 1985 the result of M.D. exami nation was declared.
Out of the 47 candidates who had ap peared for the examination, 34 candidates were declared successful including Dr. Chandrakala Patil alias Dawale and Dr. Mrs. Smita Thakkar.
The petitioner, Dr. Gosavi was declared to have failed.
Upon these, a petition was filed by Dr. Gosavi under article 226 of the Constitution of India in the High Court of Bombay.
Our attention was drawn to the fact that in the affida vit in support of the petition one Dr. Manikant Mishra had stated that he had approached Dr. Rawal to find out whether his wife had appeared in the said M.D. examination and it was alleged that on this occasion he had over heard certain alleged conversation between Dr. Rawal and Smt.
Chandrakala Patil, daughter of the Chief Minister.
It transpired later that Mrs. Kalpna Misra wife of the said Manikant Misra was not even registered as a candidate.
In the petition under, article 226 of the Constitution filed before the High Court of Bombay on 16th January, 1986 Dr. Gosavi challenged the results declared in the said examination.
The petitioner had claimed that he had been working as a junior Assistant Medical Officer and that he had done his housemanship in the Department of Obstetrics and Gynaecology at K.E.M. Hospital Respondent No. 2 i.e. Dr. Rawal was the Head of the Department of the same.
It was further the case of the petitioner that due to some reasons the petitioner had no good terms with the said respondent No. 2.
The petitioner had passed the MBBS examination in April, 1981 and after completion of internship got registra tion for M.D. (Obstetrics and Gynaecology) in June, 1982.
It was further the case of the petitioner that the petitioner had completed all the requirements and conditions for ap pearing for the M.D. examination.
The petitioner stated that the University had declared examination programme and the petitioner thereafter had appeared for the said M.D. exami nation in the month of October/November, 1985.
There are several allegations made by the petitioner about the irregularities and it was further alleged, inter alia, that the grade sheets were manipulated and tampered with as a result of which the said Dr. Chandrakala Patil and Dr. Smita Thakkar were passed by respondent No.2 Dr. Rawal at the instance and behest of respondent No. 3 in that petition, the appellant in the first appeal, being the Chief Minister of Maharashtra at the relevant time.
He prayed that the record of grade sheet submitted to the University of Bombay 465 by all the four examiners of M.D. in Obstetrics and Gynae cology examination, necessary papers and rules and regula tions, should be produced and to set aside the result of the M.D. examination to the extent that those students who had secured P minus grade be disqualified.
It was further asked to declare those students who secured upto any number of P minus to be passed.
A prayer was made in the writ petition filed in the High Court for producing grade sheets.
The petitioner incidentally verified the petition stat ing that the contents of paragraphs 1 to 22 and paragraphs 24 to 30 were true to his own knowledge while various other relevant paragraphs were verified as information received from reliable sources but the source was not disclosed.
In these circumstances the petitioner claimed that the results declared in respect of some of the candidates declared failed should have been declared passed.
The allegations had been made against the appellant in paragraphs 14 and 25 of the petition.
In paragraph 14 it was alleged that after these irregularities came to light, the petitioner in the original petition had started enquiring.as to the way in which respondent No. 2 had committed these irregularities.
The petitioner thereafter learnt that one Sree P.K. Shah who happened to be a good friend of Dr. M.Y. Rawal, respondent No. 2 in the original petition and also happened to be a good friend of respondent No. 4 as they were together as the assistant medical officers at K.E.M. Hospital, Bombay.
The petitioner also learnt that the said Dr. P.K. Shah and Dr. M.Y. Rawal though not permitted by Rules and Regulations had been practising in Zaveri Clinic for Dr. C.L. Zaveri, since long time, and thus they became dose friends.
It is also learnt that on behalf of Dr. (Mrs.) Chandrakala Patil, who is the daughter of erstwhile Chief Minister of Maharashtra the said P.K. Shah met respondent No. 2 and requested him that Dr. (Mrs.) Chandrakala Patil had appeared several times for M.D. Examination (Obs. & Gyn.) but could not get through and therefore she should be shown some favour.
It was learnt that the respondent No. 2 informed the said Dr. P.K. Shah that he would definitely favour Dr. Mrs. Chandrakala Patil if she failed, provided the Chief Minister himself phoned him personally.
The respondent No. 2 also told the said Dr. P.K. Shah that he would come to know about the result only after the submission of the grade sheet to the University because thereafter only one would know the position with regard to the names of the students who have failed and till that time he would not know.
It was further stated that it was learnt that the respondent No. 2 also informed the said Dr. P.K. Shah that he would take the risk only if the Chief Minister gave him a telephone ring otherwise he would not.
It was alleged that the respondent No. 3 in the original petition and the appellant herein after receiving this message from the respondent No. 4 and from Dr. P.K. Shah accordingly contacted respondent No. 2 and requested him to favour his daughter.
466 In paragraph 25 of the petition, the petitioner stated as follows: "The petitioner states that on the basis of information from reliable source, the peti tioner has made allegations on Chief Minister of Maharashtra, therefore, he has been made respondent No. 3 in this writ petition.
" These were the only allegations upon which the petition was factually based.
The necessary verification has been set out hereinbefore.
The appellant Shri Shivajirao Nilengekar Patil filed an affidavit denying the allegations in para graphs 14 and 25 of the application stating that he had played no part in the said examination as alleged or other wise.
It was also stated in the aforesaid affidavit that the petitioner has not disclosed the 'so called ' reliable sources of information.
No affidavit was filed by the peti tioner himself.
The alleged source of information was not disclosed at any time.
As mentioned hereinbefore an affida vit was filed by one Dr. Manikant Mishra on 28th February, 1986 in support of the allegations.
Further affidavit was sought to be tendered on behalf of the petitioner to the learned single judge regarding certain additional facts after the final hearing had started before the learned single judge of the High Court of Bombay.
It may be men tioned as a matter of historical record that Dr. M.S. Gore, Vice Chancellor of University of Bombay resigned.
The learned single judge by his judgment held that the evidence of the petitioner as well as of Dr. Misra were unsatisfactory and unreliable.
Reference was made to the submissions of the petitioner 's counsel relying under sec tion 114 of the Evidence Act.
In para 18 of the judgment it was held that it could be reasonably inferred that altering and tampering of the gradesheets were done by Dr. Rawal at the behest of respondents No. 3 and 4.
On 7th March, 1986 the day after the judgment, the appellant Shivajirao Ni langekar Patil resigned as the Chief Minister of State of Maharashtra in view of the Judgment.
It may be mentioned that on or after 14th April, 1986 certain affidavits were sought to be filed on behalf of the petitioner in pending appeals purporting to rely upon certain allegations in writ petition No. 1709 of 1985 filed by Sub Inspector Lambe challenging the order of transfer and also an article which had appeared in INDIA TODAY.
The Division Bench of the Bombay High Court rejected the prayer to adduce the additional evidence.
We have perused the nature of the additional evidence which were sought to be adduced as is apparently from the special leave applica tion by Dr. Gosavi, the original petitioner in the writ petition and the respondent in the first appeal herein.
These deal with the alleged involvement of the erstwhile Chief Minister of Maharasthra in the matter of 467 the careers of his son, his son in law and in respect of transfer of one Inspector Lambe.
As the additional evidence were not admitted and the appellant in the first appeal herein had no opportunity to deal with the same, it would not be, fair to take these allegations into consideration.
But these if true make dismal reading and give a sordid picture of the state of administration prevailing at that time in the State of Maharashtra.
But as the High Court did not admit these, perhaps because these were belated and perhaps would have unnecesserily prolonged the trial and were not directly connected with the immediate issues before the High Court, this Court in the exercise of its jurisdic tion under Article 136 of.the Constitution would not inter fere with the decision of non admission of these additional evidence and say no more.
On 16th June, 1986, the Division Bench of the Bombay High Court in appeal No. 216 of 1986 delivered judgment holding in para 35 of the judgment that the conclusion arrived at against Shri Nilangekar Patil was to be regarded merely as an adverse comment and not as a finding of fact.
To that extent the finding of the learned single judge was upset.
The special appeal has been preferred by the original petitioner against the appellant challenging the findings respectively.
In the appeal by the original petitioner an affidavit had been filed in this case claiming the right to adduce additional evidence.
The controversy before this court is rather narrow namely; was there justification for the remarks made by the learned trial judge against the appellant Patil in his judgment to the extent that manipulations in the grade sheets of M.D. examination was done at the behest of the appellant, the then Chief Minister of Maharashtra to help respondent No. 4 to pass the M.D examination can the same be justified either as a finding of fact or as a comment? In order to consider the same must be examined in little de tail.
"Something is rotten in the state of Denmark" sensed Marcellus in Scene V of Act 1 in Shakespeare 's Hamlet.
It can well be lamented that there was something rotten in once premier and prestigious University of Bombay: as the facts reveal.
Justice Pendse of the Bombay High Court, the learned single judge before whom the matter came up for hearing has in an exhaustive discussion narrated the sad state of af fairs in this University of Bombay which has produced so many eminent professors and students.
The University of Bombay conducts M.D. examinations, inter alia, in the disciplines of Obstetrics and Gynaecology in the Faculty of Medicine.
The theory examination consists of four papers, of which paper No. IV is of Essay.
The theory papers 1 to 111 consist of three questions each.
The practical clinical examination consists of a long and short case in obstetrics and a long and short case in Gynaecology and Viva.
The theory papers are assessed by individual 468 examiners and the grades are allotted in respect of each question in each paper n accordance with the provisions set out in the note giving special instructions to the examiners in the Faculty of Medicine.
The M.D. theory examination in the instant case was held between 14th October and 17th October, 1985 and was followed by practical examination which was held between 4th November and 9th November, 1985.
The University had appointed four paper setters and examin ers in accordance with the necessary provisions of the Act, two of which were internal examiners, namely Dr. M.Y. Rawal as mentioned hereinbefore and one Dr. S.N. Mukherjee from Indian Navy.
There were two external examiners who were Dr. (Mrs.) A. Nafeesa Beebi from Madras and gr.
S.T. Watwe of Sangli.
It is not necessary to deal in more detail with the 7actual aspects which as mentioned hereinbefore have been exhaustively set out in the judgment of the learned single judge, and which were not disputed before us by any of the parties.
We may mention that grading had to be made on the following lines as noted in the judgment of the trial judge: "G" Good. "p" Little better than passing. , 'p" Passing Border line failure "F" Failure.
The learned single judge noted that 37 candidates had been declared successful including respondent No. 4 being Chandrakala Patil and respondent No. 5 Dr. Mrs. Smita Thak ker.
The other respondents No. 6 to 15 mentioned hereinbe fore were other successful candidates whose result came to be nullified and made subject to re examination by the judgment of the learned single judge.
We are not concerned with this aspect or with them any more.
The petitioner had claimed that he had wrongly been declared as failed.
The petitioner stated that he had some doubts as to whether his code number was properly decoded and he made various other allegations.
The petitioner complained and the gravamen of his charges was that there were large number of irregulari ties in the declaration of result and mark sheet was tam pered in favour of respondent No. 4 Chandrakala Patil who is the daughter of the erstwhile Chief Minister and that Dr. Rawal was instrumental in tampering with the result which was done at the behest of the then Chief Minister.
The learned judge came to the conclusion that Dr. Rawal alone was responsible for tampering with and altering the tabulat ed grade sheet of theory examination.
After discussing all these aspects in detail at the concluding paragraph 15 of the judgment, the learned judge had observed that he had no hesitation in concluding that Dr. Rawal was responsible for manipulating the result by tampering with and altering the grade sheet so as to favour respondent No. 4 469 and respondent No. 5 in the writ petition namely Chandrakala Patil and Dr. Smita Thakkar.
The next question, and which is the main issue before us, to which the learned judge 's attention was drawn was whether the manipulation was done by Dr. Rawal at the in stance of or behest of respondent No. 3, the appellant herein, the then Chief Minister of Maharashtra.
The learned judge discussed the evidence in great detail.
The allega tions in respect of the same are contained in paragraph 14 of the petition which have been set out hereinbefore.
The learned judge noted after setting out the gist of the allegation in paragraph 14 of the petition that the averments made in that paragraph were wholly unsatisfactory and insufficient because the petitioner to the writ petition and the respondent herein had not disclosed from whom he had learnt what he had averred.
We are in entire agreement with that conclusion of the learned single judge.
Indeed this aspect was not disputed by any of the parties before us.
The learned single judge further noted that the allegations were not only denied by Dr. Rawal, Dr. Shah and Chandrakala Patil but also by the Chief Minister, the appellant, on oath by filing affidavit.
Dr. Shah had claimed that he had never contacted Dr. Rawal in connection with the examination of respondent No. 4 and so was the claim of respondent No. 4 and of Dr. Rawal.
The appellant in his affidavit dated 26th January, 1986 had stated that Dr. Shah did not send any message nor did be contact Dr. Rawal at any stage.
An effort was made by the original petitioner, respondent herein to establish by direct evidence the link between Dr. Rawal and respondent No. 4 by relying upon the evidence of one Dr. Mishra sworn on 28th February, 1986.
Dr. Mishra had claimed that his wife who is a doctor had left home to appear in M.D. examination in November, 1985, but subsequently the wife declined to answer as to whether she had appeared or not.
Dr. Mishra claimed that he went to Dr. Rawal to enquire and he noticed that respondent No. 4 was sitting in the doctor 's chamber.
Dr. Mishra claimed that he over heard Dr. Rawal telling respondent No. 4 about her poor performance in the examination and suggested that he could do something only if her father, the Chief Minister, gave any message.
The learned single judge observed in his judgment the less said about this affidavit was better.
The learned judge further observed that it was impossible to place any reli ance on the evidence of Dr. Mishra as it was not known how he came to contact the original petitioner respondent herein or why he did not choose to file affidavit till 28th February, 1986.
Dr. Rawal had denied in his evidence that this Mishra came to see him and pointed out that on that relevant date, that he was heavily occupied and he had hardly any time to contact any visitor.
Chandrakala Patil also denied the meeting that 'transpired between her and Dr. Rawal.
In the judgment of the learned trial 470 judge, it was unsafe to place any reliance on the words of Mishra.
We respectfully agree.
The learned judge thereafter concluded that there was no direct evidence to establish the involvement of respondent No. 3, the erstwhile Chief Minis ter or the daughter, respondent No. 4 in the original writ petition in securing favourable result from Dr. rawal.
The learned judge noted that counsel appearing on behalf of the petitioner before the trial judge had accepted this position but had urged that it was not possible or in any event extremely difficult to establish by direct evidence the link between the wrong doer and the benefit seeker in such cases.
It was, therefore, submitted that it was necessary for the court to draw inference from the probabilities of the case as well as the surrounding circumstances.
Reliance was placed on the principles of section 114 of the Indian Evi dence Act and it was claimed that from the facts found by the High Court, the inference was irresistible that the results were tampered with or altered at the behest of the erstwhile Chief Minister and his daughter.
After referring to the factual position and noting the principles of law, the learned judge observed that undoubt edly there was no direct evidence that the result of re spondent No. 4 namely Smt.
Chandrakala Patil was tampered with at the behest of the appellant, Shivajirao Nilangekar Patil, respondent No. 3 in the original petition but that would not automatically lead to the conclusion that the charges against the said respondents No. 3 and 4 to the original petition were not established.
The learned judge went on to observe that it would be a mockery of justice if the courts chose to close their eyes to the facts which were brought on record by the University by producing the origi nal documents etc.
The learned judge observed that it, in the facts and circumstances of this case, could reasonably be inferred that the alteration was done at the behest of Nilangekar Patil, erstwhile Chief Minister and her daughter, Chandrakala Patil.
It could not be overlooked, according to the learned judge, that only these three were interested in securing favourable result at the examination According to the learned judge there were two contingencies which had to be taken into consideration.
The first was that respondent No. 4, Smt.
Chandrakala Patil, might have used the name of her father, the erstwhile Chief Minister to secure favour able result from Dr. Rawal and secondly, the appellant, the erstwhile Chief Minister might have used his office to obtain a favourable result for his daughter.
Learned counsel on behalf of the original petitioner had urged before learned trial single judge that the third contingency could not be overlooked that it was probable that Dr. Rawal on his own did all these.
Learned trial judge rejected the third contingency as wholly improbable.
He was of the view that Dr. Rawal was an experienced examiner and he was not young or immature and it was impossible to accept the view that a person like Dr. Rawal would proceed to do a criminal act and tamper with the record of the examination on his own with a view merely to 471 please the people in power.
No same person, according to learned judge, was likely to take such risk unless he was prompted to do so and given an assurance of protection by the persons in power.
The learned judge was of the view that the risk involved in what Dr. Rawal had done was so enormous that it was difficult to conceive that he did it on his own.
It was further urged by learned counsel before learned trial judge that respondent No. 4, Chandrakala Patil had failed in the examination on three previous occasions when her father was Law Minister and yet previously the said Nilangekar Patil, respondent No. 3 had not used his influence and power, therefore it was difficult to accept the position that he would do it on this occasion.
This hypothetical question, according to the learned trial judge, overlooked the fact that every examiner was not necessarily obliging or subservient as Dr. Rawal was.
The learned judge, therefore, concluded that the corollary of this finding was that Dr. Rawal had done it at the behest of either the appellant Nilangekar Patil or Chandrakala Patil or both of them.
Then the learned judge passed some strictures on Dr. Rawal and suggested some punishment and gave certain directions about examination of 12 other candidates whose results were also affected by the conduct of Dr. Rawal.
As these appeals are not concerned with the same, it is not necessary to refer to these.
The learned judge directed that the result declared on 30th November, 1985 in respect of respondents nos.
4 to 15 be revoked and that there should be fresh examination by the other examiners.
These appeals are also not concerned with such direction.
It may be mentioned that an application was made before the learned trial judge for adducing certain additional evidence on behalf of the petitioner.
As the learned trial judge thought that it would prolong the trial and for other reasons, he declined to admit the additional evidence.
As mentioned hereinbefore there are three appeals filed namely appeal No. 214 of 1986 by Dr. Rawal, appeal No. 215 of 1986 by Chandrakala Patil and appeal No. 216 of 1986 by Nilangekar Patil.
These appeals came up before a division bench consisting of Kania, Ag.
C.J. Shah, J. of the Bombay High Court.
By a judgment delivered on 16th June, 1986, these appeals were disposed of.
So far as appeal No. 214 of 1986 by Dr. Rawal was concerned, the division bench found that some of the remarks against Dr. Rawal were too harsh and the punishment was too severe.
They directed that enquiry be held against him.
These appeals are not concerned with this.
So far as appeal No. 215 of 1986 preferred by Chandrakala Patil was concerned, the same was dismissed with no order as to costs.
No appeal had been preferred to this Court from the said decision, So far as appeal No. 216 of 1986 before the divi sion bench was concerned, the learned judges pointed out after discussing the evidence and the principles of law that there was no direct 472 evidence that the alterations in the grades of Chandrakala Patil were made at the instance of the appellant.
According to the division bench, the reasoning of the learned trial judge in coming to the conclusion that respondent Nos. 3 and 4 to the original petition were responsible for getting Dr. Rawal to alter the grades aforesaid was based on certain contingencies.
According to the division bench the reason ings adopted by the learned trial judge were too tenuous for the conclusion based on such reasoning to amount to a posi tive finding.
The Division Bench observed that merely be cause respondent No. 3 in the original petition had held a position of great power and would have been happy to see that his daughter respondent No. 4 and passed the M.D. examination, it was little difficult to conclude as a find ing of fact that he must have influenced respondent No. 2 to alter the grades of his daughter.
The learned Division Bench noted that it was true that a seasoned examiner like Dr. Rawal would not have taken the risk involved in altering the grades except under a great pressure of persuasion.
The position that grades were altered was upheld by the division bench.
The Division Bench, however, was of the opinion that there might have been various motives which might have induced Dr. Rawal to take the risk and alter the grades.
The division bench observed that theoretically it was possible to conclude as was urged by Mr. Dhanuka, the learned coun sel, that the respondent No. 4 might have used the name of her father and persuaded Dr. Rawal to alter the grades or some other influential person might have intervened and persuaded Dr. Rawal to alter the grades on the footing that respondent No. 3 would be very happy to see his daughter passed and would reward Dr. Rawal or take care of him or there might be some other inducement.
However, the Division Bench was of the view that in a11 probability Dr. Rawal would not have acted unless he had made him assured that the appellant in the first appeal was behind the person who persuaded him to alter the grades.
In the view of the Divi sion Bench therefore the conclusion of the learned trial judge that the grades of respondent No. 4 must have been altered by respondent No. 2 at the instance of respondent No. 3 by using his official position under a promise of protection was certainly not one which could properly amount to a finding.
The Division Bench further observed that the evidence in support of such a conclusion is too slender to support a finding of such gravity.
The Division Bench was of the view that merely because the appellant held a position of great prestige and power, it could not be said that the action of Dr. Rawal must have been induced by him and in fact when allegation of this type is made against anyone holding a position of prestige and power, it was necessary that the evidence should be closely examined before holding such allegation well founded.
The Division Bench in its exhaustive judgment noted various decisions of this Court as well as of the English Courts.
The High Court referred to the decision of this Court in Niranjan Patnaik vs Sashibhu shan Kar and Another, ; , a decision in which the judgment was delivered by one of us (section Natarajan, J.).
473 The High Court observed that the remarks made against the appellant, Nilangekar Patil cannot be supported as conclu sions arrived at against him but these can be regarded as comments and not finding of fact and such comments were not wholly unjustified in the facts of this case.
The said appeal No. 216 of 1986 was disposed of accordingly.
The Division Bench also upheld the finding of the learned single judge that there was tampering with the grade sheets.
The Division Bench also uphold the finding that Dr. Rawal was mainly responsible for the same.
The setting aside of the results of Smt.
Chandrakala Patil and Smt.
Smita Thakkar was also upheld.
So far as the learned trial judge, held that the same was done at the behest of the erstwhile Chief Minister, the same was not upheld as a finding of fact but remarks to that fact made by the learned trial judge were not interfered with.
An affidavit was filed claiming the right to adduce certain additional evidence and introducing certain writings from the magazine INDIA TODAY etc.
Such additional evidence were sought to be introduced as part of the claim of public interest litigation because it involved the conduct of the Chief Minister in respect of the affairs of the University.
Such claim for introduction of additional evidence, was, however, not entertained by the Division Bench.
The Division Bench, however, in its judgment noted that the appellant was party to the writ petition and had an opportunity of explaining and defending himself.
There were materials on record bearing on his conduct justifying the remarks which the Division Bench characterised as comments and not findings.
A prayer was made before the Division Bench for deletion of such remarks.
The Division Bench was of the view that as the appellant had opportunity to meet such remarks and such remarks were made upon hearing of the petition the question as to the conduct of the appellant in the episode was a matter of argument and it naturally fell for consideration before the Court.
Judging the conduct of respondent No. 2 i.e. Dr. Rawal the part played by the appellant, erstwhile Chief Minister naturally fell for con sideration.
If the finding of the learned trial judge, according to the Division Bench, was looked upon as more adverse comments and not as a finding as such, there could not be any objection to the same.
The Division Bench was further of the view that the circumstances noted by the learned judge against the appellant Nilangekar Patil, afore said, formed a reasonable and cogent basis for adverse comment on his conduct.
However, the Division Bench made it clear that these were merely in the nature of adverse com ments and based on the material on record and at the hearing of a proceeding which involved the taking of evidence merely on affidavits.
According to the Division Bench, a fuller enquiry might lead to a conclusion that the comment was not justified.
In view of this, the Division Bench had asked the learned counsel for the appellant Shri Dhanuka, whether the appellant desired that there should be a full fledged factu al enquiry into the charges of the alteration of the grades of respondent No. 4 having been altered as aforesaid with a view to pass respondent No. 4, Smt.
Chandrakala Patil and 474 further that this was done at the instance of the erstwhile Chief Minister.
The Division Bench noted that the appellant made no request for any such enquiry and he was merely taking a stand on the footing that the evidence on record did not justify any conclusion being arrived at or a comment being made against respondent No. 3.
The Division Bench suggested that even at that stage, if the appellant wanted a full fledged enquiry and requested the University to hold the same, the University might hold such an enquiry into the results of M.D. examination in Gynaecology and Obstectrics held in November, 1985, particularly in respect of the results of respondents Nos. 4 & 5, but if such an enquiry was held, the person designated to hold the enquiry should be selected with the consent of the Chief Justice of the Bombay High Court.
Two appeals one arising out of Special Leave Petition (Civil) No. 7568 of 1986 filed by Shivajirao Nilangekar Patil against the alleged adverse remarks and the other arising out of Special Leave Petition (Civil) No. 10665 of 1986 by the original petitioner are before this Court.
There is an application for introduction of additional evidence.
There are three points involved in these two appeals.
Firstly, we have to determine in the appeal by the appel lant, Nilangekar Patil, the erstwhile Chief Minister of Maharashtra, whether the observations made by the division bench about the comments on the conduct of the Chief Minis ter were justified or not or should be expunged.
Secondly, and connected with the first question is the question wheth er the Division Bench of the Bombay High Court was right in upsetting the finding that the tampering with the grade sheets was done at the behest of the Chief Minister was a finding based on no evidence; and thirdly whether, in the facts and circumstances of this case the court was justified in refusing to admit additional evidence and whether we should at this stage admit additional evidence.
The additional evidence as we have mentioned hereinbe fore consist of certain report in INDIA TODAY and certain other Magazines and certain affidavits.
The basic principle of admission of additional evidence is that the person seeking the admission of additional evidence should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance.
Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence.
Thirdly, that additional evidence was relevant for the determination of the issue.
The additional evidence sought to be introduced mainly consist of alleged instances when the Chief Minister on previous occasions had in respect of some criminal proceedings and other matters pending used his influence to drop those proceedings.
Now about these, these are controvertial allegations.
There is no satisfacto ry explanation that these so called material in the form of 475 additional evidence could not have been obtained before the institution of the petition in the High Court.
To this Mr. Tarkunde 's submission was that it was difficult to gather evidence against a Chief Minister in office but as the case had gathered momentum, people had come in and after decision of the learned trial judge, the Chief Minister had resigned and there was an atmosphere of belief for offering to adduce evidence which people were hesitant to give before that.
We are of the opinion that at this belated stage there was not sufficient material ground on which additional evidence should be admitted for the determination of the issues involved in these appeals.
In the appeal filed by the original petitioner Dr. Mahesh Madhav Gosavi, it was submitted that there were sufficient materials upon which the conclusion arrived at by the learned trial judge that the tampering was done at the behest of the erstwhile Chief Minister and the Division Bench was in error in deciding that, that was not the find ing of fact.
Mr. Tarkunde conceded, and in our opinion rightly, that the view of the Division Bench that the obser vation of the learned single judge that tampering of the grade sheets in M.D. examination was done at the behest of the Chief Minister was in the nature of a comment and not a finding was a distinction without any difference.
We are of the opinion that he is right in this submission.
We are also of the opinion that the Division Bench was right in holding that there was no direct evidence.
We are conscious that in a situation of this type it is difficult to obtain direct evidence.
So far as admission of additional evidence is concerned, we are unable to accept the position that such additional evidence should have been admitted in order to show the nature of the conduct of the Chief Minister in other cases in similar situations.
The admissibility of evidence as to 'similar fact ' has been considered by the courts.
In this connection it may be instructive to refer to the observations of Lord Denning in Mood Music, Publishing Co. Ltd. vs Dc.
Wolfe Ltd., [1976] 1 All England Law Reports 763 at 766.
, to the following ef fect: "The admissibility of evidence as to 'similar facts ' has been much considered in the crimi nal law.
Some of them have reached the highest 'tribunal, the latest of them being Boardman vs Director of Public Prosecutions (1974)3 All ER 887, (1975) A C 421.
The criminal courts have been very careful not to admit such evidence unless its probative value is so strong that it should be received in the interests of justice: and its admission will not operate unfairly to the accused.
In civil cases the courts have followed a similar line but have not been 476 so chary of admitting it.
In civil cases the courts will admit evidence of similar facts if it is logically probative, that is if it is logically relevant in determining the matter which is in issue, ' provided that it is not oppressive or unfair to the other side; and also that the other side has fair notice of it and is able to deal with it.
" On this aspect cross On Evidence, Sixth Edition page 346 has observed that although in some early Civil cases in England rejected similar fact evidence as res inter alias act, it was soon accepted that the rule of exclusion was certainly no stricter than that in criminal cases.
The real question was whether there was a special rule of exclusion at all, or whether it were not rather a question of simple relevance in each case.
The learned author noted that in more recent time, there has been a further relaxation of the exclusionary rules in civil cases.
Cross at page 346/347 further noted that the aforesaid observations of Lord Den ning might be interpreted as applying in civil cases a similar sort of balancing approach to the rules for the admissibility of similar fact evidence as applied in crimi nal cases.
The factors to be weighed were however different on account of the peculiar position of the accused in crimi nal cases.
The learned author noted that there was very high authority accounting for the existence of an exclusionary discretion in criminal cases solely by reference to the accused 's vulnerability to prejudice.
Applying the aforesaid principles to the facts as we have mentioned hereinbefore, we are of the opinion that the allegations of alleged conduct of the appellant in similar cases would not be a safe basis upon which to admit addi tional evidence, in this case having regard to the issues involved and nature of the issues involved in these matters and at the stage when these were sought to be introduced.
In support of the appellant in Civil Appeal arising out of Special Leave Petition No. 7568 of 1986, Dr. Singhvi submitted that the petitioner/appellant had suffered and would continue to suffer serious civil consequences on account of findings or adverse comments or strictures made by the learned single judge.
It was in those circumstances that this appeal had been filed, The appellant had resigned as Chief Minister and he is due, according to Dr. Singhvi, to contest the bye election in November, 1986.
He has fur ther submitted that the question in these appeals had to be viewed in the perspective of law and strictly on the basis of the record and should not be permitted to be politicised either by extraneous allusions or by.
presumptions and pre suppositions inconsistent with legal principles or by an attempt by political opponents to convert the proceedings into a political trial.
It was his submission that the averments and the supporting affidavits which formed the 477 basis of the allegations against the appellant were dealt with in the two courts below in the manner as we have indi cated.
He specially referred to the observations of the learned single judge about the affidavit in support of these allegations.
He also relied on the observation on Dr. Mi shra 's affidavit and the adverse comments made by the learned single judge on Dr. Mishra 's affidavit.
He also referred to the finding of the Division Bench that the petitioner had no personal knowledge of this incident nor had he disclosed the source of the information.
That the petitioner had filed the affidavit of one Manikant Misra and then drew our attention to the various allegations and infirmities of the affidavit and specially relied on the various motives which might have induced Dr. Rawal, respond ent No. 2 in the original petition to take the risk and alter the grades and also he referred us to the finding at page 132 of the Paper Book of the Division Bench that the evidence was much too slender in support of the charge against the appellant.
He emphasised that these appeals arose out of exercise of extra ordinary jurisdiction by the civil court, not by trial on examination and cross examina tion of evidence but an exercise of extra ordinary jurisdic tion on the basis of the affidavit, and the court should insist that there should be 'commensurate ' proof for judi cial certitude and that the distinction between 'finding ' and 'adverse comment ' was a distinction without any differ ence because it was throughout recognised as a finding.
The Division Bench in Appeal No. 216 of 1985 has held that the conclusion arrived at against Shri Nilangekar Patil was a comment and not a finding of fact.
Dr. Singhvi re ferred extensively to the affidavit of Dr. Mishra and com ments of learned single judge and the Division Bench as to how unreliable such affidavit was.
It was submitted that in view of the infirmities of the affidavit of Dr. Mishra upon which the original petitioner, Dr. Mahesh Madhav Gosavi based his own petition was of such an unreliable credience that the courts should not have entertained the application.
The Division Bench was unable to accept that position.
We are in agreement with the Divi sion Bench.
The allegations made in the petition disclose a lament able state of affairs in one of the premier universities of India.
The petitioner might have moved in his private inter est but enquiry into the conduct of the examiners of the Bombay University in one Of the highest medical degrees was a matter of public interest.
Such state Of affairs having been brought to the notice of the court, it was the duty of the court to the public that the truth and the validity of the allegations made be inquired into.
It was in furtherance of public interest that an enquiry into the state of affairs of public institution becomes necessary 478 and private litigation assumes the character of public interest litigation and such an enquiry cannot be avoided if it is necessary and essential for the administration of justice.
The allegations of the petitioner have been noted about the role of the Chief Minister.
It is well to remember that Rajagopala Ayyangar, J. Speaking for this Court in CS.
Rowjee & Ors., vs Andhra Pradesh State Road Transport Corpo ration observed at page 347 of the report that where allegations of this nature were made, the court must be cautious.
It is true that allegation of mala fides and of improper motives on the part of those in power are frequently made and their frequency has increased in recent times.
This Court made these observations as early as 1964.
It is more true today than ever before.
But it has to be borne in mind that things are happening in public life which were never even anticipated before and there are several glaring instances of misuse of power by men in authority and position.
This is a phenomenon of which the courts are bound to take judicial notice.
In the said deci sion the court noted that it is possible to decide a matter of probabilities and of the inference to be drawn from all circumstances on which no direct evidence could be adduced.
The court further noted that it was somewhat unfortunate that allegations of mala fide which could have no foundation in fact were made and several cases which had come up before this Court and other courts and it had been found that these were made merely with a view to cause prejudice or in the hope that whether they have basis in fact or not some of which might at least stick.
It is therefore the duty of the courts, warned this Court in the said decision, to scruti nize these allegations with care so as to avoid being in any manner influenced by them in cases where they have no foun dation in fact.
In this task which is cast on the courts, it will be conducive to have disposal and consideration of them if those against whom allegations are made came forward to place before the court either the denials or their version of the matter so that the courts might be in a position to judge whether the onus that lay upon those who make allega tions of mala fides on the part of the authorities had been discharged in proving it.
Of course, the facts in the in stant case are different.
It is true that the basis of the allegations being the affidavit of Dr. Mishra was considered by the learned single judge as well as the Division Bench to be thoroughly unreliable.
In this case there was specific and categorical denial by the erstwhile Chief Minister that tampering was done at his behest.
Therefore, while the court should be conscious to deal with the allegations of mala fide or cast aspirations on holders of high office and power, the court cannot ignore the probabilities arising from proven circumstances.
Our attention was drawn by learned counsel Dr. Singhvi on the observations of this Court in The Barium Chemicals Ltd. and Anr., vs The 479 Company Law Board and Others, [1966] Supp.
SCR 311 where at page 352 of the report the Court observed that where evi dence was adduced by affidavits, such affidavits might be properly verified either on knowledge or from sources.
But the basis of such knowledge or source of information must be clearly stated.
This was laid down as early as 1909 by Jenkins, C.J. and Woodroofe, J. in Padmabati Dasi vs Rasik Lal Dhar, [ILR XXXVII Calcutta 259] where the Division Bench of the Calcutta High Court observed that the provisions of Order XIX, rule 3 of the Code of Civil Procedure, must be strictly observes: every affidavit should clearly express how much is a statement of the deponent 's knowledge and how much of the statement was in his belief, and the grounds of belief must be stated with sufficient particularity.
This has been followed more or less universally by courts in matters where reliance is placed on affidavits.
This view has been reiterated by this Court in The State of Bombay vs Purushottam Jog Naik. ; It is on this principle that Dr. Singhvi urged that the original petition should not have been entertained because of the defective affidavit in this case.
Undoubtedly the affidavit and the petition were defective as mentioned hereinbefore.
But the court has taken cognizance of the matter and certain inferences followed from the inherent nature of facts apparent from the facts brought before the Court.
Reliance was also placed on the observations of this Court in E.P. Royappa vs State of Tamil Nadu & Anr., ; The Facts or that case need not be referred in detail except to mention that there allegation was made against the Chief Minister by a member of the Indian Admin istrative Service in the cadre of the State of Tamil Nadu for not appointing him as the Chief Secretary.
Ray, C.J. noted in the judgment several facts which were alleged as instances indicating mala fide.
It was stated that those instances gave rise to the wrath of the Chief Minister against the petitioner in that case.
After noting the al leged incidents, the Chief Justice rejected these events and indicated that from the affidavit evidence it could not have been said that the Chief Minister had committed acts of violence or intimidation and the entire affidavit evidence established beyond any measure of doubt that the allegations of the petitioner in that case imputing mala fides against the Chief Minister were baseless.
In a judgment concurring Bhagwati, J. as the learned Chief Justice then was, observed at page 389 of the report that in dealing with the allega tion of mala fide, it was necessary to bear in mind two important considerations; that the court was not concerned to investigate into the acts of maladministration by the political Government headed by the Chief Minister at that time.
It was not within the province of the court to embark on a far flung enquiry into the facts of commission and.
omission charged against the Chief Minister in the adminis tration of the affairs of Tamil Nadu.
That was not the scope of the inquiry before the court and the court must decline to enter upon any such. inquiry.
It was one thing to say that the Chief Minister had 480 malus animus against the petitioner in that case.
The court was only concerned with the later limited issue and not with the former popular issue.
The court cannot permit the peti tioner to side track the issue and escape the burden of establishing hestility and malus animus on the part of the Chief Minister by diverting courts attention to incidents of suspicious exercise of executive power.
It is perhaps on this basis that the Division Bench of the Bombay High Court in the instant case rejected the application for additional evidence and rejected the contention in support of the view of misrule or misconduct by the erstwhile Chief Minister of Maharashtra, Nilangekar Patil, the appellant in the first appeal.
The same principles in respect of affidavit evidence were reiterated in different context by this Court in Tara Chand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 SCR 198.
This Court reiterated that the High Court was not too wrong in dismissing the writ petition in limine in that case because a prima facie case requiring investiga tion had not been made out by the appellant.
This Court reiterated that the High Court would be justified in refus ing to carry on investigation into the allegations of mala fide if necessary particulars of the charge making out a prima facie case Were not given in the petition.
Since the burden of establishing mala fide lay very heavily on the person who alleged and the allegations made in regard there to in the writ petition were not sufficient in that case to establish malus animus, this Court found that the High Court was justified in dismissing the petition without issuing notice.
Dr. Singhvi submitted that precisely the same was the position in the instant case.
Reliance was also placed on Sukhvinder Pal Bipan Kumar vs State of Punjab & Ors., ; where at page 40 of the report after dealing with the allegations in the writ petition, this Court observed that the allegations in the writ petition were not sufficient to constitute an averment of mala fides so as the vitiate the orders of suspension issued in that case.
In such a situation the court was justified in refusing to carry out investigation into the allegations of mala fides if necessary particulars of the charge making a prima facie case were not there in the petition.
This Court reiterated that burden of mala fide prima facie lay very heavily on the person who alleged it.
There the petitioner sought to invalidate certain orders of suspension and it was the onus on them to establish the charge of bad faith or misuse of its power by the govern ment.
Halsbury 's laws of England, Fourth Edition, Volume 17 page 16 paragraph 19 deals with the standard of proof neces sary in these types of cases.
It has been stated that in civil cases the standard of proof is satisfied on a balance of probabilities.
However, even within this formula, there are variations depending upon the subject matter of allega tions.
481 About the adverse remarks being made against the erst while Chief Minister, we were reminded of the observations of this Court in The State of Uttar Pradesh vs Mohammad Naim 363 where this Court reiterated that it is a principle of cordinal importance in the administration of justice that the power, freedom of judges and Magistrates must be maintained and they must be allowed to perform their functions freely and without interference by any body, even by this Court.
But it is equally necessary that in express ing their opinions, Judges and Magistrates must be guided by considerations of justice, fair play and restriant.
Judicial pronouncements must be judicial in nature, and should ' not normally depart from sobriety, moderation and reserve.
In that case this Court found that the remarks in the judgment in respect of the entire police force of the State were not justified in the facts of the case, nor were they necessary for the disposal of the case and should have been expunged.
We are clearly of the opinion that the principle enunciated by that decision can have no application in the facts of this case.
In the instant case, the first issue was whether there was tampering of the gradesheet, a fact which has been found by the learned single judge and by the Division Bench and which is not in dispute in any of these appeals before us.
The other dispute was the allegation and the finding of the learned single judge was that the same was at the behest of the appellant in the first appeal and the respondent in the second appeal, Nilangekar Patil, the erstwhile Chief Minister.
This point was very much in issue.
He was a party.
He had been heard on this point.
So, therefore, whether the remarks were correct or not, is another issue but there was, no question of the remarks being beyond the issue and no question of the party against whom the remarks had been made had not been given an opportunity.
Our attention was drawn to the decision of this Court in Vineet Kumar vs Mangal Sain Wadhera AIR [1985] SC 817 in aid of the submission that additional evidence should have been allowed but in our opinion the context in which the said observation was made was entirely different and cannot have any relevance to the facts of this Case.
The Privy Counsil in The Bank of India and Others vs Jamesetji A.H. Chinoy and Messers.
Chinoy and Co. AIR reiterated that speculation is not enough to bring home the charge of fraudulent conspiracy.
In a different context dealing with the election matter in Sri Harasingh Charan Mohanty vs Sh.
Surendra Mohanty, ; the question arose was whether the consent or agency was there.
This Court observed that consent or agency of Shri Biju Patnaik could not be inferred from mere close friendship or other relationship or political affilia tion.
However, close was the relationship, unless there was evidence to prove that the person publishing or 482 writing the editorial was authorised by the returned candi date or he had undertaken to be responsible for all the publications, no consent could be inferred.
In our opinion, the observations must be read in the context of the facts of that case.
Seth Gulabchand vs Seth Kudilal and Others ; at 629] was a case under the Contract Act, 1872 where under section 3 of the applied the same standard of proof in all civil cases.
There this Court after referring to certain observations referred to the observations of the Division Bench of the Calcutta High Court in Jarat Kumari Dassi vs Bissesur.
ILR C.W.N. 265.
The Court thereafter referred to the definition of section 3 of the words 'proved ', 'disproved ' and 'not proved '.
Reference was made to the decision of the Patna High Court by Meredith, J. at page 630 in Raja Singh vs Chaichoo Singh AIR 1940 Patna 281 at 203 where it was ob served by Meredith, J. that it was well settled that where fraud had to be inferred from the circumstances and was not directly proved, those circumstances must be such as to exclude any other reasonable possibility.
In other words, the criterion was similar to that which was applicable to circumstancial evidence in criminal cases.
This Court ob served that this Court was unable to agree with those obser vations.
In that case this Court observed in respect of the allegation that a party had accepted bribe in a civil case did not convert it into a criminal case and ordinarily rule of civil cases would apply.
Reliance was placed on the observations of this Court in the case of Niranjan Patnaik vs Sashibhushan Kur and Another (supra) to which one of us (section Natarajan, J.) was a party where this Court dealt with certain adverse remarks made against the Minister.
This Court reiterated that the High Court and this Court must be deemed to have power to see that the courts below do not unjustly and without any lawful excuse take away the character of a party or of a witness or of a counsel before it.
The observations in that case in our opinion are inapplicable in the instant case.
There an adverse remark had been made which the court found to be unjustified which was not relevant to the issue in point and the party 'against whom such observations having been made was not a party to the said proceedings but only a witness.
Our attention was also drawn to certain English eases which have been noted by the Division Bench in the order under appeal and it is not necessary for us to refer to these in detail.
The Division Bench noted that this Court had in the case of State of Uttar Pradesh vs Mohammad Naim (supra) had exhaustively dealt with the limitation in making these remarks i.e. (1) whether a party whose conduct in question was before the court had an opportunity of explaining or defending himself; (2) whether there was evidence on record hearing on that conduct 483 justifying the remarks; (3) whether it was necessary for the decision of the case as an integral part thereof to refer to that conduct; and (4) the observations must be judicial in nature.
These tests, the Division Bench observed were satis fied in respect of the remarks made by the learned single judge.
The Division Bench was of the view that the circum stances relied before the learned single judge formed a reasonable and cogent basis for the adverse comment on the conduct of the appellant herein in the first appeal.
Howev er, the Division Bench made it clear that it was merely in the nature of an adverse comment based on the material on record and at the hearing of a proceeding which involved the taking of evidence merely on affidavit.
A fuller enquiry might lead to a conclusion that the comment was not justi fied.
In that view of the matter the Division Bench asked the learned counsel whether the appellant in the first appeal desired that there ' should be a full fledged factual enquiry into the charge of the grades of respondent No. 4 having been altered as aforesaid.
Such enquiry, however, must be done by a body, the Division Bench suggested, nomi nated by the Chief Justice of Bombay High Court.
Counsel for the appellant in the first appeal before us made no request for such an enquiry, however, must be done by a body, the Division Bench suggested, nominated by the Chief Justice of Bombay High Court.
Counsel for the an enquiry, before the High Court.
In other words, he was not willing to invite an enquiry to clear his image.
Shri Tarkunde, appearing on behalf of the respondent in the first appeal and appellant in the second one, submitted before us that there was sufficient substantial evidence before the learned single judge to come to the conclusion that the tampering was done at the behest of the erstwhile Chief Minister of Maharashtra.
He submitted it was a finding of fact based on substantial evidence and there was clear material on such evidence.
He further submitted that in a matter of this nature where public interest was involved namely, state of affairs in the University of Bombay in respect of a high degree in the medicine and in which the conduct of the Chief Minister was involved, public interest demanded that the High Court should have investigated the matter even though there might be some infirmities in the affidavit supporting the petition.
He submitted that in this case that after the initiation of the proceeding, public interest was involved and the High Court was justified in entertaining the application.
He, therefore, submitted that the second appeal arising out of Special Leave Petition No. 10665 of 1986 should be allowed.
He further submitted that in a case of this nature, additional evidence should have been admitted.
It was further submitted by Mr. Karanjawala, counsel, that even if this Court was inclined to accept that there was no distinction between a comment and a conclusion of fact in view of the facts disclosed in this case, this Court in exercise of its judicial discretion under article 136 of the 484 Constitution should not interfere in the facts and circum stances of this case.
He urged that neither the cause of justice nor public interest demanded interference under Article 136 of the Constitution.
It is true that exercise of the power under article 136 of the Constitution is discre tionary.
There is no question in this case of giving any clean chit to the appellant in the first appeal before us.
It leaves a great deal of suspicion that tampering was done to please Shri Patil or at his behest.
It is true that there is no direct evidence.
It is also true that there is no evi dence to link him up with tampering.
Tampering is estab lished.
The relationship is established.
The reluctance to face a public enquiry is also apparent.
Apparently Shri Patil, though holding a public office does not believe that "ceaser 's wife must be above suspicion".
The erstwhile Chief Minister in respect of his conduct did not wish or invite an enquiry to be conducted by a body nominated by the Chief Justice of the High Court.
The facts disclose a sorry state of affairs.
Attempt was made to pass the daughter of the erstwhile Chief Minister who had failed thrice before by tampering the record.
The person who did it was an employee of the Corporation.
It speaks of a sorry state of affairs and though there is no distinction between comment and a finding and there is no legal basis for such a comment, we substitute the observations made by the aforesaid observa tions as herein.
This Court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale.
It is necessary to cleanse public life in this country along with or even before cleaning the physical atmosphere.
The pollution in our values and standards is an equally grave menace as the pollution of the environment.
Where such situations cry out the Courts should not and cannot remain mute and dumb.
In that view of the matter, we dispose of the two ap peals and application for adducing additional evidence with the observations made aforesaid.
In the facts and circum stances of this case, there will be no order as to costs.
| Dr. Mahesh Madhay Gosavi appellant in CA 4453/86 and respondent in CA 4452/86 was a failed candidate at the M.D. examination in the speciality of Gynaecology and Obstetrics held in the year 1985.
He filed a writ petition under Arti cle 226 of the Constitution of India in the High Court of Bombay challenging the results of the M.D. examination held in November ' 85.
He alleged that favouritism was shown by one Dr. Rawal who went to the extent of tampering with grade sheets of the examinees so as to clear unsuccessful candi dates and in particular Smt.
Chandrakala Patil daughter of the Chief Minister of Maharashtra appellant in CA 4452/86 and respondent in cross appeal CA 4453/86.
In support of the writ petition alleging how the malpractice took place, he filed an affidavit (hearsay evidence) of one Dr. Manikant Mishra, who is supposed to have heard certain talks that took place between Dr. Rawal and Smt.
Chandrakala Patil at Dr. Rawals ' Chambers and that what the deponent heard came to be proved by the M.D. (Gynae) results in which one Dr. Smita Thakkar and Smt.
Chandrakala Patil who could not clear the said examination thrice were shown to have passed.
It was alleged that the tampering of the grade sheets were done by Dr. Rawal at the behest of the appellant in C.A. 4452/86.
The said allegations were refuted by the appellant Shivaji Rao Patil, Smt.
Chandrakala Patil, his daughter, Dr. Rawal and another Dr. Shah on oath by filing their affidavits.
The 459 respondent, though he had verified his petition, did not disclose the so called reliable source of information de rived by him.
(about the allegations made against the appel lant & others.
The learned Single Judge held: (i) that the evidence of Respondent Madhav Gosavi as well as of Dr. Mishra were unsatisfactory and unreliable: (ii) that it was impossible to place any reliance on the evidence of Dr. Mishra as it was not known how he came to contact Dr. Gosavi or why he did not choose to file affidavit till 28.2.1986 when the appellant Patil had already filed his affidavit on 26.1.86; (iii) that the allegation and the averments made in para graph 14 of the writ petition were wholly unsatisfactory and insufficient because the Respondent petitioner had not disclosed from whom he derived them; (iv) that there was tampering with grade sheets of Respondents 4 to 15 by Dr. Rawal and (v) that in the facts and circumstances of this it could reasonably be inferred that the alteration was done at the behest of the appellant in CA 4452/86 and her daughter Chandrakala.
This was because Dr. Rawal was an experienced examiner, not young or immature and a person like him would not proceed to do a criminal act and tamper with the record of the examination on his own with a view merely to please the people in power.
The risk involved in what Dr. Rawal had done was so enormous that it was difficult to conceive that he did it on his own.
Accordingly he allowed the writ peti tion, passed some structures against Dr. Rawal and the appellant in CA 4452/86 and gave certain directions about examination of 12 other candidates whose results were also affected by the conduct of Dr. Rawal.
An application made before the Judge for adducing cer tain additional evidence was rejected.
After the judgment the Vice Chancellor and the Chief Minister resigned from their posts.
Three appeals, No. 214/86 by Dr. Rawal No. 215/86 by Dr. Chaodrakala Patil and No. 216/86 by the appellant Shivaji Rao Patil, were heard and disposed of by the Division Bench consisting of the Acting Chief Justice Kania and Shah J. of the Bombay High Court on 16th June, 1986.
So far as appeal No. 216 of 1986 is concerned, according to the Division Bench; (i) there was no direct evidence that the alterations in the grades of Chandrakala Patil were made at the instance of the appellant; (ii) the reasonings of the trial Judge in coming to the conclusion that respondents No. 3 and 4 the original petition were responsible for getting Dr. Rawal to alter the grades was based on certain contingencies and were too tenuous for the conclusion based on such reasoning to amount to a positive finding; (iii) Merely because respond ent No. 3 to the original petition held a position of great power and would have been happy to see that his daughter had passed the M.D. examination, it was difficult to conclude, as a finding of fact that he must have 460 influenced Dr. Rawal to alter the grades of his daughter; (iv) it was true that a seasoned examiner like Dr. Rawal would not have taken the risk involved in altering the grades except under a great pressure or pursuation, but it cannot be ruled out the possibility of various motives which might have induced Dr. Rawal to take the risk of altering the grades; (v) however in all probability Dr. Rawal would not have acted unless he had made him assured that the appellant Shivaji Rao Patil was behind the person who pur suaded him 'to alter the grades; (vi) that when allegation of this type is made against anyone holding a position of prestige and power, it was necessary that the evidence should be closely examined before holding such allegation well founded.
Therefore the Bench observed that the remarks made against the appellant.
Nilangekar Patil cannot be supported as conclusions arrived at against him but these can be regarded as adverse comments and not finding of fact and such comments were not wholly unjustified in the facts of this case.
However, the Division Bench refused to enter tain an application to introduce additional evidence as part of the claim of public interest litigation.
Hence the appeal No. CA 4452/86 by Nilangekar Patii against the adverse comments were allowed to remain and there was a cross appeal 4453/86 by Dr; Madhav Gosavi against refusal to accept additional evidence.
Dismissing the appeals by special leave, the Court, HELD: 1.1 The basic principle of admission of addition al evidence is that the person seeking the admission of additional evidence should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance.
Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence.
Thirdly that additional evidence was relevant for the determination of the issue.
[474 G] Here, the additional evidence sought to be introduced mainly consist of alleged instances when the appellant on previous occassions had in respect of some criminal proceed ings and other matters pending used his influence to drop those proceedings.
Applying the principle as to admission of "similar fact evidence" it must be held that the allegations of the alleged conduct of the appellant in similar cases would not be a safe basis upon which to admit additional evidence in this case having regard to the issues involved and nature of the issues involved in these matters and at the stage when these were sought to be introduced.
[474 H, 476 E] Mood Music Publishing Co. Ltd. vs De Wolfe Ltd., @ 766, quoted with approval.
461 2.
The mere fact that several infirmities were noticed in the affidavit of Dr. Mishra upon which the original petitioner Dr. Gosavi based his own petition could not lead to the argument that the entertainment of the petition itself was wrong.
The allegations made in the petition disclose a lamentable state of affairs in one of the premier universities of India.
The petitioner might have moved in his private interest but enquiry into the conduct of the examiners of the Bombay University in one of the highest medical degrees was a matter of public interest.
Such state of affairs having been brought to the notice of the court, it was the duty of the court to the public that the truth and the validity of the allegations made be inquired into.
It was in furtherance of public interest that an enquiry into the state of affairs of public institution becomes necessary and private litigation assumed the character of public interest litigation and such an inquiry cannot be avoided if it is necessary and essential for the administra tion of justice.
[477F, 477G 478A] 3.1 It is true that exercise of the power under Article 136 of the Constitution is discretionary.
There is no ques tion in this case of giving any clean chit to the appellant in the first appeal.
It leaves a great deal of suspicion that tampering was done to please Shri Patil or at his behest.
It is true that there is no direct evidence.
It is also true that there is no evidence to link him up with tampering.
Tampering is established.
The relationship is established.
The reluctance to face a public enquiry is also apparent.
Apparently Shri Patii, though holding a public office does not believe that "ceaser 's wife must be above suspicion".
The erstwhile Chief Minister in respect of his conduct did not wish or invite an enquiry to be conducted by a body nominated by the Chief Justice of the High Court.
The facts disclose a sorry state of affairs.
Attempt was made to pass the, daughter of the erstwhile chief Minister who had failed thrice before by tampering the record.
The person who did it was an employee of the Corporation.
It speaks of a sorry state of affairs and though there is no distinction between comment and a finding and there is no legal basis for such a comment.
[484A D] 3.2 The court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale.
It is necessary to cleanse public life in this country along with or even before cleaning the physical atmosphere.
The pollution in the values and standards is an equally grave menace as the pollution of the environment.
Where such situations cry out the Courts should not and cannot remain mute and dumb.
[484 E] 3.3 Where allegations of mala fide were made, the Court must be cautious.
It is true that allegation of mala fides and of improper motives on the part of those in power are frequently made and their frequency has increased 462 in recent times.
In this task which is cast on the courts, it will be conducive to have disposal and consideration of them if those against whom allegations are made came forward to place before the court either the denials or their ver sion of the matter so that the courts might be in a position to judge whether the onus that lay upon those who make allegations of mala fides on the part of the authorities had been discharged in proving it.
It is true that the basis of the allegations being the affidavit of Dr. Mishra was con sidered to be thoroughly unreliable.
In this case there was specific and categorical denial by the erstwhile Chief Minister that tampering was done at his behest.
Therefore, while the court should be conscious to deal with the allega tions of mala fide or cast aspirations on holders of high office and power, the court cannot ignore the probabilities arising from proven circumstances.
[478 B, F G] C.S. Rawjee & Ors.
vs Andhra Pradesh State Road Trans port Corporation, , referred to.
3.4 Where evidence was adduced by affidavits, such affidavits might be properly verified either on knowledge or from sources.
Here it is true that undoubtedly the affidavit and the petition were defective, but the court has taken cognizance of the matter and certain inferences followed from the inherent nature of facts apparent from the facts brought before the court.
[479A. D] The Barium Chemicals Ltd. & Anr.
vs The Company Law Board & Ors., [1966] Supp.
SCR 311; Padmabati Dasi vs Rasik Lal Dhar, ILR XXXVII Calcutta 259; The State of Bombay vs Purushottam Jog Naik; , ; E.P. Royappa vs State of Tamil Nadu & Anr. ; ; Tara Chand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 SCR 198; and Sukhvinder Pal Bipan Kumar vs State of Punjab & Ors., ; ; Seth Gulabchand vs Seth Kudilal & Ors., ; at 629; Jarat Kumari Dassi vs Bissesur, ILR 39 Cal.
245:16 C.W.N. 265; Raja Singh vs Chaichoo Singh, AIR 1940 Patna 281 at 203, referred to.
The State of Uttar Pradesh vs Mohammad Naim, ; Vineet Kumar vs Mangal Sain Wadhera, AIR 1985SC817; The Bank of lndia & Ors., vs Jamesetji A.H. Chiney and Messrs. Chinoy and Co., AIR 1950 PC 90; Sri Harasingh Charan Mohantv vs Sh.
Surendra Mohanty, ; ; Niranjan Patnaik vs Shashibhushan Kar and Anr. , distinguished.
|
il Appeal Nos. 931 and 1149 of 1965.
Appeals from the judgment and decree dated July 31, 1964 of the Calcutta High Court in Appeal from Original Decree No. 613 of 1962.
N. C. Chatterjee, Janaradan Sharma, K. B. Rohtagi and section Balakrishnan, for the appellant (in C.A. No. 931 of 1965) and the respondent (in C. A. No. 1149 of 1965).
D.N. Mukherjee, for the respondent (in C.A. No. 931 of 1965) and the appellant (in C.A. No. 1149 of 1965).
The Judgment of the Court was delivered by Sarkar, C.J.
These appeals arise out of an election to a seat in the West Bengal Legislative Assembly from the Khargram Murshidabad constitutency reserved for members of the Scheduled Castes.
The contestants at this election were Abhoy Pada Saha and Sudhir Kumar Mondal.
Sudhir is admittedly a member of a Scheduled Caste.
Abhoy Pada described himself in the nomination paper as "a member of the Sunri caste which is a Scheduled Caste".
Sudhir objected to this nomination contending that Abhoy Pada did not belong to any Scheduled Caste.
The objection was rejected by the Returning Officer.
At the election which 388 ensued, Abhoy Pada secured 16,730 votes and Sudhir, 15,523 and the former was consequently declared elected.
Sudhir then filed a petition challenging the validity of Abhoy Pada 's election on various grounds.
At the hearing of the petition by the Election Tribunal, however, he challenged the election only on the ground that Abhoy Pada was a member of the Saha caste and not a member of a Scheduled Caste.
The Election Tribunal rejected this contention and dismissed the petition.
Sudhir then appealed to the High Court at Calcutta which reversed the decision of the Tribunal and declared the election of Abhoy Pada invalid and set it aside on the ground that he did not belong to a Scheduled Caste.
In his petition Sudhir had further claimed that he should be declared elected in the place of the appellant if the latter 's election was found to be invalid.
This prayer, however, was rejected by the High Court.
These two appeals are from the judgment of the High Court.
Appeal No. 931 of 1965 is by Abhoy Pada.
He challenges the validity of the order of the High Court setting aside his election.
Appeal No. 1149 of 1965 is by Sudhir and he challenges the validity of the order of the High Court rejecting his prayer to be declared elected.
We shall first deal with Appeal No. 931 of 1965 filed by Abhoy Pada and shall hereafter refer to him as the appellant and Sudhir as the respondent.
article 332 of the Constitution provides that seats shall be reserved for the Scheduled Castes in the Legislative Assembly of every State.
article 341 gives power to the President to specify by public notification the castes or parts of or groups within castes which shall for the purpose of the Constitution be deemed to be Scheduled Castes.
The President, on August 10, 1950, passed the Constitution (Scheduled Castes) Order, 1950 under article 341 setting out in its schedule the various castes which were declared Sche duled Castes.
This Order was amended from time to time by statutes passed by Parliament and it is agreed that at the relevant time Item 40 of Part 13 of the schedule to the Order which set out which were Scheduled Castes in West Bengal stood as follows: "Sunri excluding Saha".
Item 40 and some other items of the schedule were made applicable to the State of West Bengal except the Purulia District and the territories transferred from Purnea District of Bihar and it is with this item that we are concerned.
The question is, whether the appellant was a member of the Scheduled Caste specified in this item.
In the election petition, the respondent had stated that the appellant, was a member of the Saha caste and not a member of any Schedule Caste.
It was said that this showed that the respondent 's case was that the appellant belonged to an independent caste which had nothing to do with Sunri caste and that it was, therefore, not c open to him at the trial to contend, as he appears to have done.
389 that the appellant was a Sunri by caste but was excluded from the Scheduled Caste group because he belonged to a smaller caste group of Sunirs known as Sahas.
We are unable to take this strict view of the pleading.
The petition may, in our opinion, be reasonably read as stating that the appellant was a member of the Saha caste, a smaller caste group within the bigger caste group of Sunirs and was for that reason not a member of the Scheduled Caste specified in item 40.
We also observe that this reading of the petition which was accepted by the Election Tribunal, did not cause any surprise to the appellant at the trial or result in any injustice.
The High Court also read the petition in the same way.
In our view, it was open to the respondent to show that the appellant belonged to the Saha caste group within the Sunri caste group and did not, therefore, belong to the Schedule Caste specified in item 40 as he claimed.
The Tribunal rejected the respondent 's case that the Sunri caste was divided into certain groups of which the Sahas formed one.
It came to the conclusion that the Sahas originally belonged to the Sunri caste but for a long time past they had formed themselves into a different caste which had no connection with the Sunris.
It is not very clear whether the Tribunal thought that the Sahas were originally a smaller caste group within the Sunri caste group or were only distinguished from the other Sunris by their surname.
We are, however, inclined to think that the Tribunal thought that the Sahas were originally a smaller caste group within the Sunri caste because it rejected a contention advanced by the respondent that item 40 excluded from Sunirs those who bore the surname Saha observing that the names given in the schedule to the Order all referred to castes, subcaliber or groups.
It found that the evidence clearly established that the appellant belonged to the Sunri caste a fact which appears to have been admitted by the respondent and, therefore, did not belong to the independent caste which according to the Tribunal, the Sahas have formed for a long time past.
In that view of the matter, the Tribunal held the appellant to be a Sunri and a person belonging to the Schedule Caste specified in item 40 and, therefore, dismissed the election petition.
It took the view that item 40 had excluded Sahas from Sunirs by way of abundant caution, so that the Sahas who had originally belonged to the Sunri caste but had long 'ago severed all connections with it and developed into a distinct and independent caste, might not claim, by virtue of their origin, to belong to the Sunri caste stated in the item.
In the High Court P. N. Mookerjee, J. observed that the Tribunal had gone wrong in considering the Sahas as an independent caste.
He said that the expression "excluding" denoted that the Sahas contemplated would, but for this word, have come within the Sunri caste.
He held that the Sahas formed "a group within the Sunri caste be it a sub caste strictly so called or other 390 wise".
He also held that the evidence did not establish that the Sahas formed a sub caste strictly so called within the Sunri caste of a caste wholly independent of the Sunri caste.
His conclusion was that the expression "excluding Saba" referred to those Sunris who bore the surname Saha irrespective of whether they belonged to a sub caste strictly so called, of Sunris or not.
The learned Judge, therefore, held that as the appellant bore the surname Saha, he did not belong to the Scheduled Caste specified in item 40 though he was a Sunri.
The other learned Judge, Basu, J. held that the words "parts or groups within castes" in article 341 were wide enough to refer to any determinate part of a caste distinguished by a surname or otherwise and it was not necessary that such part must necessarily form a sub caste.
He also held that the evidence broadly supported "the conclusion that the respondent 's family belongs to the Saba sub caste or group within the Sunri caste".
The learned Judge however, appears to have set aside the decision of the Tribunal and directed the election of the appellant to be set aside on the ground that the appellant bore the surname Saha and was thereby excluded from the Scheduled Caste specified in item 40 for he said "these Saha families, within the fold of Sunri caste, distinguished themselves by their surname, whatever might be their other characteristics" and have come to form a class apart from the rest of the Sunris.
Now, the point in issue is, whether the appellant satisfied the description "Sunri excluding Saha" in item 40 of the President 's Order.
To decide that point, the description has first to be properly interpreted and understood.
As we have said, the Tribunal thought that the Sahas formed a distinct caste wholly outside the Sunri caste and they had been specifically excluded in item 40 for greater safety o prevent them from claiming to be Sunris by reason of their origin.
The learned Judges of the High Court thought that the effect of the item was to exclude from the Sunri caste those who belonged to that caste but bore the surname Saha.
We are unable to agree with either of these interpretations.
There is no doubt that Sunri is a caste.
Nobody disputes that.
That also follows from the fact that the Constitution (Scheduled Castes) Order, 1950 was promulgated to indicate those castes who are to be considered as Scheduled Castes for the purpose of the Constitution.
"Sunri" in item 40, therefore.
refers to a caste.
If Sunri is a caste, the word 'Saha ' in the expression "excluding Saha" in the item must, without more.
also refer to a caste group within the Sunri caste.
It is legitimate to think that when a statute says that a thing is to be excluded from another, both things are of the same kind; if one is a caste.
the other must be a caste.
It follows that when the item excluded Sahas from Sunris, since Sunri is a caste group, Saha must equally be another caste group.
The Tribunal appears to have taken the same view.
Now a thing can be 391 excluded from another only if it was otherwise within it.
Therefore, the correct interpretation of the item is that it indicates men of the Sunri caste but not those within that caste who formed the smaller caste group of Sahas.
This is where the Tribunal went wrong.
The Tribunal came to its conclusion that "Saha" in the item referred to a caste distinct from the Sunri caste because the evidence before it did not show that there was within the Sunri caste, a smaller caste group called Sahas.
The error of the Tribunal lay in interpreting the Order in the light of the evidence before it.
There was no justification for doing that.
After all, the evidence led in a case may be imperfect.
Suppose the evidence in another case led to the conclusion, as it might conceivably do, that there was a smaller caste group within the Sunri caste, called Sahas.
In that case, if the reasoning applied by the Tribunal is right, it has to be held that the expression "excluding Saha" meant excluding a smaller caste group called Sahas.
A method of interpreting a statutory provision which might lead to such uncertainty cannot be correct.
If the correct interpretation of item 40 was, as we think it was, that Sahas were a caste group within the Sunri caste, no question of Sahas being a distinct class independent of Sunris ,could arise.
The finding that Sahas were a wholly independent caste was altogether irrelevant to the point in issue.
Evidence cannot alter the natural interpretation of the words in the Order.
For the same reason, we are unable to agree with the interpretation of the High Court that the Sahas excluded were those Sunris who bore the surname Saha.
We think the learned Judges of the High Court also interpreted item 40 in the light of the evidence in the case.
If the intention was to exclude from Sunris those members of that caste who bore the surname Saha, the item would have said so; it would then have read "Sunri excluding those who bore the surname Saha".
In the absence of such words "Saha" must, in the context, be understood as referring to a smaller caste group within the bigger caste group of Sunris.
Surname is irrelevant as a test for applying item 40 unless it is shown that it indicated a smaller caste group of Sunris.
It is nobody 's case that there is evidence to show that.
It is of interest to remind in the connection that the Order provides that the Sunris in the Purulia District and those parts of the Purnea District which had been transferred to West Bengal were not to be considered as belonging to a Scheduled Caste.
That would show that where the exclusion is by a test other than a caste group, the Order expressly says so.
It is natural to think that if the excluded Sahas were those Sunris who bore the surname Saha, the Order would have made that clear.
In our opinion, the learned Judges of the High Court were in error in interpreting the item on the evidence in the case as they appear to have done.
L/S5SCI 27 392 If we are right in our interpretation of item 40, then the only question that has to be decided in this case is, whether the respondent has established that the appellant belonged to a smaller caste group called Sahas within the Sunri caste.
This question presents no difficulty.
The respondent called witnesses to establish that the appellant belonged to the smaller caste group of Sahas.
These witnesses were disbelieved by the Tribunal which described them as unreliable.
P.N. Mookerjee, J. said, "it has not been proved that the respondent (appellant here) belonged to any separate Saha caste or to any Saha Sunri sub caste of the Sunri caste".
Though Basu, J. said that the appellant belonged to the Saha group of Sunris, it would appear that 'he was thinking of that group as consisting of those Sunris who bore the surname Saha.
All the courts in West 'Bengal, therefore, came to the conclusion that it had not been prov ed in this case that the appellant belonged to the smaller caste group of Sahas.
We have no reason to take a different view of the evidence.
The result then is, that the appellant is a Sunri by caste and has not been proved to belong to the smaller caste group of Sahas.
He must be held to belong to the Scheduled Caste specified in item 40.
That being so, the election petition must fail.
Accordingly, we allow Appeal No. 931 of 1965 and set aside the judgment of the High Court and restore that of the Election Tribunal dismissing the petition.
The appellant will get the costs throughout.
In the view that we have taken in Appeal No. 931 of 1965, the other appeal must necessarily be dismissed and we, therefore, dismiss it with costs.
One set of hearing fees only.
Appeal No. 931 of 1965 allowed.
Appeal No. 1149 of 1965 dismissed.
| When item 40 of Part 13 of the Schedule to the Constitution (Scheduled Castes) Order, 1950, declared "Sunris excluding Sahas" as a Schduled Caste, it indicates that men of Sunri caste but not those within that caste who formed the smaller caste group of Sahas, are members of a Scheduled Caste.
It does not indicate that Sahas are a caste distinct from the Sunri caste, nor was it intended to exclude from Sunris those members of that caste who bore the surname Saha.
[391 A, D].
Therefore, when the respondent challenged the election to the West Bengal Legislative Assembly, of the appellant who described himself as a member of the Sunri caste, on the ground that he was a member of the Saha caste group but failed to prove the allegation, it must be held that the appellant was a Sunri by caste and belonged to the Scheduled caste specified in the item, even though he bore the surname Saha.
[392 D].
|
Appeal No. 1690 of 1993.
From the Judgment and Order dated 14.2.1991 of the Central Administrative Tribunal Jabalpur in O.A. No. 217 of 1987.
M.K. Ramamurthi and V.J. Francis for the Appellants.
Narayan B. Shetye, K. Lahiri, Vineet Kumar, Ms. Sushma Suri, Ms. Kitty Kumar Mangalam, S.N. Terdo and B.K. Prasad for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Special leave granted.
This appeal is a sequel to the checkered litigation, over a period of two decades, between members of the Indian Ordnance Factories Class III Service (the Service).
The first round of litigation was concluded in favour of K.K.M. Nair and others, the appellants, on July 28,1986 when the special leave petitions filed by the Union of India, against the judgment of Madhya Pradesh High Court, were dismissed by this court.
As a consequence the Director General Ordnance Factories (DG) issued an order dated February 20/25, 1987 granting benefits to the appellants towards seniority 909 in different grades of the Service.
S.K Chattopadhyay and others, the respondents, who were not parties to the earlier litigation, challenged the order dated February 20/25, 1987 before the Central Administrative Tribunal.
The Tribunal by its judgment dated February 14,1991 allowed the application of S.K Chattopadhyay and others and set aside the order dated February 20/25, 1987.
This appeal by K.K.M. Nair and others is against the judgment of the Central Administrative Tribunal Jabalpur.
The recruitment and seniority of the members of the Service are governed by the statutory rules called 'Indian Ordnance Factories (Recruitment and Conditions of Service of Class III Personnel) Rules, 1956" (the rules).
Rules 3(1), 8 and 12 of the rules which are relevant are reproduced hereunder: "3(1).
The Class III personnel service in the Indian Ordnance Factories to which these rules shall apply consists of the posts of the following grades, namely: Foreman (including Foreman/Design).
Storeholder Assistant Foreman Assistant Storeholder Chargeman, Grade I (including Chargeman, Grade I/Design) Chargeman, Grade II Supervisor, Grade 'A ' Supervisor, Grade 'B '.
8(1) Appointments by promotion shall be made by the Director General on the basis of selection lists prepared for the different grades by the duly constituted Depart mental Promotion Committees.
(2) Such Selection lists shall be prepared: 910 (a) In respect of appointment to the grade of Foreman, Storeholder, Assistant Foreman, Assistant Storeholder by the Departmental Promotion Committee 11 consisting of the Director General and two officers of the Directorate General, Ordnance Factories nominated by the Director General; (b) In respect of appointments to the grade of Chargeman, Grade I, and Chargeman, Grade 11, by the Departmental Promotion Committee III (Central) consisting of the Deputy Director General, Ordnance Factories and two officers of the Directorate General, Ordnance Factories nominated by the Director General after perusal of the recommendations of the Departmental Promotion Committee III (Factories) which shall be set up in each Factory and shall consist of the Superintendent of the Factory and two other gazetted officers of the Factory nominated by the Director General; and (c) In respect of appointments to the grades of Supervisor 'A ' and 'B ' Grades by the Departmental Promotion Committee III (Factories) consisting of the Superintendent of the Factory and two other gazetted officers of the Factory nominated by the Director General.
(3) The Departmental Promotion Committee shall meet periodically at least once a year and as more often as may be necessary and shall prepare for each grade and category in order of merit a list of names of persons considered at for promotion.
(4) A vacancy to be filled by promotion shall be filled by persons on the approved list strictly in the order in which names are arranged in that list provided that: (i) appointments to the grade of Supervisors, Grade 'A ' shall normally be confined to employees in the particular Factory in which the Vacancy has arisen; and (ii) in respect of appointment to other posts the next 911 person on the list working in the Factory in which the vacancy has arisen may be appointed out of turn if the vacancy is not likely to last for more than nine months.
No appointment to the posts to which these rules apply shall be made otherwise than as specified in these rules".
Appellants 1, 6, 11 and 12 were appointed Supervisor Grade 'B ' during the years 1961/62.
The remaining appellants were appointed Supervisor Grade 'A ' during the period 1964/65.
Appellants 1 to 11 were promoted as Chargeman, Grade II on different dates during 1972/77.
They were promoted to Chargeman Grade I during the years 1979/80.
They were further promoted to the post of Assistant Foreman during the period 1981 to 1984.
S.K. Chattopadhyay and others are respondents 4 to 9 in this appeal.
Respondents 4 and 5 joined as Chargeman Grade II in the year 1966, respondent 9 in the year 1967, respondent 6 in the year 1971 and respondents 7 and 8 in the year 1974.
They were promoted to Chargeman Grade I during the years 1978/1979.
Respondents 4 to 9 were further promoted to the post of Assistant Foreman during the period from 1980 to 1984.
It is not disputed that the recruitment and promotions of the appellants and respondents were made in accordance with the rules.
It is necessary to lay down the factual matrix which led to the passing of the order dated February 20/25, 1987 by the DG.
The DG issued circular dated November 6, 1962 (first circular) which is reproduced hereunder: "D.G.O.F. has decided that Diploma holders serving as Supervisor 'A ' (Tech)/Supervisor 'B '/(Tech) and in equivalent grades should be treated as follows: (i) All those Diploma holders who have been appointed as Supervisor 'B ' (Tech) (and in equivalent grades) should on completion of one year 's satisfactory service in ordnance factories be promoted to Supervisor 'A ' (Tech) and in equivalent grades.) (ii) All those Diploma holders who work satisfactorily as Supervisor 'A ' (Tech) or in equivalent grades for 2 years in Ordnance Factory should be promoted to Chargeman.
" 912 Subsequently the D.G. issued circular dated January 20, 1966 (second circular).
The operative part of the second circular is as under: "The question of promotion of Diploma holders in Mech/Elec.
Engineering and Ex apprentices serving as Supr. 'A ' Gr. or in equivalent grades has received further consideration of the D.G.O.F. who has decided that in future promotions of all such individuals will be effected in accordance with the normal rules i.e. on the basis of their listing by the relevant D.P.C. and not merely on completion of 2 years satisfactory continuous service as Super.
or equivalent grades. ' It is, thus, obvious that after the issue of second circular no Supervisor Grade 'A ' could claim to have become eligible for promotion merely on completion of two years satisfactory service and his promotion thereafter could be effected only in accordance with the rules.
In a nut shell the first circular was withdrawn by the second circular.
Seventy Five supervisors Grade 'A ' (other than the appellants and the respondents before us) filed a writ petition in the Allahabad High Court in the year 1972 claiming benefit of the first circular.
Their grievance was that they were not being promoted to the post of Chargeman Grade 11 on completion of two years satisfactory service even though large number of Supervisors Grade 'A ' had already been promoted in terms of the first circular.
The writ petition was contested by the Union of India, inter alia, on the ground that under rule 8 of the rules promotion from Supervisor Grade 'A ' to Chargeman Grade II was to be made on the basis of selection.
In the first instance the selection was to be made by the Departmental Promotion Committee at the Factory level and thereafter by the Departmental Committee at the central level.
The promotions were to be made by the DG on the basis of the select list prepared as a result of the selections made by the two committees.
It was further asserted that all the writ petitioners were considered for promotion in accordance with the rules but they were not found fit for promotion.
The learned Single Judge of the Allahabad High Court, however, did not go into the merits of the controversy and dismissed the writ petition on the ground of delay.
Against the judgment of the learned Single Judge appeal was preferred before a Division Bench of the High Court.
The Division Bench went into the merits 913 of the controversy and came to the conclusion that promotion from Supervisor Grade 'A ' to Chargeman Grade II could only be made in accordance with the procedure laid down under the rules.
The learned Judges further took the view that the first circular was to be interpreted in conformity with the rules.
It was further held that even if it was to be assumed that the DG promoted some Supervisors Grade 'A ' to the post of Chargeman Grade II immediately on the completion of two years service, without following rule 8 of the rules, no right would accrue in favour of the writ petitioners inasmuch as such promotions would be contrary to the rules and would confer no legal right on the writ petitioners for likewise promotion in breach of the rules.
The argument based on Article 16 was also rejected.
The Division Bench of the Allahabad High Court, thus, dismissed the writ petition on merits.
Against the judgment of the Allahabad High Court Civil Appeal No. 441 of 1981 was preferred in this Court.
Since the order dated February 2, 1981 passed in Virendra Kumar & Ors.
vs Union of India and Ors.
Civil Appeal No. 441/81 is the backbone of the appellants claim we reproduce the said order hereunder: "Heard counsel.
Special leave granted.
Our attention has been invited by learned counsel for both the sides to the relevant rules which govern promotion to the post of Chargeman Grade 11.
It appears that a large number of persons have been promoted to those posts though they have completed only two years of service.
The Government now appears to insist that in so far as the appellants are concerned they cannot be considered for promotion unless they complete three years of service.
We see no justification for any such differential treatment being given to the appellants.
If a large number of other persons similarly situated have been promoted as Chargeman Grade 11 after completing two years of service, there is no reason why the appellants should also not be similarly promoted after completing the same period of service.
We are not suggesting that the appellants are entitled to be promoted to the aforesaid posts even if they are found unfit to be promoted.
We therefore direct that the concerned authorities will 914 consider the cases of the appellants for promotion as Chargeman Grade 11 and promote them to the said posts unless they are found to be unfit.
If the appellants are promoted, they will naturally have to be promoted with effect from the date on which they ought to have been promoted.
This order will dispose of the appeal.
There will be no order as to costs.
" Thereafter K.K.M. Nair and 124 others, the appellants, filed six writ petitions before the Madhya Pradesh High Court during the period 1981 82.
It was contended before the High Court that the reasons which weighed with this Court in allowing Civil Appeal No. 441/81 applied to the six writ petitions also and it was prayed that the same relief be granted to the petitioners.
The Madhya Pradesh High Court, relying upon the judgment of this Court in Civil Appeal No. 441/81, allowed the writ petitions by its judgment dated April 4, 1983.
Against the aforesaid judgment of the Madhya Pradesh High Court special leave petitions (Civil) 'Nos. 5987 92/86 were filed in this Court by the Union of India and were dismissed on July 28, 1986.
Pursuant to the judgment of the Madhya Pradesh High Court dated April 4, 1983 the DG issued the order dated February 20/25, 1987 giving ante dated seniority to the appellants for the purposes of promotion to the next higher grades.
The appellants were, thus, given deemed dates of promotion to the post of Chargeman, Grade 11 from the date when they completed two years of service as Grade A and consequent seniority in the other higher grades.
S.K. Chattopadhyay and others who were senior to the appellants in the cadre of Chargeman, Grade 11 and other higher grades in the service were made junior to the appellants as a consequence of the order dated February 20/25, 1987.
At this stage we may notice the judgment of this Court in Palun Ramkrishnaiah & Others etc.
vs Union of India & Anr., ; delivered by a Three Judge Bench of this Court dismissing a bunch of nineteen writ petitions under Article 32 of the Constitution of, India.
The petitioners in the aforementioned writ petitions claimed to have been appointed as Supervisors, Grade 'A ' in various ordnance factories between 1962 to 1966 and had filed the writ petitions with the prayer that the same relief be granted to them as was given by this Court to seventy five 915 Supervisors, Grade A in Civil Appeal No. 441 of 1981.
This Court in Paluru 's case considered the rules, the first circular, the second circular and the order of this court in Civil Appeal No. 441/81 dated February 2, 1981.
Dismissing the writ petitions this Court held as under: 1.
The executive instruction could make a provision only with regard to a matter which was not covered by the rules and such executive instruction could not over ride any provisions of the rules.
Notwithstanding the issue of the instructions dated November 6, 1962 the procedure for making promotion as laid down in rule 8 of the Rules had to be followed, and the said procedure could not be abrogated by the executive instructions dated November 6, 1962.
The only effect of the circular dated November 6, 1962 was that Supervisors Grade 'A ' on completion of two years satisfactory service could be promoted by following the procedure contemplated by rule 8 of the Rules.
This circular had indeed the effect of accelerating the chance of promotion.
The right to promotion on the other hand, was to be governed by the rules.
This right of promotion as provided by the rules was neither affected nor could be affected by the circular.
After coming into force of the circular dated January 20, 1966 promotions could not be made just on completion of two years satisfactory service tinder the earlier circular dated November 6, 1962, the same having been superseded by the latter circular.
Supervisor, Grade A who had been promoted before the coming into force of the circular dated January 20, 1966 stood in a class separate from those whose promotions were to be made thereafter.
The fact that some Supervisors, Grade A had been promoted before the coming into force of the circular dated January 20, 1966 could not, therefore, constitute the basis for an argument that those Supervisors Grade A whose cases came up for consideration thereafter and who were promoted in due course in accordance with the rules were discriminated against.
There are sufficient indications that when Civil Appeal No. 441/81 was heard by this Court the circular dated January 20, 1966 and the legal consequences flowing therefrom were not brought to the notice of this Court by the learned counsel for the respondents or the same were not 916 properly emphasised.
It is thus obvious that the Three Judge Bench of this Court in Paluru 's case did not approve the order dated February 2, 1981 of Two Judge Bench in Civil Appeal No. 441/81.
Since the judgment of this Court in Civil Appeal No. 441/81 had become final inter partes, it had to be implemented.
While considering the extent of the relief to be given to the appellants in Civil Appeal No. 441/81 this Court in Paluru 's case observed as under: "As already noticed earlier certain writ petitions filed in Madhya Pradesh High Court were allowed by that Court were allowed by that Court on 4th April, 1983 relying on the judgment of this Court dated 2nd February, 1981 in Civil Appeal No. 441/81.
Against th e aforesaid judgment of the Madhya Pradesh High Court dated 4th April, 1983 Special Leave Petitions (Civil) Nos.
5987 92 of 1986 were filed in this Court by the Union of India and were dismissed on 28th July, 1986.
The findings of the Madhya Pradesh High Court in its judgment dated 4th April, 1983 thus stand approved by this Court.
In this view of the matter to put them at par it would be appropriate that the appellants in Civil Appeal No. 441 of 1981 may also be granted the same relief which was granted to the petitioners in the writ petitions before the Madhya Pradesh High Court.
" The appellants have raised an argument based on the above quoted observations of this Court in Paluru 's case which we shall consider at a later stage in this judgment.
We may come back to the point of time when the Director General issued the order dated February 20/25, 1987 giving ante dated seniority to the appellants in various grades of the service.
As mentioned above S.K. Chattopadhyay and others were not impleaded as parties at any stage of the litigation earlier to the issue of the said orders.
They were adversely affected in the matter of seniority for the first time by the order dated February 20/25, 1987.
S.K. Chattopadhyay and others challenged the said order before the Central Administrative Tribunal, Jabalpur Bench.
The 917 Tribunal by its judgment dated February 14, 1991 allowed the application of S.K. Chattopadhyay and others and set aside the order dated February 20/25, 1987 giving ante dated seniority to the appellants.
We agree with the conclusions reached by the Tribunal though we do not appreciate the reasoning adopted by the Tribunal in reaching the said conclusions.
This Court has authoritatively laid down in Paluru 's case that Civil Appeal No. 441/81 was not correctly decided by this Court.
The appellants have through out, been basing their claim on the order dated February 2,1981 in Civil Appeal No. 441/81.
Once the base is knocked out by the judgment of this court in Paluru 's case the appellants are left with no ground to sustain the order dated February 20/25, 1987 by which they were given ante dated seniority.
Following the judgment of this Court in Paluru 's case and the reasoning therein we uphold the impugned judgment of the Central Administrative Tribunal, Jabalpur.
Mr. M.K. Ramamurthy, learned counsel for the appellants, has vehemently argued that the judgment dated April 4, 1983 by the Madhya Pradesh High Court in favour of the appellants having been approved by this Court in Palunt 's case the Tribunal had no jurisdiction to negate the same.
We do not agree with the learned counsel.
We have reproduced above the paragraph from the judgment in Paluru 's case wherein this Court has observed, "findings of the Madhya Pradesh High Court in its judgment dated 4th April, 1983 thus stand approved by this Court".
It is not disputed that the said "approval" by this Court was by dismissing the special leave petitions against the judgment of the Madhya Pradesh High Court.
There is no reasoned judgment/order by this Court approving the judgment of the Madhya Pradesh High Court.
It is not necessary for us to go into the question whether in a situation like this any court below could have reversed the judgment by review or otherwise, because in this case we are faced with different situation.
S.K. Chattopadhyay and others were not parties to the proceedings before the Madhya Pradesh High Court which ended by the dismissal of the special leave petitions by this Court on July 28, 1986.
Till that date no action adverse to them had been taken by the DG or any other authority.
It was incumbent on the appellants to have impleaded all the persons who were likely to be adversely affected in the event of appellants success in the writ petition before the Madhya Pradesh High Court.
Under the circumstances 918 even if it is assumed that the Madhya Pradesh High Court judgment had 'become final and could not have been reviewed by the High Court or the Tribunal, it became final only between the parties inter se.
The first circular was issued in the year 1962.
The appellants filed writ petitions in the Madhya Pradesh High Court twenty years thereafter seeking enforcement of the first circular.
The petitioners wanted the clock to be put back by two decades through the process of the Court.
All those persons who were promoted in accordance with the rules during that long period and were not parties before the Madhya Pradesh High Court cannot be made to suffer for no fault of theirs.
On the other hand, S.K. Chattopadhyay and others challenged the order dated February 20/25, 1987 which affected them adversely within the period of limitation before the Central Ad ministrative Tribunal.
In any case the judgment of this Court in Civil Appeal No. 441 of 1981 having been over ruled by Three Judge Bench of this Court in Paluru 's case, the appellants have neither the law nor the equity on their side.
The judgment of the Tribunal being in conformity with the law laid down by this Court in Paluru 's case, we see no ground to interfere with the same.
Before parting with this judgment we may mention that because of contradictory judgments of various courts and Central Administrative Tribunals in the country the seniority position of the members of the service all over the country, numbering about twenty thousand could not be crystallised over a period of two decades.
We have been informed by the Union of India that the Central Administrative Tribunals all over the country have, by and large, taken uniform view following the judgment of this Court in Paluru 's case and the seniority lists have been issued in conformity therewith.
It has been a long drawn out battle in the court corridors causing lot of expense and suffering to the members of the service.
We hope that this judgment has finally drawn the curtains over the con troversy.
The appeal, is therefore, dismissed.
No costs.
G.N. Appeal dismissed.
| The Director General, Ordnance Factories (D.G.) issued a Circular dated 6.11.1962 to the effect that the Diploma holders who have been appointed as Supervisor Grade 'B ' (technical) or in equivalent grades, should on completion of one year 's satisfactory service be promoted the post of Supervisor Grade 'A ' (Tech.) and the Diploma holders who worked satisfactorily as Supervisor 'A ' (Tech.) or in equivalent grades for 2 years should be promoted as Chargeman.
Subsequently the D.G. issued another Circular dated 20.1.1966 according to which promotions were to be in accordance with normal rules,i.e.
on the basis of their listing by the relevant Departmental Promotion ' Committee and not merely on satisfactory completition of 2 years continuous service as Supervisor 'A ' Grade or equivalent grades.
In effect, the first Circular was withdrawn by the second Circular.
In 1973 some Supervisors Grade 'Al riled a Writ Petition before the High Court claiming benefit of the first circular.
Without going into the merits of the controvery, a Single Judge of the High Court dismissed the Writ Petition on the ground of delay.
On appeal, a Division Bench of the High Court dismissed the Writ Petition on merits.
On further appeal this Court directed that the cases of those appellants be considered for promo906 907 tion as Chargeman Gr.
II and they promoted them, unless they were found unfit, from the dates on which they ought to have been promoted.
(Virendra Kumar & Ors.
vs U.O.I, C.A. No. 441/1981 decided on 2.2.81).
Thereafter the present appellants riled Writ Petitions before the High Court praying for the same relief as was granted by this Court in Virendra Kumar 's case.
The High Court allowed the Writ Petitions.
The Special Leave Petitions filed by the Union of India against the Judgment came to be dismissed.
Consequently.
the D.G. issued an order giving antedated seniority to the appellants for the purposes of promotion.
The appellants were also given deemed dates of promotion to post of chargeman Gr.11 from the dates when they completed two years of service as Supervisor Gr. 'A ' and consequent seniority in the other higher grades.
This resulted in some employees who were senior to the appellants in the cadre of Chargeman Gr.
II and other higher grades becoming junior to the appellants.
These employees who were 'adversely affected by the order of the D.G. giving ante dated seniority to the appellants and were not impleaded as parties at any stage of the litigation, challenged the DG 's order before the Central Administrative Tribunal.
The Tribunal allowed the application and set aside the DG 's order giving ante dated seniority to the appellants.
Aggrieved by the Judgment of the Tribunal, the appellants preferred the present appeal.
Dismissing the appeal, this Court, HELD: 1.
This Court has authoritatively laid down in Paluru 's case that Civil Appeal No. 441/81 Virendra Kumar vs U.O.I, was not correctly decided.
The appellants have throughout been basing their claim on Virendra Kumar 's case.
Once the base is knocked out by the judgment of this Court in Paluru 's case the appellants are left with no ground to sustain the order dated February 20/25, 1987 issued by the D.G. by which they were given ante dated seniority.
[917 B C] 1.2.
Even if it is assumed that the High Court judgment had become final with the dismissal of the SLP against it, and could Rot have been reviewed by the High Court or the Tribunal, it became final only between the parties inter se.
The first circular was issued in the year 1962.
The appellants riled writ petitions in the High Court twenty years thereafter seeking enforcement of the first circular.
The petitioners wanted the clock to be put back by two decades through the process of the Court.
All those 908 persons who were promoted in accordance with the rules during that long period and were not parties before the High Court could not be made to suffer for no fault of theirs.
On the other hand some employees challenged the order dated February 20/25, 1987 which affected them adversely within the period of limitation before the Central Administrative Tribunal.
In any case the judgment of this Court in Virendra Kumar having been over ruled in Paluru 's case, the appellants have neither the law nor the equity on their side.
The judgment of the Tribunal being in conformity with the law laid down by this Court in Paluru 's case there is no ground to interfere with the same.
[918 A D] Paluru Ramkrishnaiah & Ors. etc.
vs Union of India & Anr., ; , followed.
Virendra Kumar & Ors.
vs Union of India & Ors.
, Civil Appeal No. 441/81 decided on 2.2.1981, referred to.
|
Civil Appeals Nos.
2563 2565 of 1969.
From the judgment and order dated the 17th May, 1968 of the Patna High Court in original order Nos. 283 285 of 1963.
M.L. Lahoty, S.C. Patel and H. Roy for the Appellant.
G.S. Chatterjee, for the Respondent State of Bengal.
Bhagat Additional Solicitor General and D. Goburdhan for the Respondent, State of Bihar.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The question involved in these three appeals by certificate relates to the liability of the State of Bihar to pay the amount of compensation in respect of lands which after their acquisition by it under the Land Acquisition Act stood transferred to the State of West Bengal under the (Act No. 40 of 1956 hereinafter referred to as 'the Act ').
The facts of these cases may be briefly stated thus: Three pieces of land belonging to the appellant which were situated in village Madati in the District of Purnea in the State of Bihar were 880 acquired under the provisions of the Land Acquisition Act by the State of Bihar in the year 1951 for a certain public purpose.
After the Land Acquisition officer passed the awards in respect of the said lands, the question of determination of proper compensation was referred to the District Judge, Purnea under section 18 of the Land Acquisition Act at the instance of the appellant.
The District Judge by his judgment and award dated May 7, 1954 enhanced the compensation payable in each of the three cases.
Against that judgment, the State of Bihar filed three appeals before the High Court of Patna in the year 1954.
When the appeals were pending before the High Court the Act was passed and it came into force on the appointed day i.e. November 1, 1956.
Under the Act, the area in which the acquired lands were situated stood transferred to the State of West Bengal.
The appeals were, however, not transferred to the Calcutta High Court.
The State of West Bengal was also not substituted in the place of the State of Bihar in the appeals.
The appeals were dismissed by the Patna High Court after hearing the counsel for the State of Bihar on March 8, 1960.
The appellant thereafter filed execution petitions in the Court of the Additional District Judge impleading the State of Bihar as the judgment debtor in 1961.
The State of Bihar raised objections to the execution proceedings by way of petitions under section 47 of the Code of Civil Procedure in March, 1962 stating that its liability under the decree had ceased by virtue of the provisions of the Act and that the State of West Bengal within whose jurisdiction the acquired lands were situated was liable to pay the decretal amounts.
The executing court upheld the plea of the State of Bihar and dismissed the execution petitions by its order dated July 9, 1963.
The appellant preferred appeals against the orders of the executing court before the High Court of Patna.
The said appeals were also dismissed.
Hence these appeals.
It should be stated here that the State of West Bengal had not been impleaded as a party either in the executing court or in the High Court.
In these appeals by an order made by this Court in the year 1972, the State of West Bengal was impleaded as a respondent in each of these cases.
The decision in these appeals turns on the true construction of the relevant provisions of the Act since it is not disputed that the acquired lands are transferred to the State of West Bengal under the Act.
Section 47 of the Act reads: "47.
Legal proceedings.
Where immediately before the appointed day, the State of Bihar is a party to any legal 881 proceedings with respect to any property rights or liabilities transferred to the State of West Bengal under this Act, that State shall be deemed to be substituted for the State of Bihar as a party to those proceedings, or added as a party thereto, as the case may be, and the proceedings may continue accordingly.
" Section 48 of the Act deals with the transfer of proceedings arising from the transferred territories and pending immediately before the appointed day before a court (other than the High Court) tribunal, authority or officer in the State of Bihar to the corresponding court, tribunal, authority or officer in the State of West Bengal.
We are now concerned with the proceedings pending in the High Court.
Section 17 of the Act is the relevant provision dealing with them.
It reads thus: "17.
Extension of jurisdiction of, and transfer of proceedings to, Calcutta High Court (1) Except as hereinafter provided, (a) the jurisdiction of the High Court at Calcutta, shall, as from the appointed day, extend to the transferred territories; and (b) the High Court at Patna shall, as from that day, have no jurisdiction in respect of the transferred territories.
(2) Such proceedings pending in the High Court at Patna immediately before the appointed day as arc certified by the Chief Justice of that High Court having regard to the place of accrual of the cause of action and other circumstances, to be proceedings which ought to be heard and decided by the High Court at Calcutta shall, as soon as may be after such certification, be transferred to the High Court at Calcutta.
(3) Notwithstanding anything contained in sub sections (1) and (2), but save as hereinafter provided, the High Court at Patna shall have, and the High Court at Calcutta shall not have, jurisdiction to entertain, hear or dispose of appeals, applications for leave to appeal to the Supreme Court, applications for review and 882 other proceedings, where any such proceedings seek any relief in respect of any order passed by the High Court at Patna before the appointed day: Provided that if, after such proceedings have been entertained by the High Court at Patna, it appears to the Chief Justice of that High Court that they ought to be transferred to the High Court at Calcutta, he shall order that they shall be so transferred and such proceedings shall thereupon be transferred accordingly.
(4) Any order made by the High Court at Patna: (a) before the appointed day in any proceedings transferred to the High Court at Calcutta by virtue of subsection (2) or (b) in any proceedings with respect to which the High Court at Patna retains jurisdiction by virtue of sub section (3), shall, for all purposes, have effect, not only as an order of the High Court at Patna, but also as an order made by the High Court at Calcutta." (underlining by us) Sub section (2) of section 17 of the Act states that only such proceedings pending in the High Court of Patna immediately before the appointed day as are certified by the Chief Justice of that High Court having regard to the place of accrual of the cause of action and other circumstances, have to be transferred to the High Court at Calcutta.
It follows that if there is no such certification, they have to be disposed of by the High Court of Patna even though the cause of action might have accrued in any part of the transferred territories as that court continues to exercise jurisdiction over those cases.
In the instant case since there was no such certificate, the High Court of Patna rightly disposed of the appeals.
The liability, however, would be that of the State of West Bengal because of section 47 of the Act.
The State of West Bengal should be deemed to have been substituted for the State of Bihar even though no such order had been passed on a formal application for substitution.
When the law says that something should be deemed to have been done in a given case, the said legal fiction should be carried to its 883 logical end to achieve the desired result.
The decrees must, therefore, be deemed to have been passed by the High Court of Patna against the State of West Bengal when the appeals were dismissed by the Patna High Court.
It may be mentioned here that the State of West Bengal has not taken any steps to get those decrees revoked till now before the Patna High Court even though it had actual notice of those proceedings when notices in these appeals were served on it.
It is also not contended by the State of West Bengal, and we feel rightly, that the decrees are not binding on the State of West Bengal.
The only submission made on its behalf is that the interest that had accrued on the amount of compensation awarded by the Court upto date or at least upto the date on which the notices issued in these appeals were served on the State of West Bengal should be disallowed.
There is no merit in this submission.
The executing court cannot go behind the decree.
The judgment debtor has to pay the entire decretal amount.
By virtue of section 47 of the Act, the State of West Bengal would be bound by the decrees or orders made in respect of matters referred to therein against the State of Bihar before the appointed day and also after the appointed day even though the State of West Bengal is not formally brought on record in the place of the State of Bihar.
In all such cases the State of Bihar should be considered as effectively representing the State of West Bengal.
That is the true effect of the 'deeming ' provision contained in that section.
In this situation the executing court should have been directed by the High Court to substitute the State of West Bengal in the place of the State of Bihar in the execution petitions and to proceed to execute the decrees against the State of West Bengal.
In view of the foregoing.
these appeals are allowed, the judgments of the High Court and of the executing court are set aside and execution applications are remanded to the executing court to proceed with the execution against the State of West Bengal after substituting the State of West Bengal as the judgment debtor in the place of the State of Bihar.
In the circumstances, the parties shall bear their costs throughout.
P.B.R. Appeal allowed.
| In 1951 three pieces of land belonging to the appellant situated in Bihar were acquired by the State of Bihar for a public purpose.
When appeals against the judgment of the District Judge enhancing the compensation payable in respect of these lands were pending before the Patna High Court the West Bengal (Transfer of Territories) Act, 1956 came into force in consequence of which the acquired lands stood transferred to the State of West Bengal.
The appeals pending before the Patna High Court were, however, not transferred to the Calcutta High Court, nor was the State of West Bengal substituted in place of the State of Bihar.
The Patna High Court dismissed tho State 's appeals.
In the execution petitions the appellant impleaded the State of Bihar as the judgment debtor but the State of Bihar raised an objection that since the lands were then situated is the State of West Bengal it was that State which was liable to pay the decretal amounts.
Upholding this contention the executing court dismissed the execution petition.
This was upheld by the High Court.
Allowing the appeal, ^ HELD: Section 17 of the Act enjoins that only such proceedings pending in the High Court of Patna immediately before the appointed day as are certified by the Chief Justice of that High Court having regard to the place of accrual of the cause of action and other circumstances, have to be transferred to the High Court of Calcutta which means that if there is no such certification they have to be disposed of by the High Court of Patna even though the cause of action might have accrued in any part of the transferred territories as that court continues to exercise jurisdiction over those cases.
[862 E G] In the instant case since there was no such certificate the High Court of Patna rightly disposed of the appeals.
[882 G] 879 Under section 47 of the Act the State of West Bengal should be deemed to have been substituted for the State of Bihar even though no such order had been passed on a formal application for substitution.
When the law says that something should be deemed to have been done, the legal fiction should be carried to its logical end to achieve the desired result.
The decrees must, therefore, be deemed to have been passed by the High Court of Patna against tho State of West Bengal when the appeals were dismissed by the Patna High Court.
[882 H; 883 A C] By virtue of Section 47 the State of West Bengal would be bound by the decrees or orders made in respect of matters referred to therein against the State of Bihar both before and after the appointed day even though the State of West Bengal is not formally brought on record in the place of State of Bihar.
In all such cases the State of Bihar should be considered as effectively representing the State of West Bengal.
[883 D E] There is no merit in the submission that the interest accrued on the amounts of compensation uptodate or upto the date on which the notices were served on the State of West Bengal should be disallowed.
The executing court cannot go behind the decree.
[883 B C]
|
Appeal No. 215 of 1954.
Appeal by Special Leave from the Judgment and Order dated the 23rd day of August 1954 of the High Court of Judicature at Bombay in Special Civil Application No. 1665 of 1954 under Article 226 of the Constitution of India.
R. B. Kotwal, J. B. Dadachanji and Rajinder Narain, for the appellant.
Naunit Lal, for respondents Nos. 1 to 3. 1955.
February 22.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave against the judgment and order dated the 23rd August 1954 of the High Court of Judicature at Bombay, dismissing the appellant 's petition for a writ of quo warranto or any other appropriate writ directed against the election of the 2nd and 3rd respondents as President and Vice President respectively of the Gadag Betgeri 1271 The facts of this case are not in dispute and may shortly be stated as follows: The 1st respondent is a municipality governed by the provisions of the Municipal Boroughs Act (Bombay Act XVIII of 1925) which 7 hereinafter shall be referred to as the Act for the sake of brevity.
The appellant is one of the 32 councillors constituting the municipality.
The last general election to the municipality took place on the 7th May 1951.
The term of the councillors was three years computed from the date of the first general meetinog held after the general election aforesaid in this case the 10th July 1951.
In that meeting the 4th and 5th respondents were elected President and Vice President respectively of the municipality for a term of three years.
The Act was amended by Bombay Act XXXV of 1954, under which the term of office of the councillors was extended from 3 to 4 years ending on the 9th July 1955.
As the term of respondents 4 and 5 aforesaid was to expire at the end of three years from the 10th July 1951 and as the term of the municipality was extended by one year under the amending Act aforesaid, the vacancies thus occurring bad to be filled up by a fresh election of President and Vice President.
The Collector therefore called a special general meeting of the municipality to be held on the 30th July 1954 to elect a President and Vice President for the remaining period of the quadrennium.
The Collector had nominated the Prant Officer (the District Deputy Collector) to preside over that special general meeting.
On the 30th July 1954 the Prant Officer under instructions from the Collector adjourned the meeting to the 3rd August 1954 without transacting any business, the only item on the agenda being the election of the President and Vice President.
The 3rd respondent raised a point of order against the adjournment but the presiding officer aforesaid overruled that objection.
Hence the special general meeting was held on the 3rd August 1954.
At that meeting the appellant raised a point of order that under the provisions of the " Act a President could not be elected for 163 1272 a term less than a year and that therefore the proposed election would be in the teeth of those provisions.
The presiding officer who was the same person who had adjourned the meeting on the 30th July 1954 overruled that objection too.
Thereupon 13 out of the 32 councillors who were present walked out on the ground that they did not propose to participate in a meeting in which the proposal was to elect a President for less than a year contrary to the provisions of the Act.
The appellant was one of those 13 councillors who walked out.
It may be added that the full strength of the municipality is 32 councillors all of whom were present both on the 30th July 1954 and the 3rd August 1954.
The remaining 19 councillors proceeded to transact business and elected the 2nd respondent as the President, the proposal being that he "should be President of the municipality for the remaining period of the quadrennium" and that was the proposal which was carried.
Immediately after the election of the President another meeting was held for the election of the Vice President under the presidency of the newly elected President (the 2nd respondent).
The appellant raised the same point of order as he had done in the case of the election of the President and that was also overruled.
Thereupon six of the councillors present including the appellant walked out and the remaining councillors elected the 3rd respondent as the Vice President.
The appellant moved the High Court of Bombay under article 226 of the Constitution for a writ of quo warranto or any other appropriate writ or order or direction against the 2nd and 3rd respondents "restraining them from usurping the office of the President and Vice President respectively of the opponent No. I Municipality and restraining them from performing any duties and from exercising any powers as President and Vice President respectively".
The High Court held that the election of the 2nd and 3rd respondents was not illegal and dismissed the application.
It held that on a proper construction of the relevant provisions of the Act it was not correct to say that the term of office of the councillors or of the newly 1273 elected President and Vice President shall end with the 9th July 1955; that the intention was to elect the President and the Vice President for the remaining term of the municipality which was not only a period of four years certain but an additional period up to 7 the date when new President and Vice President A would be elected and take over after a fresh general election; that the adjournment of the meeting of the 30th July was not beyond the powers of the presiding officer; and that consequently the meeting of the 3rd August was not vitiated by any illegality.
It was also pointed out by the High Court that all the councillors constituting the municipality had notice of the adjourned meeting and did as a matter of fact attend that meeting and that even if there was any irregularity in the adjournment on the 30th July 1954 that did not affect the illegality of the adjourned meeting and the business transacted therein.
The appellant moved the High Court for leave to appeal to this court but that application was rejected.
The appellant then applied to this court for special leave to appeal which was granted on the 3rd September 1954.
It has been argued on behalf of the appellant that the meeting held on 3rd August 1954 as aforesaid was invalid for the reasons: 1. that it was not an adjourned meeting inasmuch as the meeting of the 30th July 1954 had not been validly adjourned, 2.
that it had not been called by the Collector, and 3.
that the written notice required by section 35(3) had not been given and in any event, had not been served and published as required by law.
Secondly it was urged that the meeting of the 3rd August being thus invalid.
, the business transacted at that meeting, namely, the election of the President was equally invalid.
Thirdly it was urged that the election of the President being invalid, the meeting held that very day under the presidency of the President thus elected was also invalid and the election of the Vice President consequently was illegal.
It was 1274 further argued that the election of the President and the Vice President being in violation of section 19 of the Act was invalid on that ground also; and finally, that the amendment of section 19 by the amending Act LIV of 1954 after leave to appeal had been granted by this court could not affect the present proceedings which were then pending even though the amending Act purported to make it retrospective.
On behalf of respondents 1, 2 and 3 who only have appeared in this court, it has been urged that a President and Vice President could be elected for a term of less than one year as section 19 of the Act was subject to section 23 (1) (A); that in any view of the matter, section 19 as amended by the amending Act LIV of 1954 rendered the election beyond question as the Act in terms was meant to validate all elections held between the passing of the amending Act XXXV of 1954 and the amending Act LIV of 1954; that the presiding officer had inherent, if not statutory power to adjourn the meeting of the 30th July 1954 and that in any event the meeting held on the 3rd August 1954 could be treated as a fresh meeting called by the Collector and that any irregularity in serving the notice or in the appointment of the presiding officer was cured by the provisions of section 57 of the Act.
It was also argued that the appellant was not the councillor who had objected to the adjournment of the meeting of the 30th July and could not therefore object to it at a later stage.
Finally it was argued that the appellant had no right to a writ or order prayed for as he had not been injured in any sense.
It would thus appear that there are two main questions in controversy between the parties, namely, (1) whether the meeting of the 3rd August, 1954 had been validly held; and (2) whether the president and the vice president having been elected "for the remaining period of the quadrennium" had been validly elected.
There are a number of subsidiary questions bearing upon these two main questions which have been canvassed before us, 1275 A good deal of argument was addressed to us contending that the presiding officer had no power to adjourn the meeting of the 30th July 1954 in view of the provisions of section 35(11) of the Act.
In this connection reference was also made to the proviso to section 19 A(2).
Those provisions, it was argued,, point to the conclusion that the powers of the presiding officer are the same as those of the president of a municipality when presiding over an ordinary meeting of the municipality except that section 35(11) relating to adjournments had been qualified only to this extent by the proviso aforesaid, that the Collector or the officer presiding over the meeting for the purpose of holding an election of the president or vice president may refuse to adjourn such a meeting in spite of the wishes of the majority of the members present to the contrary.
It was also argued that the High Court had wrongly taken the view that the presiding officer had the inherent right to adjourn the meeting.
Reference was made to certain passages in "The Law of Meetings" by Head, "The Law on the Practice of Meetings" by Shackleton, and "Company Meetings" by Talbot.
In our opinion, it is unnecessary for the purpose of this case to pronounce upon the merits of that controversy in the view we take of the meeting of the 3rd August, 1954, assuming that the meeting of the 30th July, 1954 had been adjourned without authority.
It is common ground that it was the Collector who called the meeting of the 30th July 1954 and that it was under instructions from the Collector that meeting was adjourned.
Under the provisions of section 23(1) (A), on the expiry of the term of office of the president or vice president as determined by the municipality under section 19(1) of the Act, a new president or vice president shall be elected within 25 days from the date of such expiry.
The provisions of section 19 A which relate to the procedure for calling a meeting of a newly constituted municipality for the election of a president and vice president have been made applicable to the calling of a meeting and the procedure to be followed at such meeting for the 1276 election of a president.
Section 19 A requires the Collector to call a meeting for holding such an election.
Such a meeting shall be presided over by the Collector or such officer as the Collector may by order in writing appoint in this behalf.
The Collector or his nominee, when presiding over such a meeting, shall have the same powers as the president of a municipalit by when presiding over a meeting of the municipality has, but shall not have the right to vote.
On the 30th July, 1954 a special general meeting had been called by the Collector for the election of the President.
In the proceedings of that meeting it has been recorded that "Under instructions from the Collector of Dharwar the presiding authority adjourns the meeting to 3rd August 1954 at 3 P.m.".
At that meeting all the 32 councillors were present and admittedly in their presence the presiding officer declared openly that the meeting will be held on the 3rd August 1954 under instructions from the Collector concerned.
When the meeting was held on the 3rd August 1954 at 3 P.m.
as previously notified, again the 32 councillors were present.
The proceedings show that the same Prant Officer "occupied the chair as authorised by the Collector".
The presiding authority read out and explained to the members present the following telegraphic message from the Collector: "Government have directed to bold election of President of Gadag Municipality on 3rd August as already arranged.
Hold election accordingly today without fail".
At this meeting the appellant raised two points of order, (1) that the election of the president for the remaining period of the quadrennium as mentioned in the agenda was illegal, and (2) that the meeting was not an adjourned meeting of the municipality and was also illegal because it was under the instructions of the Collector that the adjourned meeting was being held and that the Collector had no such power.
The minutes of the proceedings further show that "the presiding authority ruled out the points of order on the ground that this was a special meeting called by the Collector for the election of the President and 1277 the election has to be held as already fixed".
After the ruling given by the presiding authority, 13 members including the appellant expressed a desire to walk out and walked out with the permission of the presiding authority.
The remaining members, as already indicated, continued the business of the meeting and the proposal that the 2nd respondent should be elected president of the municipality for the remaining period of the quadrennium after having been duly made and seconded was carried unanimously and the meeting terminated.
It would thus appear that the meeting of the 3rd August 1954 for the election of the president had been called by the Collector who had authorized the Prant Officer to preside over that meeting and that the 2nd respondent was duly elected president.
Under section 35(3) of the Act, for such a special general meeting three clear days ' notice has to be given "specifying the time and place at which such meeting is to be held and the business to be transacted thereat shall be served upon the councillors, and posted up at the municipal office or the kacheri or some other public building in the municipal borough and also published in a local vernacular newspaper having a large circulation if such exists".
It has been contended on behalf of the appellant that the notice required by section 35 (3) contemplates a written notice to be served and published in the manner specified, and that the meeting of the 3rd August 1954 could not be said to have been held after complying with the terms of sub section (3) of section 35.
It was also contended that the requirements of section 19 A(1) and (2) have also not been complied with because there is no evidence that the Collector had called that meeting or that he had made an order in writing that the presiding authority had been authorized to preside over that meeting.
In our opinion, there is no substance in any one of these contentions.
From the record of the proceedings of the proposed meeting of the 30th July 1954 and the actual meeting on the 3rd August 1954 it is clear that whatever had been done had been done under the orders of 1278 the Collector.
He had called the meeting of the 30th July as also of the 3rd August 1954.
It was he who had appointed the Prant Officer as the presiding officer for both those meetings.
It is true that the notice of the meeting of the 3rd August 1954 had not been given in writing but had only been intimated to all the councillors who were present at the meeting of the 30th July 1954.
The notice amply satisfies the requirement of three days ' clear notice, though it was not in writing.
It had indicated the time of the meeting and the business to be transacted.
Under section 35(4) the ordinary venue of a meeting is the municipal office unless otherwise indicated in the notice.
It is also true that the notice was not served in the manner indicated in sub section (3) of section 35 of the Act.
There is no evidence that there existed a local vernacular newspaper with large circulation, in which the notice of the meeting could be published.
The question is, do those omissions render the notice ineffective in law.
That could only be so if those provisions were held to be mandatory.
The following provisions (omitting the words not material to this case) would show that those provisions of section 35(3) are directory and not mandatory and that any omissions in the manner of service of the notice are mere irregularities which would not vitiate the proceedings unless it was shown that those irregularities bad prejudicially affected the proceedings: "No resolution of a municipality deemed invalid on account of any irregularity in the service of notice upon any councillor or member provided that the proceedings of the municipality . . . were not prejudicially affected by such irregularity".
Fortunately for the respondents, all the councillors constituting the municipality were present on both the occasions, namely, 30th July and 3rd August, 1954.
Hence they had ample notice of the meeting to be held on the 3rd August, 1954, the time and place of the meeting and the business to be transacted.
It has not been either alleged or proved that the irregularities in the service of the notice or the omissions com 1279 plained of had prejudicially affected the proceedings.
But it was contended that as the notice had not been posted up at the municipal office or the local kacheri or some other public building and had also not been published in a local vernacular newspaper, if there were one, though all the councillors were present on 3rd August, 1954, the members of the public had no such notice and naturally therefore could not be present at that meeting.
In this connection it was pointed out that sub section (6) of section 35 provides that every such meeting shall be open to the public, unless the presiding authority directs to the contrary.
It is evident from the provisions of that sub section that though the presence of the public at such meetings may be desirable, it is not obligatory.
The presence at or the absence from such a meeting of the members of the public has no legal consequence so far as the validity of the election is concerned.
It must therefore be held that the meeting of the 3rd August, 1954 in substance, though not in form, complied with the requirements of the law for holding a valid special general meeting and that therefore that meeting was not invalid, assuming, as already said, that the order of the presiding authority adjourning the meeting of the 30th July, 1954 was not authorized.
It has to be remembered in this connection that such a special general meeting can be presided over only by the Collector or the person authorized by him and if either the Collector or his nominee does not hold the meeting, it is not competent for councillors present to elect their own chairman for presiding over such a meeting.
Therefore if the presiding authority admittedly under instructions from the Collector refused to proceed with the elections on the 30th July 1954, the councillors present could not hold a meeting of their own with a president of their own choice and transact the only business on the agenda, namely, the election of president.
Hence, rightly or wrongly, if the meeting called for the 30th July was not held, another meeting had to be held for the purpose within 25 days of the occurrence of the vacancy.
In this case, as a 164 1280 result of the expiry of the original term of office of the president and vice president, another meeting giving the required three days statutory notice had to be held.
The meeting held on the 3rd August 1954 was such a meeting.
Indeed, there were some omissions in the manner of publication or service of the notice but those in law were mere irregularities which do not have the effect of vitiating the election held at that meeting.
The election of the president therefore, if not otherwise invalid, could not be assailed on the ground of the irregularity in the service or publication of the notice, in the special circum stances of this case.
If all the councillors had not been present on the 30th July or had not been informed of the proposed meeting of the 3rd August 1954, other considerations may have arisen but in this case it is clear that there was absolutely no prejudice to any party or individual or the municipality as a whole.
But it was further contended that the walking out of the 13 councillors rendered the meeting infructuous.
In our opinion, such a result does not follow from the voluntary act of the 13 councillors who chose to walk out.
It was not even suggested that there was no quorum for the special general meeting after the 13 councillors walked out.
The next question is whether the provisions of section 19 (1) as they stood on the 3rd August 1954 render the election of the president and the vice president on the 3rd August 1954 invalid as it was "for the remaining period of the quadrennium".
The High Court has taken the view that the remaining period of the quadrennium would not necessarily end on the 9th July 1955, in view of the proviso to section 19(1) "that the term of office of such president or vice president shall be deemed to extend to and expire with the date on which his successor is elected".
In view of the events that have happened it is not necessary for us to pronounce on the correctness or otherwise of that decision.
After the judgment of the High Court and after the grant of special leave by this court, the Bombay Legislature enacted Act LIV of 1954 which was published in the Bombay Gazette on the 14th 1281 October 1954.
Sections 2 and 3 of the amending Act are in these terms: "2.
In section 19 of the Bombay Municipal Boroughs Act, 1925, in sub section (I), (1)after the words 'not less than one year ' the words 'or not less than the residue of the term of office of the municipality, whichever is less ' shall be inserted; (2)for the words 'three years ' the words 'four years ' shall be substituted.
3.(1) The amendments made by this Act shall be deemed to have come into force on the date on which the Bombay District Muncipal and Municipal Boroughs (Amendment) Act, 1954, came into force (hereinafter in this section referred to as 'the said date ') and all elections to the office of the president or vice president, held on or after the said date and before the coming into force of this Act, shall be deemed to be valid as if this Act bad been in force on the said date; and any person elected to the office of the president or vice president at any of such elections shall not be deemed to have been illegally elected merely on the ground that the residue of the term of office of the municipality being less than one year at the time of such election, he would hold his office for a term less than one year in contravention of section 19 of the Bombay Municipal Boroughs Act, 1925, as it was in operation before the coming into force of this Act.
(2)Nothing contained in this section shall affect the judgment, decree or order of any competent court, passed before the coming into force of this Act, holding any of such elections invalid on the ground specified in sub section (1)".
It has not been contended that section 19 as amended by Act LIV of 1954 does not in terms cover the elections now impugned, nor that section 3 of the amending Act quoted above is not retrospective; but it has been urged on behalf of the appellant that it is not retrospective to the extent of affecting pending proceedings.
In terms the amendment in question is deemed to have come into force on the II the May 1954 1282 on which date the amending Act XXXV of 1954 had come into force.
Section 3 in terms also declares that all elections to the office of president and vice president held on or after the 11th May 1954 and before the coming into force of the amending Act shall be deemed to have been valid.
The section also declares in unequivocal terms that such an election shall not be questioned simply on the ground of contravention of section 19 on which the election of the 2nd and 3rd respondents bad been questioned before the High Court.
The legislature apparently thought fit to declare beyond all controversy that an election of president or vice president for the unexpired portion of the term of a municipality could not be questioned on the ground that the provisions of section 19 as it stood before the amendment had been contravened.
But it was argued on behalf of the appellant that in terms the amendment had not been made applicable to pending litigation and that therefore this court should hold that the amendment did not have the effect of validating the elections which were already under challenge in a court.
No authority has been cited before us in support of the contention that unless there are express words in the amending statute to the effect that the amendment shall apply to pending proceedings also, it cannot affect such proceedings.
There is clear authority to the contrary in the following dictum of Lord Reading, C.J. in the case of The King vs The General Commissioners of Income tax for Southampton; Ex parte W. M. Singer (1), "I cannot accept the contention of the applicant that an enactment can only take away vested rights of action for which legal proceedings have been commenced if there are in the enactment express words to that effect.
There is no authority for this proposition, and I do not see why in principle it should be the law.
But it is necessary that clear language should be used to make the retrospective effect applicable to proceedings commenced before the passing of the statute".
That was a case in which the Act in question had (1) , 259, 1283 validated assessments made by commissioners for wrong parishes.
It was held by the court that the retrospective effect of the relevant section extended to proceedings for a prohibition commenced before the Act came into force and the rule nisi for a prohibition was therefore discharged.
In every case the language of the amending statute has to be examined to find out whether the legislature clearly intended even pending proceedings to be affected by such statute.
A number of authorities were cited before us but it is only necessary to refer to the decision of their Lord ships of the Judicial Committee in Mukerjee, Official Receiver vs Ramratan Kuer(1), which is clearly in point.
In that case while an appeal had been pending before the Judicial Committee the amending Act had been passed clearly showing that the Act was retrospective in the sense that it applied to all cases of a particular description, without reference to pending litigation.
In those circumstances their Lordships pointed out that if any saving were to be implied in favour of pending proceedings, then the provisions of the statute would largely be rendered nugatory.
Those observations apply with full force to the present case, inasmuch as if any saving were to be implied in favour of cases pending on the date of the amendment, the words "all elections to the office of the president or vice president, held on or after the said date and before the coming into force of this Act, shall be deemed to be valid" could not be given their full effect.
As there are no such saving clauses in express or implied terms, it must be held that the amendment was clearly intended by the legislature to apply to all cases of election of president or vice president, whether or not the matter had been taken to court.
it is the duty of courts to give full effect to the intentions of the legislature as expressed in a statute.
That being so, it must be held that the amending Act had the effect of curing any illegality or irregularity in the elections in question with reference to the provisions of section 19 of the Act.
For the reasons aforesaid it must be held that the (1) [1935] L.R. 63 I.A. 47.
1284 meeting of the 3rd August 1954 had been validly held and that there is no illegality in the election of the 2nd and 3rd respondents as president and vice president respectively.
We accordingly affirm the orders of the High Court, though not for the same reasons.
The appeal fails and is dismissed with costs.
Appeal dismissed.
| The first respondent Municipality governed by the Municipal Boroughs Act, 1925 (Bombay Act XVIII of 1925) consists of 32 councillors, S, (the appellant) being one of them.
The last general election to the Municipality took place on the 7th May 1951.
The term of the councillors was three years computed from the first meeting held on 10th July 1951 after the general election.
In that meeting the 4th and 5th respondents were elected President and Vice President respectively for a term of three years.
Act XVIII of 1925 was amended by Bombay Act XXXV of 1954 under which the term of office of the councillors was extended from 3 to 4 years ending on 9th July 1955.
As the term of respondents 4 and 5 was to expire at the end of three years from the 10th July 1951 and as the term of the Municipality was extended by one year under the Amending Act XXXV of 1954 a fresh election of President and VicePresident was necessary to fill up the vacancies thus occurring.
The Collector called a special general meeting for the 30th July 1954 to elect a President and Vice President for the remaining period of the quadrennium and nominated the Prant Official (the District Deputy Collector) to preside over that meeting.
On the 30th July 1954 the Prant Officer adjourned the meeting to the 3rd August 1954 under instructions from the Collector without transacting any business.
The objection raised by respondent No. 3 against the adjournment was overruled by the presiding Officer.
The special general meeting was held on the 3rd August 1954.
An objection raised by S (the appellant) that under the provisions of the Act a President could not be elected for a term less than a year was overruled by the presiding Officer.
On this 13 councillors (including S) out of the 32 who were present walked out on the ground that the President was to be elected for a term less than a year contrary to the provisions of the Act.
The remaining 19 councillors elected the 2nd respondent as the President for the remaining period of the quadrennium.
Immediately after that another meeting presided over by the newly elected President elected respondent No. 3 as Vice President.
The same point of order raised by S as in the case of the President was overruled, on which 6 councillors walked out and the meeting was held by the remaining councillors.
All the 32 councillors were present both on the 30th July 1954 and the 3rd August 1954.
An application under article 226 of the Constitution presented by S questioning the validity of the meeting of the 3rd August, 1954, and consequently the validity of the election of respondents Nos. 2 and 3 as President and Vice President for the remaining period of the quadrennium was dismissed by the High Court.
Held, (1) that the meeting of the 3rd August 1954, in substance though not in form, complied with the requirements of the law for holding a valid special meeting and therefore the meeting was not invalid because the record of proceedings would show that whatever had been done on the 30th July 1954 and the 3rd August 1954 had been done under the orders of the Collector.
The notice to the councillors required under section 35(3) of the Act satisfied the requirements of three clear days, that the provisions of section 35(3) regarding the ser 1270 vice of notice are directory and not mandatory; and that any omissions in the manner of service of the notice are more irregularities which would not vitiate the proceedings unless it is shown that those irregularities had prejudicially affected the proceedings which had not been alleged or proved in the present case.
All the councillors constituting the Municipality were present on both the occasions namely the 30th July 1954 and the 3rd August 1954 and thus had ample notice of the meeting to be held on the 3rd August 1954, the time and place of the meeting and the business to be transacted.
That under the provisions of section 35(3) of the Act the presence at or the absence from the meeting of the members of the public has no legal consequence so far as the validity of the election is concerned; (2) that as section 19 of the Bombay Boroughs Act, (Bombay Act XVIII of 1925) had been amended by the Bombay Municipal Boroughs Act, 1954 (Bombay Act LIV of 1954) and was retrospective in its operation, it had the effect of curing any illegality or irregularity in the election with reference to the provisions of section 19 of the Act and therefore respondents Nos. 2 and 3 had been validly elected as President and, Vice President respectively.
King vs The General Commissioners of Income tax for South ampton, Ex parte W.M. Singer ([1916] 2 K.B. 249) and Mukerjee, Offcial Receiver vs Ramratan Kuer ([1935] L. R. 63 I. A. 47), referred to.
|
Appeal No. 364 of 1957.
Appeal from the judgment and order dated February 22, 1956, of the former Bombay High Court in I.T.R. No. 31/1955.
N. A. Palkhivala and I. N. Shroff, for the Appellants.
A. N. Kripal and D. Gupta, for the Respondent. 1960.
November 22.
The Judgment of the Court was delivered by SHAH, J.
This is an appeal by seven appellants with leave granted by the High Court of Judicature at Bombay certifying that it involves a question of importance.
The appellants held 570 out of a total issue of 800 shares of the Navjivan Mills Ltd., Kalol, a public limited company hereinafter referred to as the Mills.
Between the years 1943 47, the Mills purchased 5,000 shares of the Bank of India Ltd. At an extraordinary general meeting of the shareholders of the Bank of India held on May 6, 1948, a resolution was passed increasing the share capital of the Bank and for that purpose offering new shares to the existing shareholders in the proportion of one new share for every three shares held by the shareholders.
The face value of the new shares was to be Rs. 50, but the shares were issued at a premium of Rs. 50.
The shareholders had to pay Rs. 100 for each new share.
The Mills as the holder of 5,000 shares became entitled to receive 1,6662 shares of the Bank of India at the rate of Rs. 100 per share.
The Bank of India communicated its resolution by letter dated May 25, 1948 and enclosed therewith three forms, form A for acceptance, form 586 B for renunciation and 'form C which may compendiously be called a form for allotment to nominees.
On receiving the circular letter, the Directors of the Mills passed the following resolution: "Resolved that the company having a holding of 5,000 ordinary shares in the capital of the Bank of India Ltd. having now received an intimation from the said Bank that this company is entitled to get 1,6662 more ordinary shares on payment of Rs. 50 as capital and Rs. 50 as premium per each share and it is considered proper to invest in the said issue of the said Bank the funds of this company to the extent of 66 shares only and to distribute the right of this company to the remaining 1,600 shares of the said issue amongst the shareholders of this company in the proportion of the shares held by them in this company.
IT IS HEREBY RESOLVED that the funds of this company may be invested in the 66 shares out of 1,666 shares offered by 'the Bank of India Ltd., and the right to the remaining 1,600 shares is hereby distributed among 800 shares of this company in the proportion of right to two shares of the Bank per one ordinary share held in this company.
The Managing Agents may take steps to intimate the shareholders to exercise the right if they like to do so.
" Accordingly, the Mills exercised the right to take over only 66 shares out of the shares offered and resolved that the right to the remaining 1,600 shares be distributed amongst its 800 share holders.
The seven appellants as holders of 570 shares of the Mills became entitled to 1,140 shares of the Bank of India.
The appellants agreed to the allotment of these shares and ultimately transferred them to a private company Jesinghbai Investment Co. ' Ltd. The assessment of the seven appellants and of other shareholders of the Mills was reopened under section 34(1)(a) of the Indian Income Tax Act by the Income Tax Officer on the footing that, the release by the Mills of the shares of the Bank of India amounted to a distribution of "dividend" and the value of the right released in favour of the shareholders though taxable 587 under section 12 of the Act, had escaped tax.
The order of the Income Tax Officer reassessing the income of the seven appellants was confirmed in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal.
At the instance of the appellants, the i following question was submitted by the Tribunal to the High Court at Bombay under section 66(1) of the Income Tax Act: "Whether on the facts and circumstances of the case the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend" within the meaning of section 2(6A) of the Indian Income Tax Act.
" The High Court reframed the question as follows: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd., in favour of the assessees amounted to a distribution of "dividend"?" and answered it in the affirmative.
The High Court observed that the definition of "dividend" in section 2(6A) was an inclusive and not an exhaustive definition, and even if the distribution of the right to the shares of the Bank of India could not be regarded as dividend within the extended meaning of that expression in section 2(6A), it was still dividend within the ordinary meaning of that expression and was taxable as income in the hands of the appellants.
Counsel for the appellants contended that the High Court was not justified, having regard to the form of the question which expressly related to the distribution of the right to the Bank of India shares being dividend within the meaning of the definition in section 2(6A) of the Income Tax Act, in enlarging the scope of the question and in answering it in the light of its ordinary meaning.
There is no substance in this contention.
"Dividend" is defined in section 2(6A) as inclusive of various items and exclusive of certain others which it is not necessary to set out for the purpose of this appeal.
"Dividend" in its ordinary meaning is a 588 distributive share of the profits or income of a company given to its shareholders.
When the Legislature by section 2(6A) sought to define the expression "dividend" it added to the normal meaning of the expression several other categories of receipts which may not otherwise be included therein.
By the definition in section 2(6A), "dividend" means dividend as normally understood and includes in its connotation several other receipts set out in the definition.
The Tribunal had referred the question whether the distribution of the right to apply for the Bank of India shares amounted to distribution of dividend within the meaning of section 2(6A) and in answering that question, the High Court had to take into account both the normal and the extended meaning of that expression.
In the question framed by the Tribunal, there is nothing to indicate that the High Court was called upon to advise on the question whether the receipts by the appellants amounted to dividend only within the extended definition of that expression in section 2(6A).
It was also urged that in nominating its shareholders to exercise the option to purchase the new issue of the Bank of India, the Mills did not distribute any dividend.
The Mills were, it is true, not obliged to accept the offer made by the Bank of India, however advantageous it might have been to the Mills to accept the offer: it was open to the Mills to renounce the offer.
The Mills had three options, (1) to accept the shares, (2) to decline to accept the shares, or (3) to surrender them in favour of its nominee.
It is undisputed that when the shares were offered by the Bank of India to its shareholders, the right to apply for the shares had a market value of Rs. 100 per share.
The face value of the new share was Rs. 50 but the shareholders had to pay a premium of Rs. 50, thus making a total payment of Rs. 100 for acquiring the new share.
The new shares were quoted in the market at more than Rs. 200: and the difference between the amount payable for acquiring the shares under the right offered by the Bank of India and the market quotation of the shares was indisputably the value of the right.
The Mills could not be compelled to obtain 589 this benefit if it did not desire to do so: it could accept the shares or decline to accept those shares or exercise the option of surrendering them in favour of its nominees.
This last option could be exercised by nominating the persons who were to take over the shares and that is what the Mills did.
The Mills requested the Bank of India to allot the shares to its nominees, and the request for allotment to its nominees amounted to transfer of the right.
By its resolution, the Mills in truth transferred a right of the value of Rs. 200 for each share held by its shareholders.
This was manifestly not distribution of the capital of the Mills.
It was open to the Mills to sell the right to the shares of the Bank of India in the market, and to distribute the proceeds among the shareholders.
Such a distribution would undoubtedly have been distribution of dividend.
If instead of selling the right in the market and then distributing the proceeds, the Mills directly transferred the right, the benefit in the hands of the shareholders was still dividend.
Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value.
The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend.
It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value.
But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered.
We are therefore of the view that the High Court was right in holding that the distribution of the right to apply for and obtain two shares of the Bank of India (at half their market value) for each share held by the shareholders of the Mills amounted to distribution of dividend.
The appeal fails and is dismissed with costs.
Appeal dismissed.
| The appellants were shareholders of a company known as Navjivan Mills Ltd. which held a large number of shares of the Bank of India.
The Bank with the object of increasing their share capital offered some more shares to the Mills for a price including premium which was about half the market value.
The Mills purchased a small number of the shares so offered with their own funds and distributed their right to acquire the remaining shares to their shareholders in the proportion of two shares of the Bank for one share held by them.
The assessment of the appellant was reopened by the Income Tax Officer under section 34(1)(a) of the Income tax Act on the footing that the release of the right to the shares of the Bank of India amounted to distribution of dividend.
Appeals against the order of the Income Tax Officer having failed, the High Court at the instance of the appellants framed the following question: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend"? 585 The High Court answered the question in the affirmative.
On appeal with a certificate of the High Court, Held, that the view taken by the High Court was correct.
The distribution to the shareholders of the Mills of the right to obtain two shares of the Bank of India for each share held by them at half the market value amounted to distribution of "dividend" which was liable to be taxed.
|
N: Criminal Appeals Nos. 335, 336, 337, 338, 339, 346, 347, 350, 351, 352, 365, 366, 367, 383, 396, 397, 398, 399, 406, 415, 416, 417, 418, 419, 420, 430, 431, 438, 439, 440, 447, 448, 449, 463, 473, 474, 477, 498, 506, 508, 512, 511 of 1977, 1, 15, 16, 38, 53, 69, 70 of 1978, 469, 499 of 1977, 40, 41, 81, 82, 98, 109, 130, 141, 142, 145, 149, 153 and 154 of 1978.
AND Special Leave Petitions (Criminal) Nos. 260, 272, 273, 274, 383, 388 & 479 of 1978.
Appeals by Special leave from the Judgments and Orders dated 13 9 77, 13 9 77, 13 9 77, 15 9 77, 13 9 77, 21 9 77, 19 9 77, 23 9 77, 23 9 77, 23 9 77, 26 9 77, 26 9 77, 30 9 77, 7 10 77, 16 9 77 9 9 77, 20 9 77, 5 10 77, 20 10 77, 26 9 77, 20 10 77, 20 10 77, 19 10 77, 24 10 77, 25 10 77, 14 9 77, 24 10 77, 2 11 77, 2 11 77, 3 11 77, 2 9 77, 7 9 77, 2 9 77, 9 11 77, 22 11 77, 23 11 77, 24 11 77, 13 12 77, 11 11 77, 23 11 77, 14 12 77, 13 12 77, 20 12 77, 3 1 78, 4 1 78, 5 1 78, 16 1 78, 18 1 78, 30 1 78, 25 1 78, 18 11 77, 13 12 77, 10 1 78, 13 1 78, 1 2 78, 1 2 78, 8 2 78, 21 12 77, 1 3 78, 3 3 78, 3 3 78, 10 3 78, 8 3 78, 20 3 78, 17 3 78, 15 2 78, 17 2 78, 17 2 78, 24 1 78, 14 3 78, 14 3 78 and 27 3 78 of the Punjab and Haryana High Court in Crl.
3753 M, 3719 M, 3720 M, 3916 M, 3718 M, 3793 M, 3565 M, 3892 M, 3595 M, 3596 M, 4359 M, 3563 M, 3484 M, 4627 M, 3893 M, 3894 M, 3587 M, 4540 M, 4908 M, 3031 M, 4934 M, 4916 M, 4888 M, 4964 M, 4992 M, 3688 M, 4907 M, 5176 M, 5177 M, 5197 M, 3564 M, 3716 M, 3717 M, 5344 M, 5558 M, 5079 M, 5613 M, 5905 M, 5254 M, 5253 M, 5919 M, 5907 M, 6005 M of 1977, 45 M, 68 M, 102 M, , 6114 M of 1977, 462 M, , 5240 M, 5892 M of 1977, 19/78, 956/77, 104 M/78, 104 M/78, 605/78, 5995 M/77, 941 M/78, 904 M/78, 1005 M/78, 1137 M/78, 819 M/78, 1260 M/78, 866 M/78 392 & 541 M/78, 4897 M/77, 4758 M/77, 364 M/78, 1167/78, 1168 M/78 and 1381 M/78.
M. C. Bhandare, Gobind Das, K. section Thapar, Dilip Singh, Mrs. Sunanda Bhandare, A. N. Karkhanis, Deepak Thapar and Miss Malini for the Appellants in Crl.
A. Nos. 335, 365, 430, 431, 506, 508, 499/77, 150, 141, 142, 153, 154 and for the Petitioners in SLPs 272 274 of 1978.
Frank Anthony, V. C. Mahajan, O. P. Sharma and R. C. Bhatia for the Appellants in Crl.
A. Nos. 336, 337, 338, 350, 396, 397 399, 473, 474/77 and 1, 15, 16, 17, 69, 70, 81, 82, 98 and 149 and 109 of 1978.
Harjinder Singh for the Appellant in Crl.
A. 339 of 1977.
B. section Bindra, section M. Ashri and Mrs. Lakshmi Arvind for the Appellants in Crl.
348, 366, 415, 420, 477, 511, 512, 469/77 and 145 of 1978.
P. R. Mridul, H. K. Puri, Aruneshwar Prasad and Vivek Sethi for the Appellant in Crl.
A No. 346 of 1977.
L. N. Sinha, R. P. Singh, L. R. Singh, Suman Kapoor, Sukumar Sahu and M. C. Bhandare, P. P. Singh and R. K. Jain for the Appellants in Crl.
A. Nos. 351, 352, 406, 438 40, 463/77.
section K. Jain for the Appellant in Crl.
A. No. 53/78.
V. M. Tarkunde, M. M. L. Srivastava, R. Satish and E. C. Agrawala for the Appellant in Crl.
A. Nos. 367/77 and SLP 383/78.
V. C. Mahajan, Harbhagwan Singh, section K. Mehta, K. R. Nagaraja and P. N. Puri for the Appellant in Crl.
A. Nos. 383/78 and 498/77.
K. K. Mohan for the Petitioner in SLP 260/78.
A. K. Sen and Rathin Dass for the Appellant in Crl.
A. Nos. 40, 41/78.
M. M. L. Srivastava for the Petitioner in SLP 388/78.
L. M. Singhvi and N. section Das Behl for the Appellants in Crl.
A. No. 38/78 and for the Petitioner in SLP 479/78.
J. Sorabjee, Addl.
Bishamber Lal Khanna, Hardev Singh, R. section Sodhi and B. B. Singh for the Appellants in Crl.
477 449/77 and respondents in Crl.
A. Nos.
335 339,347,350, 352,366,367,388,396 398,406, 415 420,438 440,463,473,474,477, 498, 511/77, 1, 15 17/78, 469, 510/77, 109/78 and for the Petitioners in SLP Nos.
388/78, Crl. A. No. 98/78 & SLP 260/78.
393 Soli.
J. Sorabjee Addl.
Genl., Thakur Naubat Singh Adv.
Haryana, section N. Anand and R. N. Sachthey for the Respondents, in Crl.
A. Nos. 365, 430, & 431/77, 508, 499/78 and 38, 141 and 142/78.
M. M. Kshatriya and G. section Chatterjee for Respondents in Crl.
A. Nos. 40 and 41 of 1978.
M. M. Kshatriya and G. section Chatterjee for Respondents in Crl.
A. 346/77.
J. K. Gupta, B. R. Agarwala and Janendra Lal for the Vice Chancellor, Punjab University in Crl.
A. No. 346/77.
The Judgment of the Court was delivered by CHANDRACHUD, C.J.
These appeals by Special Leave involve a question of great public importance bearing, at once, on personal liberty and the investigational powers of the police.
The society has a vital stake in both of these interests, though their relative importance at any given time depends upon the complexion and restraints of political conditions.
Our task in these appeals in how best to balance these interests while determining the scope of Section 438 of the Code of Criminal Procedure, 1973 (Act No. 2 of 1974).
Section 438 provides for the issuance of direction for the grant of bail to a person who apprehends arrest.
It reads thus: "438.
(1) When any person has reason to believe that he may be arrested on an accusation of having committed a non bailable offence, he may apply to the High Court or the Court of Session for a direction under this section; and that Court may, if it thinks fit, direct that in the event of such arrest, he shall be released on bail.
(2) When the High Court or the Court of Session makes a direction under sub section (1), it may include such conditions in such directions in the light of the facts of the particular case, as it may think fit, including (i) a condition that the person shall make himself available for interrogation by a police officer as and when required; (ii) a condition that the person shall not, directly or indirectly, make any inducement, threat or promise to any person acquainted with the facts of the case so 394 as to dissuade him from disclosing such facts to the Court or to any police officer; (iii) a condition that the person shall not leave India without the previous permission of the Court; (iv) such other condition as may be imposed under sub section (3) of section 437, as if the bail were granted under that section.
(3) If such person is thereafter arrested without warrant by an officer in charge of a police station on such accusation, and is prepared either at the time of arrest or at any time while in the custody of such officer to give bail, he shall be released on bail; and if a Magistrate taking cognizance of such offence decides that a warrant should issue in the first instance against that person, he shall issue a bailable warrant in conformity with the direction of the Court under sub section (1).
" Criminal Appeal No. 335 of 1975 which is the first of the many appeals before us, arises out of a judgment dated September 13, 1977 of a Full Bench of the High Court of Punjab and Haryana.
The appellant herein, Shri Gurbaksh Singh Sibbia, was a Minister of Irrigation and Power in the Congress Ministry of the Government of Punjab.
Grave allegations of political corruption were made against him and others whereupon, applications were filed in the High Court of Punjab and Haryana under Section 438, praying that the appellants be directed to be released on bail, in the event of their arrest on the aforesaid charges.
Considering the importance of the matter, a learned Single Judge referred the applications to a Full Bench, which by its judgment dated September 13, 1977 dismissed them.
The Code of Criminal Procedure, 1898 did not contain any specific provision corresponding to the present Section 438.
Under the old Code, there was a sharp difference of opinion amongst the various High Courts on the question as to whether courts had the inherent power to pass an order of bail in anticipation of arrest, the preponderance of view being that it did not have such power.
The need for extensive amendments to the Code of Criminal Procedure was felt for a long time and various suggestions were made in different quarters in order to make the Code more effective and comprehensive.
The Law Commission of India, in its 41st Report dated September 24, 1969 pointed out the necessity of introducing a provision in the Code en 395 abling the High Court and the Court of Session to grant "anticipatory bail".
It observed in paragraph 39.9 of its report (Volume I): "39.9.
The suggestion for directing the release of a person on bail prior to his arrest (commonly known as "anticipatory bail") was carefully considered by us.
Though there is a conflict of judicial opinion about the power of a Court to grant anticipatory bail, the majority view is that there is no such power under the existing provisions of the Code.
The necessity for granting anticipatory bail arises mainly because sometimes influential persons try to implicate their rivals in false cases for the purpose of disgracing them or for other purposes by getting them detained in jail for some days.
In recent times, with the accentuation of political rivalry, this tendency is showing signs of steady increase.
Apart from false cases, where there are reasonable grounds for holding that a person accused of an offence is not likely to abscond, or otherwise misuse his liberty while on bail, there seems no justification to require him first to submit to custody, remain in prison for some days and then apply for bail.
We recommend the acceptance of this suggestion.
We are further of the view that this special power should be conferred only on the High Court and the Court of Session, and that the order should take effect at the time of arrest or thereafter.
In order to settle the details of this suggestion, the following draft of a new section is placed for consideration: "497A. (1) When any person has a reasonable apprehension that he would be arrested on an accusation of having committed a non bailable offence, he may apply to the High Court or the Court of Session for a direction under this section.
That Court may, in its discretion, direct that in the event of his arrest, he shall be released on bail.
(2) A Magistrate taking cognizance of an offence against that person shall, while taking steps under section 204(1), either issue summons or a bailable warrant as indicated in the direction of the Court under sub section (1).
(3) if any person in respect of whom such a direction is made is arrested without warrant by an officer in charge of a police station on an accusation of having com 396 mitted that offence, and is prepared either at the time of arrest or at any time while in the custody of such officer to give bail, such person shall be released on bail.
" We considered carefully the question of laying down in the statute certain conditions under which alone anticipatory bail could be granted.
But we found that it may not be practicable to exhaustively enumerate those conditions; and moreover, the laying down of such conditions may be construed as prejudging (partially at any rate) the whole case.
Hence we would leave it to the discretion of the court and prefer not to fetter such discretion in the statutory provision itself.
Superior Courts will, undoubtedly, exercise their discretion properly, and not make any observations in the order granting anticipatory bail which will have a tendency to prejudice the fair trial of the accused.
" The suggestion made by the Law Commission was, in principle, accepted by the Central Government which introduced Clause 447 in the Draft Bill of the Code of Criminal Procedure, 1970 with a view to conferring an express power on the High Court and the Court of Session to grant anticipatory bail.
That Clause read thus: "447.
(1) When any person has reason to believe that he would be arrested on an accusation of having committed a non bailable offence, he may apply to the High Court or the Court of Session for a direction under this section; and that Court may, if it thinks fit, direct that in the event of such arrest, he shall be released on bail.
(2) If such person is thereafter arrested without warrant by an officer in charge of a police station on such accusation, and is prepared either at the time of arrest or at any time while in the custody of such officer to give bail, he shall be released on bail; and if a Magistrate taking cognizance of such offence decides that a warrant should issue in the first instance against that person, he shall issue a bailable warrant in conformity with the direction of the Court under sub section (1).
" The Law Commission, in paragraph 31 of its 48th Report (1972), made the following comments on the aforesaid Clause.
The Bill introduces a provision for the grant of anticipatory bail.
This is substantially in accordance with the recommendation made by the previous Commission.
We 397 agree that this would be a useful addition, though we must add that it is in very exceptional cases that such a power should be exercised.
We are further of the view that in order to ensure that the provision is not put to abuse at the instance of unscrupulous petitioners, the final order should be made only after notice to the Public Prosecutor.
The initial order should only be an interim one.
Further, the relevant section should make it clear that the direction can be issued only for reasons to be recorded, and if the court is satisfied that such a direction is necessary in the interests of justice.
It will also be convenient to provide that notice of the interim order as well as of the final orders will be given to the Superintendent of Police forthwith.
" Clause 447 of the Draft Bill of 1970 was enacted with certain modifications and became Section 438 of the Code of Criminal Procedure, 1973 which we have extracted at the outset of this judgment.
The facility which Section 438 affords is generally referred to as 'anticipatory bail ', an expression which was used by the Law Commission in its 41st report.
Neither the section nor its marginal note so describes it but, the expression 'anticipatory bail ' is a convenient mode of conveying that it is possible to apply for bail in anticipation of arrest.
Any order of bail can, of course, be effective only from the time of arrest because, to grant bail, as stated in Wharton 's Law Lexicon, is to 'set at liberty a person arrested or imprisoned, on security being taken for his appearance '.
Thus, bail is basically release from restraint, more particularly, release from the custody of the police.
The act of arrest directly affects freedom of movement of the person arrested by the police, and speaking generally, an order of bail gives back to the accused that freedom on condition that he will appear to take his trial.
Personal recognisance, suretyship bonds and such other modalities are the means by which an assurance is secured from the accused that though he has been released on bail, he will present himself at the trial of offence or offences of which he is charged and for which he was arrested.
The distinction between an ordinary order of bail and an order of anticipatory bail is that whereas the former is granted after arrest and therefore means release from the custody of the police, the latter is granted in anticipation of arrest and is therefore effective at the very moment of arrest.
Police custody is an inevitable concomitant of arrest for non bailable offences.
An order of anticipatory bail constitutes, so to say, an insurance against police custody following upon arrest for offence or offences in respect of which the order is 398 issued.
In other words, unlike a post arrest order of bail, it is a pre arrest legal process which directs that if the person in whose favour it is issued is thereafter arrested on the accusation in respect of which the direction is issued, he shall be released on bail.
Section 46(1) of the Code of Criminal Procedure which deals with how arrests are to be made, provides that in making the arrest, the police officer or other person making the arrest "shall actually touch or confine the body of the person to be arrested, unless there be a submission to the custody by word or action".
A direction under section 438 is intended to confer conditional immunity from this 'touch ' or confinement.
No one can accuse the police of possessing a healing touch nor indeed does anyone have misgivings in regard to constraints consequent upon confinement in police custody.
But, society has come to accept and acquiesce in all that follows upon a police arrest with a certain amount of sangfroid, in so far as the ordinary rut of criminal investigation is concerned.
It is the normal day to day business of the police to investigate into charges brought before them and, broadly and generally, they have nothing to gain, not favours at any rate, by subjecting ordinary criminals to needless harassment.
But the crimes, the criminals and even the complainants can occasionally possess extra ordinary features.
When the even flow of life becomes turbid, the police can be called upon to inquire into charges arising out of political antagonism.
The powerful processes of criminal law can then be perverted for achieving extraneous ends.
Attendant upon such investigations, when the police are not free agents within their sphere of duty, is a great amount of inconvenience, harassment and humiliation.
That can even take the form of the parading of a respectable person in handcuffs, apparently on way to a court of justice.
The foul deed is done when an adversary is exposed to social ridicule and obloquy, no matter when and whether a conviction is secured or is at all possible.
It is in order to meet such situations, though not limited to these contingencies, that the power to grant anticipatory bail was introduced into the Code of 1973.
Are we right in saying that the power conferred by section 438 to grant anticipatory bail is "not limited to these contingencies"? In fact that is one of the main points of controversy between the parties.
Whereas it is argued by Shri M. C. Bhandare, Shri O. P. Sharma and the other learned counsel who appear for the appellants that the power to grant anticipatory bail ought to be left to the discretion of the court concerned, depending on the facts and circumstances of each particular case, it is argued by the learned Additional Solicitor General on behalf of the State Government that the grant of anticipatory bail should 399 at least be conditional upon the applicant showing that he is likely to be arrested for an ulterior motive, that is to say, that the proposed charge or charges are evidently baseless and are actuated by mala fides.
It is argued that anticipatory bail is an extra ordinary remedy and therefore, whenever it appears that the proposed accusations are prima facie plausible, the applicant should be left to the ordinary remedy of applying for bail under Section 437 or Section 439, Criminal Procedure Code, after he is arrested.
Shri V. M. Tarkunde, appearing on behalf of some of the appellants, while supporting the contentions of the other appellants, said that since the denial of bail amounts to deprivation of personal liberty, court should lean against the imposition of unnecessary restrictions on the scope of Section 438, when no such restrictions are imposed by the legislature in the terms of that Section.
The learned counsel added a new dimension to the argument by invoking Article 21 of the Constitution.
He urged that Section 438 is a procedural provision which is concerned with the personal liberty of an individual who has not been convicted of the offence in respect of which he seeks bail and who must therefore be presumed to be innocent.
The validity of that section must accordingly be examined by the test of fairness and reasonableness which is implicit in Article 21.
If the legislature itself were to impose an unreasonable restriction on the grant of anticipatory bail, such a restriction could have been struck down as being violative of Article 21.
Therefore, while determining the scope of Section 438, the court should not impose any unfair or unreasonable limitation on the individual 's right to obtain an order of anticipatory bail.
Imposition of an unfair or unreasonable limitation, according to the learned counsel, would be violative of Article 21, irrespective of whether it is imposed by legislation or by judicial decision.
The Full Bench of the Punjab and Haryana High Court rejected the appellants ' applications for bail after summarising, what according to it is the true legal position, thus: (1) The power under Section 438, Criminal Procedure Code, is of an extra ordinary character and must be exercised sparingly in exceptional cases only; (2) Neither Section 438 nor any other provision of the Code authorises the grant of blanket anticipatory bail for offences not yet committed or with regard to accusations not so far levelled.
(3) The said power is not unguided or uncanalised but all the limitations imposed in the preceding Section 400 437, are implicit therein and must be read into Section 438.
(4) In addition to the limitations mentioned in Section 437, the petitioner must make out a special case for the exercise of the power to grant anticipatory bail.
(5) Where a legitimate case for the remand of the offender to the police custody under Section 167 (2) can be made out by the investigating agency or a reasonable claim to secure incriminating material from information likely to be received from the offender under Section 27 of the Evidence Act can be made out, the power under Section 438 should not be exercised.
(6) The discretion under Section 438 cannot be exercised with regard to offences punishable with death or imprisonment for life unless the court at that very stage is satisfied that such a charge appears to be false or groundless.
(7) The larger interest of the public and State demand that in serious cases like economic offences involving blatant corruption at the higher rungs of the executive and political power, the discretion under Section 438 of the Code should not be exercised; and (8) Mere general allegation of mala fides in the petition are inadequate.
The court must be satisfied on materials before it that the allegations of mala fides are substantial and the accusation appears to be false and groundless.
It was urged before the Full Bench that the appellants were men of substance and position who were hardly likely to abscond and would be prepared willingly to face trial.
This argument was rejected with the observation that to accord differential treatment to the appellants on account of their status will amount to negation of the concept of equality before the law and that it could hardly be contended that every man of status, who was intended to be charged with serious crimes, including the one under Section 409 which was punishable with life imprisonment, "was entitled to knock at the door of the court for anticipatory bail".
The possession of high status, according to the Full Bench, is not only an irrelevant consideration for granting anticipatory bail but is, if anything, an aggravating circumstance.
We find ourselves unable to accept, in their totality, the submissions of the learned Additional Solicitor General or the constraints which the 401 Full Bench of the High Court has engrafted on the power conferred by Section 438.
Clause (1) of Section 438 is couched in terms, broad and unqualified.
By any known canon of construction, words of width and amplitude ought not generally to be cut down so as to read into the language of the statute restraints and conditions which the legislature itself did not think it proper or necessary to impose.
This is especially true when the statutory provisions which falls for consideration is designed to secure a valuable right like the right to personal freedom and involves the application of a presumption as salutary and deep grained in our Criminal Jurisprudence as the presumption of innocence.
Though the right to apply for anticipatory bail was conferred for the first time by Section 438, while enacting that provision the legislature was not writing on a clean slate in the sense of taking an unprecedented step, in so far as the right to apply for bail is concerned.
It had before it two cognate provisions of the Code: Section 437 which deals with the power of courts other than the Court of Session and the High Court to grant bail in non bailable cases and Section 439 which deals with the "special powers" of the High Court and the Court of Session regarding bail.
The whole of Section 437 is riddled and hedged in by restrictions on the power of certain courts to grant bail.
That section reads thus : "437.
When bail may be taken in case of non bailable offence.
(1) When any person accused of or suspected of the commission of any non bailable offence is arrested or detained without warrant by an officer in charge of a police station or appears or is brought before a Court other than the High Court or Court of Session, he may be released on bail, but he shall not be so released if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life : Provided that the Court may direct that any person under the age of sixteen years or any woman or any sick or infirm person accused of such an offence be released on bail : Provided further that the mere fact that an accused person may be required for being identified by witnesses during investigation shall not be sufficient ground for refusing to grant bail if he is otherwise entitled to be released on bail and gives an undertaking that he shall comply with such directions as may be given by the Court.
(2) If it appears to such officer or Court at any stage of the investigation, inquiry or trial as the case may be, 402 that there are not reasonable grounds for believing that the accused has committed a non bailable offence, but that there are sufficient grounds for further inquiry into his guilt, the accused shall, pending such inquiry, be released on bail, or, at the discretion of such officer or Court, on the execution by him of a bond without sureties for his appearance as hereinafter provided.
(3) When a person accused or suspected of the commission of an offence punishable with imprisonment which may extend to seven years or more or of an offence under Chapter VI, Chapter XVI or Chapter XVII of the Indian Penal Code or abetment of, or conspiracy or attempt to commit, any such offence, is released on bail under sub section (1), the Court may impose any condition which the Court considers necessary (a) in order to ensure that such person shall attend in accordance with the conditions of the bond executed under this Chapter, or (b) in order to ensure that such person shall not commit an offence similar to the offence of which he is accused or of the commission of which he is suspected, or (c) otherwise in the interests of justice.
(4) An officer or a Court releasing any person on bail under sub section (1) or sub section (2), shall record in writing his or its reasons for so doing.
(5) Any Court which has released a person on bail under sub section (1) or sub section (2), may, if it considers it necessary so to do, direct that such person be arrested and commit him to custody.
(6) If, in any case triable by a Magistrate, the trial of a person accused of any non bailable offence is not concluded within a period of sixty days from the first date fixed for taking evidence in the case, such person shall, if he is in custody during the whole of the said period, be released on bail to the satisfaction of the Magistrate, unless for reasons to be recorded in writing, the Magistrate otherwise directs.
(7) If, at any time after the conclusion of the trial of a person accused of an non bailable offence and before judgment is delivered, the Court is of opinion that there are reasonable grounds for believing that the accused is not 403 guilty of any such offence, it shall release the accused, if he is in custody, on the execution by him of a bond without sureties for his appearance to hear judgment delivered.
" Section 439 (1) (a) incorporates the conditions mentioned in Section 437 (3) if the offence in respect of which the bail is sought is of the nature specified in that sub section.
Section 439 reads thus : "439.
Special powers of High Court or Court of Session regarding bail.
(1) A High Court or Court of Session may direct (a) That any person accused of an offence and in custody be released on bail, and if the offence is of the nature specified in sub section (3) of section 437, may impose any condition which it considers necessary for the purposes mentioned in that sub section; (b) that any condition imposed by a Magistrate when releasing any person on bail be set aside or modified : Provided that the High Court or the Court of Session shall, before granting bail to a person who is accused of an offence which is triable exclusively by the Court of Session or which, though not so triable, is punishable with imprisonment for life, give notice of the application for bail to the Public Prosecutor unless it is, for reasons to be recorded in writing, of opinion that it is not practicable to give notice.
(2) A High Court or Court of Session may direct that any person who has been released on bail under this Chapter be arrested and commit him to custody.
" The provisions of Section 437 and 439 furnished a convenient model for the legislature to copy while enacting Section 438.
If it has not done so and has departed from a pattern which could easily be adopted with the necessary modifications, it would be wrong to refuse to give to the departure its full effect by assuming that it was not intended to serve any particular or specific purpose.
The departure, in our opinion, was made advisedly and purposefully : Advisedly, at least in part, because of the 41st Report of the Law Commission which, while pointing out the necessity of introducing a provision in the Code enabling the High Court and the Court of Session to grant anticipatory bail, said in paragraph 29.9 that it had "considered" carefully the question of laying down in the statute certain conditions under which alone anticipatory bail could be granted" but had come to the conclusion that the question of granting such bail should be left "to the discretion of the court" and ought not to 404 be fettered by the statutory provision itself, since the discretion was being conferred upon superior courts which were expected to exercise it judicially.
The legislature conferred a wide discretion on the High Court and the Court of Session to grant anticipatory bail because it evidently felt, firstly, that it would be difficult to enumerate the conditions under which anticipatory bail should or should not be granted and secondly, because the intention was to allow the higher courts in the echelon a somewhat free hand in the grant of relief in the nature of anticipatory bail.
That is why, departing from the terms of Sections 437 and 439, Section 438(1) uses the language that the High Court or the Court of Session "may, if it thinks fit" direct that the applicant be released on bail.
Sub section (2) of Section 438 is a further and clearer manifestation of the same legislative intent to confer a wide discretionary power to grant anticipatory bail.
It provides that the High Court or the Court of Session, while issuing a direction for the grant of anticipatory bail, "may include such conditions in such directions in the light of the facts of the particular case, as it may think fit", including the conditions which are set out in clauses (i) to (iv) of sub section (2).
The proof of legislative intent can best be found in the language which the legislature uses.
Ambiguities can undoubtedly be resolved by resort to extraneous aids but words, as wide and explicit as have been used in Section 438, must be given their full effect, especially when to refuse to do so will result in undue impairement of the freedom of the individual and the presumption of innocence.
It has to be borne in mind that anticipatory bail is sought when there is a mere apprehension of arrest on the accusation that the applicant has committed a non bailable offence.
A person who has yet to lose his freedom by being arrested asks for freedom in the event of arrest.
That is the stage at which it is imperative to protect his freedom, in so far as one may, and to give full play to the presumption that he is innocent.
In fact, the stage at which anticipatory bail is generally sought brings about its striking dissimilarity with the situation in which a person who is arrested for the commission of a non bailable offence asks for bail.
In the latter situation, adequate data is available to the Court, or can be called for by it, in the light of which it can grant or refuse relief and while granting it, modify it by the imposition of all or any of the conditions mentioned in Section 437.
This is not to say that anticipatory bail, if granted, must be granted without the imposition of any conditions.
That will be plainly contrary to the very terms of Section 438.
Though sub section (1) of that section says that the Court "may, if it thinks fit" issue the necessary direction for bail, sub section (2) confers on the Court the 405 power to include such conditions in the direction as it may think fit in the light of the facts of the particular case, including the conditions mentioned in clauses (i) to (iv) of that sub section.
The controversy therefore is not whether the Court has the power to impose conditions while granting anticipatory bail.
It clearly and expressly has that power.
The true question is whether by a process of construction, the amplitude of judicial discretion which is given to the High Court and the Court of Session, to impose such conditions as they may think fit while granting anticipatory bail, should be cut down by reading into the statute condition which are not to be found therein, like those evolved by the High Court or canvassed by the learned Additional Solicitor General.
Our answer, clearly and emphatically, is in the negative.
The High Court and the Court of Session to whom the application for anticipatory bail is made ought to be left free in the exercise of their judicial discretion to grant bail if they consider it fit so to do on the particular facts and circumstances of the case and on such conditions as the case may warrant.
Similarly, they must be left free to refuse bail if the circumstances of the case so warrant, on considerations similar to those mentioned in Section 437 or which are generally considered to be relevant under Section 439 of the Code.
Generalisations on matters which rest on discretion and the attempt to discover formulae of universal application when facts are bound to differ from case to case frustrate the very purpose of conferring discretion.
No two cases are alike on facts and therefore, Courts have to be allowed a little free play in the joints if the conferment of discretionary power is to be meaningful.
There is no risk involved in entrusting a wide discretion to the Court of Session and the High Court in granting anticipatory bail because, firstly, these are higher courts manned by experienced persons, secondly, their orders are not final but are open to appellate or revisional scrutiny and above all because, discretion has always to be exercised by courts judicially and not according to whim, caprice or fancy.
On the other hand, there is a risk in foreclosing categories of cases in which anticipatory bail may be allowed because life throws up unforeseen possibilities and offers new challenges.
Judicial discretion has to be free enough to be able to take these possibilities in its stride and to meet these challenges.
While dealing with the necessity for preserving judicial discretion unhampered by rules of general application, Earl Loreburn L. C. said in Hyman and Anr.
vs Rose : "I desire in the first instance to point out that the discretion given by the section is very wide. . .
Now it 406 seems to me that when the Act is so express to provide a wide discretion,. it is not advisable to lay down any rigid rules for guiding that discretion.
I do not doubt that the rules enunciated by the Master of the Rolls in the present case are useful maxims in general, and that in general they reflect the point of view from which judges would regard an application for relief.
But I think it ought to be distinctly understood that there may be cases in which any or all of them may be disregarded.
If it were otherwise, the free discretion given by the statute would be fettered by limitations which have nowhere been enacted.
It is one thing to decide what is the true meaning of the language contained in an Act of Parliament.
It is quite a different thing to place conditions upon a free discretion entrusted by statute to the Court where the conditions are not based upon statutory enactment at all.
It is not safe, I think, to say that the Court must and will always insist upon certain things when the Act does not require them, and the facts of some unforeseen case may make the Court wish it had kept a free hand.
" Judges have to decide cases as they come before them, mindful of the need to keep passions and prejudices out of their decisions.
And it will be strange if, by employing judicial artifices and techniques, we cut down the discretion so wisely conferred upon the Courts, by devising a formula which will confine the power to grant anticipatory bail within a strait jacket.
While laying down cast iron rules in a matter like granting anticipatory bail, as the High Court has done, it is apt to be overlooked that even Judges can have but an imperfect awareness of the needs of new situations.
Life is never static and every situation has to be assessed in the context of emerging concerns as and when it arises.
Therefore, even if we were to frame a 'Code for the grant of anticipatory bail ', which really is the business of the legislature, it can at best furnish broad guide lines and cannot compel blind adherence.
In which case to grant bail and in which to refuse it is, in the very nature of things, a matter of discretion.
But apart from the fact that the question is inherently of a kind which calls for the use of discretion from case to case, the legislature has, in terms express, relegated the decision of that question to the discretion of the court, by providing that it may grant bail "if it thinks fit".
The concern of the courts generally is to preserve their discretion without meaning to abuse it.
It will be strange if we exhibit concern to stultify the discretion conferred upon the Courts by law.
407 A close look at some of the rules in the eight point code formulated by he High Court will show how difficult it is to apply them in practice.
The seventh proposition says : "The larger interest of the public and State demand that in serious cases like economic offences involving blatant corruption at the higher rungs of the executive and political power, the discretion under Section 438 of the Code should not be exercised.
" How can the Court, even if it had a third eye, assess the blatantness of corruption at the stage of anticipatory bail ? And will it be correct to say that blatantness of the accusation will suffice for rejecting bail, even if the applicant 's conduct is painted in colours too lurid to be true ? The eighth proposition rule framed by the High Court says : "Mere general allegations of mala fides in the petition are inadequate.
The court must be satisfied on materials before it that the allegations of mala fide are substantial and the accusation appears to be false and groundless.
" Does this rule mean, and that is the argument of the learned Additional Solicitor General, that the anticipatory bail cannot be granted unless it is alleged (and naturally, also shown, because mere allegation is never enough) that the proposed accusations are mala fide ? It is understandable that if mala fides are shown anticipatory bail should be granted in the generality of cases.
But it is not easy to appreciate why an application for anticipatory bail must be rejected unless the accusation is shown to be mala fide.
This, truly, is the risk involved in framing rules by judicial construction.
Discretion, therefore, ought to be permitted to remain in the domain of discretion, to be exercised objectively and open to correction by the higher courts.
The safety of discretionary power lies in this twin protection which provides a safeguard against its abuse.
According to the sixth proposition framed by the High Court, the discretion under Section 438 cannot be exercised in regard to offences punishable with death or imprisonment for life unless, the court at the stage of granting anticipatory bail, is satisfied that such a charge appears to be false or groundless.
Now, Section 438 confers on the High Court and the Court of Session the power to grant anticipatory bail if the applicant has reason to believe that he may be arrested on an accusation of having committed "a non bailable offence".
We see no warrant for reading into this provision the conditions subject to 408 which bail can be granted under Section 437(1) of the Code.
That section, while conferring the power to grant bail in cases of non bailable offences, provides by way of an exception that a person accused or suspected of the commission of a non bailable offence "shall not be so released" if there appear to be reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life.
If it was intended that the exception contained in Section 437(1) should govern the grant of relief under Section 438(1), nothing would have been easier for the legislature than to introduce into the latter section a similar provision.
We have already pointed out the basic distinction between these two sections.
Section 437 applies only after a person, who is alleged to have committed a non bailable offence, is arrested or detained without warrant or appears or is brought before a court.
Section 438 applies before the arrest is made and, in fact, one of the pre conditions of its application is that the person, who applies for relief under it, must be able to show that he has reason to believe that "he may be arrested", which plainly means that he is not yet arrested.
The nexus which this distinction bears with the grant or refusal of bail is that in cases falling under Section 437, there is some concrete data on the basis of which it is possible to show that there appear to be reasonable grounds for believing that the applicant has been guilty of an offence punishable with death or imprisonment for life.
In cases falling under Section 438 that stage is still to arrive and, in the generality of cases thereunder, it would be premature and indeed difficult to predicate that there are or are not reasonable grounds for so believing.
The foundation of the belief spoken of in Section 437(1), by reason of which the court cannot release the applicant on bail is, normally, the credibility of the allegations contained in the First Information Report.
In the majority of cases falling under Section 438, that data will be lacking for forming the requisite belief.
If at all the conditions mentioned in Section 437 are to be read into the provisions of Section 438, the transplantation shall have to be done without amputation.
That is to say, on the reasoning of the High Court, Section 438(1) shall have to be read as containing the clause that the applicant "shall not" be released on bail "if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life".
In this process one shall have overlooked that whereas, the power under Section 438(1) can be exercised if the High Court or the Court of Session "thinks fits to do so, Section 437(1) does not confer the power to grant bail in the same wide terms.
The expression "if it thinks fit", which occurs in Section 438(1) in relation to the power of the High Court or the Court of Session, is conspicuously absent in Section 437(1).
We see no valid reason for re writing Section 438 with a 409 view, not to expanding the scope and ambit of the discretion conferred on the High Court and the Court of Session but, for the purpose of limiting it.
Accordingly, we are unable to endorse the view of the High Court that ancipatory bail cannot be granted in respect of offences like criminal breach of trust for the mere reason that the punishment provided therefor is imprisonment for life.
Circumstances may broadly justify the grant of bail in such cases too, though of course, the Court is free to refuse anticipatory bail in any case if there is material before it justifying such refusal.
A great deal has been said by the High Court on the fifth proposition framed by it, according to which, inter alia, the power under Section 438 should not be exercised if the investigating agency can make a reasonable claim that it can secure incriminating material from information likely to be received from the offender under Section 27 of the Evidence Act.
According to the High Court, it is the right and the duty of the police to investigate into offences brought to their notice and therefore, courts should be careful not to exercise their powers in a manner which is calculated to cause interference therewith.
It is true that the functions of the Judiciary and the police are in a sense complementary and not overlapping.
And, as observed by the Privy Council in King Emperor vs Khwaja Nasir Ahmed : "Just as it is essential that every one accused of a crime should have free access to a court of justice so that he may be duly acquitted if found not guilty of the offence with which he is charged, so it is of the utmost importance that the judiciary should not interfere with the police in matters which are within their province and into which the law imposes on them the duty of inquiry.
The functions of the Judiciary and the Police are complementary, not overlapping, and the combination of the individual liberty with a due observance of law and order is only to be obtained by leaving each to exercise its own function. " But, these remarks, may it be remembered, were made by the Privy Council while rejecting the view of the Lahore High Court that it had inherent jurisdiction under the old Section 561A, Criminal Procedure Code, to quash all proceedings taken by the police in pursuance of two First Information Reports made to them.
An order quashing such proceedings puts an end to the proceedings with the 410 inevitable result that all investigation into the accusation comes to a halt.
Therefore, it was held that the Court cannot, in the exercise of its inherent powers, virtually direct that the police shall not investigate into the charges contained in the F.I.R. We are concerned here with a situation of an altogether different kind.
An order of anticipatory bail does not in any way, directly or indirectly, take away from the police their right to investigate into charges made or to be made against the person released on bail.
In fact, two of the usual conditions incorporated in a direction issued under Section 438 (1) are those recommended in Sub section (2) (i) and (ii) which require the applicant to co operate with the police and to assure that he shall not tamper with the witnesses during and after the investigation.
While granting relief under Section 438 (1), appropriate conditions can be imposed under Section 438 (2) so as to ensure an uninterrupted investigation.
One of such conditions can even be that in the event of the police making out a case of a likely discovery under Section 27 of the Evidence Act, the person released on bail shall be liable to be taken in police custody for facilitating the discovery.
Besides, if and when the occasion arises, it may be possible for the prosecution to claim the benefit of Section 27 of the Evidence Act in regard to a discovery of facts made in pursuance of information supplied by a person released on bail by invoking the principle stated by this Court in State of U.P. vs Deoman Upadhyaya to the effect that when a person not in custody approaches a police officer investigating an offence and offers to give information leading to the discovery of a fact, having a bearing on the charge which may be made against him, he may appropriately be deemed to have surrendered himself to the police.
The broad foundation of this rule is stated to be that Section 46 of the Code of Criminal Procedure does not contemplate any formality before a person can be said to be taken in custody: submission to the custody by word or action by a person is sufficient.
For similar reasons, we are unable to agree that anticipatory bail should be refused if a legitimate case for the remand of the offender to the police custody under Section 167 (2) of the Code is made out by the investigating agency.
It is unnecessary to consider the third proposition of the High Court in any great details because we have already indicated that there is no justification for reading into Section 438 the limitations mentioned in Section 437.
The High Court says that such limitations are implicit in Section 438 but, with respect, no such implications arise or can be 411 read into that section.
The plenitudes of the section must be given its full play.
The High Court says in its fourth proposition that in addition to the limitations mentioned in Section 437, the petitioner must make out a "special case" for the exercise of the power to grant anticipatory bail.
This, virtually, reduces the salutary power conferred by Section 438 to a dead letter.
In its anxiety, otherwise just, to show that the power conferred by Section 438 is not "unguided or uncanalised", the High Court has subjected that power to a restraint which will have the effect of making the power utterly unguided.
To say that the applicant must make out a "special case" for the exercise of the power to grant anticipatory bail is really to say nothing.
The applicant has undoubtedly to make out a case for the grant of anticipatory bail.
But one cannot go further and say that he must make out a "special case".
We do not see why the provisions of Section 438 should be suspected as containing something volatile or incendiary, which needs to be handled with the greatest care and caution imaginable.
A wise exercise of judicial power inevitably takes care of the evil consequences which are likely to flow out of its intemperate use.
Every kind of judicial discretion, whatever may be the nature of the matter in regard to which it is required to be exercised, has to be used with due care and caution.
In fact, an awareness of the context in which the discretion is required to be exercised and of the reasonably foreseeable consequences of its use, is the hall mark of a prudent exercise of judicial discretion.
One ought not to make a bugbear of the power to grant anticipatory bail.
By proposition No. 1 the High Court says that the power conferred by Section 438 is "of an extraordinary character and must be exercised sparingly in exceptional cases only".
It may perhaps be right to describe the power as of an extraordinary character because ordinarily the bail is applied for under Section 437 or Section 439.
These Sections deal with the power to grant or refuse bail to a person who is in the custody of the police and that is the ordinary situation in which bail is generally applied for.
But this does not justify the conclusion that the power must be exercised in exceptional cases only, because it is of an extra ordinary character.
We will really be saying once too often that all discretion has to be exercised with care and circumspection depending on circumstances justifying its exercise.
It is unnecessary to travel beyond it and subject the wide power conferred by the legislature to a rigorous code of self imposed limitations.
412 It remains only to consider the second proposition formulated by the High Court, which is the only one with which we are disposed to agree but we will say more about it a little later.
It will be appropriate at this stage to refer to a decision of this Court in Balchand Jain vs State of Madhya Pradesh on which the High Court has leaned heavily in formulating its propositions.
One of us, Bhagwati J. who spoke for himself and A. C. Gupta, J. observed in that case that: "the power of granting 'anticipatory bail ' is somewhat extraordinary in character and it is only in exceptional cases where it appears that a person might be falsely implicated, or a frivolous case might be launched against him, or "there are reasonable grounds for holding that a person accused of an offence is not likely to abscond, or otherwise misuse his liberty while on bail" that such power is to be exercised." Fazal Ali, J. who delivered a separate judgment of concurrence also observed that: "an order for anticipatory bail is an extraordinary remedy available in special cases".
and proceeded to say: "As Section 438 immediately follows section 437 which is the main provision for bail in respect of non bailable offences, it is manifest that the conditions imposed by section 437 (1) are implicitly contained in section 438 of the Code.
Otherwise the result would be that a person who is accused of murder can get away under section 438 by obtaining an order for anticipatory bail without the necessity of proving that there were reasonable grounds for believing that he was not guilty of offence punishable with death or imprisonment for life.
Such a course would render the provisions of section 437 nugatory and will give a free licence to the accused persons charged with non bailable offences to get easy bail by approaching the Court under section 438 and by passing section 437 of the Code.
This, we feel, could never have been the intention of the Legislature.
Section 438 does not contain unguided or uncanalised powers to pass an order for anticipatory bail, but such an order being of an exceptional type can only be passed if, 413 apart from the conditions mentioned in section 437, there is a special case made out for passing the order.
The words "for a direction under this section" and "Court may, if it thinks fit, direct" clearly show that the Court has to be guided by a large number of considerations including those mentioned in section 437 of the Code.
" While stating his conclusions Fazal Ali, J. reiterated in conclusion no.3 that "Section 438 of the Code is an extraordinary remedy and should be resorted to only in special cases.
" We hold the decision in Balchand Jain (supra) in great respect but it is necessary to remember that the question as regards the interpretation of Section 438 did not at all arise in that case.
Fazal Ali, J. has stated in paragraph 3 of his judgment that "the only point" which arose for consideration before the Court was whether the provisions of Section 438 relating to anticipatory bail stand overruled and repealed by virtue of Rule 184 of the Defence and Internal Security of India Rules, 1971 or whether both the provisions can, by the rule of harmonious interpretation, exist side by side.
Bhagwati, J. has also stated in his judgment, after adverting to Section 438 that Rule 184 is what the Court was concerned with in the appeal.
The observations made in Balchand Jain (supra) regarding the nature of the power conferred by Section 438 and regarding the question whether the conditions mentioned in Section 437 should be read into Section 438 cannot therefore be treated as concluding the points which arise directly for our consideration.
We agree, with respect, that the power conferred by Section 438 is of an extraordinary character in the sense indicated above, namely, that it is not ordinarily resorted to like the power conferred by Sections 437 and 439.
We also agree that the power to grant anticipatory bail should be exercised with due care and circumspection but beyond that, it is not possible to agree with the observations made in Balchand Jain (supra) in an altogether different context on an altogether different point.
We find a great deal of substance in Mr. Tarkunde 's submission that since denial of bail amounts to deprivation of personal liberty, the Court should lean against the imposition of unnecessary restrictions on the scope of Section 438, especially when no such restrictions have been imposed by the legislature in the terms of that section.
Section 438 is a procedural provision which is concerned with the personal liberty of the individual, who is entitled to the benefit of the presumption of innocence since he is not, on the date of his application for anticipatory bail, convicted of the offence in respect of which he seeks bail.
An overgenerous infusion of constraints and conditions which are not to be found in Section 438 can make its provisions constitutionally vulnerable since the right to personal freedom cannot be made to depend on com 414 pliance with unreasonable restrictions.
The beneficient provision contained in Section 438 must be saved, not jettisoned.
No doubt can linger after the decision in Maneka Gandhi that in order to meet the challenge of Article 21 of the Constitution, the procedure established by law for depriving a person of his liberty must be fair, just and reasonable.
Section 438, in the form in which it is conceived by the legislature, is open to no exception on the ground that it prescribes a procedure which is unjust or unfair.
We ought, at all costs, to avoid throwing it open to a Constitutional challenge by reading words in it which are not be found therein.
It is not necessary to refer to decisions which deal with the right to ordinary bail because that right does not furnish an exact parallel to the right to anticipatory bail.
It is, however, interesting that as long back as in 1924 it was held by the High Court of Calcutta in Nagendra vs King Emperor that the object of bail is to secure the attendance of the accused at the trial, that the proper test to be applied in the solution of the question whether bail should be granted or refused is whether it is probable that the party will appear to take his trial and that it is indisputable that bail is not to be withheld as a punishment.
In two other cases which, significantly, are the 'Meerut Conspiracy cases ' observations are to be found regarding the right to bail which observe a special mention.
In K. N. Joglekar vs Emperor it was observed, while dealing with Section 498 which corresponds to the present Section 439 of the Code, that it conferred upon the Sessions Judge or the High Court wide powers to grant bail which were not handicapped by the restrictions in the preceding Section 497 which corresponds to the present Section 437.
It was observed by the Court that there was no hard and fast rule and no inflexible principle governing the exercise of the discretion conferred by Section 498 and that the only principle which was established was that the discretion should be exercised judiciously.
In Emperor vs H. L. Hutchinson it was said that it was very unwise to make an attempt to lay down any particular rules which will bind the High Court, having regard to the fact that the legislature itself left the discretion of the Court unfettered.
According to the High Court, the variety of cases that may arise from time to time cannot be safely classified and it is dangerous to make an attempt to classify the cases and to say that in particular classes a bail may be granted but not in other classes.
It was observed that the principle to be deduced from the various sections in the Criminal Procedure 415 Code was that grant of bail is the rule and refusal is the exception.
An accused person who enjoys freedom is in a much better position to look after his case and to properly defend himself than if he were in custody.
As a presumably innocent person he is therefore entitled to freedom and every opportunity to look after his own case.
A presumably innocent person must have his freedom to enable him to establish his innocence.
Coming nearer home, it was observed by Krishna Iyer, J., in Gudikanti Narasimhulu vs Public Prosecutor, High Court of Andhra Pradesh that "the issue of bail is one of liberty, justice, public safety and burden of the public treasury, all of which insist that a developed jurisprudence of bail is integral to a socially sensitized judicial process.
After all, personal liberty of an accused or convict is fundamental, suffering lawful eclipse only in terms of procedure established by law.
The last four words of Article 21 are the life of that human right." In Gurcharan Singh vs State (Delhi Admn.) it was observed by Goswami, J. who spoke for the Court, that "there cannot be an inexorable formula in the matter of granting bail.
The facts and circumstances of each case will govern the exercise of judicial discretion in granting or cancelling bail.
" In American Jurisprudence (2d, Volume 8, page 806, para 39) it is stated: "Where the granting of bail lies within the discretion of the court, the granting or denial is regulated, to a large extent, by the facts and circumstances of each particular case.
Since the object of the detention or imprisonment of the accused is to secure his appearance and submission to the jurisdiction and the judgment of the court, the primary inquiry is whether a recognizance or bond would effect that end.
" It is thus clear that the question whether to grant bail or not depends for its answer upon a variety of circumstances, the cumulative effect of which must enter into the judicial verdict.
Any one single circumstance cannot be treated as of universal validity or as necessarily justifying the grant or refusal of bail.
In regard to anticipatory bail, if the proposed accusation appears to stem not from motives of furthering the ends of justice but from some ulterior motive, the object being to injure and humiliate the applicant by having him arrested, a direction for the release of the applicant on bail in the event of his arrest would generally be made.
On the other 416 hand, if it appears likely, considering the antecedents of the applicant, that taking advantage of the order of anticipatory bail he will flee from justice, such an order would not be made.
But the converse of these propositions is not necessarily true.
That is to say, it cannot be laid down as an inexorable rule that anticipatory bail cannot be granted unless the proposed accusation appears to be actuated by mala fides; and, equally, that anticipatory bail must be granted if there is no fear that the applicant will abscond.
There are several other considerations, too numerous to enumerate, the combined effect of which must weigh with the court while granting or rejecting anticipatory bail.
The nature and seriousness of the proposed charges, the context of the events likely to lead to the making of the charges, a reasonable possibility of the applicant 's presence not being secured at the trial, a reasonable apprehension that witnesses will be tampered with and "the larger interests of the public or the state" are some of the considerations which the court has to keep in mind while deciding an application for anticipatory bail.
The relevance of these considerations was pointed out in The State vs Captain Jagjit Singh, which, though, was a case under the old Section 498 which corresponds to the present Section 439 of the Code.
It is of paramount consideration to remember that the freedom of the individual is as necessary for the survival of the society as it is for the egoistic purposes of the individual.
A person seeking anticipatory bail is still a free man entitled to the presumption of innocence.
He is willing to submit to restraints on his freedom, by the acceptance of conditions which the court may think fit to impose, in consideration of the assurance that if arrested, he shall be enlarged on bail.
A word of caution may perhaps be necessary in the evaluation of the consideration whether the applicant is likely to abscond.
There can be no presumption that the wealthy and the mighty will submit themselves to trial and that the humble and the poor will run away from the course of justice, any more than there can be a presumption that the former are not likely to commit a crime and the latter are more likely to commit it.
In his charge to the grand jury at Salisbury Assizes, 1899 (to which Krishna Iyer, J. has referred in Gudikanti), Lord Russel of Killowen said: " . . . it was the duty of magistrates to admit accused persons to bail, wherever practicable, unless there were strong grounds for supposing that such persons would not appear to take their trial.
It was not the poorer classes who did not appear, for their circumstances were such as to tie them to the place where they carried on their work.
They had not the golden wings with which to fly from justice.
" 417 This, incidentally, will serve to show how no hard and fast rules can be laid down in discretionary matters like the grant or refusal of bail, whether anticipatory or otherwise.
No such rules can be laid down for the simple reason that a circumstance which, in a given case, turns out to be conclusive, may have no more than ordinary signification in another case.
We would, therefore, prefer to leave the High Court and the Court of Session to exercise their jurisdiction under Section 438 by a wise and careful use of their discretion which, by their long training and experience, they are ideally suited to do.
The ends of justice will be better served by trusting these courts to act objectively and in consonance with principles governing the grant of bail which are recognised over the years, than by divesting them of their discretion which the legislature has conferred upon them, by laying down inflexible rules of general application.
It is customary, almost chronic, to take a statute as one finds it on the grounds that, after all "the legislature in its wisdom" has thought it fit to use a particular expression.
A convention may usefully grow whereby the High Court and the Court of Session may be trusted to exercise their discretionary powers in their wisdom, especially when the discretion is entrusted to their care by the legislature in its wisdom.
If they err, they are liable to be corrected.
This should be the end of the matter, but it is necessary to clarify a few points which have given rise to certain misgivings.
Section 438(1) of the Code lays down a condition which has to be satisfied before anticipatory bail can be granted.
The applicant must show that he has "reason to believe" that he may be arrested for a non bailable offence.
The use of the expression "reason to believe" shows that the belief that the applicant may be so arrested must be founded on reasonable grounds.
Mere 'fear ' is not 'belief ', for which reason it is not enough for the applicant to show that he has some sort of a vague apprehension that some one is going to make an accusation against him, in pursuance of which he may be arrested.
The grounds on which the belief of the applicant is based that he may be arrested for a non bailable offence, must be capable of being examined by the court objectively, because it is then alone that the court can determine whether the applicant has reason to believe that he may be so arrested.
Section 438(1), therefore, cannot be invoked on the basis of vague and general allegations, as if to arm oneself in perpetuity against a possible arrest.
Otherwise, the number of applications for anticipatory bail will be as large as, at any rate, the adult populace.
Anticipatory bail is a device to secure the individual 's liberty; it is neither a passport to 418 the commission of crimes nor a shield against any and all kinds of accusations, likely or unlikely.
Secondly, if an application for anticipatory bail is made to the High Court or the Court of Session it must apply its own mind to the question and decide whether a case has been made out for granting such relief.
It cannot leave the question for the decision of the Magistrate concerned under Section 437 of the Code, as and when an occasion arises.
Such a course will defeat the very object of Section 438.
Thirdly, the filing of a First Information Report is not a condition precedent to the exercise of the power under Section 438.
The imminence of a likely arrest founded on a reasonable belief can be shown to exist even if an F.I.R. is not yet filed.
Fourthly, anticipatory bail can be granted even after an F.I.R. is filed, so long as the applicant has not been arrested.
Fifthly, the provisions of Section 438 cannot be invoked after the arrest of the accused.
The grant of "anticipatory bail" to an accused who is under arrest involves a contradiction in terms, in so far as the offence or offences for which he is arrested, are concerned.
After arrest, the accused must seek his remedy under Section 437 or Section 439 of the Code, if he wants to be released on bail in respect of the offence or offences for which he is arrested.
We have said that there is one proposition formulated by the High Court with which we are inclined to agree.
That is preposition No. (2).
We agree that a 'blanket order ' of anticipatory bail should not generally be passed.
This flows from the very language of the section which, as discussed above, requires the applicant to show that he has "reason to believe" that he may be arrested.
A belief can be said to be founded on reasonable grounds only if there is something tangible to go by on the basis of which it can be said that the applicant 's apprehension that he may be arrested is genuine.
That is why, normally, a direction should not issue under Section 438(1) to the effect that the applicant shall be released on bail "whenever arrested for whichever offence whatsoever.
" That is what is meant by a 'blanket order ' of anticipatory bail, an order which serves as a blanket to cover or protect any and every kind of allegedly unlawful activity, in fact any eventuality, likely or unlikely regarding which, no concrete information can possibly be had.
The rationale of a direction under Section 438(1) is the belief of the applicant founded on reasonable grounds that he may be arrested for a non bailable offence.
It is unrealistic to expect the applicant to draw up his application with the meticulousness of a pleading in a civil case and such is not requirement of the section.
But specific events and facts 419 must be disclosed by the applicant in order to enable the court to judge of the reasonableness of his belief, the existence of which is the sine qua non of the exercise of power conferred by the section.
Apart from the fact that the very language of the statute compels this construction, there is an important principle involved in the insistence that facts, on the basis of which a direction under Section 438 (1) is sought, must be clear and specific, not vague and general.
It is only by the observance of that principle that a possible conflict between the right of an individual to his liberty and the right of the police to investigate into crimes reported to them can be avoided.
A blanket order of anticipatory bail is bound to cause serious interference with both the right and the duty of the police in the matter of investigation because, regardless of what kind of offence is alleged to have been committed by the applicant and when, an order of bail which comprehends allegedly unlawful activity of any description whatsoever, will prevent the police from arresting the applicant even if he commits, say, a murder in the presence of the public.
Such an order can then become a charter of lawlessness and a weapon to stifle prompt investigation into offences which could not possibly be predicated when the order was passed.
Therefore, the court which grants anticipatory bail must take care to specify the offence or offences in respect of which alone the order will be effective.
The power should not be exercised in a vacuum.
There was some discussion before us on certain minor modalities regarding the passing of bail orders under Section 438(1).
Can an order of bail be passed under that section without notice to the public prosecutor? It can be.
But notice should issue to the public prosecutor or the Government Advocate forthwith and the question of bail should be re examined in the light of the respective contentions of the parties.
The ad interim order too must conform to the requirements of the section and suitable conditions should be imposed on the applicant even at that stage.
Should the operation of an order passed under Section 438(1) be limited in point of time? Not necessarily.
The Court may, if there are reasons for doing so, limit the operation of the order to a short period until after the filing of an F.I.R. in respect of the matter covered by the order.
The applicant may in such cases be directed to obtain an order of bail under Section 437 or 439 of the Code within a reasonably short period after the filing of the F.I.R. as aforesaid.
But this need not be followed as an invariable rule.
The normal role should be not to limit the operation of the order in relation to a period of time.
420 During the last couple of years this Court, while dealing with appeals against orders passed by various High Courts, has granted anticipatory bail to many a person by imposing conditions set out in Section 438(2)(i), (ii) and (iii).
The Court has, in addition, directed in most of those cases that (a) the applicant should surrender himself to the police for a brief period if a discovery is to be made under Section 27 of the Evidence Act or that he should be deemed to have surrendered himself if such a discovery is to be made.
In certain exceptional cases, the Court has, in view of the material placed before it, directed that the order of anticipatory bail will remain in operation only for a week or so until after the filing of the F.I.R. in respect of matters covered by the order.
These orders, on the whole, have worked satisfactorily, causing the least inconvenience to the individuals concerned and least interference with the investigational rights of the police.
The Court has attempted through those orders to strike a balance between the individual 's right to personal freedom and the investigational rights of the police.
The appellants who were refused anticipatory bail by various courts have long since been released by this Court under Section 438(1) of the Code.
The various appeals and Special Leave petitions before us will stand disposed of in terms of this Judgment.
The judgment of the Full Bench of the Punjab and Haryana High Court, which was treated as the main case under appeal, is substantially set aside as indicated during the course of this Judgment.
S.R. Appeals allowed in part.
| The appellant herein, Sri Gurbaksh Singh Sibbia was a Minister of Irrigation and Power in the Congress Ministry of the Government of Punjab.
Grave allegations of political corruption were made against him and others whereupon applications were filed in the High Court of Punjab and Haryana under section 438 of the Criminal Procedure Code, praying that the appellants be directed to be released on bail, in the event of their arrest on the aforesaid charges.
Considering the importance of the matter, a learned single Judge referred the applications to a Full Bench, which by its judgment dated September, 13, 1977 dismissed them, after summarising, what according to it is the true legal position, of section 438 of the Code of Criminal Procedure, 1973 (Act 2 of 1974) thus: (1) The power under Section 438, Criminal Procedure Code, is of an extra ordinary character and must be exercised sparingly in exceptional cases only.
(2) Neither Section 438 nor any other provision of the Code authorises the grant of blanket anticipatory bail for offences not yet committed or with regard to accusations not so far levelled.
(3) The said power is not unguided or uncanalised but all the limitations imposed in the preceding Section 437, are implicit therein and must be read into Section 438.
(4) In addition to the limitations mentioned in Section 437, the petitioner must make out a special case for the exercise of the power to grant anticipatory bail.
(5) Where a legitimate case for the remand of the offender to the police custody under Section 167(2) can be made out by the investigating agency or a reasonable claim to secure incriminating material from information likely to be received from the offender under Section 27 of the Evidence Act can be made out, the power under Section 438 should not be exercised.
(6) The discretion under Section 438 cannot be exercised with regard to offences punishable with death or imprisonment for life unless the Court at that very stage is satisfied that such a charge appears to be false or groundless.
384 (7) The larger interest of the public and State demand that in serious cases like economic offences involving blatant corruption at the higher rungs of the executive and political power, the discretion under Section 438 of the Code should not be exercised; and (8) Mere general allegations of mala fides in the petition are inadequate.
The court must be satisfied on materials before it that the allegations of mala fides are substantial and the accusation appears to be false and groundless.
The argument that the appellants were men of substance and position who were hardly likely to abscond and would be prepared willingly to face trial was rejected by the Full Bench with the observation that to accord differential treatment to the appellants on account of their status will amount to negation of the concept of equality before the law and that it could hardly be contended that every man of status, who was intended to be charged with serious crimes including the one under section 409 was punishable with life imprisonment, "was entitled to knock at the door of the Court for anticipatory bail".
The possession of high status, according to the Full Bench, is not only an irrelevant consideration for granting anticipatory bail, but is, if anything, an aggravating circumstance.
Hence the appeals by special leave.
The appellants contended: (a) The power conferred by section 438 to grant anticipatory bail is "not limited to the contigencies" summarised by the High Court; (b) The power to grant anticipatory bail ought to be left to the discretion of the Court concerned, depending on the facts and circumstances of each particular case; (c) Since the denial of bail amounts to deprivation of personal liberty; Courts should lean against the imposition of unnecessary restrictions on the scope of Section 438, when no such restrictions are imposed by the legislature in the terms of that section (d) Section 438 is a procedural provision which is concerned with the personal liberty of an individual who has not been convicted of the offence in respect of which he seeks bail and who must be presumed to be innocent.
The validity of that section must accordingly be examined by the test of fairness and which is implicit in Article 21.
If the legislature itself were to impose an unreasonable restriction could have been struck down as being violative of Article 21.
Therefore, while determining the scope of section 438, the Court should not impose any unfair or unreasonable limitation on the individual 's right to obtain an order of anticipatory bail.
Imposition of an unfair or unreasonable limitation would be violative of Article 21 irrespective of whether it is imposed by legislation or by judicial decision.
Allowing the appeals in part, the Court, ^ HELD: 1.
The society has a vital stake in both of these interests namely, personal liberty and the investigational power of the police, though their relative importance at any given time depends upon the complexion and restraints of political conditions.
The Court 's task is how best to balance these interests while determining the scope of section 438 of the Code of Criminal Procedure, 1973.
[393 C D] 2.
The High Court and the Court of Session should be left to exercise their jurisdiction under section 438 by a wise and careful use of their discretion 385 which by their long training and experience, they are ideally suited to do.
The ends of justice will be better served by trusting these courts to act objectively and in consonance with principles governing the grant of bail which are recognised over the years, than by divesting them of their discretion which the legislature has conferred upon them, by laying down inflexible rules of general application.
It is customary, almost chronic, to take a statute as one finds it on the ground that, after all, "the legislature in its wisdom" has thought it fit to use a particular expression.
A convention may usefully grow whereby the High Court and the Court of Session may be trusted to exercise their discretionary powers in their wisdom, especially when the discretion is entrusted to their care by the legislature in its wisdom.
If they err, they are liable to be corrected.
[417 B D] 3.
Section 438(1) of the Code lays down a condition which has to be satisfied before anticipatory bail can be granted.
The applicant must show that he has "reason to believe" that he may be arrested for a non bailable offence.
The use of the expression "reason to believe" shows that the belief that the applicant may be so arrested must be founded on reasonable grounds.
Mere 'fear ' is not 'belief ', for which reason it is not enough for the applicant to show that he has some sort of a vague apprehension that some one is going to make an accusation against him, in pursuance of which he may be arrested.
The grounds on which the belief of the applicant is based that he may be arrested for a non bailable offence, must be capable of being examined by the court objectively, because it is then alone that the court can determine whether the applicant has reason to believe that he may be so arrested.
Section 438(1), therefore, cannot be invoked on the basis of vague and general allegations, as if to arm oneself in perpetuity against a possible arrest.
Otherwise, the number of applications for anticipatory bail will be as large, as, at any rate, the adult populace.
Anticipatory bail is a device to secure the individual 's liberty; it is neither a passport to the commission of crimes nor a shield against any and all kinds of accusation, likely or unlikely.
[417 E H, 418 A] Secondly, if an application for anticipatory bail is made to the High Court or the Court of Session it must apply its own mind to the question and decide whether a case has been made out for granting such relief.
It cannot leave the question for the decision of the Magistrate concerned under Section 437 of the Code, as and when an occasion arises.
Such a course will defeat the very object of Section 438.
[418 A B] Thirdly, the filing of a First Information Report is not a condition precedent to the exercise of the power under Section 438.
The imminence of a likely arrest founded on a reasonable belief can be shown to exist even if an F.I.R. is not yet filed.
[418 B C] Fourthly, anticipatory bail can be granted even after an F.I.R. is filed, so long as the applicant has not been arrested.
[418 C] Fifthly, the provisions of Section 438 cannot be invoked after the arrest of the accused.
The grant of "anticipatory bail" to an accused who is under arrest involves a contradiction in terms, in so far as the offence or offences for which he is arrested, are concerned.
After arrest, the accused must seek his remedy under Section 437 or Section 439 of the Code, if he wants to be released on bail in respect of the offence or offences for which he is arrested.
[418 C E] 386 4.
However, a "blanket order" of anticipatory bail should not generally be passed.
This flows from the very language of the section which requires the appellant to show that he has "reason to believe" that he may be arrested.
A belief can be said to be founded on reasonable grounds only if there is something tangible to go by on the basis of which it can be said that the applicant 's apprehension that he may be arrested is genuine.
That is why, normally, a direction should not issue under Section 438(1) to the effect that the applicant shall be released on bail "whenever arrested for which ever offence whatsoever".
That is what is meant by a 'blanket order ' of anticipatory bail, an order which serves as a blanket to cover or protect any and every kind of allegedly unlawful activity, in fact any eventuality, likely or unlikely regarding which, no concrete information can possibly be bad.
The rationale of a direction under Section 438(1) is the belief of the applicant founded on reasonable grounds that he may be arrested for a non bailable offence.
It is unrealistic to expect the applicant to draw up his application with the meticulousness of a pleading in a civil case and such is not requirement of the section.
But specific events and facts must be disclosed by the applicant in order to enable the court to judge of the reasonableness of his belief, the existence of which is the sine qua non of the exercise of power conferred by the section.
[418 E H, 419 A] Apart from the fact that the very language of the statute compels this construction, there is an important principle involved in the insistence that facts, on the basis of which a direction under Section 438(1) is sought, must be clear and specific, not vague and general.
It is only by the observance of that principle that a possible conflict between the right of an individual to his liberty and the right of the police to investigate into crimes reported to them can be avoided.
[419 A C] A blanket order of anticipatory bail is bound to cause serious interference with both the right and the duty of the police in the matter of investigation because, regardless of what kind of offence is alleged to have been committed by the applicant and when, an order of bail which comprehends allegedly unlawful activity of any description whatsoever, will prevent the police from arresting the applicant even if the commits, say, a murder in the presence of the public.
Such an order can then become a charter of lawlessness and weapon to stifle prompt investigation into offences which could not possibly be predicated when the order was passed.
Therefore, the court which grants anticipatory bail must take care to specify the offence or offences in respect of which alone the order will be effective.
The power should not be exercised in a vacuum.
[419 C E] 5.
An order of bail can be passed under section 438(1) of the Code without notice to the Public Prosecutor.
But notice should issue to the public prosecutor or the Government Advocate forthwith and the question of bail should be re examined in the light of the respective contentions of the parties.
The ad interim order too must conform to the requirements of the section and suitable conditions should be imposed on the applicant even at that stage.
[419 E F] 6.
Equally the operation of an order passed under section 438(1) need not necessarily be limited in point of time.
The Court may, if there are reasons for doing so, limit the operation of the order to a short period until after the filing of an F.I.R. in respect of the matter covered by the order.
The applicant may in such cases be directed to obtain an order of bail under Section 437 or 439 of the Code within a reasonably short period after the filing of the F.I.R. 387 as aforesaid.
But this need not be followed as an invariable rule.
The normal rule should be not to limit the operation of the order in relation to a period of time.
[419 F H] 7.
Bail is basically release from restraint, more particularly release from the custody of the police.
The act of arrest directly affects freedom of movement of the person arrested by the police, and speaking generally, an order of bail gives back to the accused that freedom on condition that he will appear to take his trial.
Personal recognizance suretyship bonds and such other modalities are the means by which an assurance is secured from the accused that though he has been released on bail, he will present himself as the trial of offence or offences of which he is charged and for which he was arrested.
[397 E G] The distinction between an ordinary order of bail and an order of anticipatory bail is that whereas the former is granted after arrest and therefore means release from the custody of the police, the latter is granted in anticipation of arrest and is therefore effective at the very moment of arrest.
Police custody is an inevitable concomitant of arrest for non bailable offences.
An order of anticipatory bail constitutes, so to say, an insurance against police custody following upon arrest for offence or offences in respect of which the order is issued.
In other words, unlike a post arrest order of bail, it is a pre arrest legal process which directs that if the person in whose favour it is issued is thereafter arrested on the accusation in respect of which the direction is issued, he shall be released on bail.
Section 46(1) of the Code of Criminal Procedure which deals with how arrests are to be made, provides that in making the arrest the police officer or other person making the arrest "shall actually touch or confine the body of the person to be arrested, unless there be a submission to the custody by word or action".
A direction under section 438 is intended to confer conditional immunity from this 'touch ' or confinement.
[397 G H. 398 A B] 8.
No one can accuse the police of possessing a healing touch nor indeed does anyone have misgivings in regard to constraints consequent upon confinement in police custody.
But, society has come to accept and acquiesce in all that follows upon a police arrest with a certain amount of sangfroid, in so far as the ordinary rut of criminal investigation is concerned.
It is the normal day to day business of the police to investigate into charges brought before them and, broadly and generally, they have nothing to gain, not favours at any rate, by subjecting ordinary criminal to needless harassment.
But the crimes, the criminals and even the complaints can occasionally possess extraordinary features.
When the even flow of life becomes turbid, the police can be called upon to inquire into charges arising out of political antagonism.
The powerful processes of criminal law can then be perverted for achieving extraneous ends.
Attendant upon such investigations, when the police are not free agents within their sphere of duty, is a great amount of inconvenience, harassment and humiliation.
That can even take the form of the parading of a respectable person in hand cuffs, apparently on way to a court of justice.
The foul deed is done when an adversary is exposed to social ridicule and obloquy, no matter when and whether a conviction is secured or is at all possible.
It is in order to meet such situations, though not limited to these contingencies, that the power to grant anticipatory bail was introduced into the Code of 1973.
[398 C F] 9.
Clause (1) of Section 438 is couched in terms, broad and unqualified.
By any known canon of construction, words of width and amplitude ought not 388 generally to be cut down so as to read into the language of the statute restraints and conditions which the legislature itself did not think it proper or necessary to impose.
This is especially true when the statutory provision which falls for consideration is designed to secure a valuable right like the right to personal freedom and involves the application of a presumption as salutary and deep grained in our Criminal Jurisprudence as the presumption of innocence.
[401 A C] The legislature conferred a wide discretion on the High Court and the Court of Session to grant anticipatory bail because it evidently felt, firstly, that it would be difficult to enumerate the conditions under which anticipatory bail should or should not be granted and secondly; because the intention was to allow the higher courts in the echelon a somewhat free hand in the grant of relief in the nature of anticipatory bail.
That is why, departing from the terms of Sections 437 and 439, Section 438(1) uses the language that the High Court or the Court of Session "may, if it thinks fit" direct that the applicant be released on bail.
Sub section (2) of Section 438 is a further and clearer manifestation of the same legislative intent to confer a wide discretionary power to grant anticipatory bail.
It provides that the High Court or the Court of Session, while issuing a direction for the grant of anticipatory bail, "may include such conditions in such directions in the light of the facts of the particular case, as it may think fit" including the conditions which are set out in clauses (i) to (iv) of sub section (2).
The proof of legislative intent can best be found in the language which the legislature uses.
Ambiguities can undoubtedly be resolved by resort to extraneous aids but words, as wide and explicit as have been used in Section 438, must be given their full effect, especially when to refuse to do so will result in undue impairment of the freedom of the individual and the presumption of innocence.
It has to be borne in mind that anticipatory bail is sought when there is a mere apprehension of arrest on the accusation that the applicant has committed a non bailable offence.
A person who has yet to lose his freedom by being arrested asks for freedom in the event of arrest.
That is the stage at which it is imperative to protect his freedom, in so far as one may, and to give full play to the presumption that he is innocent.
In fact, the stage at which anticipatory bail is generally sought brings about its striking dissimilarity with the situation in which a person who is arrested for the commission of a non bailable offences asks for bail.
In the latter situation, adequate data is available to the Court, or can be called for by it, in the light of which it can grant or refuse relief and while granting it, modify it by the imposition of all or any of the conditions mentioned in Section 437.
[404 A G] 10.
The amplitude of judicial discretion which is given to the High Court and the Court of Sessions, to impose such conditions as they may think fit while granting anticipatory bail, should not be cut down, by a process of construction, by reading into the statute conditions which are not to be found therein like those evolved by the High Court.
The High Court and the Court of Session to whom the application for anticipatory bail is made ought to be left free in the exercise of their judicial discretion to grant bail if they consider it fit so to do on the particular facts and circumstances of the case and on such conditions as the case may warrant.
Similarly, they must be left free to refuse bail if the circumstances of the case so warrant, on considerations similar to those mentioned in Section 437 or which are generally considered to be relevant under Section 439 of the Code.
[405 B D] 389 Generalisations on matters which rest on discretion and the attempt to discover formulae of universal application when facts are bound to differ from case to case frustrate the very purpose of conferring discretion.
No two cases are alike on facts and therefore, Courts have to be allowed a little free play in the joints if the conferment of discretionary power is to be meaningful.
There is no risk involved in entrusting a wide discretion to the Court of Session and the High Court in granting anticipatory bail because, firstly these are higher courts manned by experienced persons, secondly their order are not final but are open to appellate or revisional scrutiny and above all because, discretion has always to be exercised by courts judicially and not according to whim, caprice or fancy.
On the other hand, there is a risk in foreclosing categories of cases in which anticipatory bail may be allowed because life throws up unforeseen possibilities and offers new challenges.
Judicial discretion has to be free enough to be able to take these possibilities in its stride and to meet these challenges.
[405 D G] Hyman and Anr.
vs Rose, ; referred to 11.
Judges have to decide cases as they come before them, mindful of the need to keep passions and prejudices out of their decisions.
And it will be strange if, by employing judicial artifices and techniques, this Court cuts down the discretion so wisely conferred upon the Courts, by devising a formula which will confine the power to grant anticipatory bail within a strait jacket.
While laying down cast iron rules in a matter like granting anticipatory bail, as the High Court has done, it is apt to be overlooked that even Judges can have but an imperfect awareness of the needs of new situations.
Life is never static and every situation has to be assessed in the context of emerging concerns as and when it arises.
Therefore, even if this Court were to frame a 'Code for the grant of anticipatory bail ', which really is the business of the legislature, it can at best furnish broad guidelines and cannot compel blind adherence.
In which case to grant bail and in which to refuse it is, in the very nature of things, a matter of discretion.
But apart from the fact that the question is inherently of a kind which calls for the use of discretion from case to case, the legislature has, in terms express, relegated the decision of that question to the discretion of the Court, by providing that it may grant bail "if it thinks fit".
The concern the Courts generally is to preserve their discretion without meaning to abuse it.
It will be strange if the Court exhibits concern to stultify the discretion conferred upon the Courts by law.
[406 D H] Discretion, therefore, ought to be permitted to remain in the domain of discretion, to be exercised objectively and open to correction by the higher courts.
The safety of discretionary power lies in this twin protection which provides a safeguard against its abuse.
[407 F G] 12.
It is true that the functions of judiciary and the police are in a sense complementary and not overlapping.
An order of anticipatory bail does not in any way, directly or indirectly, take away from the police their right to investigate into charges made or to be made against the person released on bail.
In fact, two of the usual conditions incorporated in a direction issued under section 438(1) are those recommended in Sub section (2)(i) and (ii) which require the applicant to co operate with the police and to assure that he shall not tamper with the witnesses during and after the investigation.
While granting relief under Section 438(1), appropriate conditions can be imposed under Section 438(2), so as to ensure an uninterrupted investigation.
One of 390 such conditions can even be that in the event of the police making out a case of a likely discovery under Section 27 of the Evidence Act, the person released on bail shall be liable to be taken in police custody for facilitating the discovery.
Besides, if and when the occasion arises, it may be possible for the prosecution to claim the benefit of Section 27 of the Evidence Act in regard to a discovery of facts made in pursuance of information supplied by a person released on bail.
[409 D, 410 A D] King Emperor vs Khwaja Nazir Ahmed, 71 I.A., 203, State of U.P. vs Deoman Upadhyaya, [1961] 1 S.C.R. p. 14 @ 26; referred to. 13.
In Balchand Jain vs State of Madhya Pradesh, ; , this Court was considering whether the provisions of Section 438 relating to anticipatory bail stand overruled or repealed by virtue of Rule 184 of the Defence and Internal Security of India Rules, 1971 or whether both the provisions can by rule of harmonious interpretion, exist side by side.
It was in that context that it was observed that "As section 438 immediately follows Section 437 which is the main provision for bail in respect of non bailable offences, it is manifest that the conditions imposed by section 437(1) are implicitly contained in Section 438 of the Code".
These observations regarding the nature of the power conferred by section 438 and regarding the question whether the conditions mentioned in Section 437 should be read into section 438 cannot, therefore be treated as the ratio of the decision.
[413 C D, E] The power conferred by section 438 is of an "extra ordinary" character only in the sense that it is not ordinarily resorted to like the power conferred by sections 437 and 439.
[413 E F] Bal Chand Jain vs State of M.P., ; , distinguished.
Since denial of bail amounts to deprivation of personal liberty, the Court should lean against the imposition of unnecessary restrictions on the scope of section 438, especially when no such restrictions have been imposed by the legislature in the terms of that section.
Section 438 is a procedural provision which is concerned with the personal liberty of the individual, who is entitled to the benefit of the presumption of innocence since he is not, on the date of his application for anticipatory bail, convicted of the offence in respect of which he seeks bail.
An over generous infusion of constraints and conditions which are not to be found in Section 438 can make its provisions constitutionally vulnerable since the right to personal freedom cannot be made to depend on compliance with unreasonable restrictions.
[413 F H, 414 A] Maneka Gandhi vs Union of India, [1978] 1 S.C.C. 248; applied.
In regard to anticipatory bail, if the proposed accusation appears to stem not from motives of furthering the ends of justice but from some ulterior inotive, the object being to injure and humiliate the applicant by having him arrested a direction for the release of the applicant on bail in the event of his arrest would generally, be made.
On the other hand, if it appears likely considering the antecedents of the applicant, that taking advantage of the order of anticipatory bail he will flee from justice, such an order would not be made.
But the converse of these propositions is not necessarily true.
That is to say it cannot be laid down as an inexorable rule that anticipatory bail cannot be granted unless the proposed accusation appears to be actuated by mala fides; 391 and, equally, that anticipatory bail must be granted if there is no fear that the applicant will abscond.
There are several other considerations, too numerous to enumerate the combined effect of which must weigh with the court while granting or rejecting anticipatory bail.
The nature and seriousness of the proposed charges, the context of the events likely to lead to the making of the charges, a reasonable possibility of the applicant 's presence not being secured at the trial, a reasonable apprehension that witnesses will be tampered with and "the larger interests of the public or the state" are some of the considerations which the court has to keep in mind while deciding an application for anticipatory bail.
[415 G H, 416 A C] State vs Captain Jagjit Singh, ; , followed.
|
Appeal No. 625 of 1986.
From the Judgment and Order dated 20.11.1985 of the Allahabad High Court in Sales Tax Revision No. 3 18 of 1985.
Shanti Bhushan, Prashant Bhushan and Madan Lokur for the Appellant.
Gopal Subramanium.
R.S. Rana and Ashok K. Srivastava for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The short question which arises for consideration in this appeal relates to the period of limi tation within which an application for rectification of an order of reassessment passed under section 21 of the Uttar Pradesh Sales Tax Act, 1948 (Uttar Pradesh Act No. XV of 1948) (hereinafter referred to as 'the Act ') can be pre ferred under section 22 of the Act.
The brief facts which are necessary for deciding this case are these.
The appellant firm is a dealer carrying on business in Mathura in the State of Uttar Pradesh.
An order of assessment was passed in respect of the turnover of the appellant for the year 1975 76 by the Sales Tax Officer, Sector 2, Mathura under the Act on 7.2.1979.
Thereafter on January 8, 1980 the Sales Tax Officer issued a notice to the appellant under section 21 of the Act proposing to make a reassessment in respect of the said assessment year, i.e., 1975 76 on the 144 ground that the mandi cases and arhat (commission) which should have been included in the turnover had escaped as sessment and directed the appellant to appear before him along with its account books on 18.1.
After looking into the books of accounts and hearing the advocate who appeared on behalf of the appellant, the Sales Tax Officer passed the order under section 21 of the Act on the same date holding that the appellant was not liable to pay any more tax under the Act.
The order passed by the Sales Tax Officer reads thus: "Office of the Sales Tax Officer Sector 2, Mathura S/Shri Kundan Lal Srikishan Lala Gan j, Mathu ra Year: 75 76 Section 21 ORDER UNDER SECTION 21 The original tax assessment order in respect of you was passed on 7.2.79.
The audit, however, had objected that the busi nessman 's arhat (commission) and mandi cess amount was left out from taxation.
On this basis the businessman was called by issuing him notice under the said section.
On the appointed day, his advocate appeared and submitted the accounts books.
On examination it was found that the businessman had already included the arhat and mandi cess amount in the taxable income and he had already been assessed.
Therefore, no tax is to be levied now and the businessman is declared as free from paying any more tax under section 21.
Sd/B. Lal Sales Tax Officer Sector 2, Mathura Dated: 18.1.80" In the year 1982, the appellant realised that it was not liable to pay sales tax on purchases made on behalf of Ex U.P. principals as such purchases had occasioned inter State movement of the commodities in question and were as such exempt from the purview of the Act.
The appellant, there fore, filed four applications under section 22 of 145 the Act for rectification of the mistakes in the assessment orders for assessment years 1975 76, 1976 77, 1977 78 and 1978 79 on the ground that the turnover in respect of pur chases made on behalf of Ex U.P. principles had been wrongly assessed to sales tax in the aforementioned four years.
The applications for rectification made in respect of assessment years 1976 77, 1977 78 and 1978 79 were all within three years of the assessment orders but the application made in respect of the assessment order in respect of the assessment year 1975 76 was beyond three years from the date of the original order of assessment which had been made on 7.2.
1979 but within three years from the date of the order passed by the Sales Tax Officer under section 21 of the Act.
All the four applications made by the appellant were reject ed by the Sales Tax Officer on merits on 3.1.
There upon the appellant preferred appeals against the orders rejecting the applications before the Appellate Authority.
The said Appellate Authority by its order dated 21.1.
1983 allowed the appeals relating to the assessment orders for the assessment years 1976 77, 1977 78 and 1978 79 on merits but dismissed the appellant 's appeal in respect of the assessment order for the assessment year 1975 76 on the ground that the appellant 's application for rectification filed under section 22 of the Act had been filed beyond three years from the date of the original order of assess ment and was thus barred by limitation.
Aggrieved by the order of the Appellate Authority dismissing the appellant 's appeal arising out of the application for rectification of the assessment order passed in respect of the assessment year 1975 76, the appellant preferred a second appeal before the Sales Tax Tribunal, Uttar Pradesh.
The Department also preferred second appeals against the orders of rectification passed by the Appellate Authority in respect of the orders of assessment for assessment years ' 1976 77, 1977 78 and 1978 79.
The Tribunal disposed of all the appeals by a common order dated 26.2.
1985 by which it allowed the appeal of the appellant and dismissed the appeals filed by the Department.
The Tribunal held that the appellant was enti tled to succeed on merits in each of the appeals and further held that the rectification application made in respect of the assessment order for the assessment year 1975 76 was within limitation as the original order dated 7.2.
1979 passed in respect of the said assessment year had ceased to exist on the re opening of the assessment by the notice issued under section 21 of the Act and the final order under that section had been passed on 18.1.
1980 within three years from the date of the application for rectification which had been filed on 4.11.
Aggrieved by the orders of the Tribunal the Department filed four revision applica tions before the High Court of Allahabad.
The High Court by its order dated 15.11.
1985 dismissed three of the 146 Department 's revision applications pertaining to the appel lant 's rectification applications in respect of the assess ment orders for the assessment years 1976 77, 1977 78 and 1978 79 on merits holding that the orders of the Tribunal were correct and no ground had been made out to interfere with them.
It, however, allowed the revision application filed by the Department in respect of the application for rectification of the assessment order for the assessment year 1975 76 on the ground that the application for rectifi cation had been filed beyond three years from the date of the original order dated 7.2. 1979 and that the order dated 18.1.1980 passed under section 21 of the Act had no effect on the question of limitation.
Aggrieved by the said order of the High Court the appellant has filed this appeal by special leave.
The material part of section 21 of the Act, which is relevant for the purposes of this case, reads thus: "21.
Assessment of tax on the turnover not assessed during the year (1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemp tions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary assess or re assess the dealer or tax according to law . . " Section 22 of the Act provides that the assessing, appellate or revising authority or the Tribunal may, on its own motion or on the application of the dealer or any other interested person rectify any mistake in its order, apparent on the record within three years from the date of the order sought to be rectified.
The question for consideration is whether for purposes of limitation the date of the order of assessment for the year 1975 76 in the instant case should be the date of the original assessment order, i.e., 7.2.
1979 of whether it should be the date of the order passed under section 21 of the Act, i.e., 18.1.
On behalf of the appellant it is contended before us that on the issue of the notice under section 21 of the Act the original assessment ceased to be in force and that the only order of assessment in respect of assessment year 1975 76 which should be taken into consideration for 147 all purposes including the application for rectification of mistake is the order dated 18.1.1980.
In support of the above plea the appellant has relied upon the decision of this Court in Deputy Commissioner of Commercial Taxes vs
H.R. Sri Ramulu; , which was a case arising under the Mysore (Karnataka) Sale Tax Act, 1957.
In that case the original assessment order had been passed on March 21, 1963.
Thereafter there was an order of reassessment made under section 12A of the Mysore (Karnataka) Sales Tax Act, 1957 on June 8, 1966 because certain amounts had escaped assessment under the original assessment order.
Thereafter on June 28, 1967 the Deputy Commissioner of Commercial Taxes passed an order revising the order dated June 8, 1966 as a consequence of the decision of this Court in Shinde Brothers etc.
vs Deputy Commissioner, Raichur, A.I.R. 1967 S.C. 15 12.
Thereafter the assessee filed an application for recti fication of the order passed by the Deputy Commissioner of Commercial Taxes requesting him to set aside the order passed on revision under section 21 of that Act on the ground that the revision of assessment was barred by limita tion under section 21(3) of that Act and as such there was a mistake apparent on the record.
The Deputy Commissioner of Commercial Taxes rejected the said application.
The assessee questioned the order of the Deputy Commissioner of Commer cial Taxes before the Mysore (Karnataka) Sales Tax Appellate Tribunal.
The Tribunal too rejected that appeal.
The asses see thereafter filed a petition before the High Court under Article 226 of the Constitution of India.
The High Court allowed the appeal and quashed the order passed by the Deputy Commissioner of Commercial Taxes on June 28, 1967 on the ground that the said order had been passed without jurisdiction as the power of revision had been exercised beyond the prescribed period of four years from the date of the original assessment order dated March 21, 1963.
The Deputy Commissioner of Commercial Taxes filed an appeal against the order of the High Court before this Court.
Allowing the said appeal this Court observed thus at page 596: "The short question which arises for determi nation in these appeals is that in the event of an order having been made under section 12A of the Act, what is the starting point for computing the period of four years, mentioned in section 21(3), for the exercise of the powers under section 21(2).
Is it the initial assessment order or is it the order made under section 12A? In the context of the present case, the question to be answered is as to whether the period of four years,is to be calculated from March 21,1963 when the initial assessment oders were made, or from June 8, 1966 when 148 the orders under section 12A of the Act were made.
So far as this question is concerned, we are of the opinion that the period of four years should be calculated from June 8, 1966 i.e., the date on which orders under section 12A of the Act were made.
The reason for that is that once an assessment is reopened, the initial order for assessment ceases to be operative.
The effect of reopening the assess ment is to vacate or set aside the initial order for assessment and to substitute in its place the order made on reassessment.
The initial order for reassessment cannot be said to survive, even partially, although the justification for reassessment arises because of turnover escaping assessment in a limited field or only with respect to a part of the matter covered by the initial assessment order.
The result of reopening the assessment is that a fresh order for reassessment would have to be made including for those matters in respect of which there is no allegation of the turnover escaping assessment.
As it is we find that in the present case the assessment orders made under section 12A were comprehensive orders and were not confined merely to matters which had escaped assessment earlier.
In the circumstances, the only orders which could be the subject matter of revision by the appel lant were the orders made under section 12A of the Act and not the initial assessment orders." In reaching the above conclusion the Court relied upon three decisions of this Court, namely, Commissioner of Income tax, Excess Profits Tax, Hyderabad, Andhra Pradesh
V. Jagan Mohan Rao & Others, ; Commis sioner of Sales Tax, Madhya Pradesh vs M/s. H.M. Esufali, H.M. Abdulali, Siyaganj, Indore, ; and International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, HubIi & Ors., [1975] 2 S.C.R. 345.
The third of the above three cases, namely, International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, Hubli & Ors., (supra) was a case arising out of rectification proceedings.
In that case this Court held that once an assessment order had been rectified and it was sought to make a further rectification of that order the period of limitation for making such further rectification would commence not from the date of the original assessment order but from the date of the earlier rectification order.
In Deputy Commissioner of Commercial Taxes vs H.R. Sri Ramulu (supra) this Court has clearly laid down that when once a notice is issued for purposes of making reassessment the assessment proceedings become re opened and the initial order of assessment 149 ceases to be operative.
The Court has further held that the effect of the re opening of the assessment is to vacate or set aside the initial order of assessment and to substitute in its place the order made on reassessment and that the result of re opening of the assessment is that a fresh order for reassessment would have to be made in respect of all matters including those matters in respect of which there is no allegation of the turnover escaping assessment.
The same principle should apply even tO a Case like the present one where an 'application for rectification is filed after the completion of the reassessment proceedings.
In order to overcome the observation made by this Court in Deputy Commissioner of Commercial Taxes vs
H.R. Sri Ramulu (supra) it was argued on behalf of the State Government that since no order of re assessment had actually been passed in the instant case on 18.1.
1980 but only an order discharging the notice issued under section 21 of the Act had been passed the original order of assessment passed on 7.2.1979 continue to remain in force.
It is true that after going through the books of accounts produced by the appellant and hearing the advocate who appeared on its behalf the Sales Tax Officer was of the view that the assessee had already included in its taxable turnover the arhat (commission) and mandi cess amounts and therefore, no extra tax was leviable under section 21 Of the Act.
Even so it has to be held that the order dated 18.1.1980 is an order of reassessment not withstanding the fact that a regular order of reassessment has not been passed.
The order passed on 18.1, 1980 should be construed as a fresh order of assessment passed under section 21 of the Act and the initial order of assessment dated 7.2.1979 should be deemed to be the order passed again on 18.1.1980.
If the assessee is able to show any error apparent on the record from the order of assessment dated 7.2.1979 which as we have observed earlier should be deemed to have been passed again on 18.1.1980, the appellant is entitled to succeed in its application for rectification provided it is made within the prescribed time, i.e., three years from the date of the order passed under section 21 of the Act.
We do not find any merit in the submission made on behalf of the Department that the order passed on 18.1.1980 should be understood as an order discharging the notice issued under section 21 of the Act and not an order of reassessment as such.
This is obvious from the language of section 21, itself.
Section 21 authorises the assessing authority to.
make an order of assessment or reassessment.
It says that if the assessing authority has reason to be lieve that the whole or any part of the turnover of a deal er, for any assessment year or part 150 thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act, or any deduc tions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary assess or re assess the dealer or tax according to law.
The assessing authority gets jurisdiction to make the reassessment by issuing a notice to the dealer as provided by section 21 of the Act.
When once the notice is issued under that section the original order of assessment gets re opened and thereafter any order made under section 21 of the Act alone would be the order of assessment in respect of the period in question.
Section 21 of the Act does not require the assessing authority to pass an order deciding whether it is necessary to proceed with the inquiry under that section or not before passing an order of assessment or reassessment under that section.
The only order which the assessing authority is required to make under section 21 after a notice is issued to the dealer under that section is an order of assessment or reassessment.
It is not required to pass first an order whether it should proceed with the reassessment proceedings or not.
Such a preliminary order is not contemplated under section 21 of the Act.
Hence the order dated 18.1.1980 has to be treated as an order of assessment even though it is not in the form in which an order of assessment has to be passed and not as an order merely on the question whether the reasessment proceedings under section 21 of the Act should be proceeded with or not.
In other words it should be held that the assessing authori ty had adopted the earlier order as the order of assessment passed at the conclusion of the proceedings under section 21 of the Act.
The period of limitation for the application for rectification should, therefore, be calculated from the date of the order under section 21 of the Act.
We cannot, there fore, subscribe to the view of the High Court expressed in its observation that since no fresh order of assessment had been passed after examining the accounts of the assessee the 'original assessment order should be considered to remain intact a nothing is added or altered in pursuance of the order under section 21 of the Act '.
No other contention is urged before us.
In the result we set aside the judgment of the High Court and restore the decision of the Tribunal.
The appeal is accordingly allowed.
There shall, however, be no order as to Costs.
A.P J. Appeal allowed.
| An assessment order was passed in respect of the turn over of the appellant firm for the year 1975 76 by the Sales Tax Officer on 7.2.1979.
Thereafter, the Sales Tax Officer issued a notice under s.21 of the Uttar Pradesh Sales Tax Act, 1948, proposing to make a reassessment on the ground that the mandi cess and arhat (commission) had escaped assessment and directed the appellant to appear along with its account books on 18.1.
The Sales Tax Officer passed the order under s.21 on the same date holding that the appellant was not liable to pay any more tax.
In the year 1982 the appellant filed four applications under s.22 for rectification of the mistakes in the assess ment orders for assessment years 1975 76, 1976 77, 1977 78 and 1978 79 on the ground that the turnover in respect of purchases made on behalf of Ex U.P. principals had been wrongly assessed to sales tax.
All the four applications were rejected by the Sales Tax Officer on merits.
The appellant preferred appeals and the Appellate Au thority allowed the appeals relating to the assessment orders for the assessment years 1976 77, 1977 78 and 1978 79 on merits but dismissed the appeal in respect of the assess ment order for the assessment year 1975 76 on the ground that the application for rectification had been filed beyond three years from the date of the original order of assess ment and was thus barred by limitation.
The appellant filed second appeal before the Sales Tax Tribunal in respect of the assessment year 1975 76.
The Department also preferred second appeals in respect of the orders of assessment for assessment years 1976 77, 1977 78 and 1978 79.
The Tribunal allowed the appeal 141 of the appellant holding that the rectification application made in respect of the assessment order for the assessment year 1975 76 was within limitation as the original order dated 7.2.1979 had ceased to exist on the re opening of the assessment and the final order had been passed on 18.1.
1980 within three years from the date of the application for rectification which had been filed on 4.11.1982.
However, the appeals of the Department were dismissed.
Out of the four revision applications filed by the Department, the High Court dismissed three applications and allowed the revision application in respect of the applica tion for rectification of the assessment order for the assessment year 1975 76 holding that the application for rectification had been filed beyond three years from the date of the original order dated 7.2.
1979 and that the order dated 18.
1. 1980 had no effect on the question of limitation.
In the appeal to this Court, on behalf of the appellant it was contended that on the issue of the notice under s.21 of the Act original assessment order ceased to be in force and that the only order of assessment in respect of assess ment year 1975 76 which should be taken into consideration for all purposes including the application for rectification of mistake is the order dated 18.1.
On behalf of the State it was contended that since no order of reassessment had actually been passed in the in stant case on 18.1.
1980 but only an order discharging the notice issued under s.21 of the Act had been passed the original order of assessment passed on 7.2.
1979 continued to remain in force.
Allowing the appeal, HELD: 1.
The judgment of the High Court is set aside and the decision of the Tribunal restored.
[150G] 2.
Section 21 of the Uttar Pradesh Sales Tax Act, 1948, authorises the assessing authority to make an order of assessment or reassessment.
It says that if the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act, or any deduc tions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider neces 142 sary assess or reassess the dealer or tax according to law.
[149G H;150A B] 3.
Section 21 of the Act does not require the assessing authority to pass an order deciding whether it is necessary to proceed with the inquiry under that section or not before passing an order of assessment or reassessment under that section.
The only order which the assessing authority is required to make under s.21 after a notice is issued to the dealer under that section is an order of assessment or reassessment.
[150C D] 4.
Once a notice is issued for ,purposes of making reassessment the earlier proceedings become re opened and the initial order of assessment ceases to be operative.
The effect of the re opening of the assessment is to vacate or set aside the initial order of assessment and to substitute in its place the order mode on reassessment and that the result of the re opening of the assessment is that a fresh order for reassessment would have to he made in respect of all matters including those matters in respect of which there is no allegation of the turnover escaping assessment.
[148H;149A B] 5.
Once an assessment order hod been rectified and it was sought to make a further rectification of that order the period of limitation for making such further rectification would commence not from the date of the original assessment order but from the date of the earlier rectification order.
[148G H] Deputy Commissioner of Commercial Taxes vs
H.R. Sri Ramulu; , ; Shinde Brothers etc.
vs Deputy Commissioner, Raichur, A.I.R. 1967 S.C. 15 12; Commissioner of Income tax, Excess Profits Tax, Hyderabad, Andhra Pradesh
V. Jagan Mohan Rao & Others, ; Commis sioner of Sales Tax, Madhya Pradesh vs M/s. H.M. Esufali, H.M. Abdulali, Siyaganj, Indore, ; and International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, HubIi & Ors., [1975] 2 S.C.R. 345, followed.
The order dated 18.1.
1980 is an order of reassess ment notwithstanding the fact that a regular order of reas sessment has not been passed.
The order passed on 18.1.
1980 should be construed as a fresh order of assessment passed under s.21 of the Act and the initial order of assessment dated 7.2.1979 should be deemed to be the order passed again on 18.1.1980.
[149E F] 7.
If the assessee is able to show any error apparent on the record from the order of assessment dated 7.2.
1979 the appellant is entitled to 143 succeed in its application for rectification provided it is made within the prescribed time, i.e., three years from the date of the order passed under s.21 of the Act.
[149E F] Deputy Commissioner of Commercial Taxes vs H.R. Sri Ramulu, ; , referred to.
It should be held that the assessing authority had adopted the earlier order dated 7.2.1979 as the order of assessment passed at the conclusion of the proceedings under s.21 of the Act.
The period of limitation for the applica tion for rectification should, therefore, be calculated from the date of the order under s.21 of the Act, i.e. 18.1.1980.
[150F]
|
: Criminal Appeal No. 10 of 1974.
Appeal by Special Leave from the Judgment and Order dated 22 11 1973 of the Karnataka High Court in Criminal Appeal No. 221/73 section section Javali and B. P. Singh for the Appellant.
M. Veerappa and J. R. Dass for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
In this appeal by Special Leave the appellant has been convicted under section 34 of the Mysore Excise Act and sentenced to three months ' rigorous imprisonment and a fine of Rs. 100/ for being in possession of 48 bottles of liquor which were recovered from a car which was being driven by the appellant.
Mr. Javali appearing for the appellant has raised a short point before us.
He has submitted that the Inspector of Excise who searched the car along with the panchas had no jurisdiction to do so because he did so without complying with 1132 the provisions of section 54 of the Excise Act.
In our opinion, the contention is well founded and must prevail, Section 53 runs thus: "If a Magistrate, upon information and after such inquiry (if any) as he thinks necessary, has reasons to believe that an offence under section 32, section 33, section 34, section 36 or section 37 has been, is being or is likely to be committed, he may issue a warrant (a) for the search of any place in which he has reason to believe, that any intoxicant still, utensil, implement, apparatus or materials which are used for the commission of such offence or in respect of which such has been, is being, or is likely to be, committed, are kept or concealed, and (b) for the arrest of any person whom he has reason to believe to have been, to be, or to be likely to be engaged in the commission of any such offence.
" Thus this section relates to a contingency where the Statute enjoins that any inspector before searching a place must obtain a warrant from the magistrate.
Section 54 is a special provision which arises in urgent cases where it may not be possible for the officer concerned to get a warrant from the Magistrate.
Section 54 runs thus: "Whenever the Excise Commissioner or a Deputy Commissioner or any police officer not below the rank of an officer uncharge of a police station or any Excise Officer not below such rank as may be prescribed has reason to believe that an offence under section 32, section 33, section 34, section 36, or section 37 has been, is being, or is likely to be committed, and that a search warrant cannot be obtained without affording the offender an opportunity of escape or of concealing evidence of the offence, he may after recording the grounds of his belief (a) at any time by day or by night enter and search any place and seize anything found therein which he has reason to believe to be liable to confiscation under this Act, and (b) detain and search and, if he thinks proper, arrest any person found in such place whom he has reason to believe to be guilty of such offence as aforesaid.
" In the instant case, it is admitted that the inspector who searched the car of the appellant had not made any record of any ground on the basis 1133 of which he had a reasonable belief that an offence under the Act, was being committed before proceeding to search the car and thus the provisions of section 54 were not at all complied with.
This, therefore, renders the entire search without jurisdiction and as a logical corollary, vitiates the conviction.
We feel that both sections 53 and 54 contain valuable safeguards for the liberty of the citizen in order to protect them from ill founded or frivolous prosecution or harassment.
The point was taken before the High Court which appears to have brushed aside this legal lacuna without making any real attempt to analyses the effect of the provisions of section 53 and 54.
The High Court observed that these two sections were wholly irrelavant.
With due respect, we are unable to approve of such a cryptic approach to a legal question which is of far reaching consequences.
It was, however, suggested that the word "place" would not include the car, but the definition of the word "place" under the Act clearly includes vehicle which would include a car.
Thus the ground on which the argument of the petitioner has been rejected by the High Court cannot be sustained by us.
We are satisfied that there has been a direct non compliance of the provisions of section 54 which renders the search completely without jurisdiction.
In this view of the matter, the appeal is allowed, the conviction and sentence passed on the appellant is set aside and he is acquitted of the charges framed against him.
M.R Appeal allowed.
| The appellant was convicted under section 34 of the Mysore Excise Act and sentenced to three months R.I. and a fine of Rs. 100/ for being in possession of 48 bottles of liquor, recovered from the car being driven by him.
It was contended that the provisions of section 54 had not been complied with, and the search was made without jurisdiction.
Allowing the appeal, the Court, ^ HELD: 1.
The Inspector who searched the car of the appellant had not made any record of any ground on the basis of which he had a reasonable belief that an offence under the Act, was being committed, before proceeding to search the car, and thus the provisions of section 54 were not at all complied with, thereby rendering the entire search without jurisdiction and, as a logical corollary, vitiating the conviction.
[1132H, 1133A B] 2.
Both, Sections 53 and 54 contain valuable safeguards for the liberty of the citizen in order to protect them from ill founded or frivolous prosecution or harassment.
[1133B]
|
No. 975 of 1986.
(Under Article 32 of the Constitution of India).
D.D. Thakur, V.C. Mahajan, section Markandaya, G.S. Rao, Sreepal Singh and Ms. Kusum Chowdhary for the Petitioners.
R N. Trivedi, S.C. Batra and Raju Ramachandran for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The dispute in this group of writ petitions under Article 32 of the Constitution relates to allotment of land for residential purposes by New Okhla Industrial Development Authority (shortly known as 'NOIDA ').
NOIDA is a trans Jamuna housing project set up by the Uttar Pradesh Government in the year 327 1976.
Prior to the setting up of the NOIDA, the Defence Services Cooperative Housing Society Ltd. and other socie ties had acquired lands in the area for purposes of housing of their members and when the same came to be notified for acquisition for NOIDA, writ petition No. 9034 of 1983 was filed challenging the acquisition; the federation also filed a separate writ petition being 1588 of 1984.
Some other writ petitions by the different parties were also filed.
On 14th January, 1985, after hearing parties a Bench of this Court inter alia made the following directions: "Both sides presented a fair and nearly accurate picture of the present situation.
Spirit of re conciliation rather than confrontation prevailed all throughout.
All reasonable suggestions emanating from both sides either accepted or seriously considered by both sides with a view to implement ing the scheme under which plots were to be allotted.
Only three points remain which necessitated court 's intervention.
Having examined them we direct: (1) NOIDA shall hand over actual possession of plots to each allottee of each society involved in the dispute.
To identi fy them a list setting out their names has to be supplied within six weeks from today.
(2) Mr. G.L. Sanghi, learned counsel urged that NOIDA will be entitled to escalation charges for the year 1981 and 1982 which works out at the rate of Rs.20 per square metre.
He repeatedly pointed out that the NOIDA would be entitled to the same under the scheme.
May be there was substance in the submission.
However, having regard to the fact that a sum of Rs.5.50 crores has already been deposited by the allottees with the NOIDA for some time and as the scheme had not been implemented as per time schedule provided in the scheme itself, to meet possession of plot to each allottee had to be handed over some where in 1982 and which would be now done in 1985 pursuant to the directions yet without setting a precedent and having regard to the facts of this case and special circumstances pointed out to this Court with regard to the present position, we are of the opinion that the NOIDA is not entitled to escalation charges for the year 1981 and 1982.
(3) The third point of a minor difference was that a special 328 charge has to be paid by all allottees whose plots are said to be situated at a comparable advantageous position, such as, corner plots, plots abutting to the main road or both etc.
There may be advantage in taking the corner plot or a plot abutting on the road, but that is fortuitous and not be one 's volitional selection.
Having regard to the special facts of this case and the element of luck in getting a particular plot we direct that the NOIDA would not be enti tled to collect special charge or anything extra for such plots.
We order accordingly.
It was further pointed out that there were some applicants who applied for the plots but who failed to keep to the time schedule in the matter of payment.
If the number of such applicants had not been very large, the Court would have examined each case.
But the number of such applicants appears to be quite big.
Mr. Soli Sorabjee, learned counsel, in this con nection pointed out that under the interim order of this Court dated September 3, 1988, amongst others NOIDA was directed to reserve 269 acres of land in sectors 41 and 42 or in adjoining sectors in addition to the land already allotted to the petitioners.
Therefore, their cases deserve consideration as requisite area of land is available.
At the suggestion of the Court Mr. G.L. Sanghi, learned counsel agrees to appoint Shri Z.H. Kazmi, Law Assistant Registrar (Housing), Lucknow who would be specifi cally directed to look into the case of each such applicant and decide whether any one deserves allotment avoiding technical approach and by approaching the matter from the angle of social justice with broad vision.
If there is any dispute which cannot be resolved liberty to move this Court . . " On 16th December, 1985, the following order was made: "The parties are agreed that the dispute in regard to pay ment of interest and the eligibility for allotment of plots may be decided by Shri D.A. Desai, Chairman, Law Commission, as mediator and not as Arbitrator.
The parties agree that whatever decision is given by Shri D.A. Desai 329 will be accepted by them as binding and there will be no question of challenging it in any form whatsoever.
The parties also agree that simultaneous with the execution of documents possession of the plots shall be forthwith handed over to those who are admitted as eligible for allotment and interest shall be paid by them at the rate of 15% per annum from the date of the order made by this Court, namely, 2.4.1985, subject to adjustment one way or the other accord ing to the decision which may be given by Shri D.A. Desai.
" The decision contemplated by the December order took some time to be given and the report furnished to this Court came to be hotly debated.
More than three years have been taken on that account.
It is unnecessary to deal with the different problems which arose in the proceedings before this Court after submission of the report till the matter has been heard in the third week of January this year.
We suggested to Mr. Thakur, learned counsel appearing for the Federation of Co operative Housing Societies and Mr. Trivedi, learned Additional Advocate General of Uttar Pra desh appearing for NOIDA and counsel appearing for the different parties to sit across the table and work out an acceptable modality by which the problem could be best answered and we are happy to note that their efforts have been to a large extent successful and the scope of what at one time appeared to be an unending dispute had now been substantially reduced and confined to certain issues which require to be dealt with by this order of ours.
It is agreed that the total number of persons who are entitled to allotment is 2,380 and the Federation represent ing the various cooperative societies has drawn up the particulars of these 2,380 applicants.
At the hearing, counsel and NOIDA authorities present in Court had agreed to allotment of 90 acres out of the 269 acres set apart by this Court 's earlier order.
In a written note submitted by Mr. Thakur it has been brought to our notice that if their initial requirement of 130 acres is reduced to 90 acres, a plot of 112.5 square metres will have to be scaled down to 77.73; similarly a plot of 162 square metres will have to be reduced to 112.3 square metres; a plot of 202.5 square metres will have to be reduced to 140.45 square metres; and a plot of 250 square metres will have to be reduced to 173.59 square metres.
It has not been disputed that the four categories of plots were stipulated in the scheme.
If this scaling down is to be done the plots are 330 bound to be of odd sizes and working out may be difficult.
We have, therefore, decided that instead of 90 acres of land the total area to be released on that account should be 96.29 acres in all and different sizes of plots as provided in the scheme shall stand reduced to the sizes indicated below: section No. As per scheme Plots now to be allotted (Sq. metres} (Sq. metres) 1.
112.5 100 2. 162 130 3. 202 150 4.
250 180 Apart from 2,380 eligible allottees there are separate applications which are before the Court already and are being dealt with separately.
To meet their claims we are of the view that 71 decimals should also be set apart and the same would be subject to such orders as the Court may ulti mately make in these cases.
In the event of any area being unallotted the same would revert back to NOIDA.
The plots to be allotted are to be developed by NOIDA.
While the federation and the other petitioners wanted that a three months ' limit should be fixed it has been pleaded on behalf of the NOIDA that the time limit should be two years.
There is a limit to waiting and human patience and the span of the life of the applicants is not available to be extend ed by NOIDA.
Taking an overall picture of the matter we direct that a period of nine months beginning from 1st of March, 1990, is the limit within which developed plots shall be allotted to the 2,380 entitled persons now represented by the Federation and such other persons as referred to above.
The next relevant point for consideration is what should be the price to be paid.
We have already indicated that this Court in its order dated 14th January, 1985, had not agreed for any escalation charges.
More than five years have since been rolled by.
Turn of events have taken an unwieldy course.
Prices have gone up in every sphere and the rupee has lost its value over the years.
To bind NOIDA by the terms of its scheme at this point of time would not at all be fair.
We may point 331 out at this stage that these 2,380 persons have already deposited huge amounts of money said to be about five crores of rupees with NOIDA and the money has been held on account without utilisation, as no final decision had been taken.
Undoubtedly this money must be fetching interest.
Mr. Rama chandran learned counsel appearing for NOIDA has indicated that current rate per square metre is Rs. 1,200.
Taking into consideration the fact that these 2,380 members have waited too long for allotment of their plots, we are of the view that NOIDA should be permitted to charge @ Rs. 1,000 per square metre.
Every member who has deposited any sum of money with NOIDA against proposed allotment shall be enti tled to 12% interest on such amount from the date of deposit till the actual allotment and such interest accrued in favour of the person shall be entitled to adjustment of such interest against actual price of land to be worked out @ Rs. 1,000 per square metre.
Balance amount, if any, shall have to be paid by every person included in the figure of 2,380 within three months from now in monthly instalments.
The 1st instalment is to be paid on or before 31st March, 1990; the 2nd instalment to be paid on or before 30th April, 1990; and the 3rd instalment to be paid on or before 31st May, 1990.
It shall be the obligation of the Federation to duly notify every member of the direction and the time factor forthwith as failure to pay any of these instalments within the time limit indicated above shall disqualify such person from allotment and NOIDA would thereafter be only obliged to refund the money lying to the credit of the defaulter with bank rate of interest.
The terms in regard to allotment for the remaining few persons as stated above shall also be the same.
Town planning in NOIDA is said to be in accordance with the norms laid down by itself and the same are prescribed by the Board of which the Chief Town and Country Planner of Uttar Pradesh is a member.
We direct that all the norms laid down by NOIDA in the matter of development shall be strictly followed.
Supervision of this operation of course shall be by NOIDA but we hope and trust that the federation of the different societies would cooperate with NOIDA in this regard.
The order reserving 269 acres of land is vacated, sub ject to the allotments indicated.
The writ petition is disposed of with these directions.
There shall be no order as to costs.
P.S.S. Petitions disposed of.
| Certain cooperative housing societies comprising of the petitioners and others had acquired lands in the trans Jamuna area of Uttar Pradesh prior to the setting up of the New Okhla Industrial Development Authority in 1976.
When the said lands came to be notified for the Development Authority writ petitions were filed in 1983 under Article 32 of the Constitution for quashing the acquisition.
In its order dated January 14, 1985 the Court had directed the Authority to hand over actual possession of plots to allottees in volved in the dispute.
Since a dispute had arisen as to the eligibility of a large number of applicants who had failed to keep to the time schedule in the matter of payment the Court in its interim order dated September 2, 1983 had directed the Authority to reserve 269 acres of land in addition to the land already allotted.
The petitioners in the instant case belong to this category.
The total number of persons entitled to allotment has been determined at 2,380.
The Authority 's scheme for the petitioners had stipulated four sizes of plots viz. 112.5 sq. metres, 162 sq. metres, 202.5 sq. metres and 250 sq. metres.
They, therefore, claimed an area of 130 acres out of the 269 acres set apart for them.
The Authority, however, sought to reduce this area to 90 acres and the plot area to 77.73, 112.3, 140.45 and 173.53 sq. metres respectively.
Disposing of the petitions, the Court.
HELD: If the scaling down from 130 acres to 90 acres is to be done the plots are bound to be of odd sizes and work ing out may be difficult.
Therefore, instead of 90 acres of land the total area to be released on that account should be 96.29 acres and the different sizes of plots as provided in the scheme shall stand reduced to 100 sq. metres, 326 130 sq. metres, 150 sq. metres and 180 sq. metres respec tively.
71 decimals of land should also be set apart for the other applicants being dealt with separately.
The plots are to be developed by the Authority in accordance with the norms laid down, and allotted within a period of nine months beginning from 1st of March, 1990.
[329H 330F, 331F] Prices have gone up in every sphere.
To bind the Author ity by the terms of its scheme at this point of time would not at all be fair.
These 2,380 persons have already depos ited huge amounts of money said to be about five crores of rupees with the Authority and the money has been held on account without utilisation, as no final decision had been taken.
The current rate per square metre is Rs.1,200.
Taking into consideration the fact that the members have waited too long for allotment of their plots, the Authority should be permitted to charge Rs.1,O00 per square metre.
Every member who has deposited any sum of money with the Authority against proposed allotment shall ble entitled to 12% inter est on such amount from the date of deposit till the actual allotment and such interest accrued in favour of the person shall be entitled to adjustment against actual price of land to be worked out @ Rs. 1,000 per square metre.
Balance amount, if any, shah have to be paid by every person includ ed in the figure or 2,380 within three months from the date of the order in monthly instalments.
Failure to pay any of the instalments within the time limit indicated shall dis qualify such person from allotment.
The terms in regard to allotment for the remaining few persons shall also be the same.
[330G 331E]
|
Civil Appeal No. 2137 of 1984.
From the Judgment and Order dated 24.2.83 of the Punjab and Haryana High Court in Civil Writ No.1086/83.
WITH Writ Petition No. 11238 of 1983 Under Article 32 of the Constitution K.G. Bhagat, Additional Solicitor General and Vimal Dave for the appellant in CA.
No. 2137/84.
K.G. Bhagat, Additional Solicitor General and Ms. Asha Rani Jain for the petitioner in WP.
N o. 11238/83.
Prithvi Raj and R.C. Pathak for the respondents.
The Judgment of the Court was delivered by 482 DESAI, J.
Guru Nanak Khalsa High School ( ' School ' for short) an aided school and hence governed by The Punjab Aided Schools (Security of Service) Act, 1969 ( '1969 Act ' for short) in its application to the Union territory of Chandigarh dispensed with the service of the Headmaster of the School, appellant Shri Manmohan Singh Jaitla, and the drawing teacher Amir Singh claiming to exercise power under an agreement executed by each of them with the management of the school.
Admittedly, the school receives 95% of its expenses as grant from the Government and for contribution 5% of the expenses claims thoroughly arbitrary powers to be presently pointed out which appears to be anachronistic.
The action of the Managing Committee of the school in dispensing with the services of both the aforementioned persons is questioned in these two matters on more or less identical grounds and therefore they were heard together and are being disposed of by this judgment.
In Re: C.A. No. 2137/84: Pursuant to an advertisement inviting application for the post of Headmaster of the School, appellant Shri Manmohan Singh Jaitla applied for the same.
He was interviewed on March 28, 1976 and on the same day by the order of the same date, he was offered the post of Headmaster in the school in the prescribed scale with usual allowances sanctioned by the Education Department, Chandi garh Administration for grant in aid Schools.
The order of appointment provided that the appointee will be on probation for a period of one year and that he will be required to enter into an agreement with the school.
The appellant accepted the appointment order and joined service.
As required by the regulations of the Education Department of Chandigarh Administration, his appointment was subject to confirmation by the Director of Public Instruction.
The confirmation was granted as per the order dated August 11, 1976.
By the resolution of the Managing Committee of the School dated June 2, 1977, the appellant was confirmed with effect from May 1, 1977 in post as the Headmaster.
In token of the appreciation of the outstanding performance of the appellant as Headmaster in the field of academic work/co curricular activities and administration during the session 1980 81, he was awarded a certificate of honour by the Finance and Education Secretary, Union Territory of Chandigarh, on August 10, 1981.
It appears that the term of the earlier Managing Committee expired and a new Managing Committee took over with effect from March 24,1982.
On January 31,1983, the Education Managing Committee of ' the school informed the appellant that his 483 services were no longer required with effect from that very day i.e. January 1983 and in terms of Condition No. (iii) of the agreement entered into by him, he would cease to be in the employment of the school and was directed to hand over charge to Mrs. Gurcharan Kaur.
The appellants application for relief to the Deputy Commissioner under sub sec.
(2) of Sec. 3 of the 1969 Act was turned down.
After an unsuccessful appeal to the Commissioner, the appellant approached the High Court of Punjab and Haryana at Chandigarh under article 227 of the Constitution.
The High Court rejected the writ petition in limine but by a speaking order observing that as the school] cannot be said to be 'other authority ' under article 12 of the Constitution, it was not amenable to the writ , jurisdiction of the High Court.
Hence this appeal by special leave.
In Re W. P. No. 11238/83: Petitioner Amir Singh was appointed by the Managing Committee of the School on March 21, 1976 as a Drawing Teacher as per the appointment order No.1265 dated March 21, 1976.
This appointment was made upon an application made by the petitioner and after he was interviewed by the concerned committee of the school.
The appointment order spells out some of the conditions of appointment, one of them may be noticed.
The appointee had to enter into an agreement with the management of the school.
The petitioner was informed by a letter dated February 28, 1983 that as per the resolution adopted by the Managing Committee of the school, it was resolved to terminate the service of the petitioner as no longer required with effect from the fore noon of March 4, 1983 in terms of first part of clause (6) of the agreement entered into between the petitioner and the Management.
The petitioner approached the Deputy Commissioner and the Commissioner without success.
Thereupon he filed present petition under article 32 of the Constitution.
It is not in dispute that the school is governed by the 1969 Act.
It is an aided school receiving aid from the State Government to the tune of 95% of its expenses.
3 of the 1969 Act provides that no employee shall be dismissed or removed or reduced in rank except after an inquiry to be held in the manner prescribed therein.
Sub sec.
(2) provides that no order of dismissal or removal or reduction in rank of an employee shall take effect unless it has been confirmed by the Deputy Commissioner who may refuse to do so, if in his opinion, the provisions of sub sec.
(1) have not been complied with.
Sub sec.
(5) permits an aggrieved person to prefer an appeal 484 against any decision or order of the Deputy Commissioner under the section within a period of thirty days to the Commissioner.
Sub sec.
(6) provides that the order of the Commissioner shall be Final and binding between the parties.
The Deputy Commissioner and the Commissioner in terms held in both the cases that because of the terms of the agreement entered into by each of the teachers with the management of the school, it would not be open to them to go behind the order and to find out the true nature of the order.
It was also submitted on behalf of the respondent that under the relevant regulations of the Education Department of the Chandigarh Administration every employee of an aided school has to enter into an agreement with the management of the school.
Now if the management of the school intends to circumvent the mandatory provisions of Sec. 3 of the 1969 Act, it has merely to terminate the service by giving one month 's notice as provided in the agreement and the provisions controlling the arbitrary powers of the management to hire and fire can be rendered nugatory.
The Deputy Commissioner cannot take an easy recourse becoming oblivious to his duties merely to pay lip sympathy to the order made by the management and decline even to examine the allegation of malafide as also the true nature and character of the impugned order.
In the garb of enforcing a term of the agreement what was sought to be done in this case was to impose the penalty of removal.
And there is sufficient material on record to show that the action was malafide.
Turning to the case of Manmohan Singh Jaitla, the Headmaster, the facts herein above narrated would affirmatively show that he was fully qualified and that he was appointed after interview and selection.
He was confirmed.
He received a certificate of merit from the Chandigarh Administration.
The moment the Managing Committee changed exposing the inter se squabbles amongst persons trying to usurp control of the management of the school, almost wholly financed by the public exchequer, to wreck vengeance against those who were appointed by the outgoing management which may have been defeated at the hustings, the agreement was invoked and the services terminated.
Throwing out persons appointed by out going management is only one side of the coin.
The moment the vacancy occurs, nepotism or corruption will have field day.
Since the new management took, over quietly within a few months, service of the Headmaster was terminated on the ground that his service was no longer required.
We repeatedly asked Mr. Prithvi Raj, 485 learned counsel for the respondent school management as to how it would run a school without a Headmaster.
We naggingly persisted with the question as to why it became necessary, obviously in the middle of the term or session on January 31, 1983, to dispense with the service of a Head Master and a Drawing teacher on the ground that they were no longer required.
We waited for the answer in vain.
Obviously, there could be none and that provides proof, if any was needed, to expose the chink in the cupboard revealing the malafides of the newly elected Managing Committee.
We cannot efface the feeling that ignoring the meritorious service for a period of seven years the service of the appellant was dispensed with for a reason wholly untenable but only because he was appointed by the outgoing Managing Committee ignoring that his appointment was confirmed by the competent authority of the Chandigarh Administration.
Coupled with this is the fact that a charge sheet was served on the appellant on April 9, 1979 and a disciplinary enquiry was commenced by the school management.
But the same was withdrawn and the power to terminate the service under the agreement was invoked and exercised.
This gives a clear indication as to the punitive character of the order namely punishment for a possible misconduct and also colourable exercise of power by resorting to the agreement.
Any agreement, not in consonance with the statutory provisions beneficial to a class in need of protection cannot be given effect to if it stands in derogation of the mandatory provisions of the statute.
3 makes it obligatory to hold a disciplinary enquiry before an employee of an aided school can be either dismissed, removed or reduced in rank.
In order to circumvent this mandatory provision, a resort to the provisions of the agreement in the context of the fact that an enquiry was commenced and given up clearly indicates the true nature of the order as well as colourable exercise of power.
And this was done by the new Managing Committee which appeared to be keen to dispense with the service of persons appointed by the outgoing Managing Committee .
This smacks of malafide.
For all these reasons the order of termination of service of the appellant is bad and ab initio void.
The High Court declined to grant any relief on the ground that an aided school is not 'other authority ' under article 12 of the Constitution and is therefore not amenable to the writ jurisdiction of the High Court.
The High Court clearly overlooked the point that Deputy Commissioner and Commissioner are statutory authorities operating under the 1969 Act.
They are quasi judicial authorities and that was not disputed.
Therefore, they will be comprehen 486 ded in the expression 'Tribunal ' as used in article 227 of the which confers power of superintendance over all courts and tribunals by the High Court throughout the territory in relation to which it exercises jurisdiction.
Obviously, therefore, the decision of the statutory quasi judicial authorities which can be appropriately described as tribunal will be subject to judicial review namely a writ of certiorari by the High Court under article 227 of the Constitution.
The decision questioned before the High Court was of the Deputy Commissioner and the Commissioner exercising powers under Sec.
3 of the 1969 Act.
And these statutory authorities are certainly amenable to the writ jurisdiction of the High Court.
The matter can be viewed from a slightly different angle as well.
After the decision of the Constitution Bench of this Court in Ajay Hasia etc.v.
Khalid Mujib Sehrvardi & Ors.
etc (l) the aided school receiving 95% of expenses by way of grant from the public exchequer and whose employees have received the statutory protection under the 1969 Act and who is subject to the regulations made the Education Department of the Union Territory of Chandigarh as also the appointment of Head Master to be valid must be approved by the Director of public Instructions, would certainly be amenable to the writ jurisdiction of the High Court.
The High Court unfortunately, did not even refer to the decision of the Constitution Bench in Ajay Hasia 's case rendered on November 13, 1980 while disposing of the writ petition in 1983.
In Ajay Hasia 's case, Bhagwati, J. speaking for the Constitution Bench inter alia observed that 'the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. ' Add to this the existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality Substituting the words 'public trust ' in place of the 'corporation ' and the reasons will mutatis mutandis apply to the school.
Therefore, also the High Court was in error in holding that the third respondent school was not amenable to the writ jurisdiction of the High Court.
It would thus appear that the order of termination of service is unsustainable for more than one reason and therefore, the order of termination of service No. 58/83/20 dated January 31,1983 is quashed and set aside and the appellant Manmohan Singh Jaitla is reinstated in service as the Headmaster of the school with continuity (1)[1981] 2 S.C.R. 79. 487 in service and full backwages.
If under the orders of this Court A dated March 2, 1983, May 2, 1983 and subsequent orders, the appellant Headmaster is paid his monthly salary, credit shall be taken for the same.
Amir Singh, the Drawing Teacher has met with the same fate.
He was appointed pursuant to his application for a vacant post of a Drawing Teacher.
Right from the inception, he was a confirmed hand in the sense that he was not put on probation.
Suddenly, after the new Managing Committee got into saddle, his service was terminated with effect from March 4, 1983 on the ground that it was no longer required.
No attempt was made before us to sustain the order on this untenable ground.
Therefore, the only distinguishable feature of this case with the case of the Headmaster Manmohan singh Jaitla is that no charge sheet was served upon the petitioner teacher.
Save and except this difference, all the reasons which weighed with us in quashing the order of termination of service of Headmaster Mr Jaitla would mutatis mutandis apply to the case of this Drawing Teacher.
To restate these reasons would merely add to the length of this judgment.
As a corollary, the rule will have to be made absolute after quashing and setting aside the order of termination of service dated February 28, 1983 and directing reinstatment of Drawing Teacher Amir Singh in service with continuity in service with full backwages.
Accordingly, C. A. No. 2137/84 is allowed and the order terminating the service of Headmaster Manmohan Singh Jaitla is quashed and set aside as also the decisions of the Deputy Commissioner and the Commissioner and the Judgment of the High Court are quashed and set aside.
The appellant Headmaster Shri Manmohan Singh Jaitla is reinstated in service with continuity in service and full backwages subject to the fact that if backwages have been paid under the orders of this Court, credit may be given for the same.
Rule is made absolute in the writ petition filed by Drawing Teacher Amir Singh and the order terminating his service dated February 28, 1913 is quashed and set aside as also the orders of the Deputy Commissioner and Commissioner and he is reinstated in service with continuity in service with back wages.
The respondent School management shall pay the costs to both the employees separately quantified in each case at Rs 1, 500.
H.S.K. Petition and appeal allowed.
| Section 3 of the Punjab Aided Schools (Security of Service) Act, 1969 ( '1969 Act ' for short) provides that no employee shall be dismissed or removed or reduced in rank except after an inquiry to be held in the manner prescribed therein.
Sub sec.
(2) provides that no order of dismissal or removal or reduction in rank of an employee shall take effect unless it has been confirmed by the Deputy Commissioner who may refuse to do so.
if in his opinion, the provisions of sub sec.
(I) have not been complied with.
Sub sec.
(S) permits an aggrieved person to prefer an appeal against any decision or order of the Deputy Commissioner under the section to the Commissioner.
The appellant in the civil appeal was appointed as Headmaster of an aided school which received 95 percent of its expenses as grant from the Government.
As required by the conditions of his appointment, the appellant entered into an agreement with the management of the school.
The appellant 's appointment was confirmed by the concerned authority.
The appellant was confirmed in his post as the Headmaster.
The appellant was 480 awarded a certificate of honour by the Chandigarh administration in token of appreciation of the outstanding performance of the appellant.
After the term of the Managing Committee which appointed the appellant expired and the new Managing Committee took over, the services of the appellant were terminated invoking the conditions of the agreement entered into by the appellant.
The appellant 's appeal to the Deputy Commissioner and the Commissioner were turned down.
The appellant 's writ petition was dismissed by the High Court in limine.
The High Court observed that as the school cannot be said to be 'other authority ' under article 12 of the Constitution, it was not amenable to the writ jurisdiction of the High Court.
Hence this appeal by Special Leave.
The petitioner in the writ petition was appointed as a Drawing Teacher in 1976.
As required by the conditions of his appointment the petitioner entered into an agreement with the management.
In 1983 the petitioner 's services were terminated invoking the conditions of the agreement.
The petitioner approached the Deputy Commissioner and the Commissioner without success.
Thereupon he field the present writ petition under article 32 of the Constitution.
Allowing both the appeal and the writ petition, ^ HELD: Any agreement not in consonance with the statutory provisions beneficial to a class in need of protection cannot be given effect to if it stands in derogation of the mandatory provisions of the statute.
Section 3 of the 1969 Act makes it obligatory to hold a disciplinary inquiry before an employee of an aided school can be either dismissed removed or reduced in rank.
In order to circumvent this mandatory provision, a resort to the provisions of the agreement in the context of the fact that an inquiry was commenced and given up clearly indicates the true nature of the order as well as colourable exercise of power.
And this was done by the new Managing Committee which appeared to be keen to dispense with the service of persons appointed by the outgoing Managing Committee.
This smacks of malafide.
For these reasons the order of termination of service of the appellant is bad and ab initio void.
[485E G] The High Court declined to grant any relief on the ground that an aided school is not 'other authority ' under Act.
12 of the Constitution and is therefore not amenable to the writ jurisdiction of the High Court.
The High Court clearly overlooked the point that Deputy Commissioner and Commissioner are statutory authorities operating under the 969, Act.
They are quasi judicial authorities and that was not disputed.
Therefore, they will be comprehended in the expression 'Tribunal ' as used in article 227 of the Constitution which confers power of superintendence over all courts and tribunals by the High Court throughout the territory in relation to which it exercises jurisdiction.
Obviously, therefore, the decision of the statutory quasi judicial authorities which can be appropriately described as tribunal will be subject to judicial review namely a writ of certiorari by the High Court under article 227 of the Constitution.
The decision questioned before the High Court was of the Deputy Commissioner and the Commissioner exercising power under Sec.
3 of the 1969 Act.
And these statutory 481 authorities are certainly amenable to the writ jurisdiction of the High Court.
[485G H; 486A C] After the decision of the Constitution Bench of this Court in Ajay Hasia etc.
vs Khalid Mujib Sehravardi and Ors. etc.
the aided school receiving 95% of expenses by way of grant from the public exchequer and whose employees have received the statutory protection under the 1969 Act and who are subject to the relations made by the Education Department of the Union Territory of Chandigarh as also the appointment of Headmaster to be valid must be approved by the Director of Public Instructions , would certainly be amenable to the writ jurisdiction of the High Court.
[486C D] Ajay Hasia etc.
vs Khalid Mujib Sehravardi and Ors. etc.
; , , referred to.
The Deputy Commissioner and the Commissioner in terms held in both the cases that because of the terms of the agreement entered into by each of the teachers with the management of the school, it would not be open to them to go behind the order and to find out the true nature of the order.
Now if the management of the school intends to circumvent the mandatory provisions of Sec. 3 of the 1969 Act, it has merely to terminate the service by giving one month 's notice as provided in the agreement and the provisions controlling the arbitrary powers of the management to hire and fire can be rendered nugatory.
The Deputy Commissioner cannot take an easy recourse becoming oblivious to his duties merely to pay lip sympathy to the order made by the management and decline even to examine the allegation of malafide as also the true nature and character of the impugned order.
[484B D]
|
minal Appeal No. 281 of 1971.
Appeal by special leave from the Judgment and order dated May 18, 1971 of the Bombay High Court in Cr. A. No. 262 of 1971 and confirmation case No. 57of 1971.
section K. Dholakia and R.C. Bhatia, for the appellant.
H. R. Khanna and B. D. Sharma, for the respondent.
DUA, J.
The appellant in this appeal by special leave (accused No. 1 in the trial court) was convicted by the Second Additional Sessions Judge of Thana of offences under sections 148, 323 and 302, I.P.C. and was sentenced to death under section 302 and to various terms of rigorous imprisonment under sections 148 and 323 of the said Code.
The High Court maintained his conviction and confirmed the sentence of death.
He has now appealed to this Court and Shri Dholakia, learned counsel appearing in support of this appeal, has addressed lengthy arguments challenging both the conviction and the sentence.
This case is an off shoot of the unfortunate communal riots which occurred on May 7, 1970 in the town of Bhiwandi in Thana District in the State of Maharashtra.
Though the trouble originally started in the town of Bhiwandi it spread to the neighboring towns and villages.
In the Thakurpada of Tansa village there lived one Abdul Khalil aged about 55 years along with his family members.
This was the only Muslim family in Thakurpada.
He and his wife Sahebi had ten children.
Their names and ages in the order of seniority are : Shaukat (son) about '2 '3 years, Shamsuddin (son, who has appeared as P.W. 1) about 19 years, Kasam (son) about 17, Hanif (son) about 15, Jubeda (daughter) about 13, Nizam (son) about 11, Fatma (daughter) about 9, Hamshera (daughter) about 4, Salim (son) about 3 and Nazar (son about 4 or 5 months).
Abdul Khalil, Shaukat and Shamsuddin, all three used to work in Nevigation Company at Mohilla about 2 21 miles away from Tansa.
Abdul Khalil was a truck driver and Shaukat, a clearner.
As communal trouble spread to other places in the district, some danger to the Muslim families in Tans a 'village was also apprehended.
In that village there were perhaps about 5 or 6 Muslim families.
On the outskirts of this village there is the great Tansa lake which supplies water to Bombay city.
Mr. Khatkhate, a Hydraulic Engineer is in charge of that lake.
He has an office on the site with several employees of the Municipal Corporation of Bombay working under him living on the site.
Mr. Khatkhate met Abdul Khalil on May 12, 1970 and warned him that there was a likelihood that he and the members of his family might be attacked and that they should leave Tansa village and go to a safer place.
As 94 a result of this warning, Abdul Khalil and the members of his family abandoned their home and left Tansa village at about 6 p.m. on May 12, 1970.
They went into the forest area surrounding the great Tansa lake and encamped on a hilock known as Maholi hillock about 2 1/2 miles away from the village.
They spent the night at the hillock but having run short of water in the morning they shifted at about 10 a.m. on May 13, 1970 to the Nursery area of Tansa lake which is near the water 's edge.
This spot was about three or four furlongs away from Tansa village.
They spent most of the day there.
In the evening at .about 6 or 6.30 Shamsuddin, the.
second son, went a little distance away from the family members to ease himself when he saw a mob of about 30 or 35 persons armed with axes, spears and sticks coming from the side of the Tansa lake towards the place where Abdul Khalil and his family were staying.
Seeing the mob approaching them Shamsuddin ran back to his parents and informed them about what he had seen.
The mob was raising shouts.
The members of Abdul Khalil 's family feeling frieghtened started running in different directions.
They roughly formed themselves into three groups.
One group consisted of Kasam, Hanif, Nizam, Salim and Hashma, the other consisted of ' Jubeda, Fatma and their mother Sahebi who was also carrying in her arms the baby Nazir and the third group which was the last to leave the spot consisted of Khalil and Shaukat.
As these two persons were the last to leave the spot the mob had in the meantime come close to them.
They thus became the first target ,of the attack by the mob.
The appellant Dharina Rama Bhagare, who was armed with a bow and arrows shot an arrow at Khalil which pierced him in the back.
Khalil fell down and was surrounded by other assailants, who started belabouring him.
Abdul Khalil 's eldest son Shaukat seeing his father being attacked went to rescue him but he had hardly gone a few paces when another arrow discharged by the appellant struck him at his back near his right shoulder.
Shaukat also fell down as a result of the injury caused by the arrow about two or three paces away from his father.
He was also assaulted by some members of the mob.
, On seeing her husband and her eldest son being thus assaulted Sahebi raised alarm but she was also attacked by the appellant who shot the third arrow at her.
This struck her on the left side above the waist with the 'result that she also fell down with her infant child in her arms.
She died instantaneously.
Some of the other members of Khalil 's family hid themselves behind the trees or Karvandi bushes round about the spot whereas some of them were still running away to save themselves.
Jubeda, the young daughter on seeing her father, mother and brother being shot at with arrows, shouted.
This apparently annoyed the appellant who picked up a stone and flung it at her, thereby causing an injury on hear head.
Budhya, 95 one of the accused, also struck a blow at her with an iron bar thereby injuring her right hand.
Shamsuddin who was hiding himself behind a tree was noticed by some of the accused persons.
Budhya accused ran towards him and assaulted him with the butt end of an axe.
Some of the other accused persons also assaulted him with the result that Shamsuddin lost consciousness.
Thereafter the assailants left the scene, of occurrence and went away.
As a result of this occurrence three members of this family died on the spot whereas two members suffered injuries.
After regaining consciousness Shamsuddin and the surviving members of the family seeing their parents and eldest brother dead, were so terrified that they left the dead bodies at the scene of the occurrence and picking up their belongings proceeded on foot towards Shahpur town in the Taluk headquarters where one Gafoor, a brother in law of Shamsuddin lived.
Sending Kasam, Hanif and Nazir to the house of Gafoor, Shamsuddin himself along with others went to the police station.
At the police Station there was only a head constable by name Bendhari (P.W. 4) who found Shamsuddin not in a fit condition to make a statement.
Shamsuddin, who had sustained many injuries, was soaked in blood.
The headconstable, therefore, after making an entry to this effect in the Station Dairy, sent Shamsuddin and Jubeda to Shahpur dispensary for treatment.
At about 10 O 'clock in the morning of May 14, 1970 the police Sub Inspector in charge of the police station, Dattatreya Potdar (P. W. 13), came to the police station and on being apprised of Shamsuddin and Jubeda having gone to Shahpur for treatment he sent for Shamsuddin from the dispensary and recorded the first information report, exhibit 4.
After registering the offence he took up investigation.
He sent for Kasam from Gafoor 's house and proceeded with him to the scene of the occurrence, reaching there at about 2 p.m.
They remained there till about 5 p.m.
The Sub Inspector prepared panchanamas of the dead bodies and of the scene of the offence.
The scene of the offence was about 400 ft. away on the southern side of Tansa lake in the area known as Nursery.
Underneath the dead body of Abdul Khalil was found an arrow which had blood stains on it.
The exact words of the panchanama relating ,to the recovery of this arrow are : "There is seen an arrow and a bow pressed in the stomach between both the legs of the deceased.
On taking the arrow out it is found that its length is 5" and is of iron".
On examination by the Chemical Analyser the stains on this arrow were found to be of human blood.
Thereafter the three dead bodies were sent through constable Mahadik to the Medical Officer at Shahpur for postmortem examination.
After proceeding to Tansa village the Sub Inspector arrested the appellant along with eight other persons at about 8 p.m.
They were accused nos.
1 to 9 in the trail court.
The following morning, that is, May 15, 1970 96 the P.S.I. recorded the statements of Kassam and Jubeda.
Hanif was also called but as he was crying all the time he was not able to make any statement.
On May 16, 1970 the appellant made a statement leading to the recovery of a bow and four arrows from a spot in Karvandi shrubs about 85 paces away from his house.
The recovered bow and four arrows were exhibited as 11, 11a, 12a, 12c and 12d.
These articles were hidden under dry leaves.
One of the arrows had, blood gains on it but on examination the stains being disintegrated it could not be said if they were of human blood.
The statement of Hanif was recorded by Vishwanath, Police Inspector in July, 1970 after he had taken over the investigation.
The Additional Sessions Judge, Thana, who tried the case relied on the evidence of Kasam (P.W. 2), Jubeda (P.W. 3) and Hanif (P.W. 5).
These witnesses, according to the trail court, had not displayed any tendency to introduce falsehood in their statement though it felt that the evidence of Hanif (P.W. 5) should be read with a certain degree of care and caution because of his statement having been.
recorded by the investigating authorities more than two months after the occurrence.
For accepting Hanif 's evidence, therefore, the trail court required corroboration.
With respect to the evidence of Shamsuddin (P.W. 1), however, the trail court felt that it was not safe to rely on his testimony because his statement in court was at variance with the statement in the information lodged by him with the police.
On the basis of the testimony of P.Ws. 2, 3 and 5 the trail court came to the conclusion that the appellant was definitely present at the scene of occurrence with bow and arrows and was a member of the unlawful assembly and further that he had shot the arrows at Abdul Khalil, his eldest son Shaukat and his wife Sahebi, the three deceased victims of the unfortunate occurrence.
In that court 's opinion the three witnesses had no reason to screen the real offenders and to falsely implicate the appellant.
The appellant (Dharma Rama Bhagare, accused No. 1 in the trial court) and Budhya Dhaklya Valvi (accused no 7 in the trial court) appealed to the High Court.
It may be recalled that during the investigation one arrow had been found underneath the dead body of Khalil and four arrows were recovered at the instance of appellant.
As already observed, the arrow recovered at the scene of occurrence had blood stains on it which were on examination found to be of human origin whereas one of the four arrows recovered at the instance of the appellant was found on examination to have on it blood stains but being disintegrated it could not be said if they were of human origin.
It appears that there was some confusion in putting the exhibit 97 marks on the arrows and the bow produced in evidence.
The High Court, in the circumstances, considered it necessary to have the matter clarified by taking additional evidence.
By means of an order dated April 27, 1971 the High Court required the trial court to recall the investigating officer (P.W. 13) and the two witnesses P.Ws 6 and 10 and have the matter clarified.
The counsel for the accused appearing in the High Court also expressed a desire to ask some more questions from Dr. Deshpande (P.W. 12).
This request was granted.
The High Court thus disposed of the appeal and the murder reference after taking into consideration the additional evidence received under section 428, Cr.
The High Court, after appraising the evidence on the record did not see any cogent reason for not accepting the evidence of the three eye witnesses believed by the trial court.
That court was also unable to find any reason why these witnesses should falsely implicate the accused persons.
From the nature of the occurrence and its surrounding circumstances, in its opinion, there could not be any independent eye witnesses present and in a position to depose about the complicity of the accused persons.
The locality where the occurrence had taken place being uninhabited and the only persons present being the assailants and their victims it was not possible normally to expect any independent eye witness.
The recovery of a bow and four arrows received at the instance of the appellant were also held to support the prosecution version as these arrows were similar to the one recovered from the scene of the occurrence.
The High Court further took into consideration the circumstance that the bow and four arrows were found concealed in a place where they are normally not kept.
The appeal was accordingly dismissed.
In this Court Shri Dholakia the learned counsel appearing in support of the appeal has very strongly challenged the conclusions of the two courts below.
He has advanced two principal contentions.
According to him the prosecution case that three deaths were caused by arrows like the one found at the scene of occurrence conflicts with the medical testimony because the medical evidence shows that it was not possible to cause by such an arrow the injuries found on the dead persons.
The learned counsel complains that neither the trail court nor the High Court examined the medical evidence from this point of view.
In the second place, according to learned counsel, the conclusions of the two courts below are irrational and both the courts have not cared to attach proper importance to the first information report which was lodged by Shamsuddin who had also himself appeared as an eye witness in the case.
According to learned counsel, Shamsuddin had all along been with the other members of the family with the result that the initial version given by him to 8 L63ISupCII73 98 the police which constituted the first information report must be considered to have been given by him after knowing all the facts from the other members of the family who claimed to have witnessed the occurrence and appeared as witnesses in court.
This version as contained in the first information report must, according to the submission, be held to contradict the evidence given in court by the other eye witnesses as well.
On this premise, according to Shri Dholakia, the prosecution evidence must be considered to be unacceptable and it cannot form safe basis for holding the appellant guilty of the offence charged.
Indeed, the learned counsel went to the length of submitting that the appellant has been involved not as a result of the observation by the prosecution witnesses of what actually happened at the time of the unfortunate assault on the victims but as a result of calculated deliberation to falsely implicate him.
So far as the first point is concerned main reliance has been placed on the examination of Dr. Vinayak Deshpande (P.W. 12) when he was recalled pursuant to the order of the High Court dated April 27, 1971 under section 428, Cr.
P.C. We have been taken through that evidence which was recorded on May 4 and 5, 1971 along with the evidence originally recorded but we am unable to find anything in the doctor 's testimony which would show that the injuries sustained by the three dead persons could not be caused by the kind of arrows recovered from the scene of occurrence and from near the appellant 's house at his instance.
The real argument is founded on the opinion of P.W. 12 where he states that the Injuries sustained by Abdul Khalil and injuries sustained by Sahebi could be caused by an arrow with or without a hook and that the removal of arrow with the hook from the injury would be likely to cause more damage to the abdominal wall and also to the internal organs.
Both in the case of Sahebi and Abdul Khalil the doctor did not notice any injury to the abdominal wall which could have been caused while pulling out the arrow.
Relying on this part of the evidence, according to Shri Dholakia, all the recovered arrows which are alleged to have caused the injuries to the deceased persons having been found out of the dead bodies should have, caused severe internal ' damage expected by the doctor and since no such damage was discovered by him the injuries, as a result of which the deceased persons died, must have been caused by some weapon other than the arrows with hooks.
It has been suggested that the injuries might well have been caused by someone with a spear.
The appellant, it has been emphasised, is not stated to have used a spear.
We are wholly unable to sustain this sub.
mission on the existing record.
The doctor also explained in his evidence on which reliance is placed that if the arrow with a hook is removed skilfully out of the injury then it may not 99 cause more damage to the abdominal wall when removed out of the injury though if it is removed forcibly it may do so.
It is also noteworthy that all the arrows recovered did not have hooks on them.
The circumstances in which and the person by whom the arrow was removed from the body of Abdul Khalil is not known.
When the investigating officer went there it had already come out of the wound and was lying underneath the dead body pressed near the stomach between both the legs of the deceased.
Any attempt by this Court to determine whether the arrow had come out IV itself as a result of some movement of the injured body after receiving the arrow injury whether before or during Abdul Khalil 's last moments of life or whether someone from amongst the party of the accused had attempted to remove it but was for some reason unable to, do so or whether the arrow had come out of the body in some other way, would be mere speculation and it would be unfruitful to hazard a guess.
We are not unmindful of the fact that the doctor has stated in his additional evidence that if the arrow with the hook is shot at from a distance with force it would not come out from the injury without being pulled out by someone and also that looking at the injuries of Abdul Khalil and Sahebi the arrows must have been shot at with force.
But the fact remains that an arrow was actually found underneath Abdul Khalil 's dead body and according to the doctor the injury on the deceased could be caused by that arrow.
The mere fact, therefore, that in the opinion of the doctor the arrow with the hook, unless skilfully pulled out of the wound was likely to cause more damage is, in our opinion, not a sufficiently strong factor which should persuade us on the existing record to reject the testimony of the three eye witnesses believed by the courts below and about whose trust worthiness we do not entertain any reasonable doubt.
It is noteworthy that this contention was not raised either in the trail court or in the High Court.
Indeed, during the cross examination of Dr. Deshpande (P.W. 12) even when he was recalled no straight and direct question was put to him, if keeping in view the nature of the injuries on Abdul Khalil and Sahebi and the recovered arrows and assuming that the arrows causing the injury had not been taken out skilfully, he could confidently depose that the injuries in question were not possible to be caused by these arrows.
It is also pertinent to point out that from the order dated April 27, 1971, it does not appear that the counsel for the appellant specifically desired to clarify this point from the doctor.
The submission now forcefully advanced by Shri Dholakia appears to us to be an afterthought and in any event is clearly not supportable on the medical evidence.
We are, therefore, unable to reject the testimony of the eye witnesses merely on the medical evidence to which our attention has been drawn.
100 In so far as the information lodged with the police by Shamsuddin is concerned both the courts below have not considered it proper to reject the testimony of the other three eyewitnesses on the ground of variance between their statements in court and the contents of the said information.
The first information report, it may be pointed out, is never treated as a substantive piece of evidence.
It can only be used for "corroborating or contradicting its maker when he appears in court as a witness.
Its value must always depend on the facts and circumstances of a given case.
In the present case its value has not been considered to be of much significant because of the nature and circumstances of the occurrence and the extent and nature of the injuries suffered by Shamsuddin who quite naturally must have been subjected to a very severe shock.
The surviving members of the family could not go back to their home even after the occurrence and felt compelled to trek the whole night on foot to find shelter in the house of Gafoor at Shahpur where they reached the following morning.
In these circumstances the contents of the F.I.R. made by Shamsuddin have rightly not been given any importance by the trail court and by the High Court.
The F.I.R. can only discredit the testimony of Shanisuddin whose evidence has not been relied upon for supporting_ the appellant 's conviction.
The F.I.R. can by no means be utilised for contradicting, or discrediting the other witnesses who obviously could not have any desire to spare the real culprit and to falsely implicate the appellant.
The evidence of the eye witnesses believed by the two courts appears to us to be free from any serious infirmity justifying its rejection.
The case is obviously not one in which any reasonable doubt can be cast on the testimony of the eye witnesses on the mere ground that Shamsuddin who apparently in his attempt to save himself from the fierce indiscriminate assault by the assailants was not able carefully to see and remember as to in what manner and by what weapon his parents and eldest brother had been killed.
That they were actually killed during the occurrence in question is undisputed.
, Equally undisputed is the nature of injuries found on their bodies.
We are, therefore, unable to agree with Shri Dholakia that the prosecution case should be thrown out on the mere ground that in the first information report an altogether different version was given by Shamsuddin.
The evidence of Shamsuddin as given in court, it may be recalled, has not been relied upon for sustaining the appellant 's conviction.
We accordingly feel little hesitation in agreeing with the concurrent conclusion of the trial court and the High Court that the appellant was responsible for killing the three deceased persons.
101 The last contention by Shri Dholakia relates to the question of sentence.
According to him the present is not a case for extreme penalty.
We are unable to agree.
The question of sentence is a matter of judicial discretion.
The relevant considerations in determining the sentence broadly stated, include the motive for, and the magnitude of, the offence and the manner of its commission.
In this case the victims of the assault had given no offence to the appellant or his associates.
Indeed the unarmed innocent members of this family had to leave their heath and home and were actually at the moment of the offence running in panic, on seeing the mob, to save themselves, when the three senior most members were shot with arrows from behind and killed.
One of the victims was a woman with a baby in her arms.
The only reason for these murders is the profession of different religious faith by the victims.
According to the investigating officer, P.W. 13, Abdul Khalils residential house had also been set on fire on May 12 at 8.30 p.m.
In our country where the Constitution guarantees to all individuals freedom of religious faith, though, belief and expression and where no particular religion is accorded a superior status and non subjected to hostile discrimination the commission of offences motivated only by the fact that the victim professes a different religious faith cannot be treated with leniency.
They are no only destructive of our basic traditional social order founded on toleration in recognition of the dignity of the individual and of other cherished human values, but have also a tendency to mar our national solidarity.
We are, therefore, wholly unable to find any cogent reason for reducing the sentences imposed by the trial court and confirmed by the High Court.
The appeal accordingly fails and is dismissed.
G.C. Appeal dismissed.
| The appellant vs as convicted by the Sessions Judge of offences under sections 148,323 and 302 I.P.C.
The High Court maintained his conviction and confirmed the sentence to death.
in appeal by special leave to this Court it was contended that (i) the evidence of the eye witnesses went against the medical evidence and thereof the former was wrongly relied on by the courts below; (ii) the evidence of the three eye witnesses on which the conviction of the appellant was based was contradicted by the F.I.R. lodged by S, one of the victims of the incident and therefore should not have been relied on; and (iii) the sentence of death passed against the appellant was excessive.
Dismissing the appeal, HELD:(i) The fact remained that an arrow was actually found ,underneath A 's dead body and according to the doctor the injury on the ,deceased could be caused by that arrow.
The mere fact, therefore that in the opinion of the doctor the arrow with the hook, unless skillfully pulled out of the wound was likely to cause more damage was not a sufficiently strong factor to reject the testimony of the three eye witnesses believed by the courts below and about whose trustworthiness there could 'be no reasonable doubt.
(ii)The F.I.R. could only discredit the testimony of S whose evidence had not been relied upon to support the appellant 's conviction.
The F.I.R. could by no means be utilised for contradicting or discrediting the other witnesses who obviously could not have any desire to spare the real culprit and to falsely implicate the appellant.
The evidence of the eye witnewes believed by the two courts appeared to be free from any serious infirmity justifying its rejection.
The case was obviously not one in which any reasonable doubt could be cast on the testimony of the eye witnesses on the mere ground that S who apparently in his attempt to save himself from the fierce indiscriminate assault by the assailants was not able carefully to see and remember as to in what manner and 'by what weapon his parents and eldest brother had been killed.
(iii)The relevant considerations in determining the sentence, broadly stated, include the Motive for, and the magnitude of, the offence and the manner of its commission.
In this case the victims of the assault had given no offence to the appellant or his associates.
They were actually runni ng in panic on seeing the mob, to save themselves.
The commission of offences motivated only by the fact that the victim professes a different religious faith could not be treated with leniency.
|
Civil Appeal Nos.
13 15 of 1973.
Appeals by Special Leave from the Judgment and order dated 12th/13th August, 1970 of the Calcutta High Court in Income Tax Reference No 69/66 P. Burman, Subrata Ghosh and section Ghosh for the Appellant.
B.B. Ahuja and Miss A. Subhashini for the Respondent.
The Judgment of the Court was delivered by TULZAPURKAR, J.
These appeals by special leave involve a common question regarding the taxibility of certain amounts received by the appellant company (hereinafter referred to as "the assessee ') during the three accounting years, namely, 1359 B.S., 1360 B.S. and 1361 B.S. relevant to the assessment years 1953 54.
1954 55 and 1955 56 and the question is whether those amounts represented business income or receipts of a capital nature ? The facts giving rise to the question may briefly be stated: The assessee was incorporated on July 3, 1920 for the purpose of taking over the Zamindari properties pertaining the Ukhara Estate which belonged to Rai Pullin Behari Singha Bahadur and the late Gosta Behari Lal Singha.
Therefore, on incorporation, by an Indenture dated July 5, 1920 the assessee took a lease of the extensive Zamindari pertaining to the said Estate for a term of 999 years and also took an assignment of movables, including Government promissory notes and jewellery belonging to the members of the lessor 's family and the arrears of rents and cesses, debts, decrees, etc.
due by the tenants of the said Estate, the properties passing to the assessee being specified in the schedule appended thereto.
The consideration for the said lease and assignment was fixed at Rs. 4,08,000/ which was paid and satisfied by the assessee by allotting and issuing its 4,080 fully paid up shares to the lessors.
The quit rent receivable by the lessors for the lessors Rs. 100/ per annum and the assessee also undertook to pay the revenue and cesses payable to the superior landlords in respect of the Zamindari.
Clause 3 of the Memorandum of Association set out the various objects for which the assessee was formed and though sub cl.
(a) thereof showed that the assessee was primarily incorporated for the purpose of taking over the assets of the lessors family upon the terms and conditions set forth in the Draft Agreement referred to in Article 3 of the Articles of Association, sub cl.
(b) of cl.
3 of the Memorandum empowered the assessee "to purchase, take on lease or otherwise acquire and to traffic in land, house and other property . ,. and generally to deal in or traffic by way of sub lease, exchange or otherwise with land and house property. . " The Estate taken on lease comprised substantial 714 coal bearing lands and mines which the assessee started giving on sub lease in various parcels to well known colliery companies for various terms of long duration.
During the three accounting years in question the assessee granted several sub leases for which it received salami and premia and there were also acquisitions of the portions of the Estate by the Land Acquisition Collector for which it received compensation.
The total amount of salami, premia and the compensation received by the assessee in the three accounting years were respectively Rs. 22,197/ , 188,417/ and 73,327/ and the question arose whether these receipts were business income or receipts of a capital nature.
The Income tax officer rejected the contention of the assessee that the receipts were of a capital nature aud he included the said amounts in the total income of the assessee in each year as its business income holding that the assessee carried on business in leasehold rights and real property.
On appeal by the assessee, however, the Appellate Assistant Commissioner reversed the finding of the Income Tax officer and excluded the amounts in question from the total income of the assessee following the decision of the Tribunal rendered on June 7, 1960, in the assessee 's case for the earlier assessment year 1946 47, 1947 48 and 1948 49.
The matter was carried by the Income tax Officer in further appeals to the Tribunal, but the Tribunal by its common order dated June 29, 1963 dismissed the departmental appeals holding that the receipts were of a capital nature not liable to be included in the taxable income of the assessee.
In coming to that conclusion the Tribunal mainly relied upon cl. 3 (a) of the Memorandum of Association, Article 3 of the Articles of.
Association and the terms and conditions set forth in the Draft Agreement (in accordance with which the Indenture dated July 5, 1920 was executed) which showed that the assessee had been primarily incorporated for the purpose of the conservation and management of the Family Estate of the lessors, that, in fact, the assessee was not carrying on the business of taking leases and granting sub leases inasmuch as it had not taken on lease any other property from any one else since 1920 upto date and that the transactions of granting sub leases of long duration to various colliery companies were by way of management of real property by the assessee as owner of lease hold interest and as such the receipts on account of salami, premia and compensation were of a capital nature.
The Tribunal relied upon and applied the ratio of the decision of the Madras High Court in P. K. N. Company vs Commissioner of Income Tax which has since been confirmed by this Court in 715 At the instance of the Revenue the Tribunal referred to the High Court for his opinion the following questions: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in excluding the sums of Rs. 22,197/ , Rs. 1,88,417/ and Rs. 73,327/ from the total income of the assessee for the years 1953 54, 1954 55 and 1955 56 ?" The High Court answered the question in favour of the Revenue by holding that the receipts were not of a capital nature and were includible in the total income of the assessee as its business income.
The High Court took the view that the assessee could not be regarded as a purely family concern incorporated for the preservation and management of the family assets for maintenance of the lessor 's family especially as no provision had been made in its Memorandum of Association or Articles of Association conferring any right or share on new members that may be born in the coparcenery, it being admitted that Ukhara Zamindars constituted a Mitakshara Joint Family.
Relying upon the several objects set out in the Memorandum of Association, particularly the one indicated in cl.
3(b) (which permitted trafficking by way of sub leases) and further relying on what it called two special features of the assessee, namely, declaration of dividend and creation of reserve fund by it, the High Court held the assessee to be a trading concern and that it had dealt with its lease hold rights in the lands as trading assets by using them to earn income? rent, royalty, salami, premia, etc. and, therefore, the receipts by way of salami or premia were trading receipts and profits thereform were business income.
In other words, the High Court held that the assessee as a trading concern had dealt with its lease hold interest in Zamindari property not as an owner but as a trader and, therefore, the receipts in question were includible in the total income of the assessee as business income.
The High Court relied upon the decision of this Court in Karnapura Development Co. ltd. vs Commissioner of Income Tax, West Bengal.
It is this view of the High Court that has been challenged before us by the counsel for the assessee in these appeals.
In support of the appeals counsel for the assessee raised two or three contentions.
In the first place he contended that the High court was in error in coming to the conclusion that the assessee was a trading concern and that it had dealt with its leasehold interest in the Zamindari property as a trading asset by using the same to earn income, rent, royalty, salami, premia, etc.
He pointed out that in 716 coming to that conclusion the High Court had wrongly allowed itself to be considerably influenced by the three factors: (a) existence of several objects set out in cl. 3 of its Memorandum of Association, (b) declaration of dividend by it and (c) creation of reserve fund by it, as according to him none of these factors would show that the assessee had actually dealt with its leasehold interest in the Zamindari property as a trader.
Secondly, he contended that the real question was whether after incorporation and after acquiring the lease of the Zamindari Estate, which included substantial coal bearing lands and mines, the assessee had dealt with its leasehold interest as a landowner or not and he urged that the manner in which the assessee granted sub leases of the lands in different parcels to various well known colliery companies for various terms of long duration extending over 900 years clearly showed that such transactions of granting sub leases were transactions in the nature of management of the estate as owner of the land and, therefore, the receipts by way of salami, premia and compensation will have to be regarded as receipts of a capital nature and in that behalf he placed reliance upon cl. 3(a) of the Memorandum, Article 3 of Articles of Association and the terms and conditions of the Draft Agreement in accordance with which the Indenture dated July 5, 1920 was executed, which showed that the assessee had been primarily incorporated for the purpose of preservation and management of the family Estate of the lessors.
He also pointed out that admittedly it was not the business of the assessee to run collieries nor did it in fact run any colliery on its own but it merely granted sub leases of various parcels of land to colliery companies which were transactions by way of management of the family Estate in fulfillment of the primary object for which it was incorporated.
In support of his contentions he relied upon this Court 's decision in P. K. N. Co 's case (supra).
On the other hand, counsel for the Revenue pressed for our acceptance the view taken by the High Court.
In particular, he invited our attention to cl. 3(b) of the Memorandum of Association which conferred power on the assessee not merely to purchase, take on lease or otherwise acquire and to traffic in land, house and other property but also "generally to deal in or traffic by way of sub lease, exchange or otherwise with land and house property etc." and urged that the several transactions of granting subleases of coal bearing lands and mines to various colliery companies on payment of rent, royalty, salami and premia must be regarded as business transactions entered into in pursuance of its trading object and, therefore, the High Court was right in coming to the conclusion that the assessee had dealt with its rights in leasehold land as stock in trade or trad 717 ing assets and the receipts by way of salami, premia or compensation were its business income.
For the reasons which we shall indicate presently it is impossible to accept the High Court 's view in the matter and we have to uphold the conclusion reached by the Appellate Tribunal.
The legal principle or the test which should govern the question of the type that has arisen in these appeals has been clearly enunciated by this Court in Karnapura Development Co. Ltd. case (supra).
The assessee in that case was a company formed with the object, inter alia, of acquiring and disposing of underground coal mining rights in certain coal fields.
The Memorandum of Association of the company enumerated other objects, such as coal raising, but the assessee restricted its activities to acquiring coal mining leases over large areas, developing them as coal fields and then sub leasing them to collieries and other companies.
The leases were acquired for a term of 999 years and were sublet for the balance of the term of the respective leases minus two days.
The company never worked the coal fields with a view to raising coal, nor did it acquire or sell coal raised by the sub lessees.
As against a salami of Rs. 40/ per bigha which the assessee had paid, it realised from the sub lessees Rs. 400/ per bigha as salami.
In addition, the assessee charged certain royalties at rates higher than those it had agreed to pay under the head leases.
The company admitted that the income from the royalties was taxable.
The question was whether the amounts received by the assessee as salami for granting the sub leases constituted trading receipts in its hands and the profit therefrom was assessable to tax under the Indian Income Tax Act, 1922.
Having regard to the objects for which the company was formed as well as the nature of operations which the company indulged in, this Court held that the transactions of acquiring leases and turning them to account by way of sub leases were in the nature of trading activity within the objects of the company and not enjoyment of property as land owner and the amounts received by way of salami were trading receipts and the profits therefrom were liable to income tax.
Observing that the dividing line between the two types of operations was difficult to.
find and after referring to a number of decisions both English and Indian, this Court at page 377 of the report enunciated the principle in the following words: "Ownership of property and leasing it out may be done as a part of business, or it may be done as land owner.
Whether it is the one or the other must necessarily depend upon the object with which the act is done.
It is not that no company can own property and enjoy it 718 as property, whether by itself or by giving the use of it to another on rent.
Where this happens, the appropriate head to apply is "income from property" (section 9), even though the company may be doing extensive business otherwise.
But a company formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them tc account even by way of leasing them out as an integral part of his business cannot be said to treat them as land owner but as trader.
The cases which have been cited in this case both for and against the assessee company must be applied with this distinction properly borne in mills.
In deciding whether a company dealt with its properties as owner, one must see not to the form which it gave to the transactions but to the substance of the matter " The other decision of this Court in P. K. N. Cos case (supra) is equally important, for, certain aspects and their significance in determining the question in the instant case have been clarified.
In that case the partners of a firm, known as 'P.K.N. ' formed a private company and transferred to it all their assets and properties consisting of 3000 acres of rubber and coconut plantations besides vacant sites and houses.
The membership of the company was restricted to the members of PKN firm and in consideration of the transfer of all the assets and properties of the aggregate value of 16,50,000 dollars to the company, the partners, of the firm were allotted shares of the face value of 6,60,000 dollars, the balance remaining outstanding as a debt due to the firm.
Limitations on the admission of the members to the company and other attendant features indicates an intention of conserving the properties of the members of the firm The Memorandum of Association of the company specified, inter alia the following objects: (i) to purchase or acquire and to sell, turn to account, dispose of and deal with property and rights of any kind, and (ii) to sell, manage, develop or dispose of or otherwise deal with any part of the properties, rights and privileges of the company.
Large amounts of money were spent on cultivation and development of rubber and coconut plantations and substantial in come was derived therefrom but certain uneconomical and inconvenient plots were sold by the company in 1940 and 1941.
Between the years 1942 and 1945, when Malaya was under Japanese occupation, some further plots of land were sold.
Thereafter, in 1948, 1949 and 1950, lands were sold from time to time at profit.
As a result of these disposals, the total holding of the company was reduced to about 2,000 acres of rubber estates.
some houses and the 719 Lee estate.
The question was whether the profits realised by the company during the accounting year relevant to the assessment year 1951 52 from the sale of the properties to the tune of 1,41,326 Malayan dollars could be brought to tax ? on these facts this Court Id that the primary object of the company was to take over the sets of the firm, to carry on the business of planters and to earn profits by the sale of rubber: the acquisition of the estates was not for the purposes of carrying on business in real estate.
This Court further held that the incidental sale of uneconomical or inconvenient plots of land could not convert what was essentially an investment into a business transaction in real estate.
The amount of 1,41,326 Malayan dollars being capital accretion was not chargeable as income.
Such conclusion was reached notwithstanding that the Memorandum of Association of the company conferred power on it to sell or turn to account, dispose of or deal with the properties and rights of all kinds.
This Court clarified the significance of three aspects thus: (a) the purposes or object for which a limited company was incorporated had no decisive bearing on the question at issue, (b) the circumstance that a single plot of land was acquired and was thereafter sold as a whole or in plots was not decisive and (c) nor was profit motive in entering into a transaction decisive, but the question whether in purchasing and selling land the tax payer entered upon a business activity had to be determined in the light of the facts and circumstances.
In the instant case also the main question that arises for determination is whether, after acquiring leasehold interest in Zamindari Estate in granting the several sub leases of coal bearing lands and mines and receiving the salami and premia and in receiving compensation for compulsory acquisition of its lands the assessee dealt with its leasehold interest in the lands as a land owner or carried on business with it treating it as its stock in trade or trading asset ? It is obvious that if the case falls within the former category the receipts by way of salami, premia and compensation will be capital receipts but if it falls within the latter the receipts will be trading receipts and profits therefrom business income.
Having regard to the ratio of the decision in Karanpura Development Co 'section case (supra) it is clear that for deciding that question regard must be had to the real nature and object or purpose of the transactions entered into by the assessee over the years.
Before we proceed to examine the nature and object or purpose of the transactions we would like to point out how and where the High Court has gone wrong in answering the issue against the assessee.
In the first place the High Court has erroneously treated the assessee as a trading concern qua its leasehold interest in the Zamindari/estate without actually examining the real nature and object of the transac 720 tions of sub leases entered into by the assessee with several colliery companies.
Secondly, in arriving at that conclusion the High Court has been greatly influenced by three factors (a) existence of the power in its Memorandum of Association enabling the assessee to indulge in trafficking in land by way of sub leases of the land, (b) declaration of dividend at a high rate of 25% by the assessee for the relevant years and (iii) creation of reserve fund by the assessee pursuant to certain Articles of Association and the High Court has given such undue weight to these factors that it was almost regarded them as decisive factors.
P.K.N. Co 's case (supra) has clearly laid down that the existence of the power in the Memorandum of Association to traffic in sub leases of lands though relevant would clearly be not decisive.
In our view, declaration of dividends and creation of a reserve fund are not features peculiar to a trading concern, for, it is equally conceivable that a non trading incorporated entity like an investment company can declare dividends and may also create a reserve fund and, therefore, these so called 'special features ' are not decisive of the question whether the incorporated entity is a trading concern or not.
In deciding that question what is of importance is how it has dealt with its assets or properties, whether as a land owner or a trader treating the assets or properties as its stock in trade and it is the manner of dealing with its assets, the real nature of the operations pertaining to them and the object with which such operations are done that assume importance.
This aspect has not been properly considered by the High Court.
Looking at the issue from the aforesaid angle there are several facts and circumstances emerging from the record which clearly show that the assessee has been dealing with its leasehold interest in Zamindari property as a land owner and not as a trader.
In the first, place, as has been rightly found by the Tribunal, the assessee was primarily incorporated for the purpose of preservation and management of the family estate of the lessors.
This is clear from cl. 3 (a) of the Memorandum of Association, Article 3 of the Articles of Association and the terms and conditions set forth in the Draft Agreement in accordance with which the Indenture dated July S, 1920 was executed.
That this was the primary object also becomes clear from the facts that a nominal quit rent of Rs. 100/ per year was payable by the assessee to the lessors for the lease of the Zamindari Estate obtained by it for 999 years and that alongwith the lease the assessee also obtained an assignment of moveables including Government promissory notes and jewellery belonging to the members of the lessors ' family; assignment of Government promissory notes and jewellery could only be for preservation and better management.
The High 721 Court felt what militated against the concept of the assessee being purely a family concern incorporated for the purpose of preservation and management of family assets for the maintenance of lessors ' family was that no provision has been made in its Memorandum of Association and Articles of Association conferring any right or share on new members that may be born in the Mitakshara Joint Family of the lessors but it is difficult to appreciate this view.
On the other hand, allotment of shares of the assessee to a few members of the lessors ' family and absence of a provision conferring any right or interest in the shares on the new arrivals in the family would be more conducive to preservation and proper management of the family assets.
Secondly, admittedly since 1920 up to date the assessee had not taken lease of any other property from any one else except the lease of the Zamindari Estate under the Indenture dated July S, 1920, a pointer to the fact that the assessee did not indulge in any business of acquiring other lands.
Thirdly, and this is vital the manner in which the assessee dealt with the leasehold interest in Zamindari Estate obtained under the Indenture dated July 5, 1920, over the years clearly shows that the transactions of granting sub leases of coal bearing lands and mines ere by way of management of the Estate as land owner.
The Tribunal in its earlier order dated June 7, 1960 for the assessment years 1946 47, 1947 48 and 1948 49 a copy of which had been made a part or the record of the case, has brought out certain relevant facts in that behalf.
The Tribunal has pointed out that during the first 11 years of its incorporation the assessee did not grant any sub lease of land to any one.
In 1339 B.S. the assessee received a sum of Rs. 7,500/ on account of salami or premia from Burrakur Coal Co. Ltd., a party who was already a lessee under the predecessors of the assessee in respect of coal mining right in mouza Bankola; in 1340 B.S. there was another lease granted to the said coal company where the premium was 2,893 7 0.
Thereafter for several years there was no lease granted to anybody.
In 1349 B.S. another lease was granted to the same Burrakur Coal., the premium being Rs. 2268 12 0.
In 1350 B.S. there was no lease granted to anybody.
Then between 1351 B.S. and 1354 B.S. several sub leases of different parcels of coal bearing lands and mines were granted by the assessee to well known companies for varying terms of long duration extending over 900 years for which the assessee received salami and premium but the fact that such sub leases were for long duration extending to over 900 years dearly shows that the same parcel of land had been dealt with only once for granting the sub leases.
In the three accounting years relet to the assessment years in question in the instant case also sub 722 leases had been granted of different parcels for long duration of over 900 years.
Such manner of dealing with lease hold interest by the assessee over the years clearly shows that these transaction of granting sub leases were in the nature of acts done in the management of the Estate.
The object in granting such sub leases was not to deal with the lease hold interest as a stock in trade or trading asset.
The dealings cannot be regarded as business transactions in real property.
Fourthly, though the Memorandum of Association empowered the assessee to do business in collieries, admittedly it did not in fact run or work any colliery on its own nor did any business as miners or coal dealers or coke manufacturers, mica dealers, etc.
Having regard to the above facts it seems to us clear that the receipts on account of salami, and premia received by the assessee during the accounting years in question, must be regarded as receipts of a capital nature.
So far as the amounts of compensation received by the assessee for compulsory acquisition or portions of land are concerned, the same would obviously partake the character of capital receipt inasmuch as compulsory acquisition could not be said to be a voluntary transaction or a voluntary deal entered into by the assessee with the Land Acquisition Collector and the compensation would be a substitute for the capital asset lost by the assessee.
In our view, therefore, the High Court had erred in answering the question in favour of the Revenue and the Tribunal 's view that the receipts in question were receipts of a capital nature and.
therefore, not includible in total income of the assessee, was correct.
In the results the appeals are allowed and the Revenue will pay the costs of the appeals to the assessee.
P.B.R. Appeal allowed.
| The assessee was incorporated for the purpose of taking over cf certain zamindari properties.
By an indenture the assessee took a lease of extensive zamindari properties for a term of 999 years and also took an assignment OF moveables.
In consideration of the lease and assignment, fully paid shares worth Rs. 4.08 lakhs were issued in the new company to the lessors.
The quit rent receivable by the lessors was a nominal amount of Rs. 100 per annum.
Clause (3) (a) of the Memorandum of Association showed that the assessee was primarily incorporated for the purpose of taking over the assets of the lessor 's family, while cl.
(b) empowered the assessee to purchase, take on lease or otherwise acquire and to traffic in land and generally deal in or traffic by way of sub lease with land and house property.
The assessee thereafter started giving out on sub lease various parcels of land to colliery companies for various terms of long duration.
Rejecting the assessee 's contention that the total amount of salami premia and compensation received by the assessee in three assessment years were of a capital nature, the Income Tax officer treated the amounts as income from business and taxed them.
The Appellate Assistant Commissioner as well as the Appellate Tribunal held in favour of the assessee on the ground that She transactions of granting sub leases were by way of management of the property by the assessee and receipts on account of salami premia and compensation on acquisition of land were of capital nature not liable to be taxed as income.
On reference the High Court was of the view that the assessee could not be regarded as a purely family concern incorporated for the preservation and management of the family assets but was a trading concern which dealt with the lease hold rights in the lands as trading assets by using them to earn income and, therefore, salami, premia and compensation were trading receipts.
Allowing the appeal, ^ HELD: 1.
Having regard to the nature of the various transactions it is clear that the receipts on account of salami etc., must be regarded as receipts of a capital nature.
Similarly the amounts of compensation received by the assessee for compulsory acquisitions of portions of land partake the character of capital receipt in as much as compulsory acquisition could not be said to be a voluntary transaction, and compensation received would be a substitute for the capital asset lost by the assessee.
[722D] 712 2. Ownership of property and leasing it out may be done as part of a business or it may be done as land owner.
Whether it is the one or the other must necessarily depend upon the object with which the act is done.
Where a company is formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, it can be said that the company has treated them as trader and not as land owner.
In deciding whether a company dealt with its properties as owner one must see not to the form which it gave to the transactions but to the substance of the matter.
[717 H] 3.
On the other hand incidental sale of uneconomic or inconvenient plots of land could not convert what was essentially an investment into a business transaction in real estate.
The purposes or objects for which a limited company was incorporated has no decisive bearing on the question whether the income is of capital nature or a revenue receipt.
The circumstance that a single plot of land was acquired and was thereafter sold as a whole or in plots is not decisive either.
Nor is profit motive in entering into a transaction decisive.
The question whether in purchasing and selling land the tax payer entered into a business activity has to be determined in the light of the facts and circumstances of each case.
[719 C D] P.K.N. Company vs Commissioner of Income Tax, 60 R 65.
Karapura Development Co. Ltd. vs Commissioner of Income Tax, West Bengal.
, discussed.
In the instant case the High Court had erroneously treated the assessee as a trading concern qua its lease hold interest in the zamindari estate without actually examining the real nature and object of the transactions of sub leases entered into by the assessee with several colliery companies.
In coming to this conclusion the High Court was influenced by three factors: (a) existence of power in the memorandum of association enabling the company to indulge in trafficking in land by way of sub leases of land; (b) declaration of dividend at a high rate and (c) creation of reserve fund by the assessee pursuant to certain articles of association.
The special features of declaration of dividend and creation of a reserve fund are not features peculiar to a trading concern because a non trading incorporated entity like an investment company can declare dividends and create a reserve fund.
These special features are not decisive of the question whether the incorporated entity is a trading concern or not.
What is of importance is how it has dealt with its assets or properties.
The assessee, which had been incorporated for the purpose of preservation and management of the family estate of the lessors had dealt with Its leasehold interest as a land owner and not as a trader.
This was clear from the Memorandum and Articles of Association and the draft agreement in accordance with which the indenture was executed.
Nominal rent of Rs. 100 p.a. and the assignment of moveables in favour of the assessee also point to the same conclusion.
Secondly, since its inception the assessee had not taken lease of any other property from anyone else.
Thirdly, the transaction of granting subleases of coal bearing and other lands were by way of management of the estate as land owner.
Fourthly, though the memorandum of association authorised the assessee to do business in collieries it did not work any colliery of its own not did it do any business as miners or coal dealers.
[720 F H] 713
|
No. 1 1 of 1952.
Appeal from the Judgment and Order dated January 18, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 25 of 1947.
O.T.G. Nambiar (Samarendra Nath Mukherjee, with him I for the appellant.
M. C. Setalvad, Attorney General for India, and C. K Daphtary, Solicitor General for India (G. N. Joshi and P.A. Mehta, with them) for the respondent.
December 22.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal from the judgment and order of the High Court of Judicature at Madras upon a reference made by the Income tax Appellate Tribunal under section 66(1) of the Indian Incometax Act, 1922.
The appellant company, the assessee, is incorporated in the United Kingdom under the English Companies Act and has it registered office in London.
It owns a spinning and weaving mill at Pondicherry in French India where it manufactures yarn and cloth.
Messrs. Best and Co. Ltd., Madras, have been appointed 525 the agents of the assessee under an agreement dated, the 11th July, 1939, and have been invested with full powers in connection with the business of the assessee in the matter of purchasing stock, signing bills and other negotiable instruments and receipts and settling, compounding or compromising any claim by or against the assessee.
The yarn and cotton manufactured in Pondicherry were sold mostly in British India and partly outside British India.
In the accounting year 1941 and 1942 all the contracts in respect of the sales in British India were entered into in British India and the deliveries were made and payments received in British India.
In regard to the sales outside British India also, payments in respect of such sales were received in Madras through the said agents.
The total sales of the goods in the assessment year 1942 43 were Rs. 69,69,145 and for the assessment year 1943 44 were Rs. 93,48,822.
The value of the sales in British India amounted to Rs. 57,07,431 for the assessment year 1942 43 and to Rs. 67,98,356 for the assessment year 1943 44.
The value of the total sales outside British India amounted to Rs. 12,61,714 for the year 1942 43 and Rs. 25,50,472 for the year 1943 44.
Out of the said amounts received in respect of the foreign sales the amounts received in British India were Rs. 9,62,434 for 1942 43 and Rs. 75,230 for 1943 44 and the amounts received outside British India were Rs. 2,99,280 for 1942 43 and Rs. 24,75,242 for 1943 44.
On these facts the Income tax Officer found that the assessee was resident in British India within the meaning of section 4 A (c) (b) of the Act by reason of its income arising in British India in the year of account exceeding its income arising without British India and on that basis he assessed the company for the two assessment years 1942 43 and 1943 44 as resident in British India on the profits and gains which had accrued to the company both within and without British India under section 4 (1) (b) (i) and (ii) of the Act.
The order of the Income tax Officer was confirmed by the Appellate Assistant Commissioner and, the order 526 of the Appellate Assistant Commissioner was confirmed by the Appellate Tribunal on the 15th May, 1946.
The assessee applied to the Appellate Tribunal under section 66 (1) of the Act for reference to the High Court of certain questions of law arising out of its order.
The, Commissioner of Income tax in his reply suggested the following two questions for reference (1)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that section 42 (1) and (3) of the Income tax Act has no application to income accruing or arising to the assessee company in British India or to income received by it in British India during the previous year?" " (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire income of the assessee company during the accounting year ended 31st December, 1941, was assessable under section 4(1) of the Incometax Act, and that no portion of such in come was entitled to be exempted under section 42(3) of the Act ? The Appellate Tribunal however referred the following questions to the High Court: " (1) Whether on the facts and in the circumstances of the case, section 42 (1) and (3) of the Act alone and not section 4 of the Act have application to the income accruing or arising to the assessee company in British India and to the income attributable to the sale proceeds received by it in British India during the previous year?" " (2) Whether on the facts and in the circumstances of this case the entire profits and gains arising to the assessee company in British India should be taken into account for the purpose of applying the test laid down under section 4 A (c) (b) or only that part of the profits which should be determined after the application of sectioin 42(3) of the Act as reasonably be attributable to that part of the operations carried on in British India ?" and " (3) Whether on the facts and in the circumstances ' of the case, the provisions.
of the Indian Income tax 527 Act contained in section 4 (1) with the subsections and section 4 A (c) (b) are not ultra vires in so far as they seek to assess foreign income of the company registered outside British India ?" The third question was concluded by the decision of their Lordships of the Privy Council in the case of Wallace Bros. & Co. Ltd. (1) and was therefore not argued before the High Court and the High Court answered it by stating that the provisions of section 4 (1) and section 4 A (c) (b) of the Act were not ultra vires the Indian Legislature.
The question No. (1) was further amended by agreement between the learned counsel for the revenue authority and the assessee and it was reframed as under: " (1) Whether on the facts and in the circumstances of the case section 42 (1) and (3) of the Act alone and not section 4 of the Act have application to the income accruing or arising by reason of sales in British India of manufactured goods where the manufacturing process took place outside British India?" The question (2) was retained in the form in which it had been referred by the Appellate Tribunal.
Both these questions were answered against the assessee by the High Court.
The assessee obtained the necessary certificate from the High Court for leave to appeal to this court and hence this appeal.
It may be observed that in reply to the. notice under sections 22(2) and 38 of the Act for the assessment year 1942 43 the agents of the assessee had on the 1st June, 1943, submitted a return under protest and had claimed that the income shown in the return should be apportioned under section 42(3) of the Act as between the operations carried on in British India and operations carried on outside British India.
They had further declared that the company was non resident in British India during the previous year for which the return was made.
In the statement enclosed therewith the total world income for the year ended 31st December, 1941, had been shown at Rs. 10,23,907.
Profit at 10 per cent.
on British Indian sales which (1) (1948) 76 I.A. 86.
528 aggregated to Rs. 57,07,431 was shown at Rs. 5,70,743 and after deduction of the proportionate expenses relating to sales in British India and sundry charges was put down at the net figure of Rs. 4,58,026 which was shown as the British Indian income.
It was thus contended that the income arising in British India in the year of account did not exceed its income arising without British India and that therefore the assessee was non resident in British India.
This calculation of profits at the rate of 10 per cent.
on British Indian sales did not make any allocation between manufacturing profits and merchanting profits and all the profits arising out of British Indian sales were shown in one lump sum.
The Income tax Officer took it as settled law that the profits arose in the country in which the sales took place and as the bulk of the sales had taken place in British India the bulk of the profits accrued or arose in British India.
He held that the provisions of section 42(3) would apply only where the profits arose outside British India but which by virtue of section 42(1) were deemed to accrue or arise in British India, and that it did not apply where the profits actually arose in British India by the sale of goods in British India.
He therefore held that the entire profits on "Sales made in British India actually arose in British India and were liable to tax under section 4 (1) (c).
On a calculation of the figures he came to the conclusion that the income of the assessee arising in British India in the accounting year exceeded its income arising without British India and that the assessee was resident in British India under section 4 A(c).
The assessee was also held ordinarily resident in British India under section 4 B(c) and he assessed the company accordingly on that basis.
The Appellate Assistant Commissioner also proceeded on that basis and confirmed the order of the Income tax Officer.
He was however further of the opinion that the entire profits were received where the sale pro ceeds were received and the assessee was therefore.
liable to tax under section 4(1)(a) also.
This conclusion was arrived at by him relying upon two decisions of their Lordships of the Privy Council: (1) 529 Pondicherry Railway Company V. Commissioner of Income tax, Madras(1) and Commissioner of Income tax, Madras vs Diwan Bahadur Mathias(2), in the first of which at page 369 Lord Macmillan observed as follows : Their Lordships accordingly are of the opinion that the income derived by the Pondicherry Railway Company from the payment made to them by the South Indian Railway Company is on the facts stated received in British India within the meaning of the Act by the Agent of the Pondicherry Railway Company there on their behalf " It is unnecessary to go on to consider whether the business is carried on in British India, which is the form which question (c) takes, for it is enough if the profits of a business carried on by the assessee are received in British India and the place where the business is carried on is not material.
" The Appellate Tribunal adverted to the fact that the whole income of the company, so far as 1942 43 is concerned was received in British India and so far as 1943 44 is concerned a major part of it in this way was received in British India, but did not base its decision on this aspect of the case.
It held that the scope of section 42(3) was circumscribed by confinement to those cases where profits were deemed to accrue or arise under section 42 alone and there was no warrant for extending the principle of apportionment to other cases where the profits and gains were made taxable under other sections of the Act.
It also held that section 42 dealt with " deemed " income whereas section 4 A (c) dealt with income that arose in British India.
Therefore, it could not be said that for the purpose of section 4 A (c) a proportionate "deemed " income should be taken as income that arose in British India.
When the application for reference was made to the Appellate Tribunal the Commissioner of Income tax in the question (1) which he suggested included within its ambit this aspect of the income having been received by the assessee in British India during the previous year.
But when the Appellate Tribunal refrained the question (1) it merely (1) (2) [1939] 7 I.T.R 48.
530 confined it to income accruing and arising to the assessee in British India and to the income attributable to the sale proceeds received by it in British India during the previous year.
The question (1) as finally framed by the High Court adverted to the income accruing or arising by reason of sales in British India on manufactured goods where manufacturing process took place outside British India and the aspect of the income having been received by the assessee in British India was absolutely ignored.
When the questions were originally referred to the High Court the position in law as then understood was that profits arose in the country in which the sales took place.
This position was however negatived, particularly in the case of manufacturing businesses, in a decision of this court.
in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1).
After hearing at considerable length the arguments urged before us on behalf of the assessee as well as the Income tax authorities we feel that in view of that decision the questions framed by the Tribunal and the High Court do not bring out the real point in controversy between the parties and it is agreed that the following two questions truly represent I and bring out the matter on which the parties are at issue.
We therefore resettle the questions originally framed and reframe them as below: (1) Whether in view of the finding of fact in this case that the entire profits were received in India and the company is liable to tax under section 4 (1) (a) of the Act, the provisions of section 42(1) have any relevancy ? (2) Can the income received in India be said to arise in India within the meaning of section 4 A(c)(b) of the Act ? If not, should only those profits determined under section 42(3) as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4 A (c) (b) ? (1) ; ; 18 I.T.R. 472.
531 The case is remanded to the High Court with the direction that it should give its opinion on, these two questions and submit the case to this court within three months.
section N. Mukherjee, for the appellant.
Porus A. Mehta, for the respondent.
December 8.
BHAGWATI J.
By our judgment dated the 22nd December, 1952, we reframed the questions as below: (1) Whether in view of the finding of fact, in this case that the entire profits were received in India and the company is liable to tax under section 4 (1) (a) of the Act, the provisions of section 42 (1) have any relevancy; (2) Can the income received in India be said to arise in India within the meaning of section 4A (c) (b) of the Act ? If not, should only those profits determined under section 42 (3) as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A (c) (b), and remanded the case to the High Court with the direction that it should give its opinion on these two questions.
The High Court has accordingly considered these two questions which were referred to it for opinion and has answered the question No. I in the negative and against the assessee and question No. 2 in the manner following, i.e., the income received in British India cannot be said to wholly arise in India within the meaning of section 4A (c) (b) of the Act and that there should be allocation of the income between the various profit producing operations of the business of the company in the light of the principle contained in the judgments in Ahmedbhai Umarbhai 's case(1) and in Anglo French Textile Company vs Income tax Commissioner(2) relating to the same assessee.
When the matter came up for further arguments before us on this opinion of the High Court,Shri section N. Mukherjee, the learned counsel for the appellant (1) (1950] 18 I.T.R. 472, (2) A.I.R, 70 532 did not contest the correctness of the answer to question No. I in view of the decision of this court in Turner Morrison & Co., Ltd. vs Commissioner of Incometax, West Bengal(1).
It may be noted that even before the High Court the learned counsel appearing for both the parties agreed that the matter was concluded by this decision against the assessee and question No. I was answered accordingly by the High Court.
In regard to the question No. 2 however Shri Porus A. Mehta, learned counsel for the respondent, contended before us that the matter was not concluded by the judgment of the majority in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1) and that the High Court was wrong in the answer which it gave to this question.
He contended that the decision in the case of Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay("), turned on the statutory provisions of the Excess Profits Tax Act read with section 42 (3) of the Indian Income tax Act which was expressly incorporated therein by virtue of section 21 of the Act and not on any general principles of apportion.
ment of income, profits or gains enunciated therein.
He took us in extensover the portions of the majority judgments and tried to demonstrate that the decision there was based purely on the applicability of section 42 (3) of the Indian Income tax Act, but for the applicability of which, according to his submission, there was no room for the apportionment of the income, profits or gains of the business, in the manner contended by the appellant.
We do not accept this contention of the respondent.
Section 4A(c) (b) is concerned with the income arising in the taxable territories in a particular year exceeding the income arising without the taxable territories in that year and the very words of the section are capable of being construed as also contemplating a state of affairs where there may have to be a division or apportionment between the income arising in the taxable territories and the income arising without the taxable territories (1) (2) ; 533 in the particular year.
The whole of the argument urged before us on behalf of the respondent was aimed at establishing that the scheme of the Indian Income tax Act was not to tax the source of income but the income, profits or gains from whatever source derived which were received or were deemed to be received in the taxable territories or which accrued or arose or were deemed to accrue or arise in the taxable territories during the particular year and that it was immaterial whether the income, profits or gains were derived from business operations carried on in the taxable territories or without the taxable territories.
This argument was possible when the decisions which held that income, profits or gains arose or accrued at the places where the sales took place were good law, because then there was no question of apportionment of income, profits or gains arising from the business operations carried on in the taxable territories 'and income, profits or gains arising from the business operations carried on without the taxable territories.
The moment however it was held, as it was done in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1), that though profits may not be realised until a manufactured article was sold profits were not wholly made by the act of sale and did not necessarily accrue at the place of sale and to the extent profits were attributable to the manufacturing operations profits accrued at the place where business operations were carried on, these decisions went by the board.
The question whether a particular part of the income, profits or gains arose or accrued within the taxable territories or without the taxable territories would have to be decided having regard to the general principles as to where the income, profits or gains could be said to arise or accrue.
Section 42 of the Indian Income tax Act has no relevance to the determination of this question because it is mainly concerned with income Which is deemed to have arisen, or accrued and not with income which actually arises or.
accrues within the taxable Territories.
Section 42 (3) also is a part of the ' scheme which is enacted in section 42 and cannot help (1) (1950)S.C.R. 335.
534 in the determination of the question before us As a matter of fact the use of the words "under section 42(3)" used in the question No. 2 as reframed by us was not appropriate and the only question which should have been sent to the High Court was "If not, should only those profits determined as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A (c) (b).
" If, therefore, section 42(3) has nothing to do with the determination of the income arising in the taxable territories as distinguished from the income arising without the taxable territories as understood in section 4A(c) (b) of the Act what we have got to consider is whether there is anything in the Act which prevents the application of the general principle of apportionment of income, profits or gains between those which are derived from business operations carried on within the taxable territories and those which are derived from business operations carried on without the taxable territories.
The contention which was advanced by Shri Porus A. Mehta on behalf of the respondents in this behalf, viz., that the word ,arise " was the only word used in section 4A (c) (b) and the word "accrue" did not find any place therein, that there was a distinction between the conception of arising and the conception of accrual and that the apportionment of the income was appropriate only in cases where the income arose and was inappropriate in cases where the income accrued, was sufficiently repelled in the judgment in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai &.Co., Bombay(1), where it was observed: " Whether the words 'derive ' and 'Produce ' are or are not synonymous with the words 'accrue ' or arise it can be said without hesitation that the words 'accrue ' or " arise ' though not defined in the Act are certainly synonymous and are used in the sense of 'bridging, in as a natural result '.
Strictly speaking, the word 'accrue ' is not synonymous with 'arise ', the former connoting idea of growth or accumulation and the (1) ; at p. 364.
535 latter of the growth or accumulation with a tangible shape so as to be receivable.
There is a distinction in the dictionary meaning of these words, but throughout the Act they seem to denote the same idea or ideas very similar and the difference only lies in this that one is more appropriate when applied to a particular case.
In the case of a composite business, i.e., in the case of a person who is carrying on a number of businesses, it is always difficult to decide as to the place of the accrual of profits and their apportionment inter se.
For instance, where a person carries on manufacture, sale, export and import, it is not possible to say that the place where the profits accrue to him is the place of sale.
The profits received relate firstly to his business as a manufacturer, secondly to his trading operations, and thirdly to his business of import and export.
Profit or loss has to be apportioned between these businesses in a businesslike manner and according to well established principles of accountancy.
In such cases it will be doing no violence to the meaning of the words accrue ' or 'arise ' if the profits attributable to the manufacturing business are said to arise or accrue at the place where the manufacture is being done and the profits which arise by reason of the sale are said to arise at the place where the sales are made and the profits in respect of the import and export business are said to arise at the place where the business is conducted.
This apportionment of profits between a number of businesses which are carried on by the same person at different places determines a so the place of the accrual of profits.
" The phraseology of section 42(3) of the Act 'also repels the contention in so far as the profits and gains of the business which are referred to therein and which are capable of apportionment as therein mentioned are deemed to accrue or arise in the taxable territories thus using the words "accrue" and "arise" as synonymous with each other.
The above passage is also sufficient in our opinion to establish that the apportionment of income, or gains between those arising from business opinion 536 carried on in the taxable territories and those arising from business operations carried on without the taxable territories is based not on the applicability of section 42(3) of the Act but on general principles of apportionment of income, profits or gains.
That was really the ratio of the judgment of the majority in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1), and any attempt to distinguish that 'ease from the present one by having resort to the statutory provisions of the Excess Profits Tax Act is really futile.
We are accordingly of the opinion that the answer given by the High Court to the question No. 2 also was correct.
The appeal before us will accordingly be allowed and the answers to the questions Nos. 1 and 2 refrained by us will be as under: Question No. 1 In the negative; and Question No. 2 The income received in British India cannot be said to wholly arise in India within the meaning of section 4A (c) (b) of the Act and that there should be allocation of the income between the various business operations of the assessee company demarcating the income arising in the taxable territories in the particular year from the income arising without the taxable territories in that year for the purposes of section 4A (c) (b) of the Act.
In so far as the appellant has failed in one part of the case and succeeded in another part we think that the proper order for cost should be that each party bears and pays his own costs of this appeal including ,the costs of the remand before the High Court.
Appeal allowed.
| The assessee, a company incorporated in the United Kingdom and having its registered office in London, manufactured yarn and cloth in their,mill at Pondicherry.
The assessee had appointed another company in Madras as their agents.
The manufactured goods were sold mostly in British India and partly outside British India.
All the contracts in respect of the sales in British India: were entered into in British India and deliveries were made and payments were received in British India.
In regard to sales outside British India also, payments were received in Madras 69 524 through the agents and it was found as a fact that, the entire profits were received in India: Held, (i) that in view of the finding of fact that the entire profits were received in India and the assessee was liable to tax under section 4 (1) (a), the provisions of section 42 (1) had no relevancy ; (ii)that the income received in British India could not be said to wholly arise in British India within the meaning of section 4A (c) (b) and that there should be allocation of the income between the various business operations of the assessee demarcating the income arising in the taxable territories in the particular year from the income arising without the taxable territories in that year for the purposes of section 4A (c) (b) of the Act.
Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co. ([1950] S.C.R. 335), Pondicherry Railway Company vs Commissioner of Income tax, Madras [1931] (58 I.A. 239), Turner Morrison and Co. vs Commissioner of Income tax [1951] (19 I.T.R. 451 ; , referred to.
|
iminal Appeal No. 53 of 1964.
143 Appeal by special leave from the judgment and order dated August 9, 1963 of the Bombay High Court (Nagpur Bench) in Criminal Revision Application No. 107 of 1963.
B. Sen, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant.
P. K. Chatterjee and B. R. G. K. Achar, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Ratan Lal appellant in this appeal is the pro prietor of a business in drugs styled "Anil Medical Stores" at Wani, District Yeotmal in the State of Maharashtra.
On September 14, 1960 the Station House Officer, Wani, raided the shop of the appellant and seized 12 bottles of an Ayurvedic preparation called Mahadrakshasva manufactured by the Brahma Aushadhalaya, Nagpur and 88 bottles of Dashmoolarishta manufactured by the Vedic Pharmaceutical Works, Nagpur.
At a trial held before the Magistrate, First Class, Kalapur, the appellant was convicted of the offence punishable under section 66(1)(b) of the Bombay Prohibition Act 25 of 1949, and was sentenced to suffer rigorous imprisonment for three months and to pay a fine of Rs. 500/ .
The order was confirmed in appeal by the Court of Session, Yeotmal.
The High Court of Bombay confirmed the conviction, but modified the sentence.
The appellant appeals to this Court, with special leave.
The following are the material facts found by the trial Court and confirmed by the Court of Appeal and the High Court.
Mahadrakshasava and Dashmoolarishta are Ayurvedic medicinal preparations containing alcohol, manufactured under licences granted under the Medicinal and Toilet Preparations (Excise Duties) Act 16 of 1955.
Mahadrakshasava attached from the shop of the appellant contained 52.3% alcohol v/v and Dashmoolarishta contained 54.5% alcohol v/v.
These preparations are manufactured by a process of distillation.
The appellant had purchased these preparations from a drug store in Nagpur called the Sharda Medical Stores who in their turn were supplied by the manufacturers the Brahma Aushadhalaya, Nagpur and the Vedic Pharmaceutical Works, Nagpur.
The Bombay Prohibition Act 25 of 1949 by section 66(1) (b) penalises contravention of the provisions of the Act, or of any rule, regulation, or order made, or of any licence, permit, pass or authorization issued thereunder by any person who consumes, uses, possesses or transports any intoxicant other than opium or hemp.
144 "Intoxicant" is defined by section 2 (22) as meaning "any liquor, into xicating drug, opium or any other substance, which the State Government may, by notification in the Official Gazette declare to be an intoxicant.
"Liquor" is defined in section 2(24) as including (a) spirits denatured spirits, wine, beer, toddy and all liquids consisting of or containing alcohol; (b) any other intoxicating substance which the State Government may, by notification in the Official Gazette, declare to be liquor for the purposes of the Act.
Section 12 of the Act, insofar as it is material, provides that no person shall import, export, transport or possess liquor.
But these prohibitions are subject to certain exceptions.
By section 11 not with.
Standing anything contained in the provisions contained in Ch.
III (which includes sections 11 to 24 A) it is lawful to import, export, transport, manufacture, sell, buy, possess, use or consume any intoxicant to the extent provided by the provisions of the Act or any rules, regulations or orders made or in accordance with the terms and conditions of a licence, permit, pass or authorization granted thereunder.
The prohibitions are also inapplicable in respect of certain preparations under section 24A which provides in so far as it is material "Nothing in this Chapter shall be deemed to apply to (1) Any toilet preparation containing alcohol which is unfit for use as intoxicating liquor; "(2) any medicinal preparation containing alcohol which is unfit for use as intoxicating liquor; (3) any antiseptic preparation or solution containg alcohol which is unfit for use as intoxicating liquor; (4) any flavouring extract, essence or syrup containing alcohol which is unfit for use as intoxicating liquor; Provided that such article corresponds with the description and limitations mentioned in section 59A :" Possession of a toilet, medicinal or antiseptic preparation, of flavouring article containing alcohol is therefore not an offence if it is unfit for use as an intoxicating liquor, and it corresponds with the description and limitations mentioned in section 59A.
The appellant did at the material time possess preparations which contained a large percentage of alcohol, and it is not the case of the appellant that he was protected by a licence, permit, 145 pass or authorization.
His case was that possession of the preparations by him was not in contravention of the Act, because the preparations were medicinal preparations containing alcohol which were unfit for use as intoxicating liquor within the meaning of section 24A of the Act.
This contention of the appellant has been uniformly rejected by all the Courts below.
The question which falls to be determined in this appeal is whether the preparations containing alcohol in respect of which the appellant is convicted were medicinal preparations which were unfit for use as intoxicating liquor.
That the preparations were medicinal according to the Ayurvedic system is not denied, and it is common ground that they contained alcohol.
Attention must therefore be directed to ascertain whether the preparations did correspond with the description and limitations mentioned in section 59A.
If they did not, exemption under section 24 A will be inoperative, even if they are medi cinal preparations.
In so far as it is material, section 59A which was added by Act 26 of 1952 at the relevant time provided : "(1) No manufacturer of any of the articles mentioned in section 24A shall sell, use or dispose of any liquor purchased or possessed for the purposes of such manufacture under the provisions of this Act otherwise than as an ingredient of the articles authorised to be manufactured therefrom.
No more alcohol shall be used in the manufacture of any of the articles mentioned in section 24A than the quantity necessary for extraction or solution of the elements contained therein and for the preservation of the articles : Provided that in the case of manufacture of any of the articles mentioned in section 24A in which the alcohol is generated by a process of fermentation the amount of such alcohol shall not exceed 12 per cent by volume.
(2) . . . . ." Sub section (1) directs the manufacturer not to use in the manufacture of any article mentioned in section 24A alcohol in excess of the quantity necessary for extraction or solution of the elements and for preservation of the article, and the proviso states that in the manufacture of articles in which alcohol is generated by a process of fermentation it shall not exceed 12 per cent by volume.
Therefore the quantity of alcohol in an article in which alcohol is added or produced by distillation is determined by what is necessary for extraction, or solution of the elements, and preservation of the article but in an article containing alcohol generated 146 by a process of fermentation the percentage of alcohol, it is directed, shall not exceed 12 per cent by volume.
The trial Court held that the offending articles were Ayurvedic preparations in which alcohol was generated by a process of fermentation and as alcohol exceeded 12 per cent by volume, the preparations did not correspond with the limitations prescribed by section 59A, and therefore the exemption prescribed by section 24A was inoperative.
_ The Court of Session and the High Court agreed with that view.
But it appears that in so holding, the Courts misconceived the evidence.
Articles containing alcohol may be prepared by a process of fermentation which generates alcohol or by a process of distillation or by addition of free alcohol.
The manufacturing processes which result in distillation of alcohol and generation of alcohol by fermentation are distinct, and there was on the record clear evidence that the offending preparations were manufactured by a process of distillation and were not preparations in which alcohol was generated by fermentation.
Palnitkar, Sub Inspector of Prohibition & Excise, said that Mahadrakshasava and Dashmoolarishta are distilled Ayurvedic products.
Apparently it was conceded on behalf of the State before the Court of session that the two preparation were Ayurvedic medicinal preparations which "contained alcohol produced by distillation", and before the High Court also the case was argued on that footing.
If the bottles of Mahadrakshasava and Dashmoolarishta attached from the shop of the appellant contained alcohol produced by distillation, the proviso to section 59A will have no application.
There is no evidence on the record to prove that the two preparations contained alcohol in excess of the quantity permissible under the first paragraph of section 59A.
It must be remembered that these preparation were manufactured within the State of Maharashtra by manufacturers licensed under the Medicinal and Toilet Preparations (Excise Duties) Act 16 of 1955 and were issued from a bonded warehouse.
This would justify the inference that they did correspond with the description and limitations mentioned in section 59A.
But it was urged for the State that a medicinal preparation which corresponds with the description and limitations under section 59A may still be a preparation which is fit to be used as intoxicating liquor.
A medicinal preparation which because of the high percentage of alcohol therein, even if taken in an ordinary or normal dose, may intoxicate a normal person would be a preparation fit to be used as an intoxicating liquor.
Where the preparation contains a small percentage of alcohol, but consumption of 147 large quantities may intoxicate, it would also be regarded as a preparation fit for use as intoxicating liquor, if such consumption is not likely to involve any deleterious effect or serious danger to health of the consumer.
Whether a preparation is fit to be used as intoxicating liquor would ordinarily depend upon evidence.
But the Legislature has by section 6A prescribed special rules of evidence in adjudging whether an article is unfit for use as intoxicating liquor.
Section 6A was added by Bombay 'Act 26 of 1952 after this Court declared in, The State of Bombay vs F. N. Balsara(1) amongst others, that cl.
(c) of section 12, insofar as it affected possession of medicinal and ' toilet preparations containing alcohol, as invalid.
As originally enacted section 6A, insofar as it is material, was in the following.
form "(1) For the purpose of determining whether (a) any medicinal or toilet preparation containing alcohol, or (b) any antiseptic preparation or solution containing alcohol, or (c) any flavoring extract, essence or syrup containing alcohol, is or is not an article unfit for use as intoxicating liquor,.
the State Government shall constitute a Board of Experts.
(2) (3) (4) (5) (6) It shall be the duty of the Board to advise the State Government on the question whether any article mentioned in sub section (1) containing alcohol is unfit for use as intoxicating liquor and on such other matters incidental to the said question as may be referred to it by the State Government.
On obtaining such advice the State Government shall determine whether any such article is fit or unfit for use as intoxicating liquor or not and such article shall be presumed accordingly to, (1) ; 148 be fit or unfit for use as intoxicating liquor, until the contrary is proved." This Court held in The State of Bombay (now Gujarat) vs Narandas Mangilal Agarwal & Another(1) that it was not obligatory upon the State to consult the Board of Experts constituted under section 6A before the State could establish in a prosecution for an offence under section 66(1) (b) that a medicinal preparation was unfit for use as intoxicating liquor.
Evidence that the preparation was unfit for use as intoxicating liquor can be adduced before the Court, and the prosecution need not rely upon section 6A(6) of the Act : in a prosecution for infringement of the prohibition contained in sections 12 and 13, the State could rely upon the presumption :after resorting to the machinery under section 6A(6), but there was no obligation to consult the Board under section 6A, nor was the consultation a condition 'precedent to the institution of proceeding for breach of the provisions of the Act.
In so holding, this Court disagreed with the view expressed by the Bombay High Court in D. K. Merchant, vs The State of Bombay(2) wherein the High Court had held that the prosecution for offence under sections 65 and 66 could not be maintained unless the State Government was satisfied after consulting the Board of Experts under section 6A that the article was fit to be used as intoxicating liquor.
The offence in Narandas Mangilal 's case(1) was committed in July 1955 and on the terms of sub section
(6) as it then stood it was open to the State in a prosecution for infringement of a prohibition contained in sections 12 and 13 to rely upon the presumption under section 6A or to establish that the medicinal preparation was fit for use as intoxicating liquor aliunde.
By Act 22 of 1960, which was brought into force on April 20, 1960, the Bombay Legislature amended, inter alia, sub section
(6) of section 6A, and incorporated sub section
(7) therein.
Sub sections (6) & (7) as amended and incorporated read as follows : "(6) It shall be the duty of the Board to advise the State Government on the question whether any article mentioned in sub section (1) is fit for use as intoxicating liquor and also on any matters incidental to the question, referred to it by the State Government.
On obtaining such advice, the State Government shall determine whether any such article is fit for use as intoxicating liquor, and upon determination of the State Government that it is so fit, such article shall, until the (1) [1962] Supp. 1 S.C.R. 15.
(2) 149 contrary is proved, be presumed to be fit for use as into xicating liquor.
(7) Until the State Government has determined as aforesaid any article mentioned in subsection (1) to be fit for use as intoxicating liquor, every such article shall be deemed to be unfit for such use.
" The scheme of section 6A has by the amending Act been completely altered.
The Legislature has prescribed by sub section
(7) that until the State Government has determined any article mentioned in sub section
(1) to be fit for use as intoxicating liquor, every such article, shall be deemed to be unfit for such use.
The Legislature has therefore, prescribed a fiction which continues to function till the State Government has determined, on the report of the Board of Experts, that any article mentioned in sub section
(1) is fit for use as intoxicating liquor.
By sub section
(6) as amended it is provided that after the State Government has obtained the advice of the Board of Experts, the State Government shall determine whether such article is fit for use as intoxicating liquor and upon such determination of the State Government that it is so fit, such article shall, until the contrary is proved, be presumed to be unfit for use as intoxicating liquor.
Under the amended section 6A there is only one mode of proof by the State that an article is fit for use as intoxicating liquor, and that is by obtaining the advice of the Board of Experts and recording its determination, that the article is fit for use as intoxicating liquor.
Until it is otherwise determined by the State, after obtaining the report of the Board of Experts, every article mentioned in sub section
(1) is to be deemed unfit for use as intoxicating liquor.
After it is determined as fit for use as intoxicating liquor, in a proceeding relating to the article it would under sub section
(6) be presumed, that it is fit for use as intoxicating liquor.
But the presumption is rebuttable.
In the present case the offence is alleged to have been com mitted in September 1960.
After consulting the Board of Ex perts the Government of Maharashtra issued a declaration on October 4, 1960, declaring that both the preparations Mahadrakshasava and Dashmoolarishta were medicines fit for use as intoxicating liquor.
Thereafter a police report was filed in the Court of the Magistrate, First Class, on June 2, 1962 charging the appellant with the offence under section 66(1)(b) of the Bombay Prohibition Act.
But on the date on which the medicinal preparations were attached, the statute had provided that they shall be deemed for the purpose of the Act as articles unfit for use as intoxicating liquor.
Possession of the medicinal preparations 150 which were unfit for use as intoxicating liquor was, at the date when they were attached, not an offence.
A subsequent declaration by the State that they were fit for use as intoxicating liquor, could not have any retrospective operation, and possession which was innocent could not, by subsequent act of the State, be declared as offending the statute.
It is unfortunate that the High Court lost sight of the change in the scheme of section 6A and followed the judgment of this Court in Narandas Mangilal 's case(1).
In Narandas Mangilal 's case at all material times when the question fell to be considered, the Court had to decide whether sub section
(6) of section 6A, as it then stood.
prescribed the only method of proof whether an offending medicinal preparation was unfit for use as intoxicating liquor, and this Court on the phraseology used by the Legislature came to the conclusion that it was not the only method of proof.
But the incor poration of sub section
(7) by the Legislature has altered the scheme of the Act.
Sub section (6) incorporated in its second part both before and after the amendment, a rule of evidence : but the rule in sub section
(7), that until a declaration is made to the contrary by the State Government under sub section
(6), every article mentioned in sub section
(1) shall be deemed unfit for use as intoxicating liquor, is not a rule of evidence.
It defines for the purpose of section 24A and related sections what an article unfit for use as intoxicating liquor is.
It is plain that in Narandas Mangilal 's case(1) the effect of sub section
(7) of section 6A did not fall to be considered.
The appellant was therefore wrongly convicted.
The appeal is allowed and the order of conviction and sentence are set aside.
The fine if paid will be refunded.
Appeal allowed.
(1) [1962] Supp. 1 S.C.R. 15.
| The appellant was convicted of the offence under section 66(1) (b) of the Bombay Prohibition Act, 1949, for being in possession on September 21, 1960 of bottles of two different Ayurvedic medicinal preparations con training 52.3% and 54.5% alcohol respectively.
The appellant 's case that possession of the preparations by him was not in contravention of the Act, because the preparations were medicinal preparations containing alcohol which were unfit for use as intoxicating liquor within the meaning of section 24A of the Act, was rejected.
The trial court held that the offending articles were Ayurvedic preparations in which alcohol was generated by a process of fermentation and as alcohol exceeded 12 per cent by volume, the preparations did not correspond with the limitations prescribed by the provision to section 59A, and therefore the exemption prescribed by section 24A was inoperative.
The Court of Sessions and the High Court agreed with that view.
It was also contended on behalf of the respondents that even if the two medicinal preparations corresponded with the description and limitations under section 59A, they were still preparations fit for use as intoxicating liquor and therefore outside the exemption in section 24A.
HELD: The appellant was wrongly convicted and his conviction must he set aside.
(i) There was clear evidence on the record that the offending preparations were not preparations in which alcohol was generated by fermentation.
The proviso to section 59A Would therefore have no application.
[146 E F] (ii) On the date on which the two medicinal preparations were attached in September 1960, by vitrue of sub section (7) of section 6A they were deemed for the purpose of the Act to be unfit for use as intoxicating liquor and their possession was; not an offence.
A subsequent declaration by the State under section 6A(6) in October, 1960, that they were fit for use as intoxicating liquor, could not have retrospective operation, and possession which was innocent could not, by subsequent act of the State, be declared as offending the statute.
[150 A] The State of Bombay vs F. N. Balsara, ; , referred to.
The State of Bombay vs Narandas Mangild Agarwal & Anr.
[1962] Sup. 1 S.C.R. 15, distinguished.
|
Appeal No. 205 of 1953.
Appeal from the Judgment and Order dated the 24th February, 1953, of the High Court of Judicature at Calcutta in Appeal from Original Order No. 19 of 1952, arising out of the Order dated the 23rd day of August, 1951, of the High Court of Calcutta in its Ordinary Original Civil Jurisdiction Matter No. 157 of 1951.
K. P. Khaitan, (section N. Mukherjea and Rajinder Narain, with him) for the appellant.
M. C. Setalvad, Attorney General for India, (A. N. Sen, V. section Sawhney and section P. Varma, with him) for the respondents.
November 1.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is directed against a judgment of an appellate bench of the Calcutta High Court, dated the 24th February, 1953, reversing, on appeal, the judgment and order of a single Judge sitting on the Original Side of that Court, passed on an application under section 34 of the .
The material facts are not in controversy and may be shortly stated as follows: On the 7th of July, 1950, the respondent, Moran and Company Limited, passed two Bought Notes to the appellant company, couched in identical terms, under which the appellant purchased 12,00,000 yards of hessian cloth, 6,00,000 yards under each contract, on certain terms and conditions stated therein.
The delivery was to be made every month from January, 1951, at the rate of 1,00,000 yards per month under 864 each of these notes and payments were to be made in cash 'on delivery, each delivery being treated as a separate and distinct contract.
The Bought Notes commenced thus: Dear Sirs, We have this day Bought by your order and on your account from our Principals.
" The particulars of the goods, the price, the time of delivery and other terms of the contract are then set out and amongst the terms is an arbitration clause worded as follows: " All matters, questions, disputes, differences and/ or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract, whether or not the obligations of either or both parties under this contract be subsisting at the time of such dispute and, whether or not this contract has been terminated or purported to be terminated or completed, shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted.
" The notes were signed by the respondent, Moran and Company, describing themselves as brokers.
It is admitted that the goods covered by the Bought Notes were delivered to the appellant in all the months from January to June, 1951, with the exception of the goods due to be delivered for the month of March, 1951.
The appellant required from the respondent delivery of goods in respect of the month of March but the latter informed the appellant, by a letter dated the 27th March, 1951, that its principals disowned a liability in this respect as there was default on the part of the appellant in not giving shipping instructions for the said goods within the time mentioned in the contracts.
The appellant denied any default on its part and did not also accept the position that the respondent had any principal, and on the 27th of April, 1951, it sent its bills to the respondent claiming Rs. 1,13,042 3 0 as damages for non delivery of the 865 goods.
As the respondent did not comply with this demand, the appellant contemplated referring the matter in dispute to the arbitration of the Bengal Chamber of Commerce as provided in the contracts and while it was preparing to take steps in that direction, the respondent, on the 11th of June, 1951, filed a suit against the appellant in the Original Side of the Calcutta High Court (being Suit No. 2516 of 1951,) and it is in respect of this suit that the application under section 34 of the has been made.
It was alleged in the plaint that the plaintiff acted merely as broker and in that capacity brought about the two contracts of sale and purchase evidenced by the two Bought Notes mentioned above, that the real seller was a firm known as Gowarchand Danchand, and that the plaintiff not being a party to the contract could not incur any liability under its terms.
There were prayers in the plaint for a declaration that the plaint.
off was not a party to the said contracts and, that it had no liability under the same.
There was a further prayer for an injunction restraining the respondent from, claiming any damages in respect of the said contracts The writ of summons was served on the appellant on the 23rd of June, 1951.
On the 19th July, 1951, it filed an application under section 34 of the praying that the proceedings in the suit may be stayed in order that the matter in dispute between the parties may be dealt with under the arbitration clause contained in the contracts.
The application was heard by Das Gupta J. who allowed the prayer of the applicant and stayed further proceedings in the suit.
In the opinion of the learned Judge the dispute in this case was not whether there was any contract entered into by and between the appellant and the respondent: but whether the respondent, who admittedly passed the two Bought Notes to the appellant, could be made liable under the contract by reason of the fact that it described itself as broker.
The answer to this question depended according to the learned Judge upon the interpretation of the contract itself and the dispute arising as.
it did out of or concerning or relating to the 866 contracts would come within the purview of the arbitration clause.
Against this judgment the respondent took an appeal to the Appellate Division of the High Court and the appeal was heard by a bench consisting of Chakravartti C.J. and Sarkar J.
By two separate judgments which concurred in the result, the Chief Justice and the other learned Judge allowed the appeal and vacated the order for stay.
It is against this judgment that the appellant has come to this Court on the strength of a certificate under article 133(1)(a) of the Constitution.
The short point for our consideration is, whether on the facts of this case, the appellant is entitled to an order under section 34 of the , staying the proceedings of the suit commenced by the respondent.
Section 34 of the is in these terms: " Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, 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.
" Thus in order that a stay may be granted under this section, it is necessary that the following conditions should be fulfilled: (1)The proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement; (2)the legal proceeding which is sought to be.
stayed must be in respect of a matter agreed to be referred 867 (3)the applicant for stay must be a party to the legal proceeding and he must have taken no step in the proceeding after appearance.
It is also necessary that he should satisfy the Court not only that he is but also was at the commencement of the proceedings ready and willing to do everything necessary for the proper conduct of the arbitration; and (4)the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement.
The third condition can be taken to have been fulfilled on the facts of the present case, and the fourth is one which is exclusively for the determination of the Court.
The controversy between the parties centres round the other two conditions, namely, conditions (1) and (2) ; and unless the applicant for stay succeeds in establishing that the respondent is a party to an arbitration agreement and that the subject matter of dispute in the suit is a matter coming within the scope of such agreement, it cannot possibly ask the Court to order a stay of the proceedings, under section 34 of the .
The learned Judges of the appellate bench of the High Court have taken the view that the only matter in dispute between the parties to the suit is whether the plaintiff was a party to the contract.
It was definitely alleged by the plaintiff that the contract was not between it and the appellant but was one between the appellant and a third party and since the arbitration agreement is contained in the contract, it is an agreement between those parties only, which could not bind or affect the plaintiff in any way.
The dispute, it is said, which is the subject matter of the suit does not arise under the contract and does not relate to it; it is outside the contract altogether and does not come within the scope of the arbitration agreement.
The decision in the appeal therefore rests entirely on the finding of the learned Judges that the matter in dispute between the parties to the suit does not come within the ambit of the arbitration clause.
In view of this decision the learned Judges did not consider it necessary to go into the first point as to whether in fact 868 there was a binding arbitration agreement between the parties to the suit.
The learned Chief Justice no doubt did in a manner consider that point also, but he refrained from pronouncing any decision upon it, being of opinion that a decision on this question which was the only issue in the suit itself might prejudice the parties and create a bar of res judicata against one or the other.
We think that on the facts of this case it was necessary for the learned Judges of the appellate bench to decide the question as to whether or not the plaintiff in the suit which the applicant wants to stay was a party to the arbitration agreement.
This would have a material bearing on the decision of the other question upon which the learned Judges rested their judgments.
The first and essential pre requisite to making an order of stay under section 34 of the is that there is a binding arbitration agreement between the parties to the suit which is sought to be stayed.
The question whether the dispute in the suit falls within the arbitration clause really pre supposes that there is such agreement and involves consideration of two matters, viz., (1) what is the dispute in the suit and (2) what disputes the arbitration clause covers?(1).
The contention raised by the plaintiff in the present suit is, that the contract was really between the appellant and another party and not between it and the appellant and consequently it was not bound by the contract and could not be made liable for any damages in terms thereof.
In substance therefore the controversy between the parties in the suit is whether the plaintiff did incur any liability in terms of the contracts evidenced by the two Bought Notes to which it was a signatory no matter in whatever capacity.
The question whether the plaintiff was a party to the agreement at all is undoubtedly one which cannot go before the arbitrators and with that question they cannot possibly deal.
But as Lord Porter pointed out in Heyman vs Darwins (2), "this does not mean that in every instance (1) Vide per Viscount Simon in Heyman vs Darwins, at 360.
(2) , 393.
869 in which it is claimed that the arbitrator has no juris diction the Court will refuse to stay an action.
If this were the case such a claim would always defeat an agreement to submit disputes to arbitration, at any rate until the question of jurisdiction had been decided.
The Court to which an application for stay is made is put in possession of the facts and arguments and must in such a case make up its mind whether the arbitrator has jurisdiction or not as best it can on the evidence before it.
Indeed, the application for stay gives an opportunity for putting these and other considerations before the court that it may determine whether the action shall be stayed or not.
" Section 34 of the as is well known is a virtual reproduction of section 4 of the English of 1889.
The observations quoted above were approved of by Mr. Justice section R. Das in the case of Khusiram V. Hanutmal (1) and it was held by the learned Judge that where on an application made under section 34 of the for stay of a suit, an issue is raised as to the formation, existence or validity of the con.
tract containing the arbitration clause, the Court is not bound to refuse a stay but may in its discretion, on the application for stay, decide the issue as to the existence or validity of the arbitration agreement even though it may involve incidentally a decision as to the validity or existence of the parent contract.
We are in entire agreement with the view enunciated above.
As we have said already, it is incumbent upon the Court when invited to stay a suit under section 34 of the to decide first of all whether there is a binding agreement for arbitration between the parties to the suit.
So far as the present case is concerned if it is held that the arbitration agreement and the contract containing it were between the parties to the suit, the dispute in the present suit would be one relating to the rights and liabilities of the parties on the basis of the contract itself and would come within the purview of the arbitration clause worded as it is in the widest of terms, in accordance with the principle enunciated by this Court in A. M. Nair and (1) at 518.
870 Company vs Gordhandass (1).
If on the other hand it is held that the plaintiff was not a party to the agreement, the application for stay must necessarily be dismissed.
The appellate Judges of the High Court in our opinion held rightly that the decision in A. M. Mair and Company vs Gordhandass (1) was not in any sense conclusive in the present case on the question of the dispute in the suit being included in the arbitration agreement.
The report shows that the dispute in that case was whether the appellants had made the contract in their own right as principals or on behalf of the Bengal Jute Mill Company as agents of the latter.
The decision of this question was held to turn upon a true construction of the contract and consequently it was a dispute under or arising out of or concerning the contract.
The judgment proceeds on the footing that there was in fact a contract between the parties and the only dispute was in which character they were parties to it, the respondents contending that the appellants were not bound as principals while the latter said that they were.
Mr. Justice Fazl Ali in delivering the judgment pointed out that the error into which the learned Judges of the appellate bench of the High Court appeared to have fallen was their regarding the dispute raised by the respondent in respect of the position of the appellants under the contract as having the same consequence as a dispute as to the contract never having been entered into.
In this case it is certainly not admitted that the respondent was a party to the contract.
In fact that is the subject matter of controversy in the suit itself.
But, as has been said already, the question having been raised , in this application, under section 34 of the , the Court has undoubted jurisdiction to decide it for the purpose of finding as to whether or not there is a binding arbitration agreement between the, parties to the suit.
It has been said by Chakravartti C.J. and in our opinion rightly, that if the person whose concern with the agreement is in question is a signatory to,the contract and formally a (1) ; 871 contracting party, that will be sufficient to enable the Court to hold for purposes of section 34 that he is a party to the agreement.
It was the contention of the respondent in the Court below that this test was not fulfilled in the present case.
The point has been canvassed before us also by Mr. Sen and it has been argued on the authority of several decided cases that in cases of this description the Bought Note is a mere intimation to the buyer, that the orders of the latter have been carried out and purchases have been made from other persons and not from them.
The writer does not thereby become a party to the contract of purchase and sale even as an agent.
He remains a mere broker or intermediary and the provision of section 230(2) of the Contract Act 'Cannot be invoked against him.
Mr. Khaitan on the other hand argues that the English law being quite different from the Indian law regarding the liability of an agent contracting on behalf of an undisclosed principal, the English authorities are no guide to a solution of the problem.
It is said that the case of Patiram Banerjee vs Kanknarrah Co., Ltd.(1), upon which the respondent relies, was wrongly decided being based upon English authorities which have no application to India.
The respondent here, it is pointed out, signed an elaborate document setting out in full every particular of the contract entered into and it is impossible to say that he was not an agent executing a contract on behalf of another whose identity he did not disclose but was a mere intermediary conveying an information to the buyer.
In our opinion, the point is not free from doubt and requires careful consideration and as it was not decided by the learned Judges of the High Court and we have not the advantage of having their views upon it, the proper course for us to follow would be to send the case back for a hearing of and decision on this point.
We, therefore, allow the appeal and set aside the judgments of both the Courts below.
The matter will go back to the appellate bench of the Calcutta High Court which will decide as an issue in the proceeding under section 34 of the the question whether the respondent was or was not a party (1) Cal.
I050. 872 to the arbitration agreement.
If the Court is of opinion that the respondent was in fact a party, the suit shall be stayed and the appellant would be allowed to, proceed by way of arbitration in accordance with the arbitration clause.
If on the other hand the finding is adverse to the appellant, the application will be dismissed.
The appellant will have its costs of this appeal.
Further costs between the parties will abide the result.
Appeal allowed.
| Held, that in order that a stay may be granted under section 34 of the Indian , it is necessary that the following conditions should be fulfilled: (1) The proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement; (2) the legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred ; (3) the applicant for stay must be a party to the legal proceeding and he must have taken no step in the proceeding after appearance.
It is also necessary that he should satisfy the court not only that he is, but also was at the commencement of the proceedings, ready and willing to do everything necessary for the proper conduct of the arbitration ; and (4) the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement.
The first and essential pre requisite to making an order of stay under a. 34 of the is that there is a binding arbitration agreement between the parties to the suit which is sought to be stayed.
The question whether the dispute in the suit falls within the arbitration clause really pre supposes that there is such agreement and involves consideration of two matters, viz., (1) what is the dispute in the suit and (2) what disputes the arbitration clause covers.
It is incumbent upon the Court, when invited to stay a suit under section 34 of the Indian , to decide first of all whether there is a binding agreement for arbitration between the parties.
If, in the present case, it is held that the arbitration agreement and the contract containing it were between the parties to the suit, the dispute in the present suit would be one relating to the rights and liabilities of the parties on the basis of the contract itself and would come within the purview of the arbitration clause 863 worded as it is in the widest of terms.
If, on the other hand, it is held that the plaintiff was not a party to the agreement, the application for stay must necessarily be dismissed.
Case sent back for the decision of the question whether the respondent was or was not a party to the arbitration agreement.
Heyman vs Darwins ([1942] A.C. 356), Khusiram vs Hanutmal ((1948) , A. M. Mair and Companay vs Gordhandas ([1960] S.C.R. 792) and Patiram Y. Kankarah Company ((1915) I.L.R. referred to.
|
Appeal No. 5899 of 1983.
From the Judgment and Order dated 13.4.83 of the Bombay High Court in S.A. No. 46 of 1983.
V.A. Bobde and A.K. Sanghi for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The defendant in a suit for eviction is the appellant before this court.
The suit plot was let out to the appellant as a monthly tenant for an automobile garage.
The plaintiff respondent (hereinafter referred to as "the respondent") issued a notice on 10.7.1975 determining 170 the lease in favour of the appellant with effect from 31.7.1975.
Later the suit in question was filed.
As the suit premises had not been let out for residential purposes, it was an admitted position that the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949 was not applicable.
The Trial Court dismissed the said suit on a finding that as the appellant was using the suit premises for manufacturing purposes, a six months ' notice was required before the lease could be determined and as the notice issued to the appellant under section 106 of the Transfer of Property Act (hereinafter referred as "the Act") had purported to deter mine the tenancy with 15 days ' notice, the suit in question could not have been filed.
On appeal being filed on behalf of the respondent, the Assistant Judge came to the conclusion that the premises in question had not been let out for any manufacturing purpose but for a motor workshop and as such the notice under section 106 of the Act was valid and the respondent was entitled to the possession of the plot in dispute.
The second appeal filed on behalf of the appellant was dismissed in limine by the High Court saying that no substantial question of law was involved.
Before this Court the finding recorded by the court of appeal below and affirmed by the High Court that the respondent was entitled to a decree for possession and the appellant was liable to be evicted was not questioned.
A new stand was taken on behalf of the appellant, that in view of the subsequent events the aforesaid decree of eviction passed against the appellant cannot be given effect to.
It was pointed out that by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989 a new clause 13A has been introduced in the said Order.
The new clause 13A is as follows: "13 A. No decree for eviction shall be passed in a suit or proceeding filed and pending against the tenant in any court or before any Authority unless the landlord produces a written permission of the Controller as re quired by sub clause (1) of clause 13.
" Leave to appeal was granted by this Court on 1st August, 1983 and clause 13A has been introduced in the year 1989 during the pendency of the present appeal.
By that very amending Order the definition of "premises" given in the original Order has also been amended and the said 171 definition after amendment includes not only building but even "land not being used for agricultural purposes".
if the definition of the "Premises", which has been amended, had been in force on the date of the filing of the suit, then the respondent had to pursue the procedure prescribed for eviction in accordance with the provisions of the Order aforesaid instead of filing a suit after service of notice under section 106 of the Act.
There is no dispute that the amendment has not been introduced with retrospective effect and it is only prospective in nature.
As the suit premises is only land and not a building when the suit was filed steps for eviction of the appellant could not have been taken in accordance with the provisions of the Order aforesaid because then those provisions were not applicable.
But the stand of the appellant is that although clause 13A has been introduced not with retrospective effect still it shall be applicable to proceedings pending before any Court including this Court and in view of the bar imposed by said clause 13A, no decree for eviction can be passed by this Court in the present appeal against the appellant unless the respondent landlord produces a written permission of the Controller as required by sub clause (1) of clause 13 of the Order.
Reliance was placed on the case of H. Shiva Rao vs Cecilia Pereira, , wherein it was pointed out by this court : "It is well settled legal principle that Rent Control legislations being beneficial to the tenant have to be given a liberal interpretation.
While ordinarily substantive rights should not be held to be taken away except by express provision or clear implication, in the case of Rent Control Act, it being a beneficial legislation the provision which confers immunity to the tenant against eviction by the landlord though prospective in form operates to take away the right vested in the landlord by a decree of a court which has become final, unless there is express provision or clear implication to the contrary.
" It appears that in the aforesaid case the judgment was passed for possession of the premises in question on August 27, 1970.
Thereafter execution proceedings were initiated.
During the pendency of the execution proceedings, the village in which the suit premises was situated was included within the Mangalore Municipality by amendment of the Karnataka Rent Control After issuance of the notification the provisions of the aforesaid Rent Control Act became applicable even to the suit premises during the pendency of the execution.
An objection was taken on behalf of the tenant that in view of sub section (1) of section 21 of the Act aforesaid, the decree passed in the connected suit was not executable.
Sub section (1) of section 21 provided: "Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or other authority in favour of the landlord against the tenant.
" So far the aforesaid case is concerned, once the provisions of the Karnataka Rent Control Act became applicable during the pendency of the execution proceedings, the bar imposed on the Court from passing an order for recovery of possession of any premises in favour of the landlord became applicable.
But clause 13A, with which we are concerned, is only in respect of passing a decree for eviction and "not an, order for recovery of the possession of any premises".
If even in clause 13A a bar had been placed in respect of recovery of possession of any premises, then there was no difficulty in accepting the contention raised on behalf of the appellant and holding that although there is a decree for eviction in favour of the respondent, but as in the meantime a bar has been placed on recovery of the possession of the premises the decree became unexecutable.
Reference was also made to the case of M/s. East India Corporation Ltd vs Shree Meenakshi Mills Ltd., JT It will appear that when the suit in question had been filed or even when the leave had been granted by this Court, the building in question did not come within the purview of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, in view of an exclusionary provision contained in clause (ii) of section 30.
During the pendency of appeal before this Court clause (ii) of section 30 was struck down by this Court in another appeal pending as being violative of Article 14 of the Constitution.
The result whereof was that provisions of the aforesaid Act became applicable.
In view of the subsequent events, it was urged in the aforesaid case that section 10 of that Act became applicable as well.
Section 10 provided : "S.10.
Eviction of tenants. (1) A tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of this section or sections 14 to 16: In view of the bar placed by section 10 aforesaid on the eviction of a tenant whether in execution of a decree or otherwise except in accordance with the provisions of section 10 or sections 14 to 16 which had become applicable in view of striking down of clause (ii) of section 30, the decrees for eviction passed by courts below were set aside.
This case is clearly distinguishable because the bar had been placed in respect of eviction of the tenant whether in execution of a decree or otherwise and this Court while exercising jurisdiction under Article 136 of the Constitu tion could have taken note of that bar for purpose of setting aside the decree because in view of the subsequent events the decree passed in the suit became unexecutable in absence of compliance of section 10 or sections 14 to 16 of the Act.
Here as the bar is on the part of the Court from passing a decree for eviction, it has to be examined as to whether while affirming the decree for eviction passed by the High Court, it shall be deemed that a fresh decree for eviction shall be deemed to have been passed by this Court.
It was submitted that even if it is held that bar under clause 13A is only on respect of passing of the decree as appeal before this Court on basis of the leave granted under Article 136 of the Constitution is a continuation of the suit/proceeding, while dismissing the said appeal, it shall be deemed that this Court has passed a decree for eviction which in view of clause 13A is barred and the said bar is applicable even on this Court.
In this connection reference was made to the judgments of this Court in the cases of Amarjit Kaur vs Pritam Singh, ; , and Sadhu Singh vs Sharan Dev, AIR 1980 SC 1654.
In the case of Amarjit Kaur vs Pritam Singh (supra) the suit for pre emption in question had been decreed by the Trial Court.
The appeal preferred by the vendee was dismissed.
While the second appeal was pending before the High Court, the Punjab Pre emption (Repeal) Act, 174 1973 came into force.
In view of section 3 of the said Act, the High Court allowed the appeal and dismissed the suit.
Section 3 of that Act provided: "Bar to pass decree in suit for pre emption.
On and from the date of commencement of the Punjab Pre emption (Repeal) Act, 1973, no court shall pass a decree in any suit for pre emption.
" In view of the fact that aforesaid section 3 said in clear and unambiguous term that no court shall pass a decree in any suit for pre emption after coming into force of the Act, the High Court was of the view that said bar applied even.
to the High Court, while confirming the decree for pre emp tion as passed by the Trial Court because it amounted to passing a decree in a suit for pre emption.
This Court said : "As an appeal is a re hearing, it would follow that if the High Court were to dismiss the appeal, it would be passing a decree in a suit for pre emption.
Therefore, the only course open to the High Court was to allow the appeal and that is what the High Court has done.
In other words, if the High Court were to confirm the decree allowing the suit for pre emption, it would be passing a decree in a suit for pre emption, for, when the appellate court confirms a decree, it passes a decree of its own, and therefore, the High Court was right in allowing the appeal.
" Again in the case of Sandhu Singh vs Dharam Dev, (supra) the same section 3 of the Punjab Pre emption (Repeal) Act, 1973, came up for consideration and this Court held: "The section is plain and its meaning unambiguous that there is a statutory mandate against passing a decree for enforcement of a right of pre emption in the State of Punjab.
The only point here is as to whether a decree already passed by the trial court, challenged in appeal after the Act was passed and affirmed on appeal would fall within the mischief of section 3 while the case pends in the High Court.
We think that S.3 interdicts the passing of a decree even in appeal.
For one thing a decree challenged in appeal is reopended and the appellants ' hearing is a 175 rehearing of the whole subject matter and when a decree is passed in appeal the first decree merges in the appellate decree and it comes within the scope of section 3.
" From the facts of the aforesaid case it shall appear that even in this case section 3 of the Punjab Pre emption (Repeal) Act had come into force while appeal was pending in the High Court and the High Court had affirmed the decree of the Trial Court without taking note of the bar imposed by section 3 aforesaid.
This Court said that section 3 interdicted the passing of a decree even in appeal because the decree which had been challenged in appeal had reopened the hearing of the whole subject matter and even while affirming the said decree it shall be deemed that appellate court had passed a decree for pre emption which was not permissible in view of the bar placed by section 3 of the Act in question.
In the aforesaid cases section 3 of the Punjab Pre emption (Repeal) Act had come into force while the appeals were pending in the High Court and effect of section 3 of that Act was considered in connection with the pendency of the appeals before the High Court and not before this Court.
Can it be said that when a special leave is granted under Article 136 of the Constitution by this court, against the judgment of the High Court it is to be treated at par with an appeal entertained by the High Court against the judgment of a court subordinate to the High Court ? Whether by granting leave to appeal, the decree of the High Court is reopened "for rehearing" of the whole subject matter ? Whether on the same analogy when an appeal is dismissed by this Court, the decree of the High Court merges in the decree of this Court and amounts to passing a decree in the connected suit for eviction by this Court ? Article 136(1) of the Constitution confers on this court overriding and extensive powers of granting special leave to appeal.
Article 136 does not confer a right to appeal, it confers a right to apply for special leave to appeal which is in the discretion of this Court.
The discretionary power under Article 136 cannot be construed as to confer a right of appeal where none exist.
According to us, although the power under Article 136(1) is unfettered but it cannot be held that after having entertained a special leave petition against any final or interlocutory order, this Court converts itself into a court of appeal for the hearing of the dispute involved and as 76 such when the appeal is dismissed the decree passed by the High Court merges into the decree of this Court and in that situation amounts to passing a decree for eviction.
This aspect has been considered by this Court in the case of Gyan Chand vs Kunjbeharilal, ; , in connection with Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
Section 13A as amended by Rajasthan Ordinance 26 of 1975 extended the opportunity of paying arrears of rent by the tenant facing eviction.
Benefit was made available in pending suits, appeals therefrom and applications for revision pending on the date of commencement of the Ordinance.
This Court examined whether that benefit of section 13A can be availed by the tenant while the appeal was pending before this Court.
The Ordinance aforesaid had come into force after the special leave petition had been filed before this Court.
The appellant submitted that on basis of the leave granted a proceeding was pending before this Court within the meaning of clauses (a) and (b) of section 13A aforesaid and as such he was entitled to the benefit of section 13A which had come into force during the pendency of the proceeding/appeal before this Court.
Chandrachud, J. (as he then was) speaking on behalf of the Court said : "With regard to the first submission it may be pointed out that an application for special leave under Article 136 of the Constitution against a judgment or an order cannot be equated with the ordinary remedy of appeal, as of right, under any provisions of law.
It is an extraordinary right conferred under the Constitution, within the discretion of this Court, and such an application for special leave does not come within the contemplation of appeal pending before the Court under Section 13A(a).
It is true that the word "proceeding" which appears in Section 13A(a) and (b) means suit, appeal or application for revision according to the Explanation appended to Section 13A.
Therefore, in order to attract Section 13A(a), a suit, appeal or application for revision must be pending on the date of commencement of the Ordinance 26 of 1975.
In view of the connotation of the word "proceeding" as given under the Explanation to Section 13A it is imper 177 missible to extend the meaning of the word "proceeding" to include an application for special leave under Article 136 of the Constitution.
The collocation of the words, "suit, appeal or application for revision" in the Explanation to denote "proceeding" would go to show that suits, regular appeals therefrom, as provided under the ordinary law and applications for revision alone are intended.
It is inconceivable that if the legislature had intended to include within the ambit of "proceeding" an application for special leave under Article 136 of the Constitution it would have omitted to mention it in express terms.
" The bar placed by clause 13A of the Order in question shall be applicable only to suit or proceeding which was pending in any court under provisions of any special Act or under the provision of Code of Civil Procedure.
as the case may be.
It shall not become applicable to a special leave petition pending or an appeal registered before this Court on basis of leave granted under Article 136 of the Constitution.
This Court while exercising its discretionary power under Article 136 of the Constitution even while dismissing the appeal shall not be deemed to have passed any decree for eviction.
The matter would have been different if clause 13A instead of only imposing a bar on passing a decree for eviction had also prescribed a bar on passing any order for recovery of possession of any premises or on initiation of execution proceedings on basis of any decree passed earlier.
In that event, this Court could have taken not of subsequent change in the law and in exercise of its discretionary power could have passed an order directing the respondent not to recover possession of the premises on basis of the decree for eviction passed in his favour or to pursue the execution proceedings without complying with the requirement of clause 13A.
We accordingly dismiss the appeal.
But, in the circumstances of the case, there shall be no orders as to costs.
Before we part with this appeal, we any mention that during the pendency of the present appeal it was brought to our notice that amended definition of "premises" and clause 13A which had been inserted by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989, have been struck down by a Division Bench of Bombay High Court on 23.6.1992.
But the counsel neither produced a copy of the said 178 judgment nor could inform this Court whether any special leave to appeal against the said judgment is pending before this Court.
As such, we have considered the effect of clause 13A of the Order, so far the present appeal is concerned.
N.V.K. Appeal dismissed.
| The suit plot was let out to the appellant as a monthly tenant for an automobile garage.
The respondent plaintiff issued a notice on 10th July, 1975 determining the lease in favour of the appellant with effect from 31st July, 1975, and filed a suit for eviction.
The trial Court dismissed the said suit on the finding that as the appellant was using the suit premises for manufacturing purposes, a six months ' notice was required before the lease could be determined, and as the notice issued to the defendant appellant under section 106 of the Transfer of Property Act had purported to determine the tenancy with 15 days ' notice, the suit in question could not have been riled.
On appeal by the respondent, the Assistant Judge came to the conclusion that the premises in question had not been let out for any manufacturing purpose but for a motor workshop and as such the notice under section 106 of the Act was valid, and the respondent was entitled to the possession of the plot in dispute, and passed an order for possession.
The second appeal filed on behalf of the appellant was dismissed in limine by the High Court saying that no substantial question of law was involved.
In the appeal to this Court, the finding recorded by the Court of Appeal below and affirmed by the High Court that the respondent was entitled to a decree for possession, and that the appellant was liable to be 168 evicted was not questioned.
However, a new stand was taken on behalf of the appellant that in view of the subsequent events the decree of eviction passed against the appellant could not be given effect to.
It was submitted that by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989 a new clause 13A has been introduced and that was during the pendency of the present appeal, and that though clause 13 A had been introduced not with retrospective effect still it shall be applicable to proceedings pending before any Court including this court and in view of the bar imposed by the said clause 13 A no decree for eviction could be passed by this court in the present appeal against the appellant unless the respondent landlord produces a written permission of the Controller as required by sub clause (1) of Clause 13 of the Order.
Dismissing the appeal, this Court, HELD: 1. Article 136(1) of the Constitution confers on this Court overriding and extensive powers of granting special leave to appeal.
Article 136 does not confer a right to appeal which is in the discretion of this Court.
The discretionary power under Article 136 cannot be construed as to confer a right of appeal where none exist.
Although the power under Article 136(1) is unfettered, it cannot be held that after having entertained a special leave petition against any final or interlocutory order, this court converts itself into a court of appeal for the hearing of the dispute involved and as such when the appeal is dismissed the decree passed by the High Court merges into the decree of this court, and in that situation amounts to passing a decree for eviction.
[175G H,176A] Gyan Chand vs Kunjbeharilal, ; , referred to.
[176B] 2.
The bar placed by clause 13 A of the Order shall be applicable only to a suit or proceeding which was pending in any court under provisions of any special Act or under the provision of the Code of Civil Procedure, as the case may be.
It shall not become applicable to a special leave petition pending or an appeal registered before this court on the basis of leave granted under Article 136 of the Constitution.
This Court while exercising its discretionary power under Article 136 of the Constitution even while dismissing the appeal shall not be deemed to have passed any decree for eviction.
[177C D] 3.
The matter would have been different if clause 13 A instead of only 169 imposing a bar on passing a decree for eviction had also prescribed a bar on passing any order for recovery of possession of any premises or on initiation of execution proceedings on basis of any decree passed earlier.
In that event, this Court could have taken note of subsequent change in the law and in exercise of its discretionary power could have passed an order directing the respondent not to recover possession of the premises on the basis of the decree for eviction passed in his favour or to pursue the execution proceedings without complying with the requirement of clause 13 A. [177E F] H. Shiva Rao vs Cecilia Pereira, ; M/s East India Corporation Ltd. vs Shree Meenakshi Mills Ltd., JT ; Amarjit Kaur vs Pritam Singh, ; and Sadhu Singhi vs Dharam Dev.
AIR 1980 SC 1654, referred to.
[172F, 173G] (During the hearing it was brought to the notice of the Court, that the amended definition of 'Premises ' and clause 13 A which had been inserted by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989, have been struck down by a Division Bench of the Bombay High Court on 23.6.1992.
But the Counsel neither produced a copy of the said judgment, nor could inform whether any special leave to appeal against the said judgment was pending before this Court.
As such, the effect of clause 13 A of the Order, has been considered, so far as the present appeal was concerned.) [177H, 178A]
|
Civil Appeal No. 1095 of 1970.
and 1677 of 1973.
From the Judgment and Order dated 26/27 9 1968 of the Gujarat High Court in Estate Duty Reference No. 3/67.
S.C. Manchanda and R.N. Sachthey, for the Appellant (In CA 1095/70).
K.B. Kazi and 1.
N. Shroff, for the Respondents in CA 1095/70.
S.T. Desai and J. Ramamurthi, for the Intervener.
S.T. Desai and J. Ramamurthi, for the Appellants in CA 1677/73.
S.P. Nayar, for the Respondent in CA 1677/73.
73 KRISHNA IYER, J. Is it permissible for judges to specu late on the philosophical edge of a human problem hidden by the litigative screen before settling down to examine its forensic facet ? If it is, we may make an observation about the question posed in this case without pejorative impli cations.
For many men in advancing age arrives a stage in life when to be or not to be stampedes them into doing things 11 dubious before God and evasive before Caesar and we have a hunch both the appeals before us smack of such a disposition as will be evident when the narration of facts and discus sion of law unfold the story.
A brief statement of the circumstances leading to the single critical legal issue, proliferating into a plurality of points, may now be made.
We begin with the facts in the Gujarat Appeal [Kantilal Trikamlal(1)] since the Madras Appeal [Ranganayaki Ammal(2)] raises virtually the same question, is plainer on the facts and may conveniently be narrated immediately after.
To appreciate the complex of facts we choose to enunciate the principal proposition of law canvassed before us by the Revenue in the two appeals.
Does a relinquishment by a decedent of a slice of a share or a partition of joint property in such manner that he takes less than his due effected within two years of his death with a view to relieve himself of a part of his wealth and pro tanto to benefit the accountable person, a near relation have to suffer estate duty under the (for brevity, the Act) ? One Trikamlal Vadilal (hereinafter referred to as the deceased) and his son Kantilal (referred to later as the accountable person) constituted a Hindu undivided family.
They continued as members of a joint and undivided Hindu family until November 16, 1953 when an instrument styled 'release deed ' was executed by and between the deceased and Kantilal.
Considerable controversy between the parties turns on the interpretation of this instrument and it will therefore be necessary for us to refer to its terms briefly later.
Suffice it to state for the present that, under this instrument, a sum of rupees one lakh out of the joint family properties was taken by the deceased in lieu of his share in the joint family properties and he relinquished his interest in the remaining properties of the joint family which were declared to belong to Kantilal as his sole and absolute properties and Kantilal also, in his turn, relinquished his interest in the amount of rupees one lakh given to the deceased and declared that the deceased was the sole and absolute owner of the said amount.
Within two years from 7 3 died and on his death the question arose as to what was the estate duty chargeable on his estate.
Kantilal, who is the accountable person before us, filed a return showing the status of the deceased as individual and the principal value of the estate as Rs. 1,0.6,724.
The Assistant Con troller was, however, of the view that the instrument dated November 16, 1953 operated as relinquishment by the deceased of his interest in the joint properties in favour of Kanti lal and that the consideration of rupees one lakh for which the one half share of the deceased in the joint family properties at the date of the said instrument was Rs. 3,44,058 and there was, therefore, a disposition by the deceased in favour of a relative for partial consideration and it was, accordingly by reason of section 27, sub section
(1 ), liable to be treated as a gift for the purpose of section 9, sub section
(1), and its value, viz., Rs. 3,44,058 after deducting Rs. 1,06,724 (being the amount received by the deceased together with interest) was includable in the principal value of the estate of the (1) (2) 12 deceased.
The Assistant Controller, accordingly, included a sum of Rs. 2,37,334/ being the difference between Rs. 3,44,058/ and Rs. 1,06,724/ in the principal value of the estate of the deceased.
On appeal by the accountable person, the assessment made by the Assistant Controller was confirmed by the Central Board of Revenue.
Though the main ground on which the Cen tral Board based its decision was the same as that which found favour with the Assistant Controller, viz., that under the instrument there was a disposition by the deceased of his interest in the joint family properties in favour of Kantilal for partial consideration and it was therefore by reason of section 27, sub section
(1 ), liable to be treated as a gift for the purpose of section 9, sub section
Another argument also appealed to the Central Board and that was one based on section 2(15), Explanation 2.
The 'Board held that, in any event, under the instrument there was extinguishment at the ex pense of the deceased of his interest in the joint family properties and there was therefore a deemed disposition by the deceased of the benefit which accrued to Kantilal as a result of such extinguishment and the charge to estate duty was accordingly attracted under section 9, sub section
(1), read with section 27, sub section
On reference, the High Court held in favour of the assessee and the Revenue has appealed hopefully, relying on a ruling of the Madras High Court which itself is the sub ject matter of the sister appeal.
Here the tables were 7 3 High Court as contrary to the ratio of this Court 's pro nouncements.
Were it so, it were bad; but judgments, even of the summit court, are not scriptural absolutes but rela tive reasonings and there is in them, read as a human whole, more than meets the legal eye which looks at helpful lines here and there.
We will examine them closely, especially because several High Courts are split on the construction of 'disposition ' in the Act, and seek to resolve the conflict of views and values.
Behind everyone 's attitude to tax is an unspoken value judgment! Before we move into the arena of argument we may silhou ette the facts of the Madras case.
The deceased, Bheema Naidu, and his predeceased son 's widow and children consti tuted a Hindu undivided family.
A little within the two year pre mortem line drawn by the Act he effected a partition and turnnig abnegator took a smaller share instead of his legal half, benefiting the others to the extent of the difference.
This difference was taxed as disposition of property under the Act and fiscal hierarchy was upheld by the High Court.
The assessees assail that decision before us.
The forensic focus has been rightly turned on the inter pretation of the critical provisions in the Act bearing on this controversy.
The social design, the legislative intent and the grammar of statutory construction visa vis the Act may have to be briefly surveyed while studying the language of the text and the impact of the context.
The scheme and spirit of the Act need to be understood first, for every social legislation has a personality and taxing statute a fiscal 13 philosophy without a feel of which a correct perspective to gather the intent and effect of the separate clauses cannot be gained.
Over four centuries ago Plowden said: "Each law consists of two parts viz., of body and soul; the letter of the law is the body of the law and the sense and reason of the law is the soul of the law.
" It is well known that death duties imposed on richer estates have a socialistic savour being motivated by the State 's policy of paring of unearned accumulation of inheritances and of diminishing glaring disparities of wealth.
This comprehensive but slow egalitar ian purpose fulfils itself fully only when it operates on property at death and near death; nor is there any rational ground to save some types of disposition or subtle transfer ence of wealth from exigibility, having due regard to the plain language of estate duty measures.
The broad object also includes inhibition of dispositions, unsupported by reasonable consideration, made on the eve of death or within 7 3 or manoeuvres, though sincere, being manifestly likely to defeat death duties posthumously flowing from properties covered thereby.
The fiscal policy is dual: (i) the collec tion of revenue; and (ii) reduction of the quantum of inher itance on a progressive basis directed towards a gentle process of equalisation.
The draftsman 's efforts have been exerted to use words of the widest import and, where the traditional use of words iS likely to limit, to use legal fictions, by deeming devices, to expand the semantics there of and to rope in all kinds of dealings with property for inadequate or no consideration within the statutory prox imity of death.
The sweep of the sections which will be presently set out must therefore be informed by the lan guage actually used by the legislature.
Of course, if the words cannot apply to any recondite species of property, courts cannot supply new logos or invent unnatural sense to words to fulfil the unexpressed and unsatiated wishes of the legislature.
Law, to a large extent, lives in the language even if it expands with the spirit of the statute.
It is good to remember that the Indian Act has some English genetic touch, being largely based on the English Finance Acts of 1854 Onwards.
This historical factor has current relevance for one reason. 'We may usefully refer to, although we may not be blindly bound by, English authorities under the corresponding statute and both sides have sought trans Atlantic light on this footing.
A skletal projection of the Act to the extent that concerns us here may now be made.
This Act exacts estate duty.
The charging section (section 5) authorizes the levy of a duty upon all property which passes on the death of a person dying after the commencement of the Act.
Two questions immediately arise.
What is property as envisaged in the charging section ? When does property pass on the death of a person ? The answer to the first question is furnished in an inclusive definition of 'property ' in section 2(15).
It is a wide ranging definition supplemented by two expansive definitions.
Of immediate moment is Explanation 2 which reads: "Explanation 2.
The extinguishment at the expense of the deceased of a debt or other rights shall be deemed to have been a disposition made by the deceased in favour of the 14 person for whose benefit the debt or fight was extinguished, and in relation to such a disposition the expression 'property ' shall include the benefit conferred by the extinguishment of a debt or 7 3 What property passes on the death of a person is indicated in an inclusive definition set out in section 2(15).
It covers property passing either immedi ately on the death or after any interval and 'on the death ' includes 'at a period ascertainable only by reference to the death '.
A glance at sections 9 and 27 gives more comprehension.
Section 9, among other provisions, introduces a legal fiction and since the meaning and implication of this section has been the subject of some disputation we had better allow the provision, in the first instance, to speak for itself: "9. Gifts within a certain period before death : (1 ) Property taken under a disposition made by the deceased purporting to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settle ment upon persons in succession, or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death.
" Both the appeals deal with deceased persons who are mem bers of joint Hindu families and the subject matter of the dispositon was linked up with their share in the HUF (acro nymically speaking).
For this reason our attention has to be rivetted to sections 7 and 39 which resolve a likely difficul ty in ascertaining the interest in property which ' passes on the death of a deceassed coparcener in the joint family property the pristine rule of Hindu law being his share lapses in favour of the survivors and is not a descendible estate or a predictable fraction.
Sections 7 and 39, by a deeming process, circumvent this contretemps and crystallize a clear share in the coparcener at the point immediately before death.
Had the properties of the coparcener been partitioned immediately before the death what share in the joint family property would have been allowed to the de ceased represents the principal value of such share for the purposes of computation of death duty.
Section 27 is a strategic provision which deems as a gift all dispositions made by the deceased person in favour of his relations unless such disposition was made for full consideration or the deceased was concerned in a fiduciary capacity with the property. 'Relative ' means, in this context, near rela tions set out in section 27(2) and it is sufficient, for our pur pose, to know that in both the appeals the accounting persons are relatives failing within the statutory compass.
One more provision is pertinent to our enquiry and that deals with gifts within a certain period before death.
While there are other provisions dealing with gifts before 7 3 already been read and will later be explained.
Now to the boxing ring.
The bout has been fought over the import and amplitude of 'property ' as widened by section 2(15), especially Explanation 2 thereto.
Sri section T. Desai, appearing for the accountable per 15 son in the Madras case, and Shri Manchanda, arguing for the Exchequer in the Gujarat case, have levelled multi pointed attacks, but the crucial issue which is decisive of both cases is the same.
What is 'property ' for the purpose of this fiscal law ? Is it a misfortune for any legal system that a battle of semantics, where able judges and erudite advocates fundamen tally disagree on meanings of words pivotal to the very levy, should be a bonanza of the draftsman ? Simplicity and certainty is basic to the rule of law but is a consummation devoutly to be wished in our corpus juris.
Here we find ranged on both sides more than one High Court taking con trary but scholarly views.
A radically new legislative art is the urgent contemporary need if comprehensibility to the laity is to be a democratic virtue of law.
We will first unlock Explanation 2 to section 2(15), discover the signification of 'property ' expanded by the deeming clause and then read it in that wider sense along with the comprehensive provisions of sections 9, 27 and 5.
The key con cept that underlies this fasciculus of sections is property, the tax being charged on property passing on death.
Consid erable controversy has raged not only on the boundaries of the notion of 'disposition ' as specially defined, by import ing a legal fiction, but on the slightly ticklish and tricky placement in section 9 of the expression 'bona fide made two years or more before the death of.
the deceased '.
If we surmount these constructional difficulties, the answer to the core question arising in these appeals fol lows without much ado.
In fairness to counsel we must, at the threshold, set out the seven propositions formulated by Shri Desai for pin pointing the discussion.
They are: "1.
Partition is merely a process in and by which joint enjoyment is transferred into an enjoyment in severalty.
Since in such a case each one of the coparceners had an antecedent title which extended to the whole of the joint family properties and had therefore full interest 7 3 his share, no creation of right or interest in such specific property takes place in his favour nor does any extinguishment of any right or interest in the other property take place to his detriment.
Sections 9(1) and 27(1) form part of a single scheme.
The word 'disposition ' in section 27 (1 ) cannot be treated in isolation and must take its colour and meaning from the sense in which the word has been used in sec.
9 (1).
3. 'Disposition ' means 'giving away or giving up by a person of something which was his own , 606 SC).
No meaning howsoever wide and comprehensive of the expression 'disposition ' can possibly take in its ambit or coverage, parti tion , SC).
The mere fact that on a partition a copar cener takes a lesser share than he could have demanded does not mean 16 that there is 'disposition ' as contemplated in Explanation 2 to section 2(15) which defines 'proper ty '.
In such a partition, there is no extinguish ment, at the expense of such coparcener of any 'debt ' or 'other right '.
In a partition whether equal or unequal, there is no disposition by a coparcener in favour of any relative nor can it be said that there is any purported gift nor can it be treated as a gift.
Of course, the partition must be bona fide and not to evade duty.
The scope and ambit of Explanation 2 to section 2(15) becomes more clear when it is read in juxtaposi tion with Explanation 1.
The 'extinguishment ' contemplated in Expla nation 2 can be only in respect of any debt or other right which could have been created by the deceased and could have been enforced against him.
In a partition, no such thing takes place.
A definition is not a substantive rule of law operative by itself.
The definition of 'property ' in section 2(15) has to be read along with sections 9 and 27 and not in isolation.
Disposition, in section 9, even if read along with Explanation 2 to section 2(15), can only be of something the disponer had as his own at the time of the alleged extinguishment.
If it is of any interest in property it must be of an interest which was already vested in the disponer at the time of the disposition.
If of any other right, it must be of a right which had vested in him even when he gives it up.
" This 7 point programme of submission really brings out all the issues and sub issues, legal and factual, and the last two, over lapping in some respects, deserve first attention.
Before that, we must state, in precis form, the facts with reference to which the statute must speak.
The life of the law is not idle abstraction or transcendental meditation but fitment to concrete facts to yield jural results a synergetic action, not isolated operation.
Our discussion will therefore be conditioned by the material facts found in the two cases.
They are, tersely, though simplistically put, that the deceased person, being a member of a joint Hindu family, within two years before his death, entered into a partition of family properties bona fide, not as colourable or sham transaction, whereby he received towards his share an allotment substantially lower in value than would be his legal entitlement thus gladly suffering a diminution which would to that extent benefit the account able person by giving him a larger slice of the joint cake than was his due.
We assume, for the purpose of argument, that the divi sion in status and the partition made by metes and bounds have taken place simultaneously on the execution of the deed in question.
We also take it that the release, relinquish ment or division in the cases on hand has been bona rule made in the sense that one sharer has not over reached the other or played fraud or together the sharers have not gone through a mere simulacrum of a partition or exercise in colourable division.
We proceed on the further footing and that is law well established 16 now that 'partition is really a process in and by which a joint enjoyment is transformed into an enjoyment in several ty.
Each one of the sharers had an antecedent title and, therefore, no conveyance is involved in the process, as a conferment of a new title is not necessary '.
Now to the 7 points of Shri Desai.
The 6th point is a shade platitudinous and the other side does not dispute its soundness.
Certainly the ' definition of 'property ' in section 2(15) has to inform and must be read along with section 9 and section 27 and cannot be functional in isolation.
It is not a substantive rule of law operative by itself.
Similarly, point No. 7, stated the way it has been, may not be and has not been disputed before us, for the expression 'disposi tion ' in section 9 must be read with the definition in Explana tion 2 to section 2(15) since that is the whole purpose of a"deeming provision ' in the shape of a definition.
Granting that, the disponer cannot extinguish or part with what is not his rather a trite statement though since A can give or give up only what he has at the time of alienation or abnegation.
Shri Desai contends, and rightly, that the deceased could not dispose of any interest in property which did not earlier vest in him or at least at the time of the disposition.
No right can be given up without its being vested in him when he gives up.
This hypothesis in law turns the searchlight on the existence, at the time of the release or partition, of what has been disposed of under that deed.
What then was disposed of ? And did the deceased own at the time of disposition what he thus made over or extinguished ? An answer to these twin questions may be readily given, once we clear the confusion that has crept in at certain stages of the argument, by a process of inept importation and imperfect understanding of the rule of Hindu law regarding coparcenary.
The proposition is trite that in an undivided Hindu family coparceners have no predictable or defined shares but each has an antecedent title in every parcel of property and is jointly the owner and in enjoyment with the others.
But surely it is well established that at the very moment mem bers decide upon a partition eo instanti, a division in status takes place whereupon the share of the demanding members gets crystallised into a definite fraction and if there is division by metes and bounds the allotment of properties vivifies and specifies such shares in separate ownership.
These two processes or stages may often get telescoped when by consensus the coparceners jointly divide the properties.
Unequal divisions of properties knowingly made may not spell invalidity and mathematical equality may not be maintained always in a partition while, ordi narily, substantial fairness in division is shown.
Granting these legal positions, the more serious question which has been agitated before us is as to whether a willing, al beit ' bona fide, arrangement whereby a substantially reduced share is taken by the decedent consequentially vesting a proportionately larger estate in the recipient is a dispo sition falling within Explanation 2 to section 2(15) and there fore 'property ' within the substantive definition.
In this context we may have to read sections 9 and 27 for property taken under a disposition made.
by the deceased may be deemed to be a gift in favour of the accounting person in the circum stances mentioned in section 9.
Similarly, section 27 also tracks down certain dispositions made by deceased 18 persons in favour of relatives by treating them as 'gifts '.
The basic concept of disposition looms important in such circumstances.
This introductory statement of the law takes us to the other points of Shri Desai which we will tackle together, guided by the text of the sections aforesaid read in the light of the citations, aplenty, of cases Indian and Eng lish.
We may compendiously state, forgetting for a moment the complication in the Gujarat Case of the release deed executed by the decedent being either a relinquishmere or a partition that in both the appeals, the decedents and the recipients were members of an undivided Hindu family and within the two years proximity of death the partition ar rangement was effected where under a lesser share than due was allotted to the latter.
And indeed, it is this differ ence between what was due to the right of the deceased and what was actually taken that was treated as a 'gift ' by the Revenue based on the definition in section 2 (15 ), Explanation 2, plus sections 9 and 27.
The cornerstone of the whole case of the Revenue is thus the concept of 'disposition ' which we may point out, right at the outset, is not a term of art not legalese but plain English with wide import.
What is more, this word has acquired, beyond its normal ambit, an abnormal semantic expansion on account of a special definition with an Explanation super added.
In short, 'disposition ' in the Estate Duty law of India enjoys an extended meaning.
Even so, does it go so far as to cover a mere taking of a less than equal share by the deceased, the benefit on account of which has gone to the accountable person ? Before we enter the thicket of judicial conflict regard ing the meaning of 'property ' as extended by Explanation 2 to section 2(15), we may remind ourselves as courts that in a taxing statute one has to look merely at what is clearly said.
There is no room for any intendment.
There is no equity about a tax.
While the rulings on the point in the Act and in the allied Gift Tax Act will be adverted to presently, we may begin an incisive understanding of the Explanation 2 aforesaid.
The spirit thereof is obvious.
The framers of the Act desired by a deeming provision regarding 'disposition ' to cover extinguishments of debts and all other rights at the expense of and made by the deceased in favour of the beneficiary.
The substantive definition of 'property ' in section 2(15) is not exhaustive but only inclusive and the supplementary operation of Explana tion 2 takes in what is not conventionally regarded as 'disposition '.
Indeed, 'disposition ', even according to law dictionaries, embraces 'the parting with, alienation of, or giving up property. a destruction of property ' (Black 's Legal Dictionary).
The short question before us is whether the dispositive fact of giving up by a coparcener of a good part of what is due to him at the time of division to his own detriment and to benefit of another coparcener, can be called 'disposition ' in law.
Undoubtedly this operation, to use a neutral expression, is made up of simple jural facts that modify and extinguish jural relations and create in their place new rights whereby one gives or gives up and another gains.
This legal result, produced by voluntary 'action, is 'disposition ' within the scope of Explanation 2 to section 2(15).
The assessee 's contention, effectively presented by counsel, takes a legalistic course, ignoring the purpose, language and amplitude of 19 Explanation 2.
Argues Shri Desai, in a partition, equal or unequal, there is no element whatsoever of consideration, partial or full, since in a partition there is only an adjustment of rights and substitution of joint enjoyment by enjoyment in severalty.
In his view it is a confusion to mix up unequal partition with inadequate consideration and it is a worse confusion to talk in terms of bona fide and main fide partition where the shares are merely unequal by choice.
What is forgotten in this chain of reasoning is the office of Explanation 2 which is deliberately designed to take into its embrace what otherwise may not be 'disposi tion '.
Once we reconcile ourselves to the enlargement of sense imported by the Explanation, we part company with the traditional concept.
We have also to stress the expression 'other right ' in the Explanation which is of the widest import and cannot be constricted by reading it ejusdem generis and 'debt '. 'Other right ', in the context, is expressly meant considerably to widen the concept and there fore suggests a somewhat contrary intention to the applica tion of the ejusdem generis rule.
We may derive instruction from Green 's construction of the identical expression in the English Act Is.
45(2).
The learned author writes: "A disclaimer is an extinguishment of a right for this purpose.
Although in the event the person disclaiming never has any right in the property, he has the right to obtain it, this inchoate right is a 'right ' for the purposes of section 45(2), The ejusdem generis rule does not apply to the words 'a debt or other right ' and the word 'right ' is a word of the widest import.
Moreover, the expression 'at the expense of the deceased ' is used in an ordinary and natural manner; and is apt to cover not only cases where the extinguishment involves a loss to the deceased of a benefit he already enjoyed, but also those where it prevents him from acquiring the benefit.
The words 'the person for whose benefit the debt or other right was extinguished ' do not neces sitate a conscious intention to benefit some per son; it is sufficient that some person was in fact benefited. 'The motive or purpose of the deceased appears to me to be immaterial ', provided the transaction was gratuitous and did in fact benefit the other person concerned.
The extinguishment of a right may also cover the release of his interest by one joint tenant in favour of another." (Green 's Death Duties, 7th Ed., Butterworths, p. 149) Shri Desai and also Shri Kazi, appearing for the 'ac counting persons ' in the respective cases, urged that this expansive interpretation taking liberties with traditional jural concepts is contrary to this Court 's pronouncement in Getti Chettiar(1).
That was a case under the Gift Tax Act, 1958 and the construction of section 2(xxiv) fell for decision.
Certainly, many of the observations there, read de hors the particular statute, might reinforce the assessee 's stand.
This Court interpreted the expression 'transfer of property ' in section 2(xxiv) and held that the expression 'disposition ' used in that provision should be read in the (1) 20 context and setting of the given statute.
The very fact that 'disposition ' is treated as a mode of transfer takes the legal concept along a different street, if one may use such a phrase, from the one along which that word in the is travelling.
Mr. Justice Hegde rightly observed, if we may say so with respect, that 'Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other.
In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose that they are in tended to serve." (p. 605 606) The word 'transaction ' in section 2(xxiv) of the Gift Tax Act takes its The word that is it must be a 'transfer ' of property colour from the main clause that is , it must be a 'transfer ' of property in some way.
Since a partition is not a 'transfer ' in the ordinary sence of law, the Court reached the conclusion that a mere partition with unequal allotments not being a transfer, cannot be covered by section 2(xxiv).
A close reading of that provision and the judgment will dissolve the mist of misunderstanding and discloses the danger of reading observations from that case for application in the instant case.
The language of section 2 (15 ), Explanation 2, is different and wider and the reasoning of Getti Chettiar (supra) cannot there fore control its amplitude.
It is perfectly true that in ordinary Hindu law a partition involves no conveyance and no question of transfer arises when all that happens is a severance in status and the common holding of property by the coparcener is converted into separate title of each coparcener_as tenant in common.
Nor does subsequent partition by metes and bounds amount to a transfer.
The controlling distinction consists in 'the difference in definition between the Gift Tax Act [section 2(xxvi)] and the is.
2(15).
The Madras High Court in Valliammai Achi(1) took the correct view when it said on similar facts: "The facts of this case, in our opinion, seem to square with the second Explanation to section 2(15).
That, no doubt, is an Explanation to the inclusive definition of property.
But the language of it seems to go further and coins a deemed disposition in the nature of a transfer.
The mechanics of the transfer for the purposes of Explanation 2 consist in the extinguishment at the expense of the deceased of a right and the accrual of a benefit in the form of the right so given up in favour of the person benefited.
Transfer in a normal sense and as understood with reference to the Transfer of Property Act connotes a movement of property or interest or right therein or thereto from one person to another in praesenti.
But in the kind of disposition contemplated by the second Explanation, one can hardly trace such a transfer because of the mere fact of extinction of a certain right of the deceased which does not involve a movement, a benefit is , 808.
21 created in favour of the person benefited thereby.
In the present case the son who was a quondam coparcener had a pre existing right to every part of the coparcenary property, and if by a partition or a relinquishment on the part of one or more of the coparceners, the joint ownership is severed in favour of severalty, the process, having regard to the peculiar conception of a coparcenary, in volves no transfer .
But Explanation 2 is concerned not with that kind of situation, but an extinguishment of a right and creation of a bene fit thereby and this process is statutorily deemed to be a disposition which is in the nature of a transfer.
" This line of reasoning has our general approval.
From what we have said, the bold lines of opposing views emerge and they hinge on the conno tation of 'disposition '.
The High Courts, in their divergent stands, have lined up before both strands of reasoning.
Madras, a Full Bench of the Punjab High Court, and the classic observations in In re Stratton 's Disclaimer(1) support the point of view championed in Ranganayaki Ammal.
The contrary thinking finds support in Andhra Pradesh and Punjab as welt as in Gujarat (Kantilal).
The sense of our statutes modelled as they are on a series of English Acts, is best expressed so far as the concept of 'disposition ' is concerned, by Jenkins L.J., in In re: Stratton 's Disclaimer(1) relating to section 45 of the Finance Act, 1940 [which runs similar in strain to s.2(15).
Noting the strength of the sweeping and unparticularized reference to 'a debt or other right ', Jenkins L.J., repelled the application of the ejusdem generis rule and impart ed to the word 'right ' the widest import: "Mr. Russel did not seek to limit the effect of the words 'debt or other right 'by an applica tion of the ejusdem generis rule, and, in my view, it would not be possible to do so.
In the absence of any such restriction on its meaning the word 'right ' is a word of the widest import, and if, in accordance with my view, Mrs. Stratton can properly be held to have had a right in respect of the specific bequest and devise pending disclaimer, I see no ground for holding that it was not a right within the meaning of section 45 (2).
" * * * * "I confess that I am disposed to deprecate recourse in revenue legislation to sweeping gener alities of this kind, but the mere fact that an enactment is couched in general and comprehensive terms affords no ground for excluding from its operation transactions falling fairly within its provisions, general though they may be.
Roxburgh J., emphasized the impact of the legal fiction and observed: "A certain state of facts is to be deemed to be a different state of facts, and the line between fact and hypothesis seems to me to be drawn by the word 'deemed '.
If this be (1) [1958] 34 I.T .R. (Estate Duty) 47. 22 so, only three actual facts are expressed to be necessary in order to involve the hypothetical situation, (1) the existence of a right, (2) its extinguishment, (3) its extinguishment at the expense of the deceased.
When those three facts concur, the hypothesis goes into action, and the hypothesis is that these facts are equivalent to a disposition made by the deceased in favour of the person for whose benefit the right was extin guished.
These words, ill my opinion, all form part of the hypothesis and the concluding words are necessary to define the hypothetical disponee.
" The conventional construction of 'disposition ' has to submit to the larger sweep of the hypothetical extension by defini tion.
The Gujarat High Court has gravitated towards the nar rower construction of 'disposition ' and 'or right '.
It makes no specific reference to Stratton 's Disclaimer (supra) and the learned judges have insisted on transfer of inter est as a necessary indicium of every disposition.
Partition does not involve a transfer and therefore, cannot be a disposition, runs the logic of the Gujarat judgment.
Like wise, 'other right ', in Explanation (2), it is argued, cannot cover the case of partition as in the learned Judges ' view a transfer is a sine qua non.
We cannot agree, for reasons already stated, with this approach which defeats the intendment of the Act and the express object of Explana tion 2 to section 2(15).
The peculiar definition of 'disposi tion ' injecting a triple hypothesis and fictional expan sion covers the diminution in the share taken by the copar cener and augmentation of the share taken by the other and impresses the stamp of property on this process by the "deeming ' provision.
Sections 9 and 27 strengthen this conclusion.
We were confronted by Shri Desai with Kancharla Kesava Rao(1) for contending that giving away or giving up could not in all cases be disposition where the transaction is a partition.
This Court, in the above ruling, held that a partition in a coparcenary was just an adjustment of rights, not a transfer in the strict sense.
Shri Justice Hegde, speaking for the Court, placed on section 24 of the Act more or less the same intepretation as was put in Getti Chettiar (supra) by this Court.
Whatever might be the interpretation 'disposition ' in section 24 of the Act, we are satisfied that the only straight forward construction of that expression in section 27 is as we have explained at length above.
Section 9, dealing with gifts takes in property under a disposition made by a deceased, throwing up the question 'What is a gift? '.
Section 27 supplies the answer: 'an dispsition made by the deceased in favour of a relative of his shll be treated for the purposes of this Act as a gift '.
Unless: of course, it is made for full considera tion.
There is no limitation, environmental or by the society of words, warranting the whittling down of the unusually wide range of explanation 2 to section 2(15).
Kesava Rao (supra) cannot cut back on the liberality of section 27.
In the realm of legal fiction, law cannot be confined within traditional (1) 23 concepts.
It is pertinent that as between the Gift Tax Act and the there is basic difference in that the tax effect in the first is on transaction inter vivos and in the second on the generating source of transmission by death.
Comparisons in construction cannot therefore be pushed too far.
Before winding up tihis part of the discussion, we may refer to Grimwade vs Federal Commissioner of Taxation (1) where Williams J., dealing with the expression 'disposition of property ' defined somewhat in similar lines as in our Act, observed: "The whole emphasis of paragraph (f) is upon ' a transaction entered into by one person, which seems to me to mean that where there is an act done by one person with the requisite intent, and as a result there is a transfer of value from any property of that person to the property of another person, the conditions of liability are satisfied.
Each statute has its own mint and the coinage of words bears a special stamp.
That is our only comment when we depart semantically from other judicial ' annotations of the expres sion 'disposition '.
If A is entitled to a moiety in property worth rupees five lakhs (or let us assume that much of cash in the till belongs jointly to A and B) and by a partition relinquishment, disclaimer or otherwise A accepts something substantially less than his due, say rupees one lakh as against rupees two and a half lakhs and the remainder goes to.
the benefit of B who gets four lakhs as against two and a half lakhs, commonsense, concurrently with Explanation 2, draws the inference that A has made over at his expense and to the benefit of B a sum of rupees one and ahalf lakhs which may be designated a 'disposition ' by him in favour of B. Shri Desai rightly stressed in construing section 9 we should not confess between a mala fide transaction and unequal partition.
He is right.
But the simpIe scheme of section 9 may be stated to erase misapprehension.
What the provision declares is that if the disposition made by the deceased is more than two years before death.
,, the property covered thereby shall not pass on the death unless it shall not have been bona fide.
That is to say, even if the transaction were more than two years before the death, if it were entered into in bad faith, estate duty may still attach to that property.
So far as dispositions made within two years of the death of the deceased are concerned, there is no question of mala fides or bona fides.
All such transactions are caught within the coils of section 5 read with sections 9 and 27.
The re quirement of 'bona fides ' has nothing to do.
with disposi tions within 2 years and has much to do with those beyond 2 years.
The marginal obscurity in section 9 is due perhaps to compressed draftsmanship.
Now to costs.
We have already indicated how serious arguments have appealed in contrary ways to several fudges of the High Courts and certain observations of this Court have themselves been capable of different shade of sense from what we have read into them.
Indeed the point involved in the case is of general public importance which (1) ; 24 on account of the conflict in the High Courts, needs to be decided by the Supreme Court.
One of the major functions of this Court is to declare the law for the country under article 141 of the Constitution, although under our adversary system it is only when litigation spirals up the Court acts and declares the law.
While dealing with a similar situation, this Court in Trustees Port, Bombay(1) observed: "Is it fair in these circumstances that one party, albeit the vanquished one, should bear the burden of costs throughout for providing the occa sion not provocation for laying down the correct law in a controversial situation ? Faced with a similar moral legal issue, Lord Reid observed: "I think we must consider separately costs in this House and costs in the Court of Appeal.
Cases can only come before this House with leave, and leave is generally given because some general question of law is involved.
In this case it enabled the whole vexed matter of non est factum to be reexamined.
This seems to be a typical case where the costs of the successful respondent should come out of public funds.
The Evershed Committee on Supreme Court Practice and Procedure had suggested in England that the Attorney General should be empowered to issue a certificate for the use of public funds in appeals to the House of Lords where issues of outstanding public importance are involved.
" Maybe, a scheme for a suitors ' fund to indem nify for costs as recommended by a Sub Committee of Justice is the answer, but these are matters for the consideration of the Legislature and the Executive.
We mention them to show that the law in this branch cannot be rigid.
We have to make a compromise between pragmatism and equity and modify the loser pays all doctrine by exercise of a flexi ble discretion.
The respondent in this case need not be a martyr for the cause of the certainty of law under section 87 of the Act, particularly when the appellant wins on a point of limitation.
(The trial Court had even held the.
appellant guilty of negligence).
In these circumstances we direct that the parties do bear their costs throughout.
" We adopt the same course and while.
allowing Civil Appeal No. 1095 of 1970, and dismissing Civil Appeal No. 1677 of 1973 the parties in both the appeals are directed to bear their respective costs throughout.
V.P.S. C,4.
1095 of 1970 allowed.
CA 1677 of 1973 dismissed.
(1) ; , 738.
| Section 5 of the , authorises the levy of duty upon all property which passes on the death of a person.
Section 9 provides that property taken under a disposition made by the deceased purporting to operate as an immediate gift whether by way of transfer, delivery etc., which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death.
Explanation 2 to section 2(15), which defines 'prope rty ', provides that the extinguishment at the expense of the deceased of a debt or other rights shall be deemed to have been a disposition made by the deceased in favour of the person for whose benefit the debt or right was extinguished and in relation to such a disposition the expression 'property ' shall include the benefit conferred by the extin guishment of a debt or right.
Section 27 deems all disposi tions made by the deceased person in favour of his relations as gifts, for the purposes of the Act, unless such disposi tion was made for full consideration or the deceased was concerned in a fiduciary capacity with the property.
A member of a joint Hindu family, within two years before his death entered into a partition of family proper ties bona fide, not as a colourable or sham transaction, whereby, he received towards his share an allotment substan tially lower in value than would be his legal entitlement, with a view to relieve himself of a part of his wealth and 7 3 who is a relative within the meaning of the Act.
HELD: The relative, as the accountable person under the Act, is liable to pay estate duty, on the difference between the share that the deceased was legally entitled to and the share that the deceased actually took, that is, to the extent of the benefit received by the accountable per son.
[14 G, 12 .A.] (1) Death duties are imposed on richer estates, the fiscal policy being, (a) collection of revenue, and (b) reduction of the quantum of inheritance on a progressive basis towards equalisation by diminishing glaring dispari ties of wealth.
Therefore, the Act uses words of the widest import, legal fictions and deeming devices to.
rope in all kinds of dealings with property for inadequate or no consid eration within the statutory proximity of death.
If the words, however cannot apply to a particular species of property, courts.
cannot supply words to fulfil the unex pressed wishes of the legislature.
In a taxing statute one has to look merely at what is clearly said.
There is no room for any intendment.
There is no equity about a tax.
[13 D] (2) The definition of 'property ' in section 2(15) has to inform and must be read along with sections 9 and 27.
It is not a substantive rule of law operative by itself.
Similarly, the expression 'disposition ' in section 9 must be read with the definition in Explanation 2 to section 2(15) since that is the whole purpose of a 'deeming provision ' is the shape of a definition.
[17 B C] 3 1003 SC1/76 10 (3) The definition of 'property ' in section 2(15) is not exhaustive but only inclusive and the supplementary opera tion of Explanation 2 takes in what is not conventionally regarded as 'disposition '.
The expression "other right" in the Explanation is of the widest import and cannot be read ejusdem generis with 'debt '.
The process of extinguishment of a right and the creation of a benefit thereby is statuto rily deemed to be a disposition in the nature of a transfer.
Therefore, the definition of 'disposition ' covers the diminution in the share taken by one coparcener and augmentation of the share taken by the other and impresses the stamp of property on this process by the deeming provi sion.
[18 F G; 19 C] (4) The case of Getti Chettiar [(1971) dealt with the expression 'transfer of property ' in section 2(xxiv) of the Gift Tax Act, 1958.
This Court held that 'transaction ' 7 3 and it must be a 'transfer ' of property; and that since a partition is not a transfer in the ordinary sense of law, a mere partition with unequal allotments cannot be covered by section 2(xxiv).
But the language of Explanation 2 to section 2(15) of the is different and wider and so the reasoning of this case cannot control its amplitude.
[20 C] (5) This Court in Kancharla Kesava Rao [(1973) placed on 'disposition ' in section 24 of the the same interpretation as was put in the case of Getti Chettiar.
But, whatever might be the interpretation of 'disposition ' in section 24, under section 27, a disposition in favour of a relative not for full consideration, shall be treated as a gift and under section 9 if the disposition made by the deceased is more than 2 years before death, the property covered thereby shall not pass on the death unless it shaH: not have been bona fide to say, even if the transaction were more than 2 years before the death, if it were entered into in bad faith, estate duty may Still attach to that property.
But so far as dispositions made within two years of the death of the deceased are concerned there is no question of mala fides or, bona fides, and all such transactions would be liable to estate duty.
[22 G; 23 F G] Valliammi Achi , approved.
In re.
Stration 's Disclaimer applied.
Grimwade vs Federal Commissioner of Taxation ; referred to.
[Principles for awarding costs in matters of general public importance where there is conflict in the High Courts on a question of Law, reiterated.]
|
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.
| 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
|
Civil Appeal No. 142 of 1956.
Appeal by special leave from the judgment and order dated September 13, 1954, of the Labour Appellate Tribunal of India (Calcutta Bench) in Appeal No. Cal 87 of 1953.
H. N. Sanyal, Additional Solicitor General of India, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
P. K. Chatterjee, for the respondents.
November 5.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave arises out of an application made by the appellant to the Industrial Tribunal, Bihar under section 33 of the (hereinafter referred to as " 'the Act"), seeking permission to discharge the respondents from its employ.
873 The respondents were in the employ of the appellant and were staying in a two storeyed house in the city of Patna which had been rented by the appellant for housing its workmen.
On November 20, 1952, an occurrence took place in the said house wherein the respondents were involved.
Written reports of the said occurrence were sent on November 21, 1952, to the appellant 's Chief Engineer and the respondents were placed under suspension the same day.
An industrial dispute was then pending between the parties i.e., the appellant and its workmen before the Industrial Tribunal, Bihar, and the appellant therefore made an application to the said Tribunal under section 33 of the Act for permission to dismiss the respondents on the ground of misconduct as per cl.
17(b)(viii) of the appellant 's Standing Orders.
On November 27, 1952, the respondents also made an application before the said Tribunal under section 33A of the Act inter alia on the ground that their suspension by the appellant as aforesaid was a breach of section 33 of the Act.
On December 6, 1952, the appellant made an application before the said Tribunal stating that on a reconsideration of the facts of the case of the respondents the original prayer for permission to dismiss the the respondents was not being pressed, and for the ends of justice it would be sufficient if the appellant was granted permission to discharge the respondents under cl.
14(a) of the Standing Orders instead of the original prayer for dismissal under cl.
17(b)(viii) thereof.
This application was resisted by the respondents.
The Industrial Tribunal, however, entertained the same and after hearing the parties duly made its award on May 14, 1953, dismissing the respondents ' application under section 33A of the Act and granting the appellant permission to discharge the respondents from its employ with effect from the date of the order on payment to the respondents of one month 's pay in lieu of notice within 15 days therefrom.
The respondents carried an appeal against the said order of the Industrial Tribunal granting the appellant 's application under section 33 of the Act before the Labour Appellate Tribunal of India, Calcutta.
A 874 preliminary objection was taken on behalf of the appellant before the Labour Appellate Tribunal that no substantial question of law was involved and as such the appeal was not maintainable.
The Labour Appellate Tribunal was of the opinion that the appellant had alleged misconduct against the respondents and could not be allowed to adopt the expedient of terminating their services by giving notice for the requisite period or payment of salary in lieu of notice and that the Industrial Tribunal, therefore, ought not to have entertained the application for amendment of the prayer of the original application in which the appellant wanted to dismiss the respondents for misconduct.
This according to the Labour Appellate Tribunal was a substantial question of law and it therefore entertained the appeal.
The Labour Appellate Tribunal thereafter considered whether the appel lant had made out a case under cl.
17(b)(viii) of the Standing Orders and came to the conclusion that the respondents had not been guilty of any misconduct within the meaning of that clause and that therefore the order made by the Industrial Tribunal granting permission to the appellant to terminate the services of the respondents was liable to be set aside.
In so far, however, as after obtaining the permission from the Industrial Tribunal the appellant had given notice of discharge to the respondents, the Labour Appellate Tribunal expressed its inability to give the respondents any substantial relief either in the shape of reinstatement or compensation.
The appellant has come up in appeal before us against this order of the Labour Appellate Tribunal.
Shri H. N. Sanyal, appearing for the appellant, has urged in the fore front the contention that no appeal from the order of the Industrial Tribunal lay to the Labour Appellate Tribunal under section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
He contended that the said order was not a "decision" within the meaning of that expression in section 7 and even assuming that it was so, the appeal neither involved any substantial question of law nor was it a decision in respect of any of the matters specified in sub section (1)(b) 875 of that section.
The answer of Shri P. K. Chatterjee on behalf of the respondents was that the action of the appellant in the matter of the termination of the services of the respondents was punitive in character, that the discharge of the respondents for which permission was sought by the appellant was a punitive discharge, that such discharge was by reason of the alleged misconduct of the respondents falling within cl.
17(b)(viii) of the Standing Orders and not within cl.
14(a) thereof and that the substantial question of law which arose in the appeal was whether the appellant could be allowed to adopt the expedient of terminating the services of the respondents, without going through the procedure of submitting a charge sheet to the respondents and holding a proper enquiry in the matter of those charges, by merely giving notice for the requisite period or payment of salary in lieu of notice and thus resorting to el.
14(a) of the Standing Orders instead of cl.
17(b)(viii) of the same.
The other answer made by Shri P. K. Chatterjee was that having regard to the definition of the term "retrenchment" to be found in section 2(oo) of the Act the discharge of the respondents by the appellant really amounted to retrenchment and retrenchment being one of the matters specified in sub section
(1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950, the respondents had a right of appeal to the Labour Appellate Tribunal.
It is necessary, therefore, to appreciate what was sought to be done by the appellant when it made the application before the Industrial Tribunal on December 6, 1952.
This application has been described by the Labour Appellate Tribunal as an application for amendment of the original application which had been filed by the appellant on November 21, 1952, for permission to dismiss the respondents from its employ as per el.
17(b)(viii) of the Standing Orders.
It must be noted, however, that what the appellant purported to do by its application of December 6, 1952, was, in effect, to substitute another application asking for permission to discharge the respondents from its 111 876 employ under el.
14(a) of the Standing Orders, thus abandoning the relief which it had prayed for in the original application.
The application dated December 6, 1952, was thus, in substance, a new application made by the appellant to the Industrial Tribunal, no doubt relying upon the facts and circumstances which were set out in the original application but asking for the permission of the Industrial Tribunal to discharge the respondents from its employ under cl.
14(a) of the Standing Orders instead of dismissing them from its employ under el.
17(b)(viii) thereof.
We do not see how it was not competent to the Industrial Tribunal to allow the appellant to do so.
If the appellant bad been actuated by any oblique motives and wanted to evade the consequences of its not having held a proper enquiry, after submitting a charge sheet to the respondents one could have understood the criticism made by the Labour Appellate Tribunal in regard to the same.
The Industrial Tribunal, however, expressly recorded the finding that the application for leave to discharge the respondents from its employ was bona fide and what the appellant did by making the application dated December 6, 1952, was actuated by an honest motive of exercising its right to discharge the respondents under el.
14(a) of the Standing Orders instead of visiting upon the respondents the penalty of dismissing them from its employ under el.
17(b)(viii) thereof.
The discharge of the respondents was a discharge simpliciter in exercise of the rights of the employer under el.
14(a) of the Standing Orders and was not a punitive discharge under el.
17(b)(viii) thereof and if it was merely a discharge simpliciter, then, no objection could be taken to the same and the appellant would be well within its rights to do so, provided, however, that it was not arbitrary or apricious but was bona fide.
The only question relevant to be considered by the Industrial Tribunal would be that in taking the step which it did the appellant was not guilty of any unfair labour practice or victimization.
If the Industrial Tribunal did not come to a conclusion adverse to the appellant on these counts, it would have no jurisdiction to refuse, 877 'the permission asked for by the appellant.
Once the Industrial Tribunal was of opinion that the application dated December 6, 1952, and the discharge of the respondents for which .
the permission of the Industrial Tribunal was sought were in the honest exercise of the appellant 's rights, no question of law, much less a substantial question of law could arise in the appeal filed by the respondents against the decision of the Industrial Tribunal and the Labour Appellate Tribunal was clearly in error when it entertained the appeal.
In view of the above finding, we do not propose to deal with the contention that the order passed by the Industrial Tribunal under section 33 of the Act is not a "decision" within the meaning of that term in section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
The argument that the discharge of the respondents though patently it was a discharge simpliciter was, in substance, retrenchment within the meaning of the definition contained in section 2(oo) of the Act is equally untenable, for the simple reason that the term "retrenchment" was for the first time defined in the manner in which it has been done by an Ordinance promulgated in October 1953 which was followed by Act 43 of 1953 which was published in the Gazette of India on December 23, 1953.
The Industrial Tribunal made its order granting the permission under section 33 of the Act on May 14, 1953, so that, this definition of the term "retrenchment" could not apply to the facts of the present case.
If, therefore, at the relevant period the discharge simpliciter could not be deemed to be retrenchment of the respondents by the appellant, the decision of the Industrial Tribunal could not be said to be one in respect of any of the matters specified in sub section
(1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
In that view also no appeal could lie from the decision of the Industrial Tribunal to the Labour Appellate Tribunal.
It must be observed that neither of these two points was taken by the respondents either in the proceedings before the Industrial Tribunal or the Labour 878 Appellate Tribunal nor was either of them mentioned in the statement of case filed by the respondents in this Court.
They were taken for the first time in the arguments advanced before us by Shri P. K. Chatterjee.
We have, however, dealt with the same because we thought that we should not deprive tile respondents of the benefit of any argument which could possibly be advanced in their favour.
We are, therefore, of opinion that no appeal lay from the decision of the Industrial Tribunal to the Labour Appellate Tribunal, that the Labour Appellate Tribunal had no jurisdiction to interfere with the order made by the Industrial Tribunal granting the appellant permission to discharge the respondents under section 33 of the Act and that the decision of the Labour Appellate Tribunal is liable to be set aside.
We accordingly allow the appeal, set aside the decision of the Labour Appellate Tribunal and restore the order made by the Industrial Tribunal, Bihar, on date May 14, 1953.
The appellant will be entitled to its costs of this appeal from the respondents.
Appeal allowed.
| The appellant made an application before the Industrial Tri bunal under section 33 Of the , for permission to dismiss the respondents, its employees, on the ground of misconduct under cl.
17 (b) (viii) of the appellant 's Standing 872 Orders, but subsequently, on a reconsideration of the facts, made another application praying instead for permission to discharge the respondents under cl.
14(a) of the Standing Orders.
The Industrial Tribunal found that the second application was bona fide made by the appellant with the honest motive of exercising its right to discharge the respondents instead of visiting upon them the penalty of dismissing them, and granted the appellant permission on payment to the respondents of one month 's pay in lieu of notice.
The Labour Appellate Tribunal, on appeal, was of the opinion that having once alleged misconduct against the respondents the appellant could not be allowed to adopt the expedient of terminating their services by giving notice for the requisite period, by means of a fresh application, and after considering whether the appellant had made out a case under cl.
I7(b)(viii) of the Standing Orders, came to the conclusion that the respondents had not been guilty of any misconduct, and held that the Industrial Tribunal erred in granting the permission to discharge the respondents.
On appeal to the Supreme Court: Held, that in an application under section 33 of the Industrial: Disputes Act, 1947, the relevant consideration was whether the employer was guilty of any unfair labour practice or victimisation, and unless the Tribunal came to a conclusion adverse to the applicant it would have no jurisdiction to refuse the permission asked for to discharge the employee.
Accordingly, in view of the finding of the Industrial Tribunal that the application was bona fide, no question of law arose out of its order, and the Labour Appellate Tribunal erred in entertaining the appeal.
|
ivil Appeal No. 2010 of 1986.
From the Judgment and Order dated 15.4.
1986 of the Andhra Pradesh High Court in A.A.O. Nos.
737 of 1981 275 of 1982 and 69 of 1984.
Shanker Ghosh, A.V. Rangam and T.V. Ratnam for the Appellant.
Ashok Sen. A. Subba Rao, Qamaruddin, Mrs, Qamaruddin, C.S.S. Rao and S.V. Deshpande for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by special leave is from the judgment and order of the High Court of Andhra Pradesh dated 15th April, 1986.
On or about th of April.
1948 Sail Nawaz Jung, the then ruler of Mukkalla State, South Yeman in Arabia settled some of the properties with which the appeal is concerned by a Registered Tamleeknama in favour of his son Sultan Awaz and his grand son Galib Bin Awaz.
In 1954, there was Wakfnama by the said Sail Nawaz Jung.
On or about 23rd of August, 1963 the Military Estate Officer, Secunderabad of.
Andhra Pradesh requested for the requisition of the property named as "Sail Gulshan" with a vast extent of land and palaces with roads and surrounded by a compound wail measuring 19 acres and 10 guntas situated in the heart of Hyderabad city near Sarojini Devi Hospital.
The property in question was taken possession of on or about 12th of September, 1963.
In this appeal we are concerned with the claim for compensation for the said acquisition by one Abdul Khader who was a flower picker.
He had claimed rights as a tenant during the requisition.
His claim for compensation for requisition was settled by sharing the rent in or about 1969.
The appellant is one of the owners of the property in question deriving their title 1233 and right from the said Sail Nawaz Jung.
On or about 3rd February, 1970 the Collector issued notice for acquisition of the property under section 7(1) of the being Act 30 of 1952 (hereinafter called the Central Act).
The Gazette Notification for the acquisition was issued on 12th March, 1970.
The controversy in this case relates to the question whether Abdul Khader was 'a protected tenant ' under the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Lands Act, 1950 being Act No. XXI of 1950 (hereinafter called the Andhra Pradesh Act).
The purpose of the said Act as the Preamble states was, inter alia, to enable the land holders to prevent the excessive sub division of agricultur al holdings and empower government to assume in certain circumstances the management of agricultural lands, to provide for the registration of Co operative Farms and to make further provision for matters incidental thereto.
Section 2(r) states that the expression 'protected ' means a person who is deemed to be a protected tenant under the provisions of the said Act.
Chapter IV of the Andhra Pradesh Act deals with protected tenants and section 34 of the said Act provides who is to be considered as a protected tenant and uses the expression that a person shall, subject to the provisions of sub sections (2) and (3), be deemed to be a protected tenant in respect of the land if he has fulfilled the conditions mentioned in clauses (a) and (b) of sub section (1) of Section 34 of the said Act.
Sub section (2) of Section 34 of the said Act also deals with "to be deemed to be a protected tenant in respect of any land", for cer tain purposes.
Section 35 of the said Act deals with deci sion on claims and stipulates by sub section (1) of Section 35 of the said Act that if any question arises whether any person, and if so what person, is deemed under Section 34 to be a protected tenant in respect of any land, the landhold er, or any person claiming to be so deemed, may, within one year from the commencement of the Act apply in the pre scribed form to the Tahsildar for the decision of the ques tion and the Tahsildar shall after enquiring into the claim or claims in the manner prescribed, declare what person is entitled to be deemed to be protected tenant or as the case may be, that no person is so entitled.
Sub section (2) of Section 35 stipulates that a declaration by the Tahsildar that the person is deemed to be a protected tenant or, in the event of an appeal from the Tahsildar 's decision such declaration by the Collector on first appeal or by the Board of Revenue on second appeal, shall be conclusive that such person is a protected tenant and his rights as such shall be recorded in the Record of Right of where there is no Record of Rights in such village record as may be prescribed.
Section 36 of the said Act deals with the recovery of pos session by protected tenant.
Section 37 deals with persons not entitled 1234 under section 34 to be deemed in certain circumstances as protected tenants.
Section 38 of the said Act deals with right of protected tenant to purchase land.
Section 39 deals with right of protected tenants to exchange lands.
Section 40 of the said Act makes rights of protected tenant herita ble.
Sub section (2) of section 40 of the said Act indicates who are the heirs who would be entitled to hold the tenancy on the death of the protected tenant and on what terms.
Sub section (3) of section 40 of the said Act provides that if a protected tenant dies without leaving any heirs all his rights shall be so extinguished.
The explanation to sub section (3) of section 40 of the said Act provides who should be 'deemed to be the heirs ' of a protected tenant.
Subsection (4) of section 40 stipulates that the interest of a protected tenant in the land held by him as a protected tenant shall form sixty per cent.
It is necessary also to note the provisions of section 99 of the Act.
It is as follows: "99.
Bar of Jurisdiction: (1) Save as provid ed in this Act no Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act re quired to be settled, decided or dealt with by the Tahsildar, Tribunal or Collector or by the Board of Revenue or Government.
(2) No order of the Tahsildar, Tribunal or Collector or of the Board of Revenue or Government made under this Act, shall be questioned in any Civil or Criminal Court. ' Section 102 of the said Act stipulates that the Act shall not apply to certain lands and areas and provides inter alia as follows: "102.
Nothing in this Act shall apply (a) to lands leased, granted, alien ated or acquired in favour of or by the Cen tral Government or the State Government, a local authority or a Cooperative Society.
" It is relevant at this stage to refer to certain provi sions of the Central Act to consider the controversy in volved in this appeal.
The Central Act was enacted giving power for requisitioning and acquisi 1235 tion of immovable property for Union purposes.
Section 3 of the said Act gave power to requisition immovable property.
Section 4 of the said Act empowers taking possession of requisitioned property.
Section 5 deals with rights over requisitioned property.
Section 6 deals with the power of release from the requisitioning.
Section 7 authorises the Central Government where it is of the opinion that it is necessary to do so to acquire requisitioned property.
Sec tion 8 deals with 'principles and method of determining compensation either for requisitioning or acquisition of the property and, inter alia, provides for appointment of an arbitrator in certain contingencies in case there was no agreement for determining compensation.
Section 9 deals with the payment of compensation and provides that the amount of compensation payable under an award shall, subject to any rules made under that Act, be paid by a competent authority to the person or persons entitled thereto in such manner and within such time as may be specified in the award.
Suspect ing that the entry in the Protected Tenancy Register might not be genuine, on or about 24th of October, 1970 the Tah sildar passed an order cancelling that entry.
The main question centres around the right of Abdul Khader, respond ent No. 1 herein to the compensation awarded by the arbitra tor, it is therefore, necessary to refer to the relevant portion of the said order which inter alia, stated as fol lows: "By perusal of the Tenancy Register of 1958 it is evident that Sri Mohd. Abdul Khader is not a genuine protected tenant.
The entries of this particular so called tenant is doubtful.
I suspect that somebody has tampered the register and entered the name of Sri Mohd. Abdul Khader.
Separate enquiry in this connec tion is going on in this office to know under what circumstances such entry has been made and copy also issued without knowledge of the Tahsildar.
Hence I suspect the entry and order to cancel the copy of the tenancy issued in favour of Sri Modh.
Abdul Khader.
Sd Tahsildar.
Hyderabad West Taluk.
" This order of cancellation was challenged by Abdul Khadar by filing a writ petition in the High Court of Andhra Pradesh being W .P.
No. 1786 of 197 1 and by judgment and order passed on 27th August, 197 1, the learned single Judge, Vaidya, J. held, inter alia, as follows: 1236 "Whether the petitioner (Abdul Khader) is a protected tenant or whether he has any prima facie interest in the suit property are mat ters entirely within the sole jurisdiction of the arbitrator who has to be appointed under Section 8 of the 'Central Act '.
" In the appeal of Abdul Khader the proceedings of Revenue Divisional Officer while questioning entry of the name of Abdul Khader in the Register is a genuine one or net and while it is stated that it was entered in the Register in such suspicious way by giving Serial No. 1/A between Serial Nos. 1 and 2 of Register being Exhibit A. 106 and Exhibit A. 107, it ultimately held that Abdul Khader was a protected tenant under section 37A of the Andhra Pradesh Act.
On or about 19th of April, 1972 the order was passed by the Dis trict Revenue Officer who held that Abdul Khader was not a protected tenant.
He held further that Khasra Pahani which is the basic record of occupancy period after spot inspec tions does not find the name of Abdul Khader and further held that all entries except this entry in the Protected Tenancy Register prepared under section 37A of the Andhra Pradesh Act was supported by an enquiry.
It was in those circumstances held by him that the entry was a spurious one.
In Civil Revision Petition No. 1006 of 1972 which was filed by Abdul Khader as against others, Justice R. Ramachandra Raju of the Andhra Pradesh High Court on or about 19th August, 1974 held that Abdul Khader was not a protected tenant and directed deletion of entry made in the Final Record of tenancies as a spurious one.
The learned Judge observed, inter alia, as follows: "I am told by the counsel for both the parties that the lands in question were already ac quired for military purpose under the Requisi tion and Acquisition of Immovable property Act, 1952 and that Sri M.S. Sharma, the Addi tional Chief Judge, City Civil Court, Hydera bad has already been appointed as Arbitrator under the Act for determining the compensation and the persons entitled to it.
Not only that, in the writ petition filed by the present petitioner in this Court, it was held that it is not necessary to go into the question whether the petitioner is a protected tenant or whether he has any prima facie interest in the property because they are the matters entirely within the sole jurisdiction of the arbitrator who has to be appointed under Section 8 of the Act.
Now, as the arbitrator has already been appointed, he will go into the matter as to whether the 1237 petitioner was a protected tenant of the lands or not and if he was the protected tenant to what share in the compensation amount he would be entitled to.
Under these circumstances, the C.R.P. is dismissed with a direction that the entry made in the Final Record of Tenancies that the petitioner was the protect ed tenant, for the lands in question which is spurious as found by both the Revenue Divi sional Officer and the District Revenue Offi cer should be deleted.
" The matter was brought to this Court by a special leave application and this Court in Special Leave Petition (Civil) No. 10 of 1975 on or about 30th January.
1975 held that since the question whether the petitioner in that case namely, Abdul Khader was a protected tenant had been left open by the High Court to be decided by the Arbitrator under section 8 of the Central Act, special leave petition was rejected with those observations.
Thereafter there was an order appointing arbitrator on 29th of March, 1975 under section 8(1)(b) of the Central Act.
Claim petition was filed by the appellant before the arbitrator ' Claim petition was also filed by Abdul Khader claiming 60 '% of compensation as a 'protected tenant '.
There was an award by the arbitrator holding that as this Court had left it open to decide whether Abdul Khader was a protected tenant.
Despite the objection exercising the jurisdiction of the Arbitrator to go into the question of protected tenant, the arbitrator held that Abdul Khader was a protected tenant.
Aggrieved by the aforesaid award, the appellant claiming as one of the owners of the property filed a statutory appeal to the High Court.
In the meantime Abdul Khader filed an application on or about 21st of Octo ber, 1984 for adducing additional evidence to mark Kaulnama dated 2nd of December, 1950 for the first time and Oubu liatnama dated 2nd December, 1950 as exhibits in deciding the protected tenancy rights.
The appellant objected to that application but the High Court on 1st April, 1985 appointed Advocate Commissioner to record additional evidence.
On or about 22nd of April, 1985 the appellant filed the objection reserving the right of raising the jurisdiction of the Arbitrator to go into the question whether Abdul Khader was a protected tenant in the light of the Act 21 of 1950.
Three civil appeals were filed before this Court against the order of the High Court on 15th May, 1985.
This Court passed the order, on 19th August, 1985.
The said order is important and reads as follows: 1238 "Special leave are granted.
The appeal is heard.
Dr. Chitale learned counsel for the appellants submitted that the High Court should be directed to consider the issues relating to the jurisdic tion of the arbitrator appointed and function ing under the , 195 i to decide whether a person is protected tenant of an agricultural land or not in the light of Sections 99 and 102 of the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Land Act, 1950.
We have heard the learned counsel for the respondents on the above question.
After giving our due consideration to the question we are of the view that the High Court should determine this question.
The High Court shall decide the question of juris diction referred to above in light of the submissions to be made by both the parties.
Shri Subba Rao, learned counsel for the respondents submits that the appellants should not be permitted to withdraw from the authorities concerned more than 40 per cent of the total compensation awarded in respect of the lands in question pending disposal of the appeal before the High Court.
We agree with his submission.
We direct that the appellants shall withdraw not more than 40 per cent of the compensation pending disposal of the appeal before the High Court.
The remaining 60 per cent shall be disbursed in accordance with the directions to be given by the High Court after hearing all the parties concerned.
" The appeals were disposed of accordingly.
Other C.M.Ps. were filed for clarification of the second part of the order dated 19th August, 1985 and this Court on 29th November, 1985 in CMPs.
Nos. 4692 to 4694 of 1985 clarified and ob served that there was no need for further clarification.
It was observed that the High Court was at liberty to consider the claims to be made by both the parties and pass any fresh order with regard to the disbursement of the remaining 60% of the compensation.
The judgment under appeal was passed on 15th of April, 1986.
This appeal arises out of the said judgment.
In the judgment under appeal which is directed against the award made by the arbitrator formulated the following four issues (1) what is the value of the land; (2) who are entitled to the compensation amount; (3) whether Abdul Khader is a protected tenant of Sail Gulshan of the area 19 02 guntas excluding the 1239 land of buildings, wells, etc.
and (4) what share is to be apportioned to successors of Sail Nawaz Jung.
It has to be borne in mind that in the award, the arbitrator after ex haustively discussing the evidence on record held that Abdul Khader was a protected tenant and as such further held that he was entitled to 60% of the compensation money payable for the acquisition of the land excluding the land of buildings, wells etc.
In this appeal we are concerned with the question wheth er the High Court was right in upholding the award of the arbitrator so far as it has held in favour of Abdul Khader and his rights to get 60% of the compensation.
The High Court dealt with the value of the land.
We are not concerned with the challenge to this aspect in this appeal.
The High Court further modified a portion of the order in view of the decision of this Court in Bhag Singh vs Union Territory of Chandigarh, ; on the question of solati um and interest on the amount awarded.
The judgment also dealt with the question as to who were the successors of Nawaz Jung.
We are also not concerned with this aspect of the matter inasmuch as the same is the subject matter of another appeal being Civil Appeal No. 4406 of 1986.
We are concerned in this appeal with the right of Abdul Khader.
The High Court discussed 18 documents out of which two are challans and other depositions.
Kowlnama executed in favour of Shaik Hussain was not filed.
The Kowlnama executed in favour of the son, Mohd. Abdul Khader, on December 3, 1950 was filed and was marked as Exhibit C 1.
The document recited: "permitted to utilise garden fruits, flowers and mango fruits".
The tenant was permitted to raise flower trees at his own expenses.
The High Court took into consid eration the judgment in Suit No. 13(1) of 195 1 52 by the tenant.
The High Court on consideration of these documents was of the view that these documents showed unequivocally that the tenancy was in favour of Shaik Hussain from 1935.
After his death Mohd. Abdul Khader was recognised as the tenant.
The land was taken possession of under a panchanama dated 12th of September, 1963.
According to the High Court the documents discussed in the judgment indicated that Shaik Hussain was a tenant from 1935.
After his death on July 18, 1949, his son Mohd. Abdul Khader became a tenant.
In this background the Court addressed itself to the question wheth er Abdul Khader was a protected tenant or not entitled to 60% of the compensation.
No document was filed to show that Abdul Khader was declared by the revenue courts as a pro tected tenant.
1240 The High Court was of the view that there was surfeit of evidence prior to the commencement of the Andhra Pradesh Act that Shaik Hussain was a tenant of the land.
The question was whether on enforcement of the said Act Abdul Khader, respondent herein, was a protected tenant.
The High Court thereafter discussed the facts mentioned hereinbefore about the order of the District Revenue Officer and the orders of this Court referred to hereinbefore.
The High Court noticed the position that under the said Andhra Pradesh Act it was for the revenue authorities to order whether a tenant is a protected tenant under section 34, section 37 'and section 37A of the said Act.
Section 37A was enacted on 12th of March, 1956.
The High Court was, however, of the view that it cannot be said that it was for the revenue authorities alone to decide the issue because the arbitrator was ordered to decide the issue by the High Court on 19th August, 1974 and by this Court on 30th of January, 1975.
The High Court also referred to the directions of this Court dated 19th August, 1985 mentioned hereinbefore.
The High Court was of the view that the arbitrator was to decide that question and the arbitrator was not in error in deciding the issue in the manner it did.
The Court reiterated that there was surfeit of evidence to declare that Abdul Khader was a tenant.
If he was a tenant, the High Court observed.
he was a protected tenant under section 34 read with section 37 or under sec tion 37 A of the Andhra Pradesh Act.
The High Court on reciting the facts came to the conclusions, inter alia: (a) that Abdul Khader because he was a tenant between January, 1942 to January, 1948 for six years, therefore, was a pro tected tenant under sub clause (ii) of clause (1) of section 34 of the Andhra Pradesh Act; (b) that Abdul Khader held the land from October, 1943 to October, 1949, therefore, was a protected tenant of Sail Gulshan under sub clause (iii) of clause (1) of section 34 of Act 21 of 1950.
In these circum stances, the High Court held that Adbul Khader was entitled to 60% of the compensation paid.
Aggrieved by the aforesaid decision, the appellants being the successor of the owner of the land in question is in appeal before us.
Shri Shanker Ghosh, learned counsel for the appellant, urged that under the said Andhra Pradesh Act it was mandatory under section 99 read with section 102 of the said Act in conjunction with the definition of section 2(r) of the Act for the revenue authorities to decide wheth er Abdul Khader was a protected tenant or not.
There being no such finding by the revenue officer, on the other hand there being a finding mat Abdul Khader was not a protected tenant by the revenue authorities it was not open to the arbitrator to decide the question of 1241 protected tenancy.
The arbitrator therefore, exceeded his jurisdiction and the High Court was in error.
Shri A.K. Sen, on behalf of the respondents on the other hand contended that the compensation payable in respect of the requisitioning and acquisition must be determined under the Central Act and the arbitrator was the authority to decide that question.
The question of Abdul Khader 's right to compensation had to be decided in accordance with law.
He had claimed rights of a protected tenant.
He had sought to establish his rights which must be found within the fourcor ners of the Andhra Pradesh Act along with other documents because under section 40(4) of the Andhra Pradesh Act the interest of a protected tenant in the land held by him as a protected tenant formed 60%.
The rights of the protected tenants have been defined in the Andhra Pradesh Act and relevant provisions of that Act namely, sections 34, 37, 37A and 40 in conjunction with the definition under section 2(r) have to be taken into consideration in the background of the facts and circumstances of the case.
The two orders of this Court as we have mentioned hereinbefore dated 30th of Janu ary, 1975 and 19th of August.
1985 reiterated the position that it was for the arbitrator to decide the question and he should decide the question in the light of sections 99 and 102 of the Andhra Pradesh Act as set out hereinbefore.
On behalf of the appellant it was submitted that there was a complete bar for any civil court to go into the question whether Abdul Khader was a protected tenant and as such the arbitrator and the High Court had no jurisdiction to decide this question.
For this reliance was placed on Section 102 of the Andhra Pradesh Act which lays down that the Act will not apply to lands leased, granted, alienated or acquired in favour of or by the Central Government or the State Govern ment etc.
and on Section 99 of the Act which bars the jurisdiction of civil courts to deal with any question which is under the Andhra Pradesh Act required to be settled, to be decided or dealt with by the Tahsildar, Tribunal or Collector.
According to the appellant inasmuch as whether Abdul Khader was a protected tenant had not to be settled by the Collector or the Tribunal, the arbitrator and the High Court were in error in going to that question.
We are unable to accept this submission.
By the scheme of the Central Act compensation was payable to persons who had interest in the land acquired.
Who are the persons who have interest in the land had to be decided in accordance with the law and the evidence.
Determination by the revenue authorities and non determination is not conclusive or decisive.
It is clear that section 102 of the Andhra 1242 Pradesh Act mentions that after acquisition the Act was not to apply in respect of certain land.
Therefore, it was submitted by the respondents that section 99 of the Andhra Pradesh Act.
which made the determination by the Tahsildar to be final and debarred other courts from going into the question did not apply in case of compensation payable.
In the background of the totality of circumstances as manifest in the different orders it appeared to the arbitrator and the Court that the entry which was made in favour of Abdul Khader as the protected tenant was of doubtful validity.
We are of the opinion that the High Court was not in error in so holding.
It was the observation of the revenue authori ties that it was spurious.
That in any event what was the interest of Abdul Khader had to be determined in determining the question of payment of compensation to him and in so determining the facts and circumstances and the proceedings before the revenue authorities and entries and subsequent deletions had to be taken into consideration by the arbitra tor.
The arbitrator has done so.
He had jurisdiction to do so.
The High Court has so held.
This Court by the two orders referred to hereinbefore had also affirmed this position.
In that view of the matter we are unable to accept the challenge to the award.
Furthermore, under section 99 of the Andhra Pradesh Act the bar was not against the arbitrator but against a civil court.
In determining the amount of compensation payable to Abdul Khader under the Central Act, his interests in the property had to be determined.
In another context, the High Court of Andhra Pradesh enunciated the position that it was necessary to determine the interest of the persons claiming compensation.
Reference may be made to the decision in the case of Archi Appalareddi and another vs Special Tahsildar, land Acquisition, Visakhapatnam Municipality and mother, [1979] Andhra Weekly Reporter, Vol.
1 p. 101, where the Court observed in the context of the Land Acquisition Act that a tenant was a 'person inter ested ' as defined in clause (b) of section 3 of the Land Acquisition Act.
He has a right to object to the acquisition and/or the quantum of compensation.
The Land Acquisition Officer or the Court, as the case may be, had to ascertain the value of a claimant 's right in the property acquired and compensate him in that behalf.
We may mention that in the two orders of this Court dated 30th of January, 1975 and 19th of August, 1985 referred to here inbefore, this Court had left it open to the High Court and to the arbitrator to decide whether he is a protected tenant or not.
the arbitrator has decided that question and the High Court found 1243 over wheiming evidence in support of it.
In that view of the matter we must uphold that decision however unsatisfactory it might appear that a fruit plucker gets 60% of the compen sation while the owners get only If that is the law let it be.
In the aforesaid view of the matter this appeal must fail and is accordingly dismissed with costs.
P.S.S. Appeal dismissed.
| Section 8(1)(b) of the provides for appointment of an arbitrator by the Central Government in a case where there is no agreement for determining compensation.
Sub section (4) of section 40 of the Andhra Pradesh (Telanga na Area) Tenancy and Agricultural Lands Act, 1950 stipulates the interest of a protected tenant in the land at sixty per cent.
The expression 'protected tenant ' is defined in section 2(r) to mean a person who is deemed to be a protected tenant under the provisions of the Act.
One of the conditions to be fulfilled by such a person under section 34(1)(a), sub cls.
(ii) and (iii) is that he should have held the land as tenant continuously for a period of six years immediately preceding the 1st day of January, 1948 or for a period of six years commencing not earlier than 6th October, 1943 and completed before the commencement of the Act.
Section 35 makes the decision of the Revenue Authorities on the question conclu sive.
Section 37 mentions other persons not entitled under section 34 to be deemed to be protected tenants.
Section 37A enables persons holding lands as tenants at the commencement of the Act to be deemed to be protected tenants.
Section 99 bars the jurisdiction of Civil Courts and section 102 exempts lands leased, granted, alienated or acquired in favour of or by the Central Government.
Certain lands settled in favour of the appellant by his grandfather were requisitioned in 1963 by the Military Estate Officer, Secunderabad.
Respondent claimed rights as a tenant of the said land.
1230 His claim was settled by sharing of the rent.
The property was acquired under the Central Act subsequently in 1970.
The entry in the Protected Tenancy Register prepared under section 37A of the Andhra Pradesh Act in favour of the respondent was cancelled by the Tahsildar in 1970 suspecting it not to be genuine.
That order was challenged by the respondent in a writ petition before the High Court which held that whether the petitioner was a protected tenant or whether he had any prima facie interest in the suit property were matters entirely within the sole jurisdiction of the arbitrator who was to be appointed under section 8 of the Central Act.
The District Revenue Officer in the proceedings before him held that entry in the Protected Tenancy Register was a spurious one as it was not supported by an inquiry.
This order was upheld by the High Court in revision filed by the respondent, In its order dated 30th January, 1975 in tile special leave petition this Court left it open to the High Court and the arbitrator to decide the question whether the respondent was a protected tenant or not.
The arbitrator after exhaustively discussing the evi dence on record held that the respondent was a protected tenant and as such he was entitled to sixty per cent of the compensation money payable.
In the statutory appeal of the appellant before the High Court an application filed by the respondent for adducing additional evidence was allowed and a Commissioner appointed.
Disposing of the appeal against the aforesaid order this Court in its order dated 19th August, 1985 reiterated its earlier view that the High Court should determine this issue.
The HIgh Court took the view that the arbitrator was not in error in deciding the issue in the manner it did, that there was surfeit of evidence to conclude that the respond ent was a protected tenant under section 34 read with section 37 or under section 37A of the Andhra Pradesh Act and, therefore, he was entitled to sixty per cent of the compensation payable.
In this Appeal by Special Leave, it was contended for the appellant that it was mandatory under section 99 read with section 102 of the Andhra Pradesh Act for the Revenue Authorities to decide whether a person was a protected tenant or not and the Revenue Authorities having found that he was not a protected tenant, it was not open to the arbitrator to decide the question of protected tenancy.
On behalf of the respondent it 1231 was contended that the compensation payable must be deter mined under the Central Act and the arbitrator was the authority to decide that question.
Dismissing the appeal, the Court, HELD: The challenge to the award is rejected.
The re spondent was a 'protected tenant ' under the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Lands Act, 1950.
He was, therefore, entitled to get sixty per cent of the compensation amount.
[l242D, H; 1243A] Under section 99 of the Andhra Pradesh Act, which makes the determination by the Tahsildar to be final, the bar of jurisdiction is not against the arbitrator appointed under section 8 of the but against a civil court.
In determining the amount of compensation payable to a person under the Central Act his interest in the property had to be deter mined.
[1242DE] Atchi Appalareddi and another vs Special Tahsildar Land Acquisition, Visakhapatnam Municipality and another, (1979 Andhra Weekly Reporter, Vol.
1 p. 101), referred to.
By the scheme of the Central Act compensation was pay able to persons who had interest in the land acquired.
Who were those persons had to be decided in accordance with law and the evidence.
Determination by the revenue authorities and non determination was not conclusive or decisive.
Sec tion 102 of the Andhra Pradesh Act lays down that after acquisition of the lands by the Central Government the Act was not to apply in respect of such lands.
Section 99 of that Act, therefore, had no application.
[124 1 G 1242B] In its two orders dated 30th January, 1975 and 19th August, 1985 this Court had left it open to the High Court and to the arbitrator to decide whether the respondent was a protected tenant or not.
What was the interest of the re spondent in the land acquired had to be determined in deter mining the question of payment of compensation to him and in so determining the facts and circumstances and proceedings before the revenue authorities and entries and subsequent deletions had to be taken into consideration by the arbitra tor.
The arbitrator had done so and held that the respondent was a protected tenant and as such entitled to sixty per cent of money payable for the acquisition of land.
He had jurisdiction to do so.
The High Court found overwhelming evidence in support of this view.
It discussed 18 documents and concluded (a) 1232 that because the respondent was a tenant of the said land between January 1942 to January 1948 for six years he was a protected tenant under sub cl.
(ii) of cl.(a) of sub section
(1) of section 34 of the Andhra Pradesh Act, and (b) that because he held the land from October 1943 to October 1949 he was a protected tenant under sub cl.
(iii) and held that he was entitled to sixty per cent of the compensation.
This view has to be upheld however unsatisfactory it might appear that a fruit plucker gets sixty per cent of the compensation while the owners get only forty per cent.
If that is the law let it be. ]1242G, C; 1239AB; 1242H 1243A; 1239DE; 1240EF; 1243A]
|
ivil Appeal No. 2966 of 1979.
From the Judgment and Order dated 31.12.
1977 of the High Court of Himachal Pradesh in R.F.A. No. 7 of 1970.
F.S. Nariman, V.A. Bobde, S.D. Mudaliar and C.K. Rat naparkhi for the Appellant.
K.G. Bhagat, Naresh K. Sharma for the Respondents.
473 The Judgment of the Court was delivered by AHMADI, J.
This appeal by special leave is directed against the judgment of the Division Bench of the High Court of Himachal Pradesh in Regular First Appeal No. 7 of 1970 arising out of Suit NO. 11 of 1987.
The appellant original plaintiff is the second son of late Raja Padam Singh, the ex ruler of Bushahr State.
He filed a suit on 18th November, 1964 principally against the Union of India and the Govern ment of the Union Territory of Himachal Pradesh for a decla ration of his proprietary rights in about 1720 acres of forest land situate in Khatas Nos. 1 & 2, Khataunis Nos.1 to 25 comprising 106 plots, both measured and unmeasured, bearing Khasra Nos. 1, 2, 6, 23, 30, 34, 44, 108,218,222,309,341,409,479,606,433,241,732/280, 736/394 and 728/402 of Chak Addu, tehsil Rampur, in the present district of Mahasu in Himachal Pradesh.
He traced his title to the said lands to a Patta executed by his father on 14th Maghar 1999, Bikrami, i.e. 28th November 1942 A.D., and to the Order No. 5158 of even date directing corresponding mutation changes.
In the said suit Choudhary Gopal Singh & Co., a forest contractor, was added as proforma defendant No. 3 but no relief was claimed against the said party.
The said suit was filed on 18th November, 1964 in the Court of the Senior Sub Judge, Mahasu, but on the upward revision of the suit valuation for the purposes of court fees and jurisdiction the plaint was presented the High Court of Delhi, Himachal Bench, Shimla, and was re numbered as Suit No. 11 of 1967.
The said suit was tried on the original side of the High Court by Jagjit Singh, J. who by his judgment and order dated 6th April, 1970 substantially decreed the suit, in that, he upheld the appellant plaintiff 's claim of owner ship in respect of Khatas Nos. 1 & 2, Khataunis Nos.
1 to 25 comprising 106 plots bearing khasra Nos. 1, 2, 6, 23, 30, 34, 44, 108, 2 18,222,309, 341,409,606, 4 and 33 situate in Chak Addu without prejudice to the application, if any, of Section 27 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953.
The contesting defend ants Nos. 1 and 2 preferred an appeal, being Regular First Appeal No. 7 of 1970, before the Division Bench of the High Court which came to be allowed on 31st December, 1977.
The Division Bench came to the conclusion that the grant made by the erstwhile ruler was in respect of revenue yielding lands only admeasuring about 263.4 bighas and not in respect of the forest lands.
It, however, took the view that after the execution of the lease deed dated 25th September, 1942, Exh.D 1, in favour of the Government of Punjab, the Raja had no subsisting right in the forest lands in question which he could transfer by way of a grant.
In that view of the matter the appeal was allowed and the suit of the 474 plaintiff was dismissed in toto with costs throughout.
Feeling aggrieved by the said judgment and decree, the original plaintiff has preferred this appeal by special leave under Article 136 of the Constitution.
For the sake of convenience we will refer to the parties by their original position and description in the suit.
We now proceed to set out the relevant facts.
The Raja of Rampur Bushahr had sought the aid of the British Government in the management of his forests with a view to preserving, conserving and protecting the same from large scale illicit and indiscriminate cutting of trees.
Pursuant to this request an agreement dated 20th June, 1864 was executed between the said Raja and the British Govern ment whereunder a fixed royalty was agreed to be paid to the former.
By a subsequent agreement dated 1st August, 1871, the Raja granted his rights in waif and windfall timber to the British Government in consideration of certain payments agreed upon under the said agreement.
The terms of both these agreements were revised in 1877 whereby the British Government agreed to pay a fixed annual sum to the Raja on a fifty years ' lease renewable at the will of the British Government.
This arrangement was further revised in 1929 w.e.f.
1st November, 1928 for a period of twenty five years on agreed terms as to payments, etc.
During the subsistence of the said agreement, the parties executed yet another agreement of lease dated 25th September, 1942, Exh.
D 1, for a term of fifty years w.e.f.
1st April, 1941 superseding all previous agreements.
Under clause (II) thereof, the term 'forest ' was defined to mean and include (a) demarcated forests; (b) forests reserved for the use of the Raja; and (c) undemarcated forests.
Demarcated forests were those which were defined and stated as demarcated forests in the forest settlements of Bushahr State whereas undemarcated forests included (a) all tracts of land bearing tree growth or from which the trees were felled and which paid no land revenue as cultivated land to the Bushahr State; and (b) such other tracts of land, cultivated or uncultivated, as with the previous sanction of the Raja were from time to time included in the existing undemarcated forests or were declared to be undemarcated forests.
By clause (III) of the said document, the Raja granted to the Punjab Government 'the entire and sole control of the whole of the forests of Bushahr excepting those reserved for the use of the Raja '.
The Raja was to receive an annual payment of Rs. 1 lakh to be paid in two equal half yearly installments of Rs.50,000 on 30th April and 3 1st of October of each year.
In addition to the said amount of Rs. 1 lakh he was to receive payment of the whole net surplus on the working of the forests included in the lease.
Thus, according to clause (III) of the lease 475 agreement the Raja granted to the Punjab Government the entire and sole control of the forests of Bushahr, excepting those reserved for his use under clause (II) thereof.
Under Section 1 of the Indian Independence Act, 1947, as from 15th August, 1947, two independent Dominions of India and Pakistan came to be set up.
By virtue of section 4 the Province of the Punjab as constituted under the Government of India Act, 1935, ceased to exist and the same was recon stituted into two new Provinces of West Punjab and East Punjab.
In section 7(1) were set out the consequences of the setting up of the two Dominions, Paragraph (b) whereof said that 'the suzerainty of His Majesty over the Indian States lapses, and with it, all treaties and agreements in force at the date of passing of this Act between His Majesty and the rulers of Indian States '.
The plaintiff 's father Raja Padam Singh having died in April 1947, his eider son Tikka Vir Bhadra Singh born to his first wife Shanta Devi succeeded to the Gaddi under the rule of primogeniture but since he was a minor a council for the administration of Bushahr State was set up to mind the affairs of the State.
On 15th April, 1948 an agreement of merger was signed whereby the Raja of Bu shahr ceded to the Dominion of India 'full and exclusive authority, jurisdiction and powers for and in relation to the governance of the State '.
A centrally administered unit of Himachal Pradesh came into being on that day.
The agree ment of lease dated 25th September, 1942 was formally termi nated by mutual agreement between the East Punjab Government and the Himachal Pradesh Administration on 1st April, 1949.
While the forests of Bushahr were under the control and management of the Government of Punjab, Raja Padam Singh, the plaintiff 's father, executed a document on 14th Maghar 1999.
Bikrami (i.e. 28th November, 1942) whereby he bestowed upon the plaintiff and his mother Rani Sahiba Katochi land admeasuring about 1720 acres.
This original document called the Patta was admittedly lost during the minority of the plaintiff, vide statement of counsel for defendants Nos. 1 and 2 dated 29th May, 1969.
However, the factum of the grant cannot be disputed as it has been referred to in the subse quent two grants executed by the plaintiff 's father on 29th Phagun 1999, Bikrami (i.e. 11th March, 1943 Exh.
P 2) and 24th Maghar 2003, Bikrami (i.e. 10th December, 1946 Exh.
These two subsequent grants Exh.
P 1 and Exh.
P 2 have been proved through the evidence of the scribe ' PW 1 Thakur Chet Ram.
By the execution of the third grant dated 24th Maghar 2003, Bikrami, the half share granted to the Rani Sahiba Katochi under the first grant of 14th Maghar 1999, 476 Bikrami, was transferred to the plaintiff with the Rani Sahiba 's consent.
Thus, the plaintiff became the sole gran tee of the entire area of 1720 acres but as he was a minor his interest was looked after initially by his father who expired in April 1947 and thereafter by his mother Rani Sahiba Katochi as his natural guardian.
After the execution of the first grant of patta the plaintiff 's father made an Order No. 5158 of even date directing his revenue officers to effect consequential changes in the mutation.
P 6 is a copy of the mutation entry which contains the following endorsement: "According to Shri Sarkar 's order No. 5158 dated 14.7.99 (equivalent to 28th November, 1942), the mutation, granting permanent ownership, without condition, of khata khatauni Nos.
1/1 to 20 and 2/21 to 25, plots 106, measuring 263.4 (219.7 plus 43.17) and part of uncultivated Jagir the reve nue and swai of which has been remitted is sanctioned in favour of Rani Sahiba Katochi and Rajkumar Rajinder Singh Sahib in equal shares in its present form.
" The mutation entry Exh.
P 6 does not mention the khasra numbers of the 106 plots.
Khata khatauni No. 1/1 to 20 comprise 82 plots showing an area admeasuring 219.7 bighas as cultivated and 200.8 bighas as uncultivated whereas khata khatauni No. 2/21 to 25 comprise 24 plots showing an area admeasuring 5.6 bighas as cultivated and 38.11 bighas as uncultivated.
The mutation entry, besides mentioning the area of 263.4 bighas, also speaks of 'part of uncultivated Jagir the revenue and swai of which has been remitted '.
Even according to the Division Bench of the High Court it is not in dispute that the measurement of 106 plots is much more than 263.4 bighas.
This stands corroborated by the note of Mr. Raina, the then Conservator of Forests, Shimla Circle dated 24th July, 1960 which discloses that the disputed plots over which the plaintiff has made a claim admeasure about 1819 acres.
By the second grant of 29th Phagun 1999, Bikrami, the plaintiff 's father granted certain additional land, namely, Basa Sharotkhala Pargana Bhatoligarh, jointly to the plaintiff and his mother Rani Sahiba Katochi.
This grant refers to the first grant of 14th Maghar 1999, Bikra mi.
The third grant of 24th Maghar 2003, Bikrami, was exe cuted by the plaintiff 's father with a view to making the plaintiff the sole beneficiary under the first two grants by deleting the name of Rani Sahiba Katochi as a joint grantee with her consent.
There is no dispute that under the afore said three grants taken together the properties mentioned therein were bestowed upon the plaintiff exclusively and the Rani Sahiba Katochi had no share therein, nor did she, at any 477 time, make a claim thereto.
After the execution of the third grant an order No. 258 dated 3rd December, 1946, Exh.
P 14, was made by the plaintiff 's father directing that all the lands and 'bases ' granted under the Patta of 24th Maghar 2003, Bikrami, exclusively to the plaintiff should be shown in his sole name in the records by deleting the name of Rani Sahiba Katochi therefrom.
On the death of the plaintiffs father in April 1947, the Political Agent, Punjab Hill States, Shimla, wrote a letter Exh.
P 50 dated 9th August, 1947 expressing dissatisfaction with the non implementation of the Patta and directed speedy implementation thereof.
In paragraph 3 of the said letter it was stated as under: "There is only one point for decision and that is the valid ity of the patta dated 19th December, 1946 granted by the late Raja Padam Singh.
The Committee have not questioned this and I, therefore, take it to be the true will of the late ruler.
The provision of the Patta are quite clear and reasonable, so 1 order the division of the private property, both movable and immovable, in accordance with its terms, that is to say the possession of the immovable property of the late Ruler specified in the Patta shall at once be mutuated in favour of Rajkumar Rajinder Singh and given in trust to Rani Sahiba katochi on behalf of her minor son . . ".
The grant was ultimately given effect to be the mutation entry No.2299 dated 17/18 12 2003, Bikrami, Exh.
Unfortunately, the plaintiff 's mother who acted as his guardian after the death of her husband in April 1947 also passed away shortly thereafter on 22nd July, 1949 necessi tating the Court of Wards to step in since the plaintiff was still a minor.
While the plaintiff 's estate was under the Superintendence of the Court of Wards a list of his Jagirs was prepared.
This list Exh.
P 18, which is in respect of tehsil Ramput, describes the disputed khasra Nos. 341, 108,222, 34, 479,606 and 4 as unmeasured and forest lands.
On the plaintiff attaining majority his estate was released w.e.f.
1st April, 1956 from the Superintendence of the Court of Wards under the Financial Commissioner 's notification dated 24th March, 1956.
Owing to the existence of certain pillars of the forest department within the areas belonging to the plaintiff, the plaintiff made a representation Exh.
P 25 for the removal of the said pillars from his lands.
As a result of this representation, joint demarcation reports dated 24th June 1958, Exh.
P 5, and 9th December, 1958, Exh.
P 8, were made which disclosed that the dispute related to the boundary in compartment 8 b only but no final decision could be taken 478 as some difference of opinion persisted between the officers of the forest department in this behalf.
The plaintiff thereafter made a further representation dated 11th August, 1959, Exh.
D 2, claiming compensation for the trees cut by the forest department during his minority when the estate was under the Superintendence of the Court of Wards.
As a sequel to this representation Mr. Raina, the Conservator of Forests, wrote a letter dated 27th May, 1960 marked secret, Exh. D 3/4, wherin he stated that the first class forest compartments 10A (Part, 10B (Part), 9A, 9B, 9C and 8C were the property of the forest department and the question of demarcation of these forests did not arise.
He further pointed out that if the possession of these compartments is transferred to the plaintiff the department will have to undergo a loss of Rs. 18.75 lakhs.
Lastly, he warned that if the plaintiff 's claim is accepted numerous such claims will be made by the villagers because of similar entries in the revenue records.
He thought that this was a test case.
He followed this up by his note dated 24th July, 1960, Exh.
D 3/6, wherein he reiterated that except for 263.4 bighas of revenue yielding land the claim of the plaintiff in respect of the remaining 1719 acres was fantastic.
He strongly urged that the plaintiff 's claim should be rejected outright and he and his contractor, defendant No. 3, should not be al lowed to lift the timber of the trees which he was permitted to cut from khasra Nos. 341,606, 222 and 34 under the letter No. Ft/43 124/VI dated 29th February, 1959.
Thereafter the Divisional Forest Officer by his letter No. C II 37/810 dated 25th May, 1960 informed the plaintiff and defendant No. 3 that the timber felled in compartment 9C should not be removed and no further felling of trees should take place in compartments 8C, 9A, 9B and 10A (Part) and lOB (Part) in khasra No. 341.
By a subsequent letter No. CII 37/1181 dated 2nd August, 1960 the plaintiff was informed that the trees felled in compartments 9B and 9C were Government property and could be removed on payment of Rs.3,05,811.70.
An amount of Rs.3,36,000 was later deposited pending finalisation of the dispute.
Certain statutory developments which took place in the meantime may now be noticed.
On 25th February, 1952 the Government of Himachal Pradesh issued a Notification under Section 29 of the declaring that the provisions of Chapter IV of the said enactment shall apply to all forest lands and waste lands in Himachal Pradesh which are the property of the Government or over which the Government has proprietor rights or to the whole or any part of the produce of which the Government is entitled.
This enactment deals with (i) Reserved Forests, (ii) Village Forests and (iii) Protected 479 Forests.
Chapter II comprising Sections 3 to 27 deals with Reserved Forests, Chapter III which consists of a single section 28 refers to Village Forests and Chapter IV compris ing Sections 29 to 34 conncerns Protected Forests.
Section 29(1) empowers the State Government to apply the provisions of Chapter IV to any forest land or waste land which is not included in the Reserved Forests but which is the property of the Government, or over which the Government has proprie tory rights, or to the whole or any part of the forest produce of which the Government is entitled.
According to sub section (2) such forest land and/or waste land comprised in any such notification shall be called a 'protected for est '.
Section 32 empowers the State Government to make rules to regulate the matters catalogued in clauses (a) to (1) thereof in respect of protected forests, which, inter alia, include the cutting, sawing, conversion and removal of trees and timber and collection, manufacture and removal of forest produce from protected forests; the granting of licences to persons felling or removing trees or timber or other forest produce from such forest for the purposes of trade; the payments, if any, to be made by such licencees in respect of such tree, timber or forest produce, etc.
Section 33 pre scribes the penalty for the contravention of the rules.
After the issuance of the Notification Exh.
DW 1/1 under Section 29, the State Government framed the rules under Section 32, Exh.
DW 1/2, of even date.
Under these rules 'First Class Protected Forests ' mean and include those forests which are defined and stated as demarcated forests in the Forests Settlement of Bushahr State viz., Forest Settlement Report of Sutlej Valley and Forest Settlement Report of Rupi, Pabar and Giri Valleys prepared in 1921 and 1911, respectively. 'Second Class Protected Forests ' mean the undemarcated forests or areas other than the demarcated forests and include all tracts of land bearing tree growth or from which the trees have been felled which pay no land revenue as cultivated land.
The Himachal Pradesh Private Forests Act, 1954, (Act No. VI of 1955) came into force from 28th June, 1956.
Section 2 thereof in terms states that the Act shall not apply to any land which is a reserved or protected forest under the .
Section 4 empowers the State Gov ernment to prohibit by notification the cutting, felling, gridling, lopping, burning, stripping off the bark or leaves or otherwise damaging any tree or counterfeiting or defacing marks on trees or timber in such private forests as may be specified.
Under Section 5, after the section 4 notification is issued, the Forest Officer is required within a period of one year from the date of publication of such notification, to demarcate the limit of such forest in accordance 480 with the revenue records and erect such number of boundary pillars at such points of the line of demarcation as may be necessary at Government expense.
Once the notification is issued under Section 4, Section 6 restrains the landlord and all other persons from cutting, collecting, or removing trees, timber or other produce in or from the notified forests in contravention of the provisions made in or under the Act.
Section 11, however, authorises a Forest Officer on the application of the landlord or owner to grant a licence for the felling of trees for such purposes and with such conditions as he may deem proper.
Sub section (3) of that section permits the owner to exercise the option of selling the trees either through the Forest Department or direct to any contractor.
In the latter event the owner must pay 15% fees on the price of the trees calculated in accordance with the prescribed principles.
Section 16 makes a contract entered into by the owner with any person conferring on such person the right to cut, collect or remove trees, timber or fuel from the private forests void unless the owner has first obtained a licence in this behalf under Section 11.
By notification dated 10th June, 1959, Exh.
P 21 published in the Himachal Pradesh Government Gazette dated 25th June, 1959, the plaintiff 's forests in Khasra Numbers 1, 2, 3,218, 606, 149, 263 and 166 situate in Village Addu were declared 'private forests ' under Section 4 of the said statute.
By a similar notification dated 17th September, 1959, Exh.
P 22, published in the Himachal Pradesh Government Gazette dated 26th September, 1959, Khasra Numbers 34, 309, 108, 479, 307, 207 and 3 17 situate in Village Addu were also notified as private forests of the plaintiff under the same provision.
The expression 'Private Forests ' as defined by Section 3(13) of the Act means a forest which is not the property of the Government or over which the State has no proprietary fights or to the whole or any part of the forest produce of which the State is not entitled.
Subsequently, by Corrigendum Exh.
P 29 dated 28th July, 1960, the State Government deleted Khasra Numbers 1, 2, 3, 2 18, 6, 44, 606, 149, 263 and '166 of Village Addu from the notification of 10th June, 1959 and Khasra Numbers 34, 309, 108,479,307,207 and 370 of Village Addu from the notification dated 17th September, 1959 on the ground that they were erroneously notified as they in fact belonged to the Himachal Pradesh Administration.
After the said enactment came into force w.e.f.
28th June, 1956 and before the notifications under Section 4 thereof were issued, the plaintiff had by his application dated 21st May, 1957 applied for permission, presumably under Section 11 of the Act, to fell trees from Khasra Numbers 1, 222 & 606 of Village Addu.
The said permission 481 was granted by Exh.
P 20 and the plaintiff also paid the fee as demanded by Exh.
P 23 dated 23rd August, 1957.
By another application dated 16th February, 1959 the plaintiff sought permission to sell trees from khasra Numbers 34, 222, 34 1, 606 of Khewat No. 1, Khatauni No. 2 which was granted by the Chief Conservator of Forests by his letter Exh.
P 28 dated 19th February, 1959.
By the said letter the plaintiff was informed that the Divisional Forest Officer had been in structed to mark the trees in the said areas silviculturally and to allow him to sell and remove the same through his contractor (defendant No. 3).
However, the attitude of the Government underwent a change after Mr. Raina 's secret letter of 27th May, 1960 and his note dated 24th July, 1960.
The State Government issued a corrigendum dated 28th July, 1960 amending the earlier notifications issued under Section 4; restrained the plaintiff and his agent defendant No. 3, from cutting and lifting the trees from the forest area and compelled deposit of Rs.3,36,000 for removing the trees and was also required to execute a bond.
The plaintiff, there fore, filed the suit which has given rise to this appeal to assert his rights.
The learned Trial Judge on a close scrutiny of the oral and documentary evidence placed on record came to the con clusion that (i) the plaintiff 's father, who in internal matters had sovereign powers, had bestowed the lands in dispute as a perpetual and unconditional grant on the plain tiff and the mere fact that in the mutation entry the area was shown to be 263.4 bighas did not imply that the grant was limited to that much land only.
He held that (ii) in the State of Bushahr only cultivated land was generally measured and forest lands remained unmeasured and, therefore, the area of only revenue yielding cultivated land was mentioned in the mutation entry but that did not mean that the grant was confined to that area only.
He also held that the subse quent grant of 25.10.2003 Bikrami was executed by the plain tiff 's father with the concurrence of Rani Saheba Katochi, with a view to conferring exclusive proprietary rights in the entire grant on the plaintiff.
Further according to the learned Trial Judge, the evidence, considered as a whole, fully established that (iii) the grant was not repudiated but was given effect to by the Political Agent, Shimla, as well as by the revenue authorities of Bushahr State and was recognised by the Dominion of India at the time of the State 's merger.
He found that in the statement of the Zamin dars of Village Addu, Exh.
P 26, it was specifically admit ted that the forest comprised Khasra Nos. 34, 141, 222 and 606 Khewat No. 1, Khatauni No. 2 and was 'owned ' and was 'in possession ' of the plaintiff.
(iv) Assuming that the lands in dispute formed part of forests leased to the Government of Punjab, 482 the learned Judge held that the Raja was not precluded from making the grant and the grants made in favour of the plain tiff were perfectly legal and valid.
After the lease was terminated by mutual consent of the Governments of Himachal Pradesh and East Punjab, the Himachal Pradesh Administration treated the plaintiff as the owner and permitted him various acts as owner and person in possession.
Notifications were issued under Section 4 of the Himachal Pradesh Private Forest Act, 1954 declaring the disputed lands as private forests.
He held that the notification issued under Section 29 of the had no application.
According to him, except for an area of 11 biswas occupied by roads of the Forest Department, the plaintiff was in possession of the remaining forest lands.
The learned Trial Judge, there fore, held that the suit was neither barred by limitation nor on account of Section 34 of .
The other technical objections to the maintainability of the suit were spurned and the learned Trial Judge decreed the suit as stated earlier On appeal the Division Bench of the High Court came to the conclusion that when the plaintiff 's father executed the first grant in favour of the plaintiff he was aware that he had renewed the lease in respect of the forest lands for a period of fifty years and, therefore, he could not have intended to make an absolute grant in respect of the forest lands covered under the lease to the plaintiff.
According to the Division Bench after the execution of the agreement of lease dated 25th September, 1942, (v) the plaintiff 's father had no surviving or subsisting right in the lands covered under the lease and, therefore, the grant in respect of the forest lands was of no consequence and did not confer any right, title or interest in the plaintiff.
At the most the grant could take effect in respect of revenue yielding cultivated land admeasuring 263.4 bighas.
In support of this finding the Division Bench points out (1) that the grant Exh.
P 1 dated 10th December, 1946 refers to the lands by Basa and not Khasra which reveals that reference is only to revenue yielding area in the occupation of tenants; (2) that clause 2 of Exh.
P 2 shows that the intention of the grantor was to secure an annual income of Rs.9,000 for his son which could only be from the revenue yielding lands as the forest lands were already placed at the disposal of the Government of Punjab and (3) that the recital in Exh.
P 2 regarding handing over of the Basajat could be in respect of revenue yielding area only as the forests were already in the pos session of the Punjab Government.
The 'Division Bench also held that the notification under Section 29 of the Indian Forests Act was validly issued and so long as it held the field, no notification could be issued under Section 4 of the Himachal Pradesh Private Forest Act, 1954 and 483 the same were, therefore, rightly corrected by deleting the Khasra Numbers claimed by the plaintiff from the notified forest area.
It, therefore, held that the said two notifica tions issued under Section 1 had no efficacy in law and the permissions granted under Section 11 of the said law can be of no avail to the plaintiff.
As regards the plaintiff 's contention based on the surrender of the lease in 1949, the Division Bench concluded that the exchange of letters Exh.
DW 1/3A dated 25th April, 1949 by Himachal Pradesh Govern ment and Exh.
DW 1/ 3B dated 5/9th May, 1949 by the East Punjab Government revealed that an arrangement was worked out whereunder the East Punjab Government transferred the management and administration of the disputed forests to the Himachal Pradsh Government on certain terms and conditions and there was no completed surrender of the lease.
Adopting this approach, the Division Bench reversed the findings recorded by the learned Trial Judge and dismissed the plain tiff 's suit in toto with costs throughout.
It is against the said Judgment and decree that the plaintiff has moved this Court.
From the above resume of facts and findings recorded by The Courts below, the questions which arise for our determi nation and on which counsel for the rival sides addressed us may be formulated as under: 1.
Whether, by the execution of the Agreements of Lease from time to time beginning with the Agreement of 20th June, 1864 and ending with the Agreement of 25th September, 1942, the erstwhile Rulers of Bushahr State, including the plain tiff 's father, had been divested of their rights, title and interests in the forest lands leased thereunder? 2.
If no, whether the plaintiff 's father was competent to make grants in respect of such forest lands under the Pattas of (i) 14 Maghar 1999 Bikrami (i.e. 28th November, 1942): (ii) 29th Phagun 1999 Bikrami (i.e. 11th March, 1943): and (iii) 24th Maghar 2003 Bikrami (i.e. 10th December, 1946)? 3.
If yes, was the grant confined to the revenue yielding lands admeasuring about 263.4 bighas only or extended to the other unmeasured forest lands also as claimed by the plain tiff? 484 4.
Was the State Government competent to issue the Notifica tion under Section 29 of the ? If yes, what is its effect on the plaintiff 's claim in the suit? and 5.
Was the State Government competent to issue Notifications under Section 4 of the Himachal Pradesh Private Forest Act, 1954? If yes, was the State Government justified in issuing the subsequent Corrigendum of 28th July, 1960? What is the effect of these statutory developments on the plaintiff 's claim? In order to appreciate the circumstances in which the erstwhile Ruler of Bushahr State entered into an agreement with the British Government in 1864, it would be advanta geous to notice a few facts mentioned in H.M. Glover 's Forest Settlement Report of 11th February, 1921.
In Vol. 1, Chapter II of this Report which concerns Bushahr State, the history of Bushahr forests prior to 1850 is set out.
It reveals that at that time large matured trees were plenti ful.
However, there was large scale destruction of these trees due to frequent fires, shifting of cultivation and felling of trees by traders.
The Report mentions: "Every forest cleared by traders was subject to frequent fires either caused by carelessness or by villagers who fired the debris and what was left of the standing crops in order to clear the ground for cultivation; there can be no question that if the Government had not assumed control, the forest would have practically disappeared from all the more accessible slopes.
" It further reveals that the Raja found it difficult to deal with the traders who indulged in destroying the forests by indiscriminate felling of trees and was anxious to protect them.
With this in view he eventually concluded an agreement of lease in 1864 with the British Government whereunder the latter agreed to protect and conserve the forests and pay a fixed royalty for each tree felled.
In 1877 the lease was revised, the British Government agreeing to pay a fixed annual lumpsum.
The lease was renewed in 1928 on revised terms as to payment for a further period of 25 years but before the expiry of that period another agreement of lease Exh.
D 1 was concluded between the Raja and the Government of Punjab on 25th September, 1942.
Clause III of the docu ment recites as under: ' 485 "III.
In consideration of the following payments, the Raja hereby grants to the Punjab Government the entire and sole control of the whole of the forests of Bushahr excepting those reserved for the use of the Raja as defined in Clause II and subject to the definitions and rules prescribed in the Schedule and Appendices attached to this agreement" It becomes clear from the aforesaid clause in the lease deed that the Raja granted 'the entire and sole control ' of the whole forest of Bushahr to the Punjab Government excepting the fights specifically reserved unto him.
This entire and sole control was granted to enable the Punjab Government 'to make more definite provisions for the conservancy of the forests '.
Clause IX of the agreement makes this clear when it says that the whole cost of conserving the forests in cluded in the lease together will all costs of felling and transporting timber for use of the Punjab Government and of maintaining the necessary establishment in such forests shall be borne by the Punjab Government unless otherwise provided for in the lease.
From this clause also it can be seen that the emphasis was on the need to conserve the forests.
The Rules framed in the Schedule to the lease reinforce this view.
Under paragraph 1 of the Schedule (a) breaking up land for cultivation; (b) setting fire to grass tracts in the vicinity of forest or negligently permitting the fire to extend to forests; (c) setting fire to grass, trees, bushwood or stumps; (d) cutting out slabs, torches, etc., from the steam of standing trees, barking and tapping for resin, or otherwise injuring trees; (e) felling or lopping trees; (f) selling timber; and (g) removing dead leaves and surface soil, is prohibited unless expressly permitted by the Divisional Forest Officer.
Even the Raja is not permitted to fell trees and/or remove converted timber from the leased area excepting the specified quantity re quired for State purposes, vide paragraph 5 of the Schedule.
It, therefore, seems clear to us that the paramount object of the lease was to conserve the forests of Bushahr State.
But, by concluding the lease agreement with the Punjab Government, the erstwhile Ruler did not convey all his fights, title and interests in the leased forest lands to that Government.
All that he did was to transfer the control and management of the forests to the Punjab Government with a view to preserving and conserving the forests.
He retained his proprietary interest in the forest lands, subject of course to the limitations concerning the management of the leased area and the fight to the usufruct therefrom.
Had it been the intention of the Raja to divest himself of all his interests in the forests lands there was no need to provide the duration of the lease on the 486 expiry whereof (unless the renewal clause was invoked) the Raja would have a right of re entry.
The lease also provided that in addition to the two half yearly installments of Rs.50,000 each, the Raja was to receive payment of the "Whole net surplus on the working of the forests included in the lease".
This is also consistent only with the position that the Raja retained his proprietory interests in the forest lands.
We, therefore, find it difficult to agree with the Division Bench that by concluding the agreements of lease from time to time the former Rulers of Bushahr State including the plaintiff 's father had divested themselves of all their rights in the leased forests.
We are of the opin ion that the plaintiff 's father had a surviving and subsist ing right in the forest lands which were the subject matter of the lease dated 25th September, 1942 and was competent to grant the same to the plaintiff or anyone else, albeit subject to the terms of the lease.
The first patta was executed by the plaintiff 's father on 14th Maghar 1999 Bikrami whereby he bestowed certain lands jointly on the plaintiff and his mother.
The original patta is admittedly not traced.
The plaintiff 's father had by his order No. 5158 of even date directed corresponding mutation entries to be made in the relevant records.
The endorsement found in the copy of the mutation entry Exh.
P 6 extracted earlier bears testimony to this fact.
This entry shows that the Raja had granted permanent ownership, without condition, of Khata Khatauni Nos.
1/1 to 20 and 2/21 to 25, comprising 106 plots, admeasuring 263.4 bighas and 'part of uncultivated Jagir ' the revenue and swai of which was remit ted.
Therefore, the doubt regarding the making of the grant of 14th Maghar 1999 Bikrami stands repelled.
The existence of this grant is further fortified by the mention thereof in the subsequent two grants dated 29th Phagun 1999 Bikrami and 24th Maghar 2003 Bikrami.
There can, therefore, be no doubt regarding the execution of the patta of 14th Maghar 1999 Bikrami.
The next question is regarding the identity of land granted to the plaintiff under the said grants.
The entry Exh.
P 6 mentions the Khata Khatauni numbers and the total number of the plots but does not mention the khasra numbers.
Secondly, its area is stated to be 263.4 bighas and 'part of uncultivated Jagir '.
The fact that these lands are situated in Chak Addu is not disputed Says Glover 's Report: "For administrative purposes the village and its outlying hamlets have been formed into a 'Chak ', which forms the unit of the land revenue assessment.
" Since the patta in respect of the first grant is admittedly not 487 available, we have to look to evidence aliunde the grant of identify the property settled on the plaintiff.
We have already referred to the Raja 's order No. 5158 on the basis whereof the entry Exh.
P 6 was made.
The plaintiffs witness PW7 Thakur Sen Negi has deposed that in Khewat 2, Khatauni 21, Khasra Nos. 6, 34, 101, 222, 341, 479 and 4 are unmeas ured.
P 15, P 18, P 33, P 38 and D 4, which are en tries from the Jamabandi also show that Khasra Nos. 6, 34, 108, 222, 341, 479, 606 and 4 of khatauni No. 21 are unmeas ured 'Banjar Kadeem '.
This expression according to Glover 's report means "land, recorded as the property of the Zamin dar, that has lain waste since the 1889 settlement and pays on land revenue until recultivated.
When included in 'Chaks ' in demarcated forests it has almost invariably been acquired or exchanged.
" The Division Bench has, after an elaborate examination of the oral as well as the documentary evidence, particularly Exhs.
P 15, P 17, P 18, P 33, P 34, P 36 and P 38, and the notification Exh.
P 22 declaring certain areas as private forests, come to the conclusion that land de scribed as Banjar Kadeem could include forest lands, thereby repelling the submission made by the plaintiff 's counsel to the contrary.
We cannot, therefore, countenance the submis sion made by the learned counsel for the contesting defend ants that the expression Banjar Kadeem does not include forests.
If it were so, the whole controversy based on the submission that the Raja was divested of his rights in respect of the forest lands covered by the agreement of lease and was not competent to make a grant thereof would have ended in favour of the plaintiff.
We, however, do not consider it necessary to examine the correctness or other wise of this finding of the Division Bench, since we propose to proceed on the assumption that the disputed lands form part of the leased area.
But the question still survives whether in addition to the cultivated lands measuring about 263.4 Bighas the plain tiffs father had made a grant in favour of the plaintiff in respect of the disputed forest lands.
We may now examine if the subsequent two grants throw any light on this point.
The second grant Exh.
P 2 was executed on 29th Phagun 1999 Bikrami.
In this document the Jagir granted to the plaintiff under the first Patta has been described as comprising several 'Basas '.
By the second grant one more Basa Sharotk hola pargana Bhatoligarh was granted in perpetuity.
The land revenue and other cesses in respect of these basas were remitted for ever.
The annual income of the Jagir thus grant ed was Rs.9,000 and in addition thereto the State agreed to pay Rs.9,000 in cash as Jagir money, besides agreeing to bear the expense of the plaintiff 's education and marriage.
The third document Exh.
P 1 was executed on 24th Maghar 2003 Bikrami 488 This document also describes the grant made under the first Patta by different Basas.
It further recites that 'the possession of Basa granted to you has already been given and entries have already been made in your favour and you will realise the income from this Jagir . . '.
The argument that as the actual possession of the forests was with the Punjab Government the same could not have been transferred to the plaintiff overlooks the fact in such cases symbolic and dejure possession is transferred to make the grant complete.
Therefore, the above recital in the document is consistent with the grant.
It is, therefore, clear that certain Basas situate in Basajats were given to the plain tiff as his Jagir.
The dispute in the present case mainly concerns a few Khasra numbers of Basa Kotadhar Ghori Samat Pargana Baghi Mastgarh comprising 106 plots.
What then is a Basa? In paragraph 41 of the Assessment Report of Rohru Tehsil of Bushahr State, Exh. D 7, prepared by Mr. Emerson, Manager of Bushahr State, it is stated as under: "The State lands in which the Raja enjoys both superior and inferior rights of ownership are of several descriptions: Firstly, there are the Crown estates or Basas, comprising of some of the most fertile area which former Rulers reserved for their own enjoyment or for the support of their rela tives and dependents.
These were formerly cultivated by bethus, under the supervision of a number of officials who were supposed either to remit the produce to the Headquar ters or to arrange for its loan on extravagant rates of interests to zamindars At present they are leased to con tractors for fixed periods on cash or grain rents, the former predominating.
" According to PW 11 S.R. Jhingta, the power of attorney of the plaintiff, basa land included cultivated forests and grazing lands.
PW3 Roop Singh Negi described basa lands as Banjar lands, arable lands, cultivated lands and forest lands.
PW 10 Sagar Singh produced pattas to show that two basas containing forests were granted by the Raja to his father.
The Division Bench refused to place reliance on the oral testimony of the aforesaid witnesses in view of the aforequoted authoritative definition.
But this definition is not exhaustive and does not specifically rule out the inclu sion of forest lands.
If by the grant the Raja intended to grant only the revenue yielding area of 263.4 bighas there was no need to mention 'and part of the uncultivated Jagir ' in 489 Exh.
It is an admitted fact that the total area of the basa comprising 106 plots is much more than 263.4 bighas.
That means that it includes besides the cultivated area of 263.4 bighas certain unmeasured area also.
The revenue of the cultivated area of 263.4 bighas is a paltry Rs.58 8 3.
It is not shown that the total revenue of cultivated lands in all the basas constituting the grant works out to Rs.9,000 per year.
Besides, if the grant is confined to 263:4 bighas only, the words 'and part of the cultivated Jagir ' are rendered redundant.
Next the concerned Khasra numbers have been described as Banzar Kadeem which includes forests as held by the Division Bench.
All the entries namely Exh.
P 15, P 33, P 36 and P 38 describe the con cerned Khasra numbers as unmeasured.
If the 106 plots in Exh.
P 6 admeasure more than 263.4 bighas, it follows that they also include unmeasured lands referred to as 'part of the uncultivated Jagir '.
Reference to uncultivated Jagir implies existence of land other than cultivated revenue yielding land which may include forests.
According to Punjab Settlement Manual (Fourth Edition) uncultivated land is classified as Banzar Jagir, Banzar Kadeem and Gair Mumkeen.
The Division Bench points out that the definition in the Manual is not to be rigidly construed and would include forest lands which may not be cultivated but may have the potential for cultivation, if forests are removed.
In other words lands covered by forests may be highly fertile and may be reserved by the Ruler for his own use or for the use of his relatives and dependents.
This supports the statement of PW11 S.R. Jhingta that in Tehsil Rampur forests and grass lands were entered as Banzar Kadeem.
This discussion leads us to the conclusion that a Chak comprises Basas, a Basa comprises both cultivated and uncultivated lands, unculti vated land includes Banzar Kadeem which in turn includes unmeasured forests.
The recent revenue Settlement of 1979 80 shows that the disputed Khasra Numbers 34, 222, 34 1 and 606 comprise of 422 plots admeasuring 789 84 85 Hectares out of which 711 2750 Hectares form part of the forests.
It is pertinent to note that the same is shown in the ownership of the plaintiff.
The relevant revenue records of the Bushahr State right from 1915 16 show the disputed Khasra Numbers as unmeasured.
The list of the plaintiffs Jagir prepared by the revenue authorities after the death of his mother also describes the said Khasra numbers as unmeasured forests.
It is also neces sary to remember that the plaintiff was denied the ownership of Khasra Numbers 241, 732/280, 736/394 and 728/402 admeas uring about 11 biswas as they formed part of the forest road.
These four plots though measured did not yield reve nue.
If the Raja desired to grant only revenue yielding lands to the plaintiff he would 490 not have included these four numbers in the grant.
There is, therefore, intrinsic evidence to show that the grant was not limited to only the revenue yielding area of 263.4 bighas.
The subsequent conduct of the parties, as we shall presently show, also lends support to this view.
On the plaintiff attaining majority his estate was released from the Superintendence of the Court of Wards w.e.f.
1st April, 1956.
The list in respect of his movable and immovable properties was prepared before the properties were handed over to the plaintiff.
This list dated 31st January, 1956 shows the total landed estate comprised of 1864 acres.
In 1958 59 the plaintiff had planted 3000 Deod har and Kail trees which was highly appreciated by the Deputy Commissioner, Vide Exh.
Some land was acquired by the State Government for its P.W.D. and the plaintiff was paid Rs. 11,000 as compensation.
The plaintiff had also made applications for permission to fell trees from the disputed khasras which were granted, vide Exhs.
P 20, P 23 and P 28.
Indisputably trees had been felled pursuant to the permis sion so granted.
Next Exhs.
P 41 and P 42 show that the plaintiff sold some part of khasra No. 341 on 16th April, 1960 and 25th June, 1960 to third parties and corresponding changes in mutation were made.
He had also donated some land from the same khasra for a school.
These are acts of owner ship which have not been repudiated.
The disputed Khasra numbers were also the subject matter of two notifications issued under section 4 of the Himachal Pradesh Private Forest Act, 1954, whereby they were notified as 'private forests '.
All this conduct on the part of the defendants 1 and 2 goes to show that they treated the disputed Khasra Numbers as the Jagir of the plaintiff.
It was only in 1960 after Mr. Raina 's secret letter and his subsequent note that the defendants disputed the plaintiff 's ownership in the said Khasra numbers and issued the corrigendum Exh.
P 29 withdrawing the aforesaid two notifications as it was rea lised that it would result in a substantial loss of Rs. 18.75 lakhs.
Till the doubt was raised by Mr. Raina, the State Government throughout treated the disputed Khasra numbers as forming part of the plaintiff 's Jagir.
this conduct evidence lends support to the view that the disputed Khasra numbers were bestowed on the plaintiff under the first Jagir of 14th Maghar 1999 Bikrami.
Counsel for the defendants, however, contended that it was not open to the Court in view of the prohibition con tained in Section 92 of the Evidence Act to take into ac count the subsequent facts and circumstances to determine the extent of the grant under the Patta of 14th Maghar 1999 Bikrami.
He submitted that where a claim is based on a written document, the terms of the document must be inter preted 491 without the aid of extrinsic evidence.
It is true that ordinarily the intention of the parties to a document must be gathered from the language in which the relevant terms and conditions are couched and no oral evidence can be permitted with a view to varying or contradicting the terms of the document.
To put it differently, if the terms of the document are clear and unambiguous, extrinsic evidence to ascertain the true intention of the parties is inadmissible because Section 92 mandates that in such a case the inten tion must be gathered from the language employed in the document.
But if the language employed is ambiguous and admits of a variety of meanings, it is settled law that the 6th proviso to the section can be invoked ;which permits tendering of extrinsic evidence as to acts, conduct and surrounding circumstances to enable the Court to ascertain the real intention of the parties.
In such a case such oral evidence may guide the Court in unraveling the true reten tion of the parties.
The object of admissibility of such evidence in such circumstances under the 6th proviso is to assist the Court to get to the real intention of the parties and thereby overcome the difficulty caused by the ambiguity.
In such a case the subsequent conduct of the parties fur nishes evidence to clear the blurred area and to ascertain the true intention of the author of the document.
If any authority is needed in support of this proposition reference may be made to the case to Abdulla Ahmed vs Animendra Kissen Mitter, ; At page 46 we find the following passage: "The evidence of conduct of the parties in this situation as to how they understood the words to mean can be considered in determining the true effect of the contract made between the parties.
Extrinsic evidence to determine the effect of an instrument is permissible where there remains a doubt as to its true meaning.
Evidence of the acts done under it is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of instrument (Vide para 343 of Hailsham Edn. of Halsbury, Vol. 10, p. 274)".
In the present case the Patta of 14 Maghar 1999 Bikrami is admittedly lost.
Reliance was, therefore, placed on Exh.
P 6 which incorporates the order No. 5158 of even date.
The entry in Exh.
P 6 mentions the Khata Khatauni of the 106 plots granted to the plaintiff and the area thereof is shown to be 263.4 bighas and part of the uncultivated jagir Since a doubt arose whether the disputed Khasra numbers formed part of the uncultivated Jagir referred to in Exh .P 6, the parties led oral as well as documentary evidence with a view to enabling the Court to 492 ascertain the extent of the Jajir granted to the plaintiff.
Since the words 'part of the uncultivated Jagir ' were ambi gous extrinsic evidence aliunde the grant became necessary to explain the coverage of those words.
We, therefore, do not see any merit in the objection.
We may now consider the effect of the notification issued under section 29 of the .
Sub section (1) of section 29 permits the State Government to issue a notification declaring the application of the provisions of Chapter IV to any forest land which is not included in a reserved forest but which is the property of Government, or over which the Government has proprietary rights, or to the whole or any part of the forest produce of which the Government is 'entitled '.
The forest land com prised in any such notification is called a 'protected forest '.
Sub section (3) of section 29 reads as under: "No such notification shall be made unless the nature and extent of the fights of Government and of private persons in or over the forest land or waste land comprised therein have been inquired into and recorded at a survey or settlement, or in such manner as the State Government thinks sufficient.
Every such record shall be presumed to be correct until the contrary is proved.
" The proviso to that sub section, however, permits the State Government to issue a notification before completion of such inquiry and record in the event of urgency.
The Division Bench was, therefore, not fight in presuming that an inquiry of the type contemplated by subsection (3) of Section 29 must have preceded the notification.
The possibility of the application of the urgency clause cannot be ruled out.
The inquiry is contemplated to determine the nature and extent of the rights of the Government and of private persons in or over the forest land.
Based on the findings of the inquiry the record is to be prepared.
The learned Trial Judge has observed that 'after the grant no right of the Government in the land in suit was recorded in the Forest Settlement or land revenue settlement or the land revenue records '.
Under sub section (3) such a record shall be presumed to be cor rect until the contrary is proved.
The presumption, there fore, attaches to the record prepared in pursuance of the inquiry.
In the present case, no such record evidencing the fight of the Government in the forest land or forest produce is shown to have been made.
Therefore, the question, of presumption of correctness of record never arose and the plaintiff was not obliged to dislodge the same.
The evidence on the contrary shows that the disputed lands were entered in the revenue records as the 493 private property of the plaintiff.
That should be so because where the land in question forms part of a permanently settled grant, it is ordinarily the private property of the grantee.
That is why by the subsequent notifications issued under section 4 of the Himachal Pradesh Private Forest Act, 1954, the disputed forests were notified as private forests of the plaintiff.
The plaintiff, therefore, sought permis sion, presumably under section 11 of the said Act, for cutting and felling trees situate in his private forests.
If the notification issued under section 29 held the field, the State Government could not have issued the subsequent noti fications under section 4 of the State Act, in view of section 2(b) thereof which in terms states that 'this Act shall not apply to any land which is a reserved or protected forest under the '.
But before the State Government can invoke section 29(1), it must be shown that the requirements of that provision are satisfied.
From the various documents placed on record it is quite clear that the disputed forests did not belong to the Government nor did the Government have any proprietary rights thereon.
But the Division Bench has held that the Government was entitled to the whole or part of the forest produce under the agreement of lease dated 25th September, 1942.
The agreement of lease merely permitted the Government to manage the forests as the Raja found it difficult to prevent the indiscriminate cutting and felling of trees.
To preserve and conserve his forests, the Raja sought the aid of the British Government from time to time.
Under the last agreement of lease, the Raja granted the sole control of the forests to the Punjab Government without transferring or conveying his proprietary interests therein.
The Punjab Government was liable to account for the usufruct as the Raja was entitled to the whole net surplus determined triennially after de ducting from the total revenue from the forests the total expenditure incurred by the Punjab Government over the same period.
Therefore, the Government was not 'entitled ' to the whole or any part of the produce in its own right dehors the lease.
The word 'entitled ' in the context must take colour from the preceding words and must be understood to mean that the Government must have an independent claim or right to the forest produce and not merely a right to collect and deal with the same subject to an obligation to account for the same to the owner.
The word 'entitled ' is used in the sense of the Government having a right or claim to the usufruct in its own right and not as the agent of another.
After we attained independence, the erstwhile ruler of Bushahr State ceded to the Dominion of India whereupon the properties belonging to the State as distinguished from private property devolved on the 494 Himachal Pradesh Administration.
As discussed earlier, the record shows the disputed khasra numbers as the private property of the plaintiff.
The plaintiff exercised proprie tary rights thereon till 1960 when doubts were raised by Raina, who feared that if the plaintiffs claim is conceded the State will have to suffer a loss of Rs. 18.75 lakhs approximately.
Since the Raja exercised supreme fights in internal matters he was entitled to make a grant in respect of property over which he exercised ownership fights as a ruler.
Therefore, once the disputed property was granted to the plaintiff, the latter became the owner thereof.
The suzerainty of the British Crown over the Indian States lapsed as from the appointed day, i.e. 15th August, 1947, by virtue of section 7(1)(b) of the Indian Independence Act, 1947, and with it lapsed (i) all agreements in force between His Majesty and the rulers of Indian States and (ii) all obligations of His Majesty towards the Indian States.
After the merger of the Bushahr State, a separate administrative unit was constituted by the Central Government for Himachal Pradesh.
It appears from the letter Exh.
DW 1/3A dated 25th April, 1949 that the lease agreement was mutually terminated and the management of the forests was taken over by Himachal Pradesh Administration from the East Punjab Government w.e.f.
1st April, 1949 on the stated terms.
The said terms were accepted by the East Punjab government by the Chief Secretary 's letter dated 5/9th May, 1949, Exh.
D 1/3B.
At the date of merger the forests belonging to the State of Bushahr devolved on the Himachal Pradesh Administration except the private forests.
The need to continue the lease for a few private forests was perhaps not felt.
On the termination of the lease the private property reverted to the owners.
However, so far as the plaintiffs forests were concerned they continued under the State 's management since he was a minor.
But on that account the State was not 'ent itled ' to the forests produce from such private forests.
Therefore, the notification issued under section 29 could have no application to such private forests.
The State Government was, therefore, competent to issue the two noti fications under section 4 of the Himachal Pradesh Private Forest Act, 1954, and it was not justified in annulling them on the erroneous premise that the said lands belonged to the State Government.
The Division Bench, therefore, ought not to have reversed the trial court on this point.
In the result this appeal must succeed.
We allow the appeal and set aside the judgment and decree of the Division Bench of the High Court.
We would have been inclined to restore the decree of the Trial Court but counsel for the appellant plaintiff made a statement at the bar that in view of the provisions of the Himachal Pradesh Ceiling on 495 .
Land Holdings Act, 1972, the question of granting such a declaration does not survive.
He, however, submitted that the State Government should be directed to refund the amount of Rs.3,36 lakhs with interest which was deposited by defendant No. 3 in the Treasury under an agreement dated 19th August, 1961, entered into with the President of India through the Secretary, Forest Department.
Clause (VI) thereof provides that in the event the appellant plaintiff succeeds in establishing his title to the trees in question, the said amount would be refunded subject to a deduction of 15% towards royalty.
However, defendant No. 3 filed a suit against the appellant for the recovery of the said amount which suit ended in a compromise decree whereunder the appellant plaintiff paid the 3rd defendant Rs.2.51 lakhs in full and final satisfac tion of his claim reserving unto him the right to recover the deposited amount from the State Bank.
We, therefore, told that the plaintiff appellant is entitled to the refund of Rs.3.36 lakhs with interest at 9% per annum subject to deduction of royalty calculated at 15% The appellant plaintiff has also claimed refund of Rs.4.60 lakhs with interest lying in fixed deposits with the State Bank of India, Shimla in the name of the Registrar of the High Court.
The Division Bench of the High Court by its order dated 14th December, 1970 directed that the trees included in the Local Commissioner 's report dated 7th Decem ber, 1980 be sold by public auction and the sale proceeds be deposited in the State Bank of India, Shimla till the dis posal of the appeal.
Accordingly, the sale proceeds were deposited out of which the appellant plaintiff was permitted to withdraw a sum of Rs.2.60 lakhs after furnishing surety.
The balance of Rs.4.60 lakhs is lying in fixed deposits and the appellant plaintiff is entitled to the refund thereof.
We, therefore, direct that the said amount together with interest accrued thereon shall be refunded to the appellant plaintiff The appellant plaintiff also made a claim in respect of the value of the trees cut and sold by the Forest Department during the year 1951 52 when the appellant was a minor.
The estimated value of these trees is stated to be Rs. 1.50 lakhs.
However, no claim was made in respect thereof in the suit filed by the appellant plaintiff which has given rise to this appeal.
If the appellant plaintiff was entitled to the said amount he ought to have claimed the same in the suit filed in 1964.
We, therefore, do not entertain this claim.
496 The appellant plaintiff has also claimed a refund with interest of the market value of trees totalling 10,505 cut and sold by the Forest Department during the period from 1980 to 1985 notwithstanding the order of this Court dated 17th October, 1979.
However, in view of the fact that Hima chal Pradesh Ceiling on Land Holdings Act, 1972 has since intervened we do not entertain this claim in the present proceedings.
The refusal to entertain this claim will not debar the plaintiff from seeking any relief that is avail able to him under the 1972 Act.
In the ultimate, we direct the State Government to refund Rs.3.36 lakhs with interest at 9% per annum thereon to the appellantplaintiff after deducting royalty at 15%.
We also direct refund of the amount of Rs.4.60 lakhs with interest accrued thereon lying in fixed deposits in the State Bank of India, Shimla under the High Court 's order dated 14th December, 1972.
We grant three months time to comply with above directions.
The appeal is allowed accord ingly but we make no order as to costs.
In view of the above, the CMP will also stand disposed of accordingly.
R.S.S. Appeal allowed.
| The plaintiff/appellant is the second son of late Raja Padam Singh, the ex ruler of Bushahr State in Himachal Pradesh.
The erstwhile Ruler of Bushahr had sought the aid of the British Government in the management of his forests with a view to preserving, conserving and protecting the same from large scale illicit and indiscriminate cutting of trees.
Pursuant to this request, an agreement of lease dated 20th June, 1864 was executed between the said Raja and the British Government.
The terms of this agreement were revised in 1877 and again 1928.
Before the expiry of its extended term, another agreement of lease was executed between Raja Padam Singh and the Government of Punjab on 25th September, 1942 superseding all previous agreements.
By clause (III) of this agreement the Raja granted to the Punjab Government the entire and sole control of the forests of Bushahr excepting those reserved for his use under clause (II) thereof.
The Raja was to receive in lieu thereof an annual payment of Rs.1 lakh, and further payment of the whole net surplus on the working of the forests included in the lease.
Raja Padam Singh executed a document on 28th November, 1942 whereby be bestowed upon the plaintiff and his mother land admeasuring about 1720 acres, both measured and unmeas ured.
The original document, called the Patta, was admitted ly lost during the minority of the appellant.
The patta had, however, been referred to in the subsequent two grants executed by the Raja on 11th March 1943 and lOth December 1946.
After the execution of the first grant or patta the 470 plaintiff 's father had made an Order No. 5158 directing corresponding mutation changes.
The mutation entry, besides mentioning the area of 263.4 bighas, also speaks of 'part of uncultivated 'Jagir '.
Subsequently, in September, 1959, the plaintiff 's forests were notified as 'private Forests ' under section 4 of the Himachal Pradesh Private Forests Act, 1954.
But in July, 1960 the State Government annulled the notifi cations on the ground that they were erroneously issued and that the lands in fact belonged to the Himachal Pradesh Administration.
The plaintiff filed a suit on 18th November, 1964 for a declaration his proprietary rights in about 1720 acres of forest land, both measured and unmeasured.
The learned Single Judge substantially decreed the suit.
The learned single Judge held that (i) the plaintiff 's father, who in internal matters had sovereign powers, had bestowed the lands in dispute as a perpetual and uncondi tional grant on the plaintiff; (ii) the mere fact that in the mutation entry the areas was shown to be 263.4 bighas did not imply that the grant was limited to that much land only; (iii) in the State of Bushahr only cultivated land was generally measured and forest lands remained unmeasured, and, therefore, the area of only revenue yielding cultivated land was mentioned in the mutation entry; (iv) the evidence, considered as a whole, fully established that the grant was not rependiated but was given effect to by the Political Agent, Simla, as well as by the revenue authorities of Bushahr State and was also recognised by the Dominion of India at the time of the State 's merger; (v) even assuming that the lands in dispute formed part of forests leased to the Government of Punjab, the Raja was not precluded from making the grant and the grants made in favour of the plain tiff were perfectly legal and valid; (vi) after the lease was terminated on 11th April, 1949, the Himachal Pradesh Administration treated the plaintiff as the owner and per mitted him various acts as owner and person in possession; (vii) notifications were issued under Section 4 of the Himachal Pradesh Act, 1954 declaring the disputed land as private forests; and (viii) the notification issued under section 29 of the had no application to such lands.
The Division Bench, allowing the State appeal, inter alia took the view that after the execution of the lease deed dated 25th September, 1942 in favour of the Government of Punjab, the Raja had no surviving or subsisting right in the forest lands in question which he could transfer by way of a grant; at the most the grant made by the erstwhile ruler could take effect in respect of revenue yielding lands only, admeasuring 471 about 263.5 bighas, and not in respect of the forest lands; and that the notification under section 29 of the was validly issued and so long as it held the field, no notification could be issued under section 4 of the Himachal Pradesh Private Forests Act, 1954.
Allowing the appeal, this Court, HELD: (1) The plaintiff 's father had a surviving and subsisting right in the forest lands which the subject matter of the lease dated 25th September, 1942 and was competent to grant the same to the plaintiff or anyone else, albeit subject to the terms of the lease.
[486C] (2) The paramount object of the lease was to conserve the forests of Bushahr State.
By concluding the lease agree ment with the Punjab Government, the Raja did not convey all his rights, title and interest in the leased forest lands to the Government.
All that he did was to transfer the control and management of the forests to the Punjab Government with a view to preserving and conserving the forests.
He however retained his proprietary interest in the forest lands.
Had it been the intention of the Raja to divest himself of all his interests in the forest lands, there was no need to provide the duration of the lease on the expiry whereof (unless the renewal clause was invoked) the Raja would have a right of re entry.
[485G H; 486A] (3) The lease provided that in addition to the two half yearly installments of Rs.50,000 each, the Raja was to receive payment of "whole net surplus" on the working of the forests included in the lease.
This was consistent only with the position that the Raja retained his proprietary inter ests in the forest lands.
[486A B] (4) If the terms of the document are clear and unambigu ous, extrinsic evidence to ascertain the true intention of the parties is inadmissible because section 92 of the Evi dence Act mandates that in such a case the intention must be gathered from the language employed in the document.
But if the language employed is ambiguous and admits of a variety of meanings, it is settled law that the 6th proviso to the section can be invoked which permits tendering of extrinsic evidence as to acts, conduct and surrounding circumstances to enable the Court to ascertain the real intention of the parties.
[491B C] In such a case the subsequent conduct of the parties furnished evidence to clear the blurred area and to ascer tain the true intention of the author of the document.
[491D] 472 Abdulla Ahmed vs Animendra Kissen Mitter, ; , referred to.
Since the words 'part of the uncultivated Jagir ' were ambiguous, extrinsic evidence allunde the grant became necessary to explain the coverage of those words.
[492A] (6) There is intrinsic evidence to show that the grant was not limited to only the revenue yielding area of 263.4 bighas.
If by the grant the Raja intended to grant only the revenue yielding area of 263.4 bighas, there was no need to mention 'and part of uncultivated Jagir ' and these words would be rendered redundant.
The subsequent conduct of the parties lends support to this view.
[488H; 489A] (7) From the various documents placed on record it is quite clear that the disputed forests did not belong to the Government nor did the Government have any proprietary rights therein.
The Government was also not 'entitled ' to the whole or any part of the produce in its own right dehors the lease.
[493C] (8) The word 'entitled ' in the context of section 29 of the must take colour from the preceding words and must be understood to mean that the Government must have an independent claim or right to collect and deal with the same subject to an obligation to account for the same to the owner.
On that account the State was not 'enti tled ' to the forests produce from such private lands.
There fore, the notification issued under section 29 could have uo application to such private forests.
The State Government was, therefore, competent to issue the two notifications under section 4 of the Himachal Pradesh Private Forest Act, 1954 and it was not justified in annulling them on the erroneous premise that the said lands belonged to the State Government.
[493F; 494F G]
|
Civil Appeals Nos. 525 and 526 of 1960.
Appeals from the judgment and order dated March 20, 1959, of the Orissa High Court in O.J.C. No. 12 of 1959.
382 A. Viswanatha Sastri, B.R.L. Iyengar and T. M. Sen, for the appellant (In C.A. No. 525/60) and respodent No. 1 (in C.A. No. 526 of 1960.) B. P. Maheshwari, for the appellants (in C.A. No. 526/60) and Respondents Nos.
2 to 8, 10, 13 to 16, 19 21, 23, 25, 27, and 28 (in C.A. No. 525/60).
A. Ranganadham Chetty.
A. V. Rangam, section Mishra, A. Vedavalli and R. Patnaik, for respondent No. 1 (in C.A. No. 525/60) and 2 (in C.A. No. 526 of 60).
December 22.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These two appeals are directed against the order passed by the High Court of Orissa under article 226 of the Constitution striking down as unconstitutional sections 4 and 5 (1) of orissa Ordinance I of 1959 promulgated by the Governor of Orissa on January 15, 1959.
This Order was passed on the Writ Petition filed by Mr. B. K. Bose against the State of Orissa and 27 persons who were elected Councillors of the Cuttack Municipality, including the Chairman and the Vice Chairman respectively.
Appeal No. 525 has been filed by the State of Orissa whereas Appeal No. 526 is filed by the said Municipal Councillors.
The appellants in both the appeals obtained leave from the Orissa High Court to appeal to this Court.
It appears that during December, 1957 to March, 1958, elections were held for the Cuttack Municipality under the provisions of the Orissa Municipal Act, 1950 Orissa (XXXIII of 1950) (hereinafter called the Act) and the 27 appellants in Appeal No. 526 of 1960 were declared elected as Councillors.
From amongst them, Manmohan Mishra was elected the Chairman and Mahendra Kumar Sahu the Vice Chairman.
Mr. B. K. Bose, who is an Advocate practising in Cuttack and a resident within the municipal limits of Cuttack, 383 had contested the said elections as a candidate from Ward No.13.
He was, however, defeated.
Thereupon, he presented an application to the High Court (O.J.C. No. 72 of 1958) to set aside the said elections.
To this application he impleaded the State of Orissa and the 27 elected Councillors.
In his petition Mr. Bose alleged that the elections held for the Cuttack Municipality were invalid and he claimed an injunction restraining the 27 respondents from functioning as elected Councillors and the Chairman and the Vice Chairman amongst them from discharging their duties as such.
The respondents to the petition traversed the allegations made by Mr. Bose and urged that the elections were valid and that the petitioner was not entitled to any relief under.
article 226.
The High Court upheld the contentions raised by the petitioner.
It came to the conclusion that the qualifying date for determining the age qualification of voters under s.13 of the Orissa Municipal Act had been published by the State Government only on January 10, 1958, though the preliminary electoral rolls had already been published on December 23, 1957.
In consequence, the claims and objections had been invited for a period of 21 days from the said date to January 12, 1958.
As a result of the delay made in publishing the qualifying date for the determination of age qualification of voters, the citizens of Cuttack were, in fact, given only two days ' time to file their claims and objections, whereas under the relevant Election Rules they were entitled to 21 days.
The High Court also came to the conclusion that this drastic abridgment of the period for filing claims and objections had materially affected the results of the elections, by depriving several voters of their right to be enrolled as such.
The High Court also found that whereas a candidate was entitled to 15 clear days for the purpose of canvassing, the notification issued under the Orissa Municipal Election Rules curtailed this period to 384 14 days.
According to the High Court, the respondents to the petition had failed to show that the results of the elections had not and could not have been affected by the contravention of the said Rules.
On these findings, the elections in question were set aside and appropriate orders of injunction issued as claimed by the petitioner.
This judgment was pronounced on December 11, 1958.
It appears that the State of Orissa took the view that the effect of the said judgment could not be confined only to Cuttack Municipality.
As a result of the findings made by the High Court during the course of the said judgment the validity of elections to other Municipalities ' might also be exposed to the risk of challenge and that would have necessitated the preparation of fresh electoral rolls after following the procedure prescribed in that behalf by the Act.
That is why the Governor of Orissa promulgated the impugned Ordinance on January 15, 1959.
Broadly stated, the effect of the Ordinance was that the elections to the Cuttack Municipality stood validated and the said Municipality began to function once again.
It also validated the electoral rolls prepared in respect of the other Municipalities in the State of Orissa and thus sought to save elections held or to be held in respect of the said Municipalities from any possible challenge.
When Mr. Bose found that his success in the Writ Petition (O.J.C. No. 72 of 1958) had thus been rendered illusory by the Ordinance, he moved the High Court again by the present Writ Petition.
He contended that the material provisions of the Ordinance, viz., sections 4 and 5(1) were unconstitutional and he asked for an appropriate relief on that basis.
The High Court has again upheld the contentions raised by Mr. Bose and has struck down ss.4 and 5(1) of the Ordinance and issued appropriate orders of injunction restraining the elected Councillors and 385 the Chairman and Vice Chairman from functioning as such.
The State of Orissa and the 27 Councillors by separate applications obtained a certificate from the High Court and have come to this Court by their two separate appeals Nos.
525 and 526 of 1960, Before dealing with the validity of the impugned provisions of the Ordinance, it is necessary to consider the broad features of the Ordinance itself.
As the preamble to the Ordinance shows, the Governor of Orissa promulgated it because he thought it necessary to provide for the validation of electoral rolls and elections to Municipalities.
In his opinion, the preparation of fresh electoral rolls and the holding of fresh elections which would have become necessary unless a validating Ordinance had been passed, would have entailed huge expenditure and would have given rise to problems regarding the administration of such Municipalities during the intervening period.
He also thought that it was necessary to take immediate steps to provide for the validation of the electoral rolls and the elections since the Legislature of the State of Orissa was not then in session and the Governor thought circumstances existed which rendered it necessary to take immediate action.
In exercise of the powers conferred on him by article 213(1) of the Constitution, he was, therefore, pleased to promulgate the Ordinance.
That, according to the statement made in the preamble to the Ordinance explains the genesis of its promulgation.
The Ordinance consists of five sections.
Section 1 gives its short title and extent, while s.2 is the defining section.
Sections, 3, 4 and 5 read thus: "3.
(1) Notwithstanding the Order of any Court to the contrary or any provision in the Act or the rules thereunder: (a) the electoral rolls of the Cuttack Municipality shall be, and shall always 386 be deemed to have been validly prepared and published; and (b) the said electoral rolls shall be deemed to have come in force on the date of publication and shall continue to be in force until they are revised in accordance with the rules made in this behalf under the Act.
(2) The validity of the electoral rolls shall not be called in question in any court on the ground that the date on which a person has to be not less than 21 years of age was fixed under Section 13 of the act after the publication of the preliminary electoral rolls.
Any order of a court declaring the election to the Cuttack Municipality invalid on account of the fact that the electoral rolls were invalid on the ground specified in Sub section (2) of section 3 or on the ground that the date of polling of the election was not fixed in accordance with the Act or the rules made thereunder, shall be deemed to be and always to have been of, no legal effect, whatsoever, and the elections to the said Municipality are hereby validated.
(1) All actions taken, and powers exercised by the Councillors, Chairman or Vice Chairman of the Cuttack Municipality prior to the coming into force of this Ordinance shall be deemed to have been validly taken, and exercised.
(2) All actions taken and powers exercised by the District Magistrate of Cuttack in respect of the Cuttack Municipality in pursuance of the order of the Government of Orissa in the Health (L. section G.) Department No. 8263 L.S.G. dated the 13th December, 1958, shall be deemed to have been taken 387 and exercised by the Council of the said Municipality or its Chairman or Vice Chairman, as the case may be.
" It will thus be seen that section 3 purports to validate the electoral rolls which had been held to be invalid by the High Court in Writ Petition No. 72 of 1958.
Sub section (1) of section 3 deals specifically with the infirmities found in the elections held for the Cuttack Municipality whereas sub section
(2) deals with the defects in the electoral rolls in respect of all the Municipalities.
Section 4 validates, in particular, the elections to the Cuttack Municipality which had been held to be invalid by the High Court.
Section 5(1) purports to protect all actions taken and powers exercised by the Councillors, the Chairman and the Vice Chairman prior to the coming into force of the Ordinance, while section 5(2) validates all actions taken and powers exercised by the District Magistrate of Cuttack in respect of the Cuttack Municipality in pursuance of the Order there specified.
In other words, the Ordinance is a validating Ordinance.
It purports to validate the elections of the Cuttack Municipality in particular and to make valid and regular the electoral rolls which would otherwise have been held to be irregular and invalid in accordance with the judgment of the High Court.
Before the High Court, on behalf of Mr. Bose five points were raised.
It was argued that the provisions of the Ordinance were a mere colourable device to set aside the judgment of the High Court in O.J.C. No. 72 of 1958.
It was, in fact, and in substance, not any exercise of legislative power by the Governor but assumption by him of judicial power which is not warranted by the Constitution.
The High Court has rejected this contention and the finding of the High Court on this point has not been challenged before us.
So we are relieved of the task of considering the merits of this finding.
388 It was then contended that section 4 of the Ordinance contravenes the equality before law guaranteed by article 14 of the Constitution.
It was also urged alternatively that even if section 4 did not contravene article 14, it did not successfully cure the invalidity of the elections to the Cuttack Municipality arising out of the fact that material prejudice had been caused to the citizens by the abridgement of the period for filing claims and objections and of the period for canvassing.
In regard to section 5(1) the argument was that it was invalid under article 254(1).
All these three contentions have been accepted by the High Court and the correctness of the findings recorded by the High Court in that behalf fall to be considered in the present Appeals.
The last contention raised in support of the petition was that on February 23, 1959, a Bill entitled "Orissa Municipal Election Validating Bill, 1959" which contained substantially similar provisions as those of the Ordinance, was sought to be introduced in the Orissa Legislative Assembly but was defeated by a majority of votes and that made the ordinance invalid.
This contention has been rejected by the High Court and the finding of the High Court on this point has not been challenged before us.
Thus, out of the 5 points raised before the High Court, 3 have been argued before us.
For Mr. Bose, Mr. Ranganathan Chetty has also urged two additional points.
He has contended that the present appeals have really become infructuous in view of the fact that the impugned Ordinance lapsed on April 1, 1959.
This argument has been strenuously pressed before us in the form of a preliminary objection against the competence of the appeals themselves.
On the merits, Mr. Chetty has urged an additional ground that the Ordinance was invalid inasmuch as it purported to invalidate the judgment of the High Court in O.J.C. No. 72 of 1958 delivered under article 226 of the Constitution.
389 Let us first consider whether section 4 offends the equality before law guaranteed by article 14.
In coming to the conclusion that the said section is unconstitutional on the ground that it contravenes article 14.
the High Court was very much impressed by the fact that as a result of its earlier judgment, Mr. Bose had obtained a very valuable right of preventing the existing Councillors from functioning as such and of having fresh elections conducted according to law in which he would have the right to stand as a candidate once again.
The petitioner Mr. Bose, may legitimately ask, observed the High Court, why, when hundreds of successful suitors who have sought the help of that Court for relief under article 226 were allowed to enjoy the fruits of their success, he alone should have been discriminated against by hostile legislation.
With respect, this rhetorical approach adopted by the High Court, in dealing with the question about the validity of section 4 is open to the obvious criticism that it is inconsistent with the view taken by the High Court itself in this very judgment that the Governor was competent to issue an Ordinance to invalidate the judgment of the High Court pronounced in O.J.C. No. 72 of 1958; as we have already pointed out one of the contentions raised by Mr. Bose against the validity of the Ordinance was that in the guise of the exercise of the legislative powers, the Governor had purported to exercise judicial powers and that was beyond his competence.
Since the finding of the High Court on this question has not been challenged before us by Mr. Chetty, we propose to express no opinion on its merits.
But if it is held that in promulgating the validating Ordinance the Governor was exercising his powers under article 213(1) and his legislative competence in that behalf is not in doubt, then it is difficult to appreciate how the High Court should have allowed itself to be influenced by the grievance made by Mr. Bose that he had been deprived of the fruits of his success in the earlier Writ Petition.
390 The High Court was, no doubt, influenced by its conclusion that Mr. Bose alone had been singled out for discriminatory treatment of the impugned Ordinance and that, according to the High Court, constituted violation of the provisions of article 14.
There are, however, two obvious infirmities in this conclusion.
Looking at the scheme of the Ordinance, it is clear that sections 3 and 4 must be read together.
The object of the Ordinance was two fold.
Its first object was to validate the elections to the Cuttack Municipality which had been declared to be invalid by the High Court and its other object was to save elections to other Municipalities in the State of Orissa whose validity might have been challenged on grounds similar to those on which the elections to the Cuttack Municipality had been successfully impeached.
It is with this two fold object that section 3 makes provisions under its two sub sections
(1) and (2).
Having made the said two provisions by section 3, section 4 proceeded to validate the elections to the Cuttack Municipality.
If we bear in mind this obvious scheme of the Ordinance, it would be unreasonable to read section 4 in isolation and a part from section 3.
The High Court was in error in dealing with section 4 by itself unconnected with section 3 when it came to the conclusion that the only subject of section 4 was to single out Mr. Bose and deprive him of the fruits of his success in the earlier Writ Petition.
If sections 3 and 4 are read together, it would be clear that Mr. Bose alone had not been singled out or discriminatory treatment; the validating provisions applied, no doubt, to the Cuttack Municipal elections but they are also intended to govern any future and even pending dispute in regard to the elections to other Municipalities.
Therefore in our opinion, the High Court was not right in coming to the conclusion that the object of the Ordinance was only to validate the Cuttack Municipal elections and nothing more.
391 Besides, if the power to validate by promulgating an Ordinance is conceded to the Governor under article 213(1), it would not be easy to appreciate why it was not open to the Governor to issue an Ordinance dealing with the Cuttack Municipal Elections themselves.
The Cuttack Municipal Elections had been set aside by the High Court and if the Governor thought that in the public interest, having regard to the factors enumerated in the preamble to the Ordinance, it was necessary to validate the said elections, it would not necessarily follow that the Ordinance suffers from the vice of contravening article 14.
Article 14 has been the subject matter of decisions in this Court on numerous occasions.
It is now well established that what the said Article forbids is class legislation no doubt, but it does not forbid reasonable classification for the purposes of legislation.
In order that the test of permissible classification should be satisfied, two conditions have to be fulfilled, viz., (1) the classification must be founded on an intelligible differentia which would distinguish persons or things grounded together from others left out of the group, and (2) that the differentia must have a rational relation to the object sought to be achieved by the statute in question.
As this Court has held in the case of SHRI RAM KRISHNA DALMIA V. SHRI JUSTICE section R. TENDOLKAR(1), a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself.
Therefore, if the infirmity in the electoral rolls on which the decision of the High Court in the earlier writ petition was based, had not been applicable to the electoral rolls in regard to other Municipalities in the State of Orissa, then it may have been open to the Governor to issue an Ordinance only in 392 respect of the Cuttack Municipal Elections, and if, on account of special circumstances or reasons applicable to the Cuttack Municipal Elections, a law was passed in respect of the said elections alone, it could not have been challenged as unconstitutional under article 14.
Similarly, if Mr. Bose was the only litigant affected by the decision and as such formed a class by himself, it would have been open to the Legislature to make a law only in respect of his case.
But as we have already pointed out, the Ordinance does not purport to limit its operation only to the Cuttack Municipality; it purports to validate the Cuttack Municipal Elections and the electoral rolls in respect of other Municipalities as well.
Therefore, we are satisfied that the High Court was in error in coming to the conclusion that section 4 contravenes article 14 of the Constitution.
Having regard to the fact that certain infirmities, in the electoral rolls were presumably found to be common to electoral rolls in several Municipalities the Governor thought that the decision of the High Court raised a problem of public importance affecting all Municipal elections in the State and so, acting on the considerations set out in the preamble to the ordinance, he proceeded to promulgate it.
In dealing with the challenge against section 4 of the said Ordinance, the High Court should have considered all the provisions of the Ordinance together before coming to the conclusion that section 4 was discriminatory and contravened Art 14.
In support of the finding of the High Court, Mr. Chetty referred us to the decision in the State of Vermont vs Albert Shedroi.
(1) In that case the Court was dealing with a statute which exempted certain persons from the obligation to obtain a licence for the privilege of selling goods as peddlers.
The impugned statute conferred exemption on persons resident in the State, who had served as soldiers in 393 the war for the suppression of the Rebellion in the Southern States, and were honourably discharged.
This statute was held to contravene the provisions of the 14th Amendment whereby no state can deny to any person within its jurisdiction the equal protection of the laws.
In our opinion, this decision can afford no assistance to Mr. Chetty in supporting the finding of the High Court that section 4 contravenes article 14.
The services rendered by the soldiers in the war for the suppression of the Rebellion in the Southern States had hardly any rational connection with the exemption granted to them from obtaining licence for selling goods as peddlers and so, the classification purported to be made by the impugned statute was obviously unreasonable and irrational.
That is not so in the present case.
Certain irregularities in the electoral rolls were discovered and it was thought that unless the said irregularities were validated, public exchequer would be involved in huge expenditure and problems regarding the administration of Municipalities during the intervening period would arise.
That is why the Ordinance was promulgated.
The impugned provisions of the Ordinance cannot be said to be based on a classification which is not rational and which has no reasonable connection with the object intended to be achieved by the Ordinance.
Therefore, in our opinion the conclusion of the High Court that section 4 contravened article 14 cannot be sustained.
As we have already pointed out, the High Court has taken the view that even if section 4 did not offend against Art 14, it nevertheless could not cure the invalidity of the elections to the Cuttack Municipality inasmuch as it had not said anything about the finding of the High Court that the irregularities complained against had caused material prejudice to the citizens of Cuttack by the abridgement of the period for filing claims and objections 394 and of the period for canvassing.
When the validating provision, observes the High Court, merely cures the invalidity arising out of the fixation of the qualifying date after the publication of the preliminary electoral rolls and is completely silent about the results of the elections being materially affected thereby, it cannot be said to have annulled the judgment of this Court in O. J. C. No. 72 of 1958.
The same reasoning would also apply to the abridgement of the period of canvassing from 15 days to 14 days which also materially affected the results of the elections.
The High Court thought that if the Governor wanted to annul the effect of its earlier decision, he should have made express provision to that effect or at least should have referred to that fact in Section 4.
It is not easy to appreciate this view.
What the Ordinance has purported to do is to validate the electoral rolls and thereby cure the infirmities detected in them.
Once that is done, there is hardly any occasion to say further that no prejudice shall be deemed to have been caused by the said infirmities of the electoral rolls.
In validating the elections to the Cuttack Municipality, the Ordinance was not expected or required to cover the reasons given by the judgment or the finding recorded in it.
The basis of the judgment was the irregularities in the Electoral rolls and the procedure followed in holding the elections.
Those irregularities have been validated and that inevitably must mean that the elections which were held to be invalid would have to be deemed to be valid as a result of the Ordinance and so no question of material prejudice can arise.
That being so, we do not think there is any substance in the alternative argument urged in support of the plea that section 4 is ineffective even if it does not contravene Art, 14.
That takes us to the question as whether section 5(1) is invalid.
The High Court has taken the view that section 5(1) purports to protect not only actions taken and powers exercised under the Municipal 395 Act but all actions and all powers exercised even outside the Municipal Act in violation of other laws.
Basing itself on this broad and wide construction of 5(1), the High Court thought that between ss.5(1) and s.477A of the Indian Penal Code there was inconsistency.
That is why it struck down section 5(1) under articles 254(2) and 213(1) of the Constitution.
We have no hesitation in holding that the construction placed by the High Court on section 5 (1) is obviously unreasonable.
The object of section 5 (1) is plain and unambiguous.
It seeks to save actions taken and powers exercised by the Councillors, the Chairman or the Vice Chairman in pursuance of, and in accordance with, the provisions of the Municipal Act.
Having validated the elections to the Cuttack Municipality, it was obviously necessary to validate actions taken and powers exercised by the appropriate authorities and Councillors as such after the elections were held and before they were invalidated by the judgment of the High Court.
Having regard to this plain object which s.5(1) is intended to serve, it is,.
we think, wholly unreasonable to put upon its words an unduly wide construction and then strike it down as inconsistent with article 254(2) of the Constitution.
It is true that section 5(1) is not in express terms confined to all actions taken and powers exercised under the Municipal Act, but, in the context, that is obviously intended.
Indeed, it is doubtful whether it was really necessary to add the words under the Municipal Act having regard to the scheme of the ordinance and the context in which section 5(1) is enacted.
Therefore, we do not think that the High Court was justified in holding that section 5(1) was void to the extent of its repugnancy to the existing laws dealing with matters in the Concurrent List.
There is no repugnancy to any existing laws and so, there is no contravention of article 254(2) of the Constitution at all.
We will now deal with the two additional grounds urged before us by Mr. Chetty.
He contends 396 that the Governor was not competent to issue an Ordinance with a view to over ride the judgment delivered by the High Court in its jurisdiction under article 226 of the Constitution.
This argument is obviously untenable, for it erroneously assumes that the judgment delivered by the High Court under article 226 has the same status as the provisions in the Constitution itself.
In substance, the contention is that just as a provision in the Constitution like the one in article 226 cannot be amended by the Governor by issuing an Ordinance, so a judgment under article 226 cannot be touched by the Governor in his Ordinance making power.
It is true that the judgment delivered by the High Court under Art.226 must be respected but that is not to say that the Legislature is incompetent to deal with problems raised by the said judgment if the said problems and their proposed solutions are otherwise within their legislative competence.
It would, we think, be erroneous to equate the judgment of the High Court under article 226 with Art 226 itself and confer upon it all the attributes of the said constitutional provision.
We must now turn to the main argument urged before us by Mr. Chetty that the Ordinance having lapsed on April 1st 1959, the appeals themselves have become infructuous.
He contends that the Ordinance was a temporary statute which was bound to lapse after the expiration of the prescribed period and so, as soon as it lapsed, the invalidity in the Cuttack Municipal elections which had been cured by it revived and so there is no point in the appellants challenging the correctness of the High Court 's decision.
Indeed, it was this point which Mr. Chetty strenuously stressed before us in the present Appeals.
If the true legal position be that after the expiration of the Ordinance the validation of the elections effected by it comes to an end, then Mr. Chetty would be right in contending 397 that the appeals are infructuous.
But is it the true legal position ? that is the question which calls for our decision.
It is true that the provisions of section 6 of the General Clauses Act in relation to the effect of repeal do not apply to a temporary Act.
As observed by Patanjali Sastri, J., as he then was, in section Krishnan vs The State of Madras(1) the general rule in regard to a temporary statute is that, in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires.
That is why the Legislature can and often does, avoid such an anomalous consequence by enacting in the temporary statute a saving provision, the effect of which is in some respects similar to that of section 6 of the General Clauses Act.
Incidentally, we ought to add that it may not be open to the Ordinance making authority to adopt such a course because of the obvious limitation imposed on the said authority by article 213(2) (a).
Wicks vs Director of Public Prosecutions (2) is an illustration in point.
The Emergency Powers (Defence) Act, 1939, section 11, sub section 3, with which that case was concerned, provided that the expiry of the Act shall not affect the operation thereof as respects things previously done or omitted to be done.
The appellant Wicks was convicted in May, 1946, of offences committed in 1943 and 1944, contrary to Regulation 2A of the Defence (General) Regulations 1939, made pursuant to the Act.
Both the Act and the Regulation expired on February 24, 1946.
It was as a result of this specific saving provision contained in section 11 (3) of the Act that the House of Lords held that, although regulation 2A had expired before the trial of the appellant, he was properly convicted after the expiration of the Act, since section 11 (3) did not expire with the rest of the 398 Act, being designed to preserve the right to prosecute after the date of expiry.
Mr. Chetty contends that there is and can be, no corresponding saving provision made by the Ordinance in question and so, the invalidity of the Cuttack Municipal Elections would revive as soon as the Ordinance expired by lapse of time.
This contention is based on the general rule thus stated by Craies: "that unless a temporary Act contains some special provision to the contrary, after a temporary Act has expired, no proceedings can be taken upon it and it ceases to have any further effect.
That is why offences committed against temporary Acts must be prosecuted and punished before the act expires, and as soon as the Act expires any proceedings which are being taken against a person will ipso facto terminate." (1) In our opinion, it would not be reasonable to hold that the general rule about the effect of the expiration of a temporary Act on which Mr. Chetty relies is inflexible and admits of no exceptions.
It is true for instance that offences committed against temporary Acts must be prosecuted and punished before the act expires.
If a prosecution has not ended before that day, as a result of the termination of the Act, it will ipso facto terminate.
But is that an inflexible and universal rule ? In our opinion, what the effect of the expiration of a temporary Act would be must depend upon the nature of the right or obligation resulting from the provisions of the temporary Act and upon their character whether the said right and liability are enduring or not.
As observed by Parker, B. in the case of Steavenson vs Oliver, (2) "there is a difference between temporary statutes and statutes which are repealed the latter (except so far as they relate to transactions already completed under them) become as if they had never existed; but with respect to the former, the 399 extent of the restrictions imposed, and the duration of the provisions, are matters of construction.
" In this connection, it would be useful and interesting to consider the decision in the case of Steavenson itself.
That case related to 6th Geo. 4, c. 133, section 4 which provided that every person who held a commission or warrant as surgeon or assistant surgeon in His Majesty 's Navy or Army, should be entitled to practise as an apothecary without having passed the usual examination.
The statute itself was temporary and it expired on August 1, 1826.
It was urged that a person who was entitled to practise as an apothecary under the Act would lose his right after August 1, 1826, because there was no saving provision in the statute and its expiration would bring to an end all the rights and liabilities created by it.
The Court rejected this contention and held that the person who had acquired a right to practise as an apothecary, without having passed the usual examination, by virtue of the provision of the temporary Act, would not be deprived of his right after its expiration.
In dealing with the question about the effect of the expiration of the temporary statute, Lord Abinger, C. B. observed that "it is by no means a consequence of an act of Parliament 's expiring, that rights acquired under it should likewise expire.
Take the case of a penalty imposed by an act of Parliament; would not a person who had been guilty of the offence upon which the legislature had imposed the penalty while the Act was in force, be liable to pay it after its expiration ? The case of a right acquired under the Act is stronger.
The 6 Geo. 4 c. 133, provides that parties who hold such warrants shall be entitled to practise as apothecaries; and we cannot engraft on the statute a new qualification, limiting that enactment.
" It is in support of the same conclusion that Parker, B. made the observations which we have already cited.
"We must look at this act", 400 observed Parker, B., "and see whether the restriction in the 11th clause, that the provisions of the statute are only to last for a limited time, is applicable to this privilege, in question.
It seems to me that the meaning of the legislature was that all assistant surgeons, who were such before the 1st of August, 1826, should be entitled to the same privileges of practising as apothecaries, as if they had been in actual practice as such on the 1st of August, 1815, and that their privileges, as such was of an executory nature, capable of being carried into effect after the 1st of August, 1826.
" Take the case of a penalty imposed by a temporary statute for offences created by it.
If a person is tried and convicted under the relevant provisions of the temporary statute and sentenced to undergo imprisonment, could it be said that as soon as the temporary statute expires by efflux of time, the detention of the offender in jail by virtue of the order of sentence imposed upon him would cease to be valid and legal ? In our opinion, the answer to this question has to be in the negative.
Therefore, in considering the effect of the expiration of a temporary statute, it would be unsafe to lay down any inflexible rule.
If the right created by the statute is of an enduring character and has vested in the person, that right cannot be taken away because the statute by which it was created has expired.
If a penalty had been incurred under the statute and had been imposed upon a person, the imposition of the penalty would survive the expiration of the statute.
That appears to be the true legal position in the matter.
This question sometimes arises in another form.
As Craies has observed: "If an act which repeals an earlier Act is itself only a temporary Act, the general rule is that the earlier Act is revived after the temporary Act is spent; and inasmuch as ex hypothesis the temporary Act expires and is not repealed, the rules of construction laid 401 down by ss.11(1) and 38 (2) of the Interpretation Act, 1889, do not apply, But there will be no revivor if it was clearly the intention of the legislature to repeal the earlier Act absolutely." Therefore even as regards the effect of the repealing of an earlier Act made by a temporary Act.
the intention of the temporary Act in repealing the earlier Act will have to be considered and no general or inflexible rule in that behalf can be laid down.
This position has been tersely expressed by Lord Ellenborough, C. J., when he observed in Warren vs Windle (1) "a law though temporary in some of its provisions, may have a permanent operation in other respects.
The stat, 26 Geo. 3, c. 108, professes to repeal the statute of 19 Geo. 2, c. 35, absolutely, though its own provisions, which it substituted in place of it, were to be only temporary.
" In other words, this decision shows that in some cases the repeal effected by a temporary Act would be permanent and would endure even after the expiration of the temporary Act.
We have referred to this aspect of the matter only by way of analogy to show that no inflexible rule can be laid down about the effect of the expiration of a temporary Act.
Now, turning to the facts in the present case, the Ordinance purported to validate the elections to the Cuttack Municipality which had been declared to be invalid by the High Court by its earlier judgment so that as a result of the Ordinance, the elections to the Cuttack Municipality must be held to have been valid.
Can it be said that the validation was intended to be temporary in character and was to last only during the life time of the Ordinance ? In our opinion, having regard to the object of the ordinance and to the rights created by the validating provisions, it would be difficult to accept the contention that as soon as the Ordinance expired the validity of the elections came to an end and their invalidity was revived.
The rights created by this 402 Ordinance are, in our opinion, very similar to the rights with which the court was dealing in the case of Steavenson and they must be held to endure and last even after the expiry of the Ordinance.
The Ordinance has in terms provided that the Order of Court declaring the elections to the Cuttack Municipality to be invalid shall be deemed to be and always to have been of no legal effect whatever and that the said elections are thereby validated.
That being so, the said elections must be deemed to have been validly held under the Act and the life of the newly elected Municipality would be governed by the relevant provisions of the Act and would not come to an end as soon as the Ordinance expires.
Therefore, we do not think that the preliminary objection raised by Mr. Chetty against the competence of the appeals can be upheld.
The result is that the appeals are allowed, the order passed by the High Court is set aside, and the Writ Petition filed by Mr. Bose is dismissed with costs throughout.
Appeals allowed.
| Elections were held for the Cuttack Municipality and 27 persons were declared elected as Councillors.
One B, who was defeated at the elections, filed a writ petition before the High Court challenging the elections.
The High Court held that the electoral rolls had not been prepared in accordance with the provisions of the Orissa Municipalities Act, 1950, as the age qualification had been published too late thereby curtailing the period of claims and objections to the preliminary roll to 2 days from 21 days as prescribed; Consequently the High Court set aside the elections.
The State took the view that the judgment affected not merely the Cuttack Municipality but other municipalities also.
Accordingly, the Governor promulgated an ordinance validating the elections to the Cuttack Municipality and validating the electoral rolls prepared in respect of other municipalities.
Thereupon, B filed a writ petition before the High Court contending that the ordinance was unconstitutional.
The High Court found that the ordinance contravened article 14 of the Constitution, that it did not successfully cure the invalidity and that it offended article 254(1) of the Constitution as it was inconsistent with many Central Acts falling in the concurrent list and was unconstitutional.
The State and the Councillors appealed and challenged the findings of the High Court.
B raised two further contentions that the appeal had become infructuous as the ordinance had expired and that the ordinance was invalid as it purported to invalidate the judgment of the High Court.
^ Held, that the ordinance was valid and that it successfully cured the invalidity of the electoral roll and of the elections to the Cuttack Municipality.
The Ordinance did not offend article 14 of the Constitution.
Its object was not only to save the elections to the 381 Cuttack Municipality but also to other municipalities whose validity might be challenged on similar grounds.
It did not single out B for any discriminatory treatment.
Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar; , , referred to.
State of Vermont vs Albert Shedroi,(1904)68 L. Ed. 179, distinguished.
The Ordinance effectively removal the defects in the electoral rolls found by the High Court by its first judgment.
It was not necessary for it to further state that the result of elections was not materially affected.
Section 5(1) of the Ordinance which saved the actions taken and powers exercised by the Councillors, the Chairman and the Vice Chairman was not repugnant to any existing law and did not contravene article 254(2) of the Constitution.
Section 5(1) was confined to action taken under the Orissa Municipalities Act and did not extend to violations of other laws made by the Central Legislature under the concurrent list.
The first judgment of the High Court under article 226 of the Constitution could not be equated with article 226 itself.
As such the Governor did not transgress any constitutional limitation in nullifying its effect by the validating Ordinance.
The invalidity of the electoral rolls and the elections to the Cuttack Municipality did not revive on the expiry of the Ordinance.
The general rule with regard to temporary statutes is that, in the absence of a special provision to the contrary, proceedings being taken under it against a person will ipso facto terminate as soon as the statute expires.
But, if the right created by the Statute is of an enduring character and has vested in the person, that right cannot be taken away simply because the statute has expired.
The rights created by the Ordinance lasted even after the Ordinance lapsed as its object was to remove the invalidity permanently.
Krishnan vs State of Madras [1951] S.C.R. 621, Wicks vs Director of Public Prosecutions, [1947] A.C. 362, Steavenson vs Oliver ; and Warren vs Windle, ; , referred to.
|
Appeal No. 65 of 1975.
From the Judgment and Order dated 3.12.
1973 of the Gujarat High Court in I.T.R. No. 35 of 1972.
1169 T.A. Ramachandran, Mrs. J. Ramachandran and S.C. Ratelh for the Appellant.
V.S. Desai and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal by certificate is di rected against the judgment of the High Court of Gujarat.
Assessee is assessed as an individual and she derived income from "other sources" being in the shape of interest, dividends etc.
The relevant year of assessment is 1966 67.
During this year assessee claimed deduction of Rs.26986 being interest paid to Barivallabndas Kalidas Estate on loans taken by her.
The Income tax Officer found that out of the loans real investment was of a sum of Rs. 1250 only.
He disallowed the claim to the extent of Rs. 10,275 on propor tionate basis.
According to him this claim could not be admitted under section 57(iii) of the Income tax Act of 1961.
Assessee 's first appeal to the Appellate Assistant Commissioner was rejected.
The Appellate Authority relied upon the ratio of the decision of the Bombay High Court in Bai Bhuriben Ballubhai vs Commissioner of Income tax, Bombay North Cutch and Saurashtra.
[1956] ITR (XXIX) 543 and dis missed the appeal.
In further appeal before the Tribunal the claim of the assessee was reiterated by contending that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted.
It was further contended that the assessee instead of liquidating the investments which were return oriented, found it commercially expedient and viable to raise a loan instead of disturbing the investments and, therefore, the claim became admissible in law.
The Tribunal did not accept this contention and observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business.
The Tribunal also relied upon the ratio of Bombay High Court decision referred to above.
As the Tribunal dismissed the appeal assessee asked for the case to be stated to the High Court and the following question was referred for its opinion: "Whether on the facts and in the circumstances of the case, 1170 payment of interest to the extent of Rs. 10.27 was not an admissible deduction under section 57(iii) of the Incometax Act?" The High Court referred to various authorities and decided against the assessee by concluding that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental.
The High Court further found that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and therefore did not come under section 57(iii) of the Act.
It is not disputed by Mr. Ramchandran for the assessee that unless the claim comes within the purview of section 57(iii) of the Act it would not be admissible as a deduc tion.
That section as far as relevant provides: "The income chargeable under the head 'income from other sources ' shall be computed after making the following deductions, namely: (i). (ii) . (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the pur pose of making or earning such income; P r ovided . . . . . . .
E x p l a n a t ion: . . . . . . .
In order that the claim for the deduction could be sustained, it was for the assessee to satisfy the Income tax Officer that the loan interest in respect of which is claimed as deduction was laid out or expended wholly and exclusively for earning the income from out of which the deduction was claimed.
There is no dispute that the provi sion of section 57 of the Act corresponds to section 12(2) of the Act of 1922.
Dealing with a claim under section 12(2) of the 1922 Act this Court in Eastern Investments Ltd. vs Commissioner of Income tax, West Bengal, [ 1 summarised the position of law thus: "On a full review of the facts it is clear that this transaction was voluntarily entered into in order indirectly to facilitate 1171 the carrying on of the business of the company and was made on the ground of commercial expediency.
It therefore falls within the purview of Section 12(2) of the Income tax Act.
1922, before its amendment . . " "This being an investment company, if it borrowed money and utilised the same for its investments on which it earned income.
the interest paid by it on the loans will clearly be a permissible deduction under section 12(2) of the Income tax Act.
" In Commissioner of Income tax, West Bengal vs Rajendra Prasad Moody, 19 this Court observed: "The determination of the question before us turns on the true interpretation of section 57(iii) and it would, therefore.
be convenient to refer to that section, but before we do so, we may point out that section 57(iii) occurs in a fasciculus of sections under the heading "F Income from other sources".
Section 56, which is the first in this group of sections, enacts in sub section (1) that specified in section 14, Items A to B, shall be chargeable to tax under the head "Income from other sources" and sub section (2) includes in such income various items, one of which is "divi dends".
Dividend on shares is thus income chargeable under the head "Income from other sources".
Section 57 provides for certain deductions to be made in computing the income chargeable under the head "Income from other sources" and one of such deductions is that set out in clause (iii).
which reads as fol lows: . . . " "The expenditure to be deductible under section 57(iii) must be laid out or expended wholly and excluSively for the pur pose of making or earning such income In the said decision this Court clearly indi cated that: "It is the purpose of the expenditure that is relevant in determining the applicability of section 57(iii) and that purpose must be making or earning of income.
" The taxing authorities as also the High Court have clearly recorded a 1172 factual finding facts that the expenditure in this case was to meet the personal liability of payment of income tax and wealth tax and annuity.
From the order of the Tribunal as also the judgment of the High Court it appears that the assessee had taken the stand that even if the claim relating to income tax and wealth tax was not admissible.
that part of the claim relatable to annuity deposit should have been admitted as it fetched interest.
We are inclined to agree with the High Court that so far as meeting the liability of income tax and wealth tax is concerned it was indeed a personal one and payment thereof cannot at all be said to be expenditure laid out or expended wholly and exclusively for the purpose of earning income.
So far as annuity deposit is concerned the Tribunal and the High Court have come to the right conclusion that the dominant purpose was not to earn income by way of interest but to meet the statutory liabili ty of making the deposit.
The test to apply is that the expenditure should be wholly and exclusively for the purpose of earning the income.
The fact finding authorities have come to the conclusion that no part of the expenditure came within the purview of section 57(iii,) of the Act.
Mr. Ramchandran then maintained that even if there was an indirect link between the expenditure and the income earned, the claim would be admissible and relied upon the observations of Bose.
J. in Eastern Investments Case.
No attempt has been made by the assessee to point out before the taxing authorities or even before the High Court by placing the necessary facts to justify such a claim.
On mere assumptions such a point cannot be allowed to be raised here for consideration.
In fact unless the loan is incurred for meeting the liability connected with the sources itself it would ordinarily be difficult to entertain the claims for deduction.
This appeal has to fail and the order of the High Court has to be affirmed.
We accordingly dismiss the appeal but leave the parties to bear their respective costs.
A.P.J. Appeal dismissed.
| The assessee, assessed as an individual, derived income from "other sources" in the shape of interest, dividends etc.
In the assessment year 1966 67 she claimed deduction of Rs.26,986 being interest paid on loans taken by her, under section 57(iii) of the Income Tax Act, 1961.
The income Tax Officer found that out of the loans real investment was Rs.1,250 only.
He disallowed the claim of Rs.10,275 on proportionate basis.
The Appellate Assistant Commissioner relying upon the ratio of the decision in Bai Bhuriben Lallubhai vs Commissioner of Income tax, Bombay North Cutch and Saurashtra, [1956 ITR (XXIX) 543] dismissed the appeal of the assessee.
Before the Tribunal the assessee contended: (1) that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted and (2) that the asses see instead of liquidating the investments which was return oriented, found it commercially expedient and viable to raise a loan instead of disturbing the investments and, therefore, the claim became admissible.
The Tribunal reject ing the contentions and dismissing the appeal observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business.
On reference, the High Court held that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental and that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and.
therefore.
did not come under section 57(iii) of the Act.
1168 Dismissing the appeal of the assessee the Court.
HELD: 1.
Unless the claim comes within the purview of section 57(iii) of the Income Tax Act.
1961 it would not be admissi ble as a deduction.
[1170C] 2.
The test to apply is that the expenditure should be wholly and exclusively for the purpose of earning the in come.
[1172C] Eastern Investments Ltd. vs Commissioner of income tax, West Bengal, and Commissioner of Income tax, West Bengal vs RaJendra Prasad Moody. , followed.
In order that the claim for deduction could be sus tained, it was for the assessee to satisfy the Income Tax Officer that the loan, interest in respect of which is claimed as deduction, was laid out or expended wholly and exclusively for earning the income from out of which the deduction was claimed.
[1170F G] 4.
The Income Tax Authorities as also the High Court have clearly recorded a factual finding of facts that the expenditure in this case was to meet the personal liability of payment of income tax and wealth tax and annuity and that no part of the expenditure came within the purview ors.
57(ii) of the Act.
[1171H 1172A, D] 5.
This Court is inclined to agree with the High Court that so far as meeting the liability of income tax and wealth tax is concerned, it was indeed a personal one and payment thereof cannot at all be said to be expenditure laid out or expended wholly and exclusively for the purpose of earning income.
So far as annuity deposit is concerned.
the Tribunal and the High Court have come to the right conclu sion that the dominant purpose was not to earn income by way of interest but to meet the statutory liability of making the deposit.
[1172B C] 6.
Unless the loan is incurred for meeting the liability connected with the sources itself it would ordinarily be difficult to entertain the claims for deduction.
[1172F]
|
thority has made a huge profit by levy of surcharge is without merits.
On the contrary it appears that the overall working of the Authority is deficit ridden.
[723 A B] & ORIGINAL JURISDICTION: Writ Petitions Nos.4660/78 & 562/79 (Under Article 32 of the Constitution).
Y. section Chitale and R. B. Datar for the Petitioner in W.P. No. 4660/78.
L. M. Singhvi, Sardar Bahadur Sahariya, Vishnu Bahadur Sahariya and L. K. Pandey for the Respondent No. 1 in both the Writ Petitions.
F. section Nariman and B. Datta and K. K. Manchanda for the Petitioner in W.P. No. 562/79.
The Judgment of the Court was delivered by DESAI, J.
Allottees of flats, constructed by the Delhi Development Authority ( 'Authority ' for short), located at Rajouri, Garden, 708 Prasad Nagar and Lawrence Road comprised in Middle Income Group scheme, question the decision of first respondent (Delhi Development Authority) to collect surcharge as part of the sale price of each flat from each of them as unauthorized and discriminatory i character, in there two petitions under Article 32 of tho Constitution.
Both the petitions raise identical contentions and i was said that Writ Petition No. 562 of 1979 is more comprehensive in character and, therefore, the facts alleged therein may be taken as representative character.
They may be briefly stated.
Delhi Development Authority was set up under the Delhi Development Act, 1957.
The Act was enacted to provide for the development of Delhi according to plan and for matters ancillary thereto and for carrying out the objects underlying the Act, the Authority has prepared Master and Zonal development plans for Delhi.
With a view to easing the acute housing problems in the capital city the Authority undertakes construction of dwelling units for people belonging to different income groups styled as Middle Income Group ( 'MIG ' for short), Low Income Group ( 'LIG ' for short), Janta and Community Personnel Service ( 'CPS ' for short).
In 1971 the Authority commenced registration of intending applicants desirous of having n dwelling unit in different income groups.
Some of the petitioners got themselves registered with the authority in accordance with the terms and conditions laid down by it and made the initial deposits as required by the terms and conditions.
Petitioners had applied and got themselves registered for allotment of flats in MIG scheme situated at Lawrence Road.
As the number of available flats in this scheme were less than the number of allottees registered, lots were drawn and the petitioners were informed that they have been allotted flats and that each of them should deposit the amount mentioned in the letter of allotment.
It appears that the petitioners paid the amount they were called upon to pay and a flat was allotted to each of them and they have entered into possession.
Petitioners now contend that the Authority being a statutory body formed with an object of working on 'no profit no loss ' basis and having prescribed a formula for working out the cost price of flats has levied and collected a surcharge from each of the petitioner.
According to the petitioners the cost price worked out in accordance with the formula prescribed by the Authority cost of each flat would be between Rs. 51,800 and Rs. 55,600 depending upon the area, extra balcony etc.
However, each one of them had to pay between Rs. 56,000 to Rs. 60,000 and that according to the petitioners a surcharge varying from Rs. 3,400 to Rs. 6,000 for a flat has been illegally and unlawfully collected by way of premium or profit.
It is further alleged that the 709 Authority has not levied and collected such surcharge from other A allottees of flats in some other MIG Schemes and that this action of levying and collecting surcharge is violative of article 14 inasmuch as persons belonging to the same class, namely, allottees of flats in MIG Scheme have been unequally treated.
It is also alleged that there was no valid or understandable justification of levying and collecting surcharge as price of flats comprised in MIG Schemes, between 1976 and 1977, and that from May 10, 1978, this unauthorised surcharge has been abolished.
Petitioners also contend that the assertion of the Authority that this surcharge was levied and collected with a view to financing housing projects for lower income groups, Janta and CPS dwelling units so as to provide these weaker sections of the society, houses at a price lower than cost price with a view to making them affordable by such members of the weaker sections of the society, is belied by facts undisputed and that the whole attempt of the Authority, in violation of its avowed policy, was to make profit by levying such illegal surcharge.
The petitioners, therefore, prayed for issue of a writ or order or direction declaring the levy of surcharge as illegal and unconstitutional and for a direction for refund thereof together with the interest at the rate of 12% per annum from the date of levy and collection till the date of refund.
In the cognate petition the petitioners are allottees of flats situated at Prasad Nagar and Rajouri Garden under MIG scheme and they complain that in their case surcharge varies from Rs. 19,200 to 22,600.
Respondents to the petition are Delhi Development Authority, No. 1 and Chairman and Vice Chairman of the Authoring, Nos. 2 and 3 respectively.
In Writ Petition No. 4660/78 the Authority is respondent 1 and Union of India, respondent 2.
Petitions were mainly contested by and on behalf of the Authority.
The Delhi Development Act, 1957 ( 'Act ' for short), was enacted as its long title shows with the a view to providing for the development of Delhi according to the plan and for arresting haphazard growth and for matters ancillary thereto.
It envisages the setting up of an Authority to be styled as Delhi Development Authority which would be a body corporate by the name aforesaid having perpetual succession and a common seal with power 'o acquire, hold and dispose of property, both movable and immovable, and to contract and shall by the said name, sue and be sued.
The composition of the Authority is set out in sub section (iii) of section 3.
Amongst others, Administrator of Union Territory of Delhi would be an ex officio Chairman and a Vice Chairman to be appointed by the Central Government.
The 710 Vice Chairman may be either a whole time or part time officer as the Central Government may think fit.
Section S contemplates the constitution of an Advisory Council for the purpose of advising, the Authority on the preparation of the master plan and on such matters relating to the planning of development or arising out of or in connection with the administration of the Act.
Section 5A which was added by amending Act 56 of 1963 confers power on the Authority to constitute as many committees consisting wholly of members or wholly of other persons or partly of members and partly of other persons and for such purpose or purposes as it may think fit.
Chapter Ill A which was inserted by the Amending Act of 1963 confers power for modification of the master plain once prepared.
Chapter IV provides for development of lands.
Chapter V confers power on the Central Government to acquire land for the purposes of development or for any other purpose under the Act under the provisions to the Land Acquisition Act, 1894, and further authorises the Central Government to transfer the land so acquired to he Authority.
Chapter VI provides for finances and audit of the accounts of the Authority Chapter VII provides for supplemental and miscellaneous provisions.
Section 52 confers power on the Authority to delegate any power exercisable by it under the Act, except the power to make regulations, on such officer or local authority or committee constitued under section 5A as may be mentioned, by a notification to be published in the Official Gazette in such cases and subject to such conditions, if any, as may be specified therein.
One more section of which notice should be taken is section 57 which confers power on the Authority with the previous approval of the Central Government by notification in the official Gazette to make regulations consistent; with the Act and the rules made thereunder to carry out the purposes of this Act.
Sub section provides that until the Authority is established under the Act any regulation which may be made under sub section may be made by the Central Government and any regulation so made may be altered or rescinded by the Authority in exercise of its powers under sub section
Section 58 makes it obligatory to lay every rule and regulation made under this Act before each House of Parliament in session for a period of 30 days and subject to any alteration or modification therein the rule or regulation shall after expiry of the prescribed period mentioned have effect only in such modified form or be of no effect as the case may be, so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under the rule or regulation.
Petitioners belong to MIG, each of whom registered himself as an intending applicant for a flat in MIG scheme and each of whom has 711 been allotted a flat either in Rajouri Garden, Prasad Nagar or Lawrence Road.
Number of persons desirous of having a flat registered with the Authority far outnumbered the available flats with the result that lots had to be drawn and the lucky ones got a letter of allotment to pay the price set out in the brochure in respect of each scheme and to obtain a flat.
Each petitioner had paid the price and has entered into possession of the allotted flat.
All the petitioners now contend that the Authority has levied and collected a surcharge as part o: purchase price of flat arbitrarily and without the authority of law and has collected the same from them in violation of its object of functioning on 'no profit no loss ' basis and thereby made a huge profit.
They further contend that they have been subjected to discriminatory treatment in contravention of article 14 of the Constitution inasmuch as no surcharge has been collected from allottees of flats in MIG schemes prior to November 1976 and subsequent to January 1977 except these three schemes and one Wazirpur MIG scheme.
Further, no other MIG scheme flats have been subjected to such unauthorised levy of surcharge.
It is pointed out that the levy of surcharge has been scrapped in 1978.
The petitioners contend that levy of surcharge has no nexus to the object for which the Authority was set up namely, providing housing accommodation at reasonable price by the Authority whose declared policy is 'no profit no loss '.
It was said on behalf of the petitioners that even if the Authority was set up for providing housing accommodation to the people in different income groups (keeping in view their financial capacity/affordability) yet a statutory body like the Authority operating on 'no profit no, loss ' basis must have a scientifically prescribed formula for working out its price structure and that must be uniformly applied to all those who apply for flats and to whom they are allotted and such a statutory Authority cannot discriminate in working out the disposal price of the flats by including surcharge in respect of some MIG schemes within a certain specified period, a surcharge not authorised by law and not sanctioned by the Authority as a component of price and unknown to pricing of flats, while others similarly situated and similarly circumstanced and belonging to the same income group enjoyed the benefit cf getting flats at cost price and, therefore, petitioners have been accorded discriminatory treatment in the matter of price of flats allotted to them.
Petitioners, therefore, contend that even if they applied for flats anc got registered and were offered flats and accepted the same at the price stated in the brochure and even if it has resulted in a concluded contract yet the Court should not turn a blind eye to such gross discrimination by a statutory authority charged with a duty to provide housing accommodation acting on the declared policy of 'no profit no 712 loss '.
It was simultaneously contended that the Vice Chairman of the Authority authorised to determine the prices of flats in each income group has not made any order or has not given any direction for levy of surcharge and that the levy of surcharge was wholly unauthorised.
A preliminary objection was raised by the Authority that the petitions are not maintainable under article 32 of the Constitution inasmuch as The petitioners have not come to the Court for enforcement of a t fundamental right conferred upon the petitioners under Part III of the Constitution but the petitioners have invoked jurisdiction of this Court for a relief of re opening concluded contracts.
It was also submitted that if the Court accepts the contention of the petitioners they would derive an unfair advantage over others who may not have applied for flats because of the price set out in the brochure and if surcharge is excluded they may have applied for flats at a lower price and, there fore, also the Court should not entertain the petitions.
Though we are not inclined to reject the petitions on this preliminary objection as we have heard them on merits it is undeniable that camouflage of article 14 cannot conceal the real purpose motivating these petitions, namely, to get back a part of the purchase price of flats paid by the petitioners with wide open eyes after flats have been securely obtained and petition to this Court under article 32 is not a proper remedy nor is this Court a proper forum for re opening the concluded contracts with a view to getting back a part of the purchase price paid and the benefit taken.
The undisputed facts are that petitioners offered themselves for registration for allotment of flats that may be constructed by the, Authority for MIG scheme.
After the registration and when the flats were constructed and ready for occupation brochures were issued by the Authority.
One such brochure for ', allotment of MIG flats in Lawrence Road residential scheme is Annexure R 1.
This brochure specifies the terms and conditions including price on which flat will be offered.
It also reserved the right to surrender or cancel the registration, the mode and method of paying the price and handing over the possession.
There is an application form annexed to the brochure.
Annexure 'A ' to the brochure sets out the price of flat on the ground floor, first floor and second floor respectively.
It sets out the premium amount payable for land as also the total cost in respect of the flats on the ground floor, first floor and second floor.
The statement also shows the earnest money deposited at the time of the registration and the balance payable.
It is on the basis of these brochures that the applicants applied for the flats in Lawrence Road and other MIG schemes.
They knew and are presumed to know the contents of the brochure and particularly the price 713 payable.
They offered to purchase the flats at the price on which the Authority offered to sell the same.
After the lots were drawn and they were lucky enough to be found eligible for allotment of flats, each one of them paid the price set out in the brochure and took possession of the flat, and thus sale became complete.
There is no suggestion that there was a mis statement or incorrect statement or any fraudulent concealment in the information supplied in the brochure published by the Authority on the strength of which they applied and obtained flats.
How the seller works out his price is a matter of his own choice unless it is subject to statutory control.
Price of property is in the realm of contract between a seller and buyer.
There is no obligation on the purchaser to purchase the flat at the price offered.
Even afar registration the registered applicants may opt for other schemes.
His light to enter into other scheme opting out of present offer is not thereby jeopardised or negatived and applicants so outnumbered the available flats that lots had to be drawn.
With this background the petitioners now contend that the Authority has collected surcharge as component of price which the Authority was not authorised or entitled to collect.
Even if there may be any merit in this contention, though there is none, such a relief of refund cannot be the subject matter of a petition under article 32.
And article 14 cannot camouflage the real bone of contention.
Conceding for this submission that the Authority has the trappings of a State or would be comprehended in 'other authority ' for the purpose of article 12, while determining price of flats constructed by it, it acts purely in its executive capacity and "is bound by the obligations which dealings of the State with the individual citizens import into every transacting entered into the exercise of its constitutional powers But after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the Constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se.
No question arises of violation of article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act.
In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract" (see Radhakrishna Agarwal & Ors.vs State of Bihar & Ors.)
Petitioners were under no obligation to seek allotment of flats even after they had registered themselves.
They looked at the price and flats and applied for the flats.
This they did voluntarily.
They were advised by the brochures to look at the flats before going 714 in for the same.
They were lucky enough to get allotment when the lots were drawn.
Each one of them was allotted a flat and he paid the price voluntarily.
They are now trying to wriggle out by an invidious method so as to get back a part of the purchase price not offering to return the benefit under the contract, namely, surrender of flat.
I The Authority in its affidavit in reply in terms stated that it is willing to take back the fiats and to repay them the full price.
The transaction is complete, viz., possession of the flat is taken and price is paid.
At a later stage when they are secure in possession with title, petitioners are trying to get back a part of the purchase price and thus trying to re open and wriggle out of a concluded contract only partially.
In a similar and identical situation a Constitution Bench of this Court in Har Shankar & ors.vs The Dy.Excise & Taxation Commr.& ors.has observed that those who contract with open eyes must accept the burdens of the contract along with its benefits.
Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract.
By such a test no contract would ever have a binding force.
The jurisdiction of this Court under article 32 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred.
It would thus appear that petitions ought not to have been entertained.
However, as the petitions were heard on merits, the contentions canvassed on behalf of the petitioners may as well be examined The principal contention canvassed on behalf of the petitioners is that the treatment meted to them by the Authority is discriminatory inasmuch as no surcharge was levied on flats in MIG scheme constructed and allotted prior to November 1976 and after January 1977.
MIG flats involved in these petitions were constructed and were available for allotment in November 1976 and the lots were drawn in January 1977.
There is one more MIG scheme at Munirka where the allotment took place at or about the same time but in which case no surcharge was levied.
The contention is that once for the purpose of eligibility to acquire a flat, the criterion is grounded in income brackets, MIG, LIG, et .
those in the same income bracket form one class even for the purpose of determining disposal price of flat allotable to them irrespective of situation, location or other relevant determinants which enter into price calculation and therefore, in the same income group there cannot be differentiation by levying of surcharge in some cases and charging only the cost price in other cases and that the discrimination is thus writ large on the face of the record 715 because by levying surcharge in case of petitioners they have been treated unequally and with an evil eye.
It is difficult to appreciate how article 14 can be attracted in the circumstances hereinabove mentioned.
Cost price of a property offered for sale is determined according to the volition of the owner who has constructed the property unless it is shown that he is under any statutory obligation to determine cost price according to certain statutory formula.
Except the submission that the Authority has a proclaimed policy of constructing and offering flats on 'no profit no loss ' basis which according to Mr. Nariman has a statutory flavour in the regulations enacted under the Act, the Authority is under no statutory obligation about its pricing policy of the flats constructed by it.
When the flats were offered to the petitioners the price in round figure in respect of each flat was mentioned and surcharge was not separately set out and this price has been accepted by the petitioners.
The obligation that regulations are binding on the Authority and have provided for a statutory price fixation formula on 'no profit no loss ' basis will be presently examined but save this the Authority is under no obligation to fix price of different flats in differed schemes albeit in the same income group at the same level or by any particular statutory or binding formula.
The Authority having the trappings of a State might be covered by the expression 'other authority ' in article 12 and would certainly be precluded from according discriminatory treatment to persons offering to purchase flats in the same scheme.
Those who opt to take flats in a particular income wise area wise scheme in which all flats came up together as one project, may form a class and any discriminatory treatment in the same class may attract article 14.
But to say that throughout its course of existence the Authority would be bound to offer flats income groupwise according to the same price formula is to expect the Authority to ignore time, situation, location and other relevant factors which all enter the price structure.
In price fixation executive has a wide discretion and is only answerable provided there is any statutory control over its policy of price fixation and it is not the function of the Court to sit in judgment over such matters of economic policy as must be necessarily left to the Government of the day to decide.
The experts alone can work out the mechanics of price determination; Court can certainly not be expected to decide without ' the assistance of the experts (See Prag Ice & oil Mills and Anr.vs Union of India) In the leading judgment it has been observed that mechanics of price fixation have necessarily to be left to the executive and unless it is patent that there is hostile discrimination against a class the processual basis of price fixation has to be accepted in the generality of cases as valid.
716 This Court in Avinder Singh vs State of Punjab,(l) approved the following dictum of Willis on Constitutional Law, page 587: "The State does not have to tax everything in order to tax something.
It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably .
The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation.
What is forbidden by article 14 is discrimination amongst persons of the same class and for the purposes of allotment of flats scheme wise, allottees of flats in the same scheme, not different schemes in the same income bracket, will have to be treated as a class and unless in each such class there is unequal treatment or unreasonable or arbitrary treatment, the complaint that article 14 is violated cannot be entertained.
Therefore, in the State of Gujarat & Another vs Shri Ambica Mills Ltd., Ahmedabad, etc., Mathew, J., speaking for the Court observed as under: "A reasonable classification is one which includes all who are similarly situated and none who are not.
The question then is what does the phrase 'similarly situated ' mean ?
The answer to the question is that we must look beyond the classification to the purpose of the law.
A reasonable classification is one which includes all persons who are similarly situated with respect to the purpose of the law.
The purpose of a law may be either the elimination of a public mischief or the achievement of some positive public good."
" Is the classification income wise scheme wise violative of article 14 in any manner ? The Authority formulates income wise area wise schemes for constructing flats.
Petitioners contend that there should be only income wise classification wholly ignoring area and time factor for classification.
They say that allottees of flats in all MIG schemes irrespective of area and location and irrespective of when the flats were constructed form one class for determining price of flats.
There is no merit in this contenting.
What are price determinants ?
Price of land, building material, labour charges and cost of transport, quality and availability of land, supervision and management charges are all variable factors that enter into price fixation.
Their cost varies time wise, place wise, availability wise.
All these uncertain factors cannot 717 be overlooked for the purpose of classification.
Therefore, it is not possible to hold that allottees of flats in MIG scheme at any place and executed at any time will form one class for the purpose of pricing policy only valid basis for classification would be income wise, area wise, time wise, scheme wise, meaning all flats constructed at or about the same time in same area in one project for particular income group will form a class.
And there is no discrimination amongst them.
Pricing policy is an executive policy.
If the Authority was set up for making available dwelling units at reasonable price to persons belonging to different income groups it would not be precluded from devising its own price formula for different income groups.
If in so doing it uniformally collects something more than cost price from those with cushion to benefit those who are less fortunate it cannot be accused of discrimination.
In this country where weaker and poorer sections are unable to enjoy the basic necessities, namely, food, shelter and clothing, a body like the Authority undertaking a comprehensive policy of providing shelter to those who cannot afford to have the same in the competitive albeit harsh market of demand and supply or can afford it on their own meagre emoluments or income, a little more from those who can afford for the benefit of those who need succour, can by no stretch of imagination attract article 14.
People in, the MIG can be charged more than the actual cost price so as to give benefit to allottees of flats in LIG, Janata and CPS.
And yet record shows that those better off got flats comparatively cheaper to such flats in open market.
It is a well recognised policy underlying tax law that the State has wide discretion in selecting the persons or objects it will tax and that the statute is not open to attack on the ground that it taxes some persons or objects and not others.
It is only when within the range of its selection the law operates unequally, and this cannot be justified on the basis of a valid classification, that there would be a violation of article 14, (see East India Tobacco Co. vs State of Andhra Pradesh).
Can it be said that classification, income wise cum scheme wise is unreasonable ?
The answer is a firm No.
Even the petitioners could not point out unequal treatment in same class.
However, a feeble attempt was made to urge that allottees of flats in MIG scheme at Munirka which project came up at or about the same time were not subjected to surcharge.
This will be presently examined but aside from that, contention is that why within a particular period, namely, November 1976 to January 1977 the policy of levying surcharge was resorted to and t hat in MIG schemes pertaining to period prior to November 1976 and later April 1977 no surcharge was levied.
718 If a certain pricing policy was adopted for a certain period and was uniformly applied to projects coming up during that period, it cannot be the foundation for a submission why such policy was not adopted earlier or abandoned later.
It was, however, said that levying of surcharge runs counter to object for which the Authority was set up, namely, to make available housing accommodation on 'no profit no loss ' basis.
The argument proceeds on the assumption that the principle of 'no profit no loss ' implies that in respect of each flat the cost of its construction must be worked out and that alone can be the disposal price of each flat.
Principle of 'no profit no loss ' has been explained by the respondents.
It IS said that in the over all working, planning and execution of projects which the Authority undertakes as part of development of Delhi, the integral part of it being construction of flats for different income groups the motives and working of it would not be profit oriented but would work on 'no profit no loss ' economic doctrine.
This would not for a moment suggest that the principle of 'no profit no loss ' should apply either to every flat or to every scheme or to every piece of land developed by the Authority.
It would be impossible for the Authority to function on such fragmented basis and such a policy statement has not been made by the Authority.
Of course, some public statement appears to have been made that the overall working of the Authority is on "no profit no loss ' basis.
Respondent 1 has been able to point out that the Authority 's housing scheme, as a whole has been running in a heavy deficit because flats including such as those of the petitioners actually cost much more than the initially determined estimates and by the time flats are ready for occupation initial estimates founded on prevalent market prices of materials and labour escalate and revised estimates have to be made.
It is also shown that till Municipal authority takes over municipal services the Authority spends for the same and incurs cost.
Apart from that petitioners have not been able to show that the Authority is actuated by commercial profit oriented approach in its overall working.
It is, however, necessary to examine the contention whether this 'no profit no loss ' policy statement has any statutory flavour as contended by Mr Nariman.
The regulations styled as the Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968, ( 'Regulations ' for short) are framed in exercise of the powers conferred by section 57 and were laid before the Houses of Parliament as required by section 58.
Disposal price has been defined in Regulation 2(13) to mean in relation to a property such price as may be fixed by the Authority for such property.
There is not the slightest or even a remote reference to 'no profit no loss ' formula for 719 determining the cost price.
A quick survey of the Regulations do A not spell out any formula for price determination on the basis of 'no profit no loss '.
Whether the power to determine disposal price is in the Housing Committee will be presently examined.
Regulations, however, on the contrary indicate that the power to determine the disposal price is vested in the Authority and as price has been fixed by the delegate of the Authority even if it is inclusive of surcharge it cannot be said that it runs counter to the declared policy of the Authority.
It is at this stage necessary to examine the contention that in the case of Wazirpur and Munirka LIG schemes which came up during this very period no surcharge was levied and, therefore, there is invidious discrimination amongst members of the same class.
Again the argument proceeds that income wise classification alone is valid.
Here time wise (November 1976 to January 1977) classification is relied upon.
It is an admitted position that no surcharge is levied on MIG flats at Munirka.
The affidavit in reply shows that the land on which flats are constructed in Munirka MIG scheme turned out to be very rocky with the result that the construction cost in respect of flats at Munirka MIG scheme worked out at Rs. 456 per plinth area per metre whereas in respect of Lawrence Road it came to Rs. 401.54 p. Only.
The Authority, therefore, thought that if surcharge is levied on flats under MIG scheme in Munirka area the disposal price would be very high and would be beyond the reach of MIG.
It is in this background of the special facts that 'no surcharge was levied in respect of any flat in MIG in Munirka area.
Project wise price fixation cannot be dubbed as arbitrary or discriminatory in comparison with other projects at different places.
It was, however, pointed out that 132 flats in Rajouri Garden MIG scheme were disposed of without levying surcharge as component of sale price.
It is pointed out in affidavit in reply that those flats were handed over to the Government of India for meeting their needs for staff quarters and that was done in the year 1978.
It is also pointed out that the Government charged half the price of the land in respect of these 132 flats and, therefore, surcharge was not levied.
There is two fold fallacy in this submission.
Government ordinarily is in a class by itself and its needs of staff quarters deserve to be met in large public interest.
Government has not got any undeserved benefit at the cost and risk of petitioners.
Hence their complaint in this behalf is without merits.
It was next contended that surcharge is arbitrary inasmuch as how the surcharge is worked out in each case does not answer any 720 rational, tangible, scientific cr understandable formula.
How the figure of surcharge has been worked out has been explained in detail in affidavit in reply.
Briefly recapitulating the same, it may be mentioned that initial estimates for 304 MIG flats in Prasad Nagar area were prepared in or about 1971 and the estimated cost was Rs. 1,17,83,200 and that on March 21, 1972, an estimate of Rs 1,09,97,100 was sanctioned.
After the work commenced and the actual cost started coming in the revised estimate for 304 flats was of the order of Rs. 2,07,33,000 which was approved by the Vice Chairman on September 18, 1976.
According to the revised estimate the approximate disposal cost for each flat came to Rs. 68,202 and the cost of land per dwelling unit was Rs. 7,008.
Extracts of original notes of Financial Adviser (Housing) and the approval of the same by the Vice Chairman have been set out in the affidavit in reply.
The subsequent revised estimates show that disposal price of each flat would be Rs. 75,200.
In the meantime the Income Tax Department wanted to acquire 40 MIG flats in Prasad Nagar area and the same were offered at the price of Rs. 75,000, per flat.
Commissioner of Income Tax accepted the price.
This became the starting point for working out the disposal price in that period.
The difference between the cost price and the disposal price of Rs. 75,000 per flat was treated as surcharge and the purpose was to use the extra money for extending cost reduction benefit to the allottees of flats in LIG, Janata and CPS schemes.
Affidavit in reply of the Secretary of Respondent 1 provides further information which show that the cost price would be Rs. 78,000.
Therefore, at best the component of surcharge would be between Rs. 1700 to Rs. 2200 in Rajouri Garden MIG flats.
Similarly, with regard to MIG flats at Lawrence Road the actual cost price would be in close proximity of the disposal price would be in close proximity of the disposal price charged from the petitioners.
It is, therefore, difficult to entertain the contention that even if surcharge could be justified its actual computation is arbitrary and irrational.
The next contention is that Vice Chairman had no authority to levy surcharge and that even if he has authorised the same it runs counter to the principle of fixing disposal price incorporated in Resolution No. 209 dated November 26, 1974.
The Vice Chairman is to be appointed by the Central Government as per section 3(3)(b) of the Act.
It appears that this Vice Chairman is whole time officer and will be the Chief Executive of the Authority.
This becomes clear from regulation 3 of the Regulations which provides as under: "3.These regulations shall be administered by the Vice Chairman, subject to general guidance and resolutions of the 721 Authority, who may delegate his powers to any officer of the Authority".
Thus the Vice Chairman, subject to general guidance and resolutions cf the Authority, shall administer the regulations.
He can delegate the functions to any officer of the Authority.
Regulation 59 is important which reads as under: "59.The Authority may delegate all or any of its powers under these regulations to the Vice Chairman or to a whole time member".
Armed with this power of delegation the Authority adopted Resolution No. 60 dated February 21, 1970 which reads as under: "Resolved that the recommendations of the Committee be approved and all the powers of Delhi Development Authority be exercised by the Housing Committee and the Chairman, Delhi Development Authority be authorised to constitute the said committee, determine the organisational set up and take (sic) all efforts for implementing the housing and allied schemes".
Serious exception was taken to this gross abdication of its powers and functions by the Authority.
The composition of the Authority as set out in section 3 would include such persons as Finance and Accounts Member, Engineering Member, representatives of Municipal Corporations of Delhi and representatives of Metropolitan Council as and when set up.
Three other persons were to be nominated by Central Government of whom one shall be person with experience of planning.
It is a high power body.
Yet it completely abdicated its power and authority in favour of Housing Committee.
The Housing Committee will practically supplant the Authority.
But the more objectionable part of Resolution No. 60 is that such Housing Committee which is to enjoy all powers and functions of the Authority was to be constituted by the Chairman at his sole discretion because he was authorised not only to constitute the Housing Committee but to determine organisational set up and then make all efforts for implementing the housing and allied schemes.
It is really difficult to appreciate such whole sale abdication or delegation of powers by a statutory authority in favour of a Committee whose composition would be determined by one man, the Chairman.
By a process of elimination the Housing Committee could supplant the Authority and the Chairman could constitute Housing Committee.
Therefore, the Chairman enjoyed 722 a very wide discretionary power.
Though Mr. Nariman did challenge the validity of Resolution No. 60, Mr. Chitaley in cognate petition refrained from doing so.
Once the power to delegate is given by the Regulations the challenge to validity on the ground of delegation must fail It is, however, necessary to examine the submission whether Vice Chairman could have permitted levy of surcharge as a component of the price of flats in MIG schemes.
In this connection it would be advantageous to refer to Resolution No. 20 dated June 18, 1968.
Of the Authority by which the recommendations of the Standing Committee, inter alia, empowering the Vice Chairman to approve forms of application as well as to fix the disposal and hire purchase price were accepted.
Resolution No. 209 is the one adopted by the Housing Committee.
It takes note of the delegation of powers to fix disposal and hire purchase price of flats to the Vice Chairman and further provides that if there is a marginal saving in any scheme the amount is always diverted to subsidies cost of Janata and CPS houses.
It seems the Resolution is for information of the Housing Committee and the Housing Committee has merely resolved that the information be noted.
The Resolution No. 200 of the Authority with Resolution No. 209 of the Housing Committee sets out clearly that the power to fix the disposal price was delegated to the Vice Chairman and ordinarily such excessive delegation to one man may be galling to a judicial body yet the scheme of regulations and the provisions contained in Regulation 3 read with section 59 clearly envisages such delegation of powers.
It is, therefore, idle to contend that the Vice Chairman had no authority to levy the surcharge as component of disposal price of flats.
It was next contended that even if Vice Chairman had such power there is nothing to show that he has exercised this power and that, therefore, somewhere without any authority someone has added the surcharge to the disposal price and that, therefore, the levy of surcharge is unauthorised.
The submission seems to be factually incorrect.
The note of Accounts officer (Housing) dated September 8, 1976, submitted to the Financial Advisor (Housing) shows that the flats have been offered at the rate of Rs. 75,000 to the Commissioner of Income Tax for the Income Tax Department and that should be the disposal price This note was approved by the Financial Advisor (Housing) and ultimately countersigned by the Vice Chairman.
There fore, the price of Rs. 75,000 as the disposal price is approved by the Vice Chairman.
Even if it includes surcharge it cannot be said with confidence that the Vice Chairman has not approved the surcharge as a component of disposal price.
723 The last contention is that the Authority has made a huge profit by levy of surcharge.
In this connection statistical table was annexed to the petition and there was serious controversy about the facts and figures set out therein, by the other side.
Having gone through the detailed affidavit in reply it transpires that the contention is without merits.
Therefore, there is no substance in the contention that the Authority has made a huge profit.
On the contrary it appears that the overall working of the Authority is deficit ridden.
These were all the contentions in these petitions and as there is no Merit in any of them the petitions are dismissed.
There will be no order as to cost.
N.K.A Petitions dismissed.
| The Delhi Development Authority Act was enacted to provide for the development of Delhi through Master and Zonal Plans.
The authority undertakes constructions of dwelling units for people belonging to different income groups styled as Middle Income, Low Income, Janata and Community Personnel Service.
In 1971, the authority commenced registration of intending applicants desirous of having dwelling units in different Income Groups.
Some of the petitioners got themselves registered with the authority in accordance with the terms and conditions laid down by it, for allotment of flats in deposits as required by the terms and conditions for MIG Scheme at Lawrence Road, Prasad Nagar and Rajouri Garden and made the initial deposit.
The number of available flats being less in each scheme compared to the number of applicants registered, lots were drawn and the petitioners were informed that each of them should deposit the amount mentioned in the letter of allotment.
The Petitioners paid the amount as intimated and consequently a flat was allotted to each of them and they entered into possession.
In their writ petitions under Article 32, the petitioners assailed the levy and collection of surcharge in addition to the cost price of the flats.
It was con tended on their behalf that; (i) The treatment meted by the Authority is discriminatory inasmuch as no surcharge was levied on flats in MIG schemes constructed and allotted prior to November, 1976 and after January, 1977; (ii) As the authority formulates income wise, area wise schemes for constructing flats, there should be only income wise classification wholly ignoring area and time factor for classification; (iii) Levying of surcharge runs counter to the object for which the authority was set up namely to make available housing accommodation on "no profit no loss" basis; (iv) Surcharge is arbitrary inasmuch as how the surcharge is worked out in each case does not conform to any rational, tangible, scientific or understandable formula; (v) The Vice Chairman had no authority to levy surcharge and that even if he has authorised the same, it runs counter to the principle of fixing disposal price incorporated in resolution No. 209 dated November 26, 1974; (vi) Even if the Vice Chairman had such power there is nothing to show that he has exercised this power and given direction for adding the surcharge to the disposal price and that therefore, the levy of surcharge is unauthorised; and (vii) that the authority has made a, huge profit by levy of surcharge.
The respondents raised a preliminary objection that the petitions were not maintainable under Article 32 of the Constitution inasmuch as the petitioners have not come to the Court.
fol enforcement of a fundamental right conferred upon.
705 them under Part III of the Constitution but that the petitioners have invoked the jurisdiction of the Court for the relief of reopening concluded contracts, and that if the court accepts the contentions, the petitioners would derive an unfair advantage over others who may not have applied for flats because of the price set out in the brochure and if surcharge is excluded they may have applied for Flats at a lower price.
The Court should not therefore entertain the petitions.
Dismissing the petitions, ^ HELD: 1.
As the Court has heard the petitions on merits it is not inclined to reject them on the preliminary objections.
It is undeniable that camouflage of article 14 cannot conceal the real purpose motivating the petitions, namely to get back a part of the purchase price of flats paid by the petitioners with wide open eyes after flats have been securely obtained.
Petition to this Court under article 32 is not a proper remedy nor is the Supreme Court a proper forum for re opening concluded contracts with a view to getting back a part of the purchase price paid after the benefit is taken.
[712 D E] In the instant case it is difficult to appreciate how article 14 can be attracted.
Cost price of a property offered for Sale is determined according to the volition of the owner who has constructed the property unless it is shown that he is under any statutory obligation to determine cost price according to certain statutory formula.
The authority is under no obligation to fix price of different flats in different schemes albeit in the same income group at the same level or by any particular statutory or binding formula.
Those who opt to take flats in a particular income wise, area wise scheme in which all flats came up together as one project, may form a class and any discriminatory treatment In the same class may attract article 14.
But to say that the Authority would be bound to offer flats income group wise according to the same price formula is to expect the Authority to ignore time, situation, location and other relevant factors which all enter the price structure.
[713 E, 715 A F] Radhakrishna Agarwal & Ors.
vs State of Bihar & Ors. ; at 255; Har Shankar & Ors. etc.
vs The Dy.
Excise & Taxation Commr.
& Ors. ; , referred to.
In price fixation executive has a wide discretion and is only answerable provided there is any statutory control over its policy of price fixation and it is not the function of the Court to sit in judgment over such matters of economic policy as must be necessarily left to the Government of the day to decide.
The experts alone can work out the mechanics of price determination, Court can certainly not be expected to decide without the assistance of the experts.
[715 F G] Prag Ice & Oil Mills and Anr. etc.
vs Union of India; , at 330; Avinder Singh vs State of Punjab ; ; State of Gujarat & another vs Shri Ambica Mills Ltd. Ahmedabad, etc.
[974] 3 S.C.R 760 at 782; referred to.
Price of land, building, material, labour charges and cost of transport, quality and availability of land, supervision and management charges are all variable factors that enter into price fixation.
Their cost varies time wise, place wise and availability wise.
All these uncertain factors cannot be overlooked for the purpose of classification.
It is not possible therefore to hold that allottees of 706 flats in MIG scheme at any place and executed at any time will form one class for the purpose of pricing policy.
The only valid basis for classification would be income wise, area wise, time wise, scheme wise, meaning all flats constructed at or about the same time in same area in one project for particular income group will form a class, and there is no discrimination amongst them.
[716 G H. 717 A B] 4.
Pricing policy is an executive policy.
If the Authority was set up for making available dwelling units at reasonable prices to persons belonging to different groups it would not be precluded from devising its own price formula for different income groups.
If in so doing it uniformally collects something more than cost price from those with cushion to benefit those who are less fortunate it cannot be accused of discrimination.
In this country where weaker and poorer sections are unable to enjoy the basic necessities, namely, food, shelter and clothing, a body like the Authority undertaking, a comprehensive policy of providing shelter to those who cannot afford to have the same in the competitive albeit harsh market of demand and supply nor can afford on their own meagre emoluments or income, a little more from those who can afford for the benefit of those who need succour, can by no stretch of imagination attract article 14.
[717 B D] 5.
It is a well recognised policy underlying tax law that the State has a wide discretion in selecting the persons or objects it will tax and that the statute is not open to attack on the ground that it taxes some persons or objects and not others.
It is only when within the range of its selection the law operates unequally, and this cannot be justified on the basis of a valid classification, that there would be a. violation of article 14.
[717 E F] East India Tobacco Co. vs State of Andhra Pradesh, ; 6.
The principle of "no profit no loss" cannot apply either to every flat or to every scheme or to every piece of land developed by the Authority.
It would be impossible for the Authority lo function on such fragmented basis and such a policy statement has not been made by the Authority.
[718 D E] 7.
There is not the slightest or even a remote reference to "no profit no loss" formula for determining the cost price.
A survey of the Regulations do not spell out any formula for price determination on the basis of "no profit no loss".
Project wise price fixation cannot be dubbed as arbitrary or discriminatory by comparing it with other projects at different places or at different times.
[719 A B In the instant case after the work commenced and the actual cost estimate started coming in the revised estimate for 304 flats was of the order of Rs. 2,07,33,000/ which was approved by the Vice Chairman on September 18, 1976.
According to the revised estimate the approximate disposal cost for each flat.
came tc Rs. 68.202/ and the cost of land per dwelling; unit was Rs. 7008/ .
The revised estimate showed the disposal price of each flat as Rs. 75.200/ .
The Commissioner of Income Tax who wanted to acquire 40 MIG flats in Prasad Nagar area offered the price of Rs. 75,000/ per flat which price was accepted.
The difference between the cost price and the disposal price of Rs. 75,000/ per flat was treated as surcharge and the purpose was to use the extra money for extending price reduction benefit to The allottees of flats in LIG, Janata and CPS schemes.
It is therefore difficult to entertain the contention that even if surcharge could be justified its actual computation is arbitrary and irrational.
[720 B E, E F] 707 8 .
The Vice Chairman is appointed by the Central Government as per Section.
3(3)(b) of the Act.
He is a whole time officer and the Chief Executive of the Authority.
The composition of the Authority as set out in section 3 would include such persons as Finance and Accounts Member, Engineering Member, representatives of Municipal Corporation of Delhi and representatives of Metropolitan Council.
Three other persons, were to be nominated by Central Government of whom one shall be person with experience of planning.
It is a high power body.
Yet it completely abdicated its power and authority in favour of Housing Committee.
The Housing Committee will practically supplant the Authority.
By a process of elimination the Housing Committee would supplant the Authority and the Chairman could constitute the Housing Committee.
Therefore, the Chairman enjoyed a very wide discretionary power.
However once the power to delegate is given by the Regulations, the challenge to validity on the ground of delegation must fail.
[720 G H; 721 E H, 722 A] 9.
Resolution No. 209 is the one adopted by the Housing Committee.
It takes note of the delegation of powers to fix disposal and hire purchase price of flats to the Vice Chairman and further provides that if there is a marginal saving in any scheme the amount be diverted to subsidies cost of Janata and CPS houses.
The Resolution No. 200 of the Authority read with Resolution No. 709 of the Housing Committee sets out clearly that the power to fix the disposal price was delegated to the Vice Chairman and ordinarily such excessive delegation to one man may be galling to a judicial body yet the scheme of regulations and the provisions contained in Regulation 3 read with Section 59 clearly envisages such delegation of powers.
[722 C E] 10.
The note of Accounts Officer (Housing) dated September 8, 1976, submitted to the Financial Advisor (Housing) shows that the flats have been offered at the rate of Rs. 75,000/ to the Commissioner of Income Tax for the Income Tax Department and that should be the disposal price.
This note was approved by the Financial Advisor (Housing) and ultimately countersigned by the Vice Chairman Even if it includes surcharge it cannot be said with confidence that the Vice Chairman has not approved has not approved the surcharge as a component of disposal price.
[722 G H]
|
Nos. 186 & 195 of 1954.
Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
S.C. Isaacs, (Mohan Behari Lal and P. K. Ghosh, with him) for the petitioners in both petitions.
M. C. Setalvad, Attorney General of India (Porus A.Mehta and P. G. Gokhale, with him) for the respondents.
September 22.
The Judgment of the Court was delivered by IMAM J.
These petitions under article 32 of the Constitution of India question the validity of the notifications issued under section 52 A of the Insurance Act of 1938 (hereinafter referred to as the Act) and the appointment of an Administrator.
In the case of the Tropical Insurance Company Ltd. an Administrator was appointed, under notification dated the 14th of July, 1951 and in the case of the Jupiter General Insurance Company Ltd. another Administrator was appointed under notification dated the 10th of July, 519 1951.
These two insurance companies do insurance business of life insurance and general insurance.
Admittedly previous to the appointment of the Administrators the Controller issued notices under section 52 A to the petitioners and the Finance Ministry of the Central Government sent letters to them pointing out the allegations in the report of the Controller to which they replied.
The learned Counsel for the petitioners has candidly stated that he could not raise any constitutional point after the fourth amendment to the Constitution of India.
He assumed; therefore, that the provisions of sections 52 A to 52 G of the Act were constitutional but he urged that the notifications under section 52 A and the taking over of the management of the affairs of the companies were invalid inasmuch as they were in excess of the powers conferred by section 52 A of the Act and that the notifications appointing the Administrators do not fix the period of management as required by law.
He further urged that the provisions of the section 52 B of the Act had not been complied with and in consequence the management by the Administrator had been excessively prolonged and thus had become unlawful.
There has, therefore, been a violation of the fundamental rights of the petitioners.
Finally it was urged that there was no authority either under the provisions of the Act or of any other law by which the Government was empowered to take over management of the affairs of the company with respect to its general insurance business.
The power of the Government under section 52 A was restricted exclusively to life insurance business.
As to the first two contentions, they were urged in Petitions Nos. 94 of 1954 and 183 of 1954, but were not allowed to be put forward by this Court as these questions had not been specifically raised in the petitions under article 32 of the Constitution and they were accordingly dismissed.
The position is similar in this respect so far as the present applications are concerned and consequently it must be held that the petitioners cannot be allowed now to urge grounds which they had not taken in their petitions.
66 520 There remains, however, to consider the last contention urged on behalf of the petitioners.
It was pointed out by Mr. Isaacs that the petitioners are insurance companies doing both life insurance business and general insurance business.
He contends that a section 52 A of the Act, on a true interpretation of its provisions, applies only to the life insurance business carried on by an insurer and not to the general insurance business done by him.
The Administrator appointed under section 52 A of the Act could therefore take over management only of the life insurance business done by the insurer.
The notifications authorising him to take over the management of the insurance business of the insurer including his general insurance business were thus beyond the powers conferred on Government under section 52 A of the Act and such taking over of the management of the general insurance business of the petitioners by the Administrator was, therefore, without lawful authority.
In view of the submission made by the learned Counsel, it is necessary to set out the relevant provisions of the section 52 A. Sub section (1) of that section states: "If at any time the Controller has reason to believe that an insurer carrying on life insurance business is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies, he may, after giving such opportunity to the insurer to be heard as he thinks fit, make a report thereon to the Central Government".
Sub section (2) states: "The Central Government, if it is of opinion after considering the report that it is necessary or proper to do so, may appoint an Administrator to manage the affairs of the insurer under the direction and control of the Controller".
Sub section (4) states: "The management of the business of the insurer shall as on and after the date of appointment of the Administrator vest in such Administrator, but except with the leave of the Controller, the Administrator shall not issue any further policies" 521 Section 52 B of the Act is concerned with the powers and duties of the Administrator.
Under this section, the Administrator shall conduct the management of the business of the insurer with the greatest economy ' compatible with efficiency and shall, as soon as may be possible, file with the Controller a report stating what specified courses under the section should be taken which would be most advantageous to the general interest of the holders of life policies.
One of the courses specified is the winding up of the business of the insurer.
Section 52 D of the Act is concerned with termination of the appointment of the Administrator.
Section 53 of the Act is concerned with the winding up by the Court and it enables the Controller to apply to the Court for winding up of an insurance company on certain grounds, one of them being that the continuance of the company would be prejudicial to the interests of the policy holders.
Mr. Isaacs urged that the Act made a clear distinction between life insurance business and general insurance business of an insurer.
He referred to various sections of the Act with reference to Registration, Separation of Accounts and Funds and Balance Sheets.
It was also pointed out by him that the Act defines "general insurance business" and "life insurance business" and these two kinds of businesses are quite distinct.
There could be little doubt that the Act does regard "life insurance business" as something distinct from "general insurance business".
It seems to us, however, that while keeping this distinction in mind, we have to give to the words used in section 52 A(1) their ordinary and natural meaning.
"Insurer" has been defined in section 2 of the Act.
The definition speaks of an insurer carrying on an insurance business.
This business may be either a life insurance business or a general insurance business or both.
Under section 7 of the Act deposits have to be made by every insurer other than an insurer specified in sub clause (c) of clause (9) of section 2.
The section specifies the amount of deposit to be made where the business done is life insurance only.
Similarly it specifies the deposit to be made in the case of business 522 done which comes within the description of general insurance business only.
It also contemplates a combination of life insurance business and general insurance business and specifies the deposit to be made in such event.
It is clear that section 52 A(1) does not apply to an insurer doing only general insurance business.
The question for decision is does it apply to him when he 'also does along with such business insurance business? Section 52_A(1) speaks of "an insurer carrying on life insurance business".
It does not speak of "only life insurance business".
It is permissible for an insurer to combine in his insurance business both life and general insurance business.
If he acts in a manner which is likely to be prejudicial to the interests of the holders of the life insurance policies with him, he makes himself amenable to the provisions of the section 52 A of the Act and the Controller is authorised to make a report to the Central Government.
The Central Government, after con sidering the report, may appoint an Administrator to manage "the affairs" of the insurer and the management of "the business" of the insurer shall vest in the Administrator.
The words "the affairs" and "the business" of the insurer are wide enough to empower the Central Government to take over the management of the entire business of the insurer including his general insurance business.
To hold otherwise would be to give an unnaturalmeaning to the words used in section 52 A of the Act.
In the present case the insurers are public limitedcompanies and it is difficult to conceive that the Act intended to vest in the Administrator the management of only the life insurance business while the insurers would be free to manage the general insurance business, because under section 52 B the Administrator may suggest to the Controller for the winding up of the company after managing its insurance business economically and efficiently.
Under section 53 a Court may order a winding up of an insurance company if on an appli cation by the Controller, it is satisfied that the con tinuance of the company is prejudicial to the interests of the policy holders.
The winding up of the com 523 pany would be concerned with its entire insurance business ,including life and general insurance business, because there could be no partial winding up of a company.
It is not difficult to imagine that the affairs of the company with reference to its general insurance business may be in such a hopeless state that winding up may be the only course to be taken to protect the interests of the life policy holders.
When the provisions of the Act are closely examined, it will be noticed that its main policy has been to safeguard the interests of life policy holders, who are deeply affected by the manner in which the insurance business of an insurer is carried on.
We have no difficulty in interpreting section 52 A(1) to mean that where an insurer is carrying on insurance business of various kinds which includes life insurance business, he becomes amenable to the provisions of section 52 A if he is acting in a manner prejudicial to the interests of the holders of life policies and he would have to suffer the consequences following the report made by the Controller and the appointment of an Administrator by the Government.
The provisions in the Act making a distinction between life insurance business and general insurance business, the keeping of separate accounts and balance sheets have been enacted for the safeguard of the holders of life insurance policies and they provide an over all picture of the business done by the insurer showing the exact state of affairs concerning the life insurance business of the insurer.
These provisions cannot and do not affect the provisions of of section 52 A of the Act.
These petitions are accordingly dismissed with costs to be paid by Petitioners 2, 3 and 4 in Petition No. 186 of 1954 and Petitioners 2 and 3 in Petition No. 195 of 1954.
| The petitioners, two Insurance Companies, carrying on business both in life insurance and general insurance, questioned the validity of notifications issued against them under section 52 A of the Insurance Act for appointment of Administrators to take over management of their affairs on the ground, inter alia, that section 52 A was exclusively restricted to life insurance business and the Government had no power to take oyer management of general insurance busi ness.
Held, that the Insurance Act of 1938 no doubt makes a distinction between life insurance business and general insurance business, but its main concern is to protect life insurance policy holders.
Although section 52 A of the Act has no application to an insurer who carries on business in general insurance alone, it undoubtedly applies to an insurer who combines both and gives the Central Government the power, on the report of the Controller, to appoint an Administrator to take over the management of the entire business of the insurer including general insurance business when such insurer is found to act in a manner prejudicial to the interests of the life policy holders.
That grounds not specifically taken in petitions under article 32 cannot be urged at the time of the hearing.
|
ivil Appeal No.2560 of 1988.
From the Judgment and Order dated 12.1.1988 of the Madhya Pradesh High Court in Misc.
No. 685 of 1987.
AND Civil Appeal No. 1639 of 1988.
From the Judgment and Order dated 8.6.1987 of the Madhya Pradesh High Court in Misc.
Petition No. 1488 of 1987.
G.L. Sanghi, M.N. Krishmani, Diwan Balak Ram and R.K. Singh for the Appellant in C.A. No. 2560 of 1988.
Rajender Sachar, Sanjay Sareen, Vivek Gambhir, S.K. Gambhir for the Appellant in C.A. No. 1639 of 1988.
Ashwani Kumar, T.C. Sharma and S.N. Khare for the Respondents.
The Judgment of the Court was delivered by SEN, J.
These two appeals by special leave brought from the judgments and orders of the Madhya Pradesh High Court dated June 8, 1987 and January 12, 1988 dismissing the writ PG NO 284 petitions filed by each of the appellants, substantially involve a question as to the interpretation of Rule 10 of the Madhya Pradesh Selection for Post Graduation Course (Clinical, Para clinical and Non clinical Courses) in Medical Colleges of Madhya Pradesh Rules, 1984 ( 'Rules ' for short).
The question raised is one of moment as it involves the right to admission to a seat in the Post Graduate course in Medicine & Surgery in a Medical college (hereinafter referred to as the PG course in MD/MS) falling vacant 'in the midst of ', or 'towards the end of ', an academic year which, we believe, is a problem facing all the States.
First the facts.
In these cases, the facts are not in dispute.
In Dr. Ajay Pradhan 's case, for the academic year 1986 87 commencing from September 1986, there were nine seats reserved for the post graduate course in the clinical subject of General Medicine for the G.R. Medical College, Gwalior.
All the nine seats were filled by the Dean, Medical College from amongst candidates strictly on the basis of merit i.e. by candidates placed at serial Nos. 1 to 9 on the recommendation of the College and Hospital Council.
The appellant Dr. Ajay Pradhan who was placed at serial No. 15 obviously could not be given admission to the P.G. course in M.D. in General Medicine and was instead placed at serial No. 6 in the waiting list.
Later on, he was given admission to the Diploma course in Radiology on 4. 10.86 and he duly joined that course on 6.10.96 but failed to appear at the examination.
On 11.7.87 Dr. Arun Yadav, one Of the Selected candidates, who stood first in the merit list and was admitted to the P.G. course in M.D. in General Medicine met with a tragic death in a road accident.
Inasmuch as his death occurred towards the end of the academic year, the authorities took no steps to fill up the seat.
However, on the death of Dr. Arun Yadav, the appellant staked a claim to fill up the vacant seat under r. 10 of the Rules on the ground that the candidates placed above him in the merit list had been rendered ineligible having either opted for the Diploma course in Radiology or had left their house job.
That claim of his having been turned down he moved the Gwalior Bench of the High Court under article 226 of the Constitution.
A Division Bench of the High Court by its order dated January 12, 1988 dismissed the writ petition holding that the claim of the appellant in terms of r. 10 was misconceived.
The facts in Dr. Sanjay Kumar Shrivastava 's case are these.
For the academic year 1986 87 commencing from August 1986, there were five seats reserved for the P.G. course in M.S. in Obstetrics and Gynaecology for the Medical College, Jabalpur.
On March 2, 1987, the State Government passed an PG NO 285 order transferring the seat occupied by Dr. Smt.
Dhurupkar in Obstetrics and Gynaecology from the Medical College, Jabalpur to Medical College, Bhopal with a view to accommodate her and presumably because such transfer involved financial implications.
On her transfer to Medical College, Bhopal, Dr. Smt.
Dhurupkar continued to draw her stipend of Rs.800 per month reserved against one of the five seats in that discipline for Medical College, Jabalpur.
The appellant Dr. Sanjay Kumar Shrivastava, who was placed at Serial No. 7 in the waiting list moved the authorities seeking admission to the P.G. course in Obstetrics and Gynaecology in Medical College, Jabalpur contending that the seat had fallen vacant because of the transfer of Dr. Smt.
Dhurupkar and had therefore become available in terms of r. 10 of the Rules.
The authorities having disallowed his claim, the appellant moved the High Court by a petition under article 226 of the Constitution.
The High Court by its order dated June 8, l987 dismissed the writ petition in limine holding that 'the seat occupied by Dr. Smt.
Dhurupkar had been transferred with her and hence the same, in fact, was not available.
The main question that falls for determination in these appeals is whether in terms of r. 10 of the Rules there is a right to admission to a seat in the PG course in MD/MS falling vacant in a medical college 'in the midst of ' or 'towards the end of ' an academic year to which it pertains.
A further question arises in one of these appeals as to whether the State Government has the power to transfer a seat in any of the disciplines in the PG course in MD/MS reserved for a medical college to another medical college in the State in order to accommodate a particular post graduate student.
The Medical Council of India constituted under the and one of whose duties is to prescribe the minimum standards of medical education, made recommendations on February 12/13, 1971 prescribing uniform standards for post graduate medical education throughout India which having been approved by the Government of India and as revised from time to time, have the status of Regulations under section 33 of the Act.
The Regulations framed by the Medical Council of India provide inter alia for the different specialities for which PG courses in MD/MS as also Diploma courses in certain disciplines may be conducted, and the norms for admission of students to the PG courses in MD/MS as also to the Diploma courses.
According to the Regulations framed by the Medical Council of India, the student teacher ratio for the PG course in MD/MS is to be maintained at 1:1.
The relevant regulation prescribing a student teacher ratio at 1:1 for PG NO 286 the PG course in MD/MS made with a view to maintain the minimum standards of medical education for the PG course in MD/MS insorfar as relevant, is as follows: "General (1) For M.D./M.S. degree in clinical subjects, there shall be proper training in basic medical sciences related to the disciplines concerned as well as paper in these subjects at the examination.
In the case of M.D. & M.S. in basic medical sciences there should be training in applied aspect of the subject and a paper on the subject.
(2) In all post graduate courses, whether clinical or basic medical sciences, preventive and social aspects should be emphasised.
(3) This should be a part of the examination in the degree courses as this gives training in research methodology.
(4) The student teacher ratio should be such that the number of post graduate teachers to the number of post graduate students admitted per year be maintained at 1:1.
For the proper training of the post graduate students, there should be a limit to the number of student admitted per year.
For this purpose every unit should consist of atleast 3 full time post graduate teachers and can admit not more than 3 students for post graduate teachers in the unit is more than three then the number of students can be increased proportionately.
For this purpose one student should associate with one post graduate teacher.
(5) The selection of post graduates both for degree and diploma courses should be strictly on the basis of academic merit." In most of the States rules have been framed by the various State Governments under article 162 of the Constitution regulating the manner of admission of students to the PG course of studies in MD/MS in the medical college in the State.
The number of seats available for the PG courses in PG NO 287 MD/MS and for the Diploma courses in various disciplines is therefore limited.
There cannot be increase in the number of seats without the sanction of the Medical Council of India and without corresponding increase in the strength of the teaching staff, which necessarily involves financial implications.
The whole controversy turns on the purport and effect of r. 10 of the Rules prescribing the manner in which seats available in any particular year are to be filed, and is in these terms: "10.
The seats available in any particular year will be filled up in that year.
No candidates will be admitted against the seats remaining vacant from previous year.
" We must interpret r. 10 by the written text.
If the precise words used are plain and unambiguous, we are bound to construe than in their ordinary sense and give them full effect.
The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are alternative methods of construction.
Where the language is explicit its consequences are for Parliament, and not for the Courts, to consider.
"Where the language of an Act is clear and explicit", said Viscount Simon in King Emperor vs Bensari Lal Sarma, LR (1945) 72 Ia 57 at p. 70, "we must give effect to it whatever may be the consequences for in that case the words of the statute speak the intention of the legislature".
We do not see why the same rule of construction should not apply to the Rules framed by the State Governments under article 162 of the Constitution.
On a plain construction, r. 10 is in two parts.
The power to admit a student under the first part arises when a seat falls vacant in a particular year.
The words 'filled up in that year ' necessarily qualify the preceding words 'the seats available in any particular year '.
It must logically follow that a necessary concomitant of the power under the first part of r. 10 is the 'availability ' of the seat being filled up in the academic year to which it pertains.
The words 'filled up in that year 'which follow clearly imply that the vacancy cannot be carried over to the next academic year or years.
That construction of ours is reinforced by the second part of r. 10 which, by the use of negative language, clearly creates a bar against the seat being filled up in the next or succeeding academic year.
What is implicit in the first part of r. 10 is made explicit in the second part.
The use of the negative words in the second part 'No candidates will be admitted . etc. ' are clearly PG NO 288 prohibitory in nature and exclude the applicability of the carry for ward rule.
It follows that if a seat falls vacant for any reason, namely, that the candidte selected in order of merit does not join the PG course in MD MS in a medical college or by reason of his death or otherwise, and due to inaction on the part of the authorities the seat is not filled up in the academic year to which it pertains, there is no question of the vacancy being carried forward to the next academic year.
Rule 10 is a specific provision made for the benefit of the merit candidates who are placed in the waiting list.
Normally, the question" of a seat being filled up must arise at the commencement of the academic year or soon thereafter.
In our considered opinion on the terms of r. 10 as it exists, no other view is possible.
When a seat falls vacant in any particular academic year there is a corresponding duty cast on the authorities to take immediate steps to fill up the same.
There is no question of a right of admission to a seat falling vacant in the midst of, or towards the end of, the academic year.
As per the Regulations framed by the Medical Council of India, the PG course in MD/MS is a three years ' course including one year 's house job.
This is followed by a two years ' degree course.
The two years ' degree course in a medical college as prescribed by the Medical Council of India is a period of intensive training.
A post graduate student has not only to write a dissertation or thesis under the supervision of the Professor or Associate Professor who is his guide, but has also to take part in seminars, group discussions, clinical meetings besides attending classes.
There is also emphasis on in service training and not on didactic lectures.
The in service training requires the student to be a resident in the campus and he has the graded responsibility in the management and treatment of patients entrusted to his care.
For this purpose, adequate number of posts of clinical residents or tutors are created.
The period also includes adequate training in the basic sciences of Anatomy, Physiology, Bio Chemistry, Bio Physics.
Pharmacology and Pathology in all aspects relevant to the speciality concerned.
He is also required to participate in the teaching and training programmes of under graduate students or interns in their subjects.
The examination for the PG course in MD/MS consists of (i) thesis or dissertation, (ii) written papers.
(iii) clinical, oral and practical examination.
There are four theory papers for the post graduate degree examination, of which one has to be on Applied Basic Sciences.
The clinical examination is aimed at eliciting the knowledge of the student to undertake independent work as a Specialist.
The oral and practical examinations are meant to test his knowledge on PG NO 289 investigative procedures, techniques and other aspects of the speciality.
The syllabus prescribed by the Medical Council of India for the PG course in MD/MS as also the student teacher ratio of 1:1 virtually negate the right to admission to a seat falling vacant in the midst of or towards the end of the academic year to which it pertains.
In Ajay Pradhan 's case, the High Court dismissed the writ petition principally on the ground that in terms of r. 10 of the Rules he was not entitled to any relief.
Dr. T.N. Singh, J. speaking for himself and Ram Murti Rastogi, J. construed the words 'filled up in that year ' in r. 10 as meaning that a vacancy in any particular academic year must be filled up in that year.
According to him, the power to admit a student under r. 10 must be availed of either before the academic year commences or very soon thereafter, so that a candidate placed in the waiting list admitted under r. 10 does not suffer serious loss of study due to belated admission.
Further he rightly observes, the second part of r. 10 mandates that if any seat has not been filled up in the academic year to which it pertains, the exercise cannot be undertaken in the succeeding year and it furnishes the rationale behind the provision, and said: "An academic course cannot be compressed to accommodate any particular candidate who comes late.
Because, no separate or 'special ' arrangement can be made for a latecomer for imparting instructions to him.
Any other view would not make a reasonable reading or construction of the Rule in its context and setting for each candidate has to be not only examined periodically with respect to instructions imparted, the pre requisite therefore has also to be fulfilled by rendering instructions to him during the whole period of the course.
We have no doubt that when a seat is allotted a date has to be specified by which it has to be availed.
Therefore, it shall not be deemed 'filled up ' if it is not availed.
Indeed, it would then become the duty of the concerned authority to fill up the same by offering it to any other eligible candidate according to merit.
In such a case, a decision has obviously to be taken to do so either before the session commences or very soon thereafter so that the new comer does not suffer serious loss of studies due to belated admission.
" We are in complete agreement with the view expressed by the learned Judge.
PG NO 290 We shall now deal with a couple of decisions to which we were referred to by learned counsel for the appellants during the course of their arguments.
It was submitted that the High Court has consistently been taking a view that it has the power as well as the duty to issue an appropriate writ, direction or order for the 'backlog ' of seats to be filled up whenever it finds that the authorities have acted in violation of the norms prescribed by the relevant rules and a deserving candidate has been wrongly denied admission to such a professional course of studies.
It seemingly appears to be so, but on closer scrutiny the decisions relied upon are clearly distinguishable on facts.
There are three decisions we must mention: Dr. Mrs. Urmilla Shukla vs State of M.P. & Ors., (Misc.
Petition No. 297/83 decided on 17.4.84); Rekha Saxena vs State of M.P. & Ors., and Dr. Sunil Gajendragadkar vs State of M.P., (Misc.
Petition No. 57/85 decided on 11.3.85).
In Dr. Urmilla Shukla 's case, the facts were these.
Dr. Mrs. Urmilla Shukla had applied for admission to the PG course in MS in Gynaecology and Obstetrics as well as to the Diploma course in that discipline in G.R. Medical College, Gwalior for the academic year 1983 84.
It was not in dispute that there were 7 Lecturers in Obstetrics & Gynaecology in that College and as such 7 students had to be admitted for the PG course in MS in Gynaecology and Obstetrics.
As per r. 2.2 of the Rules the State Government had fixed the ratio of 2/3rd for the merit candidates and 1/3rd for the candidates in Government Service as Assistant Surgeons or equivalent posts, for admission to Post Graduate course in Gynaecology.
No rules had been framed for working out the ratio of 2/3rd and 1/3rd.
Dr. Mrs. Urmilla Shukla stood fifth in the merit list.
However, the authorities did not select her for the studies in MS course in Obstetrics & Gynaecology for the academic session starting from August 1983 but gave her admission to the Diploma course.
She made a representation that she should have been given admission to the PG course in MS in Obstetrics & Gynaecology and not to the Diploma course, contending that there was no justification now the ratio of 4:3 had been worked out.
The Government however rejected the representation and there upon she moved the High Court.
The High Court allowed the writ petition and struck down the decision of the State Government dated August 30, 1983 fixing the ratio at 4:3 as being wholly arbitrary and without any rational basis, and held that the ratio should have been 5:2.
C.P. Sen, J. speaking for himself and R.C. Shrivastava, J. explained that 2/3rd of 7 came to 4.666 while 1/3rd was 2.333.
and the question was now the figure had to be rounded PG NO 291 off for filling up the 7 seats.
The learned Judge explained that the proper method would be that if the figure is more than half the same has to be rounded off as 1 while if the figure is less than half it is not to be reckoned.
The High Court accordingly issued a writ in the nature of mandamus directing the Government to give admission to Dr. Mrs. Urmilla Shukla to the Post Graduate course in Obstetrics & Gynaecology and permit her to appear at the MS examination in that discipline.
It is however necessary to observe that the learned Judge mentioned that out of 7 seats for the PG course of studies in Obstetrics & Gynaecology, one seat had been kept vacant probably because of the filing of the writ petition by Dr. Mrs. Urmilla Shukla and therefore there could be no impediment to the grant of admission to her and cited a precedent under similar circumstances during the earlier year.
Dr. Miss Sushma Dixit had been admitted to the MS course in Obstetrics & Gynaecology because one of the candidates selected had gone abroad without permission and her admission had been cancelled.
He further pointed out that Dr. Mrs. Urmilla Shukla was pursuing her studies in the Diploma course in Obstetrics & Gynaecology and the syllabus in the MS in that discipline for the first year was the same and therefore there could be no difficulty in her way in determining the percentage of attendance to make her eligible to appear at the examination.
The decision in Dr. Mrs. Urmilla Shukla 's case therefore turned on its own facts.
The decision in Rekha Saxena 's case was an aftermath of the decision in Dr. Mrs. Urmilla Shukla 's case Dr. Rekha Sexena had applied for admission only to the Diploma course in Gynaecology & Obstetrics and she rightly contended that the ratio for the P.G. course in MG between merit candidates and Assistant Surgeons should have been 5:2 and she being placed at serial No. 4 in the merit list, should have been admitted to the Diploma course.
She complained that after Dr. Urmilla Shukla was given admission to the MS course, she made an application that she be given provisional admission to the Diploma course on the assurance that if ultimately Dr. Urmilla Shukla had to come back to the Diploma course she would walk out and further that she could not claim any stipend for the period of her studies, and that though the High Court allowed the writ petition of Dr. Urmilla Shukla and the College Council recommended her case for admission to the Diploma course, the authorities turned down her claim on the ground that she could not be given admission in 1984 against the quota for the academic year 1983 84.
The petitioner in her rejoinder pointed out the instance of Dr. Miss Sushma Dixit who was given admission to the MS course in Gynaecology & Obstetrics in the month of March 1983 PG NO 292 though she was doing her Diploma course for the academic year 1982 83, and made a grievance that she was being discriminated against as the authorities were adopting different yardsticks in her case.
In the return filed by the State Government, the facts were not disputed.
All that was said was that against the aforesaid judgment of the High Court in Dr. Mrs. Urmilla Shukla 's case, the State Government had taken an appeal to the Supreme Court and therefore her seat in the Diploma course was kept vacant and had not been declared to be available for any other candidate.
Upon this basis, it was asserted that as there was no seat vacant, no admission could be granted to Dr. Rekha Saxena.
At the hearing of the writ petition the Government 's appeal in Dr. Mrs. Urmilla Shukla 's case was still pending.
G.L Oza, Actg.
speaking for himself and Rampal Singh, J. allowed the writ petition and directed that the petitioner Dr. Rekha Saxena be given provisional admission to the Diploma course in the vacancy caused on admission being granted to Dr. Mrs. Urmilla Shukla to the MS course.
The High Court repelled the contention that the petitioner was a candidate for admission to a course for the academic year 1983 84 and could not be admitted in the year 1984, and observed: "It is strange that this request of the petitioner dated 26.8.1983 was ultimately turned down by the respondents by an order dated 25.4.1984, practically eight months after this prayer was made by the petitioner.
This delay in taking a decision on such matters when every day that passes in the life of a professional candidate is materially speaks volumes about the efficiency of this department and the rejection is on this basis that the petitioner was selected for the year 1983 and could not be admitted in the year 1984.
This logic of this order, it appears, is not defended in the return and a new defence has been raised in the return that as the case of Dr. Smt.
Urmilla Shukla is not yet finally decided and is pending in the Supreme Court, the seat has not been declared vacant although it is not disputed that the seat is and was vacant in fact.
It is peculiar that if Dr. Smt.
Urmilla Shukla could be given a provisional admission, why the petitioner could not have been given provisional admission immediately when she had herself offered in terms which would throw no liability on the respondents if ultimately she had to go back, but it appears that her application was not considered and ultimately practically major part of the session was wasted PG NO 293 and then the refusal was on the ground of delay for which the authorities themselves were responsible.
It is, therefore, plain that this kind of attitude could not be justified.
" It was then observed: "It is also interesting that in fact the selection of a candidate for admission to a course is for the academic session which is August 1983 to August 1984 and, therefore, when this order in April 1984 was passed, the session was still in the offing and if the petitioner was granted admission, there was no question of consideration of merit for the year 1984.
It is also plain that the seat remained vacant as Dr. Smt.
Urmilla Shukla had been admitted in the M.S. Course. ' ' Incidentally, the High Court was not impressed with the submission made on behalf of the Government that there was no declaration that the seat in the Diploma course had fallen vacant and therefore there was no question of giving admission to the petitioner, observing that formal declaration of vacancy was too abstract a concept to deprive a candidate admission to the P.G. Course or Diploma course to which he is entitled, merely on the ground that the vacancy pertained to the academic year which had gone by or that no additional seat in the new year could be created without sanction of the Medical Council of India.
In coming to the conclusion that it did, the High Court mainly relied on certain observation made by this Court in Punjab Engineering College vs Sanjay Gulati & Ors., ; , and in particular to the following observations: "Those who infringe the rules must pay for their lapse and the wrong done to the deserving students who ought to have been admitted has to be rectified.
The best solution under the circumstances is to ensure that the strength of seats is increased in proportion to the wrong admissions made.
" We need not enter into this controversy.
What is of significance is that in Rekha Saxena 's case the seat occupied by Dr. Urmilla Shukla in the Diploma course in Obstetrics & Gynaecology was kept vacant and therefore there was no legal impediment for the High Court to have issued a direction for the admission of Dr. Rekha Saxena.
PG NO 294 In Sunil Gajendragadkar 's case, the facts were more or less these.
One Dr. Laxmi Jain did not join the P.G. course in MD in General Medicine for the academic year 1983 84 and the College Council on December 22, 1984 decided to cancel her admission w.e.f.
August 1, 1984.
But the vacancy caused thereby was not notified or advertised.
The High Court relying on Rekha Saxena 's case repelled the contention of the Government based on r. 10 that a seat falling vacant in a particular year can only be filled up in that year and the Sunil Gajendragadkar could not be admitted in the academic session 1983 84 which commenced from August 2, 1983.
Oza, CJ.
speaking for himself and Ram Pal Singh, J. repelled the contention of the Government that the petitioner being a candidate for admission to the P.G. course in MD in General Medicine for the academic year 1983 84, could not be considered for admission in the year 1984 85 relying on the earlier decision in Rekha Sexena 's case based on the observation of this Court in Punjab Engineering College that "those who infringe the rules must pay for their lapse and the wrong done to the deserving students who ought to have been admitted has to be rectified.
The best solution under the circumstances is to ensure that the strength of seats is increased in proportion to the wrong admissions made", and quoted from Rekhu Saxena 's case: "In the present case, as it is clear that in the vacancy of Dr. Urmilla Shukla the petitioner was entitled to admission immediately in August l983 itself, and if the respondents had chosen to keep her away by not considering her prayer, it could not be contended that now it is too late for her to be admitted.
" The learned Chief Justice largely relied on the concept of justice and fairness.
He adverted to the fact that the College Council took a decision on December 22, 1984 creating a vacancy w.e.f. August 1, 1984 i.e. commencement of the next academic session.
Although Dr. Laxmi Jain did not join the P.G. course in MD in General Medicine in August 1983, her seat was in fact vacant, but due to apathy and lethargy of the authorities no steps were taken to fill up the seat in that year in terms of r. 10.
On the language of r. 10, we find it difficult to sustain the action of the authorities in making the seat available from August 1, 1984 i.e. commencement of the next academic year, or the view expressed by the High Court.
In the appeal preferred by Dr. Sanjay Kumar Shrivastava, it is conceded by learned counsel appearing for the State Government that there is no provision which empowered the PG NO 295 State Government to transfer a seat in the P.G. course in MD/MS reserved for a medical college to another medical college.
It must therefore follow that the High Court was obviously wrong in holding that the seat occupied by Smt.
Dhurupkar had been transferred with her when the same was, in fact, available.
On the construction that we place on r. 10 of the Rules, the appellants are not entitled to any relief.
Obviously, the seat that became vacant in the academic year 1986 87 cannot now filed in terms of r. 10.
We wish to impress upon the State Government of Madhya Pradesh the desirability of taking immediate steps under r. 10 of the Rules to fill up the vacancy in the P.G. course in MD/MS or the diploma course of studies in a particular discipline, the moment the seat in a medical college in that discipline is available in a medical college in any particular academic year.
The State Government should ensure that the authorities charged with the duty of granting admission to students under r. 10 of the Rules must act with due promptitude, and should not by their lethargy or inaction deprive an otherwise meritorious candidate admission to such a higher course of studies to which he was otherwise entitled.
Perhaps, the solution lies in making a suitable provision in the Rules providing for a reasonable period, say fifteen days, within which the authorities ought to exercise their powers under r. 10 of the Rules, failing which the seat available would be deemed to have been filled by the candidate placed first in the waiting list strictly according to merit.
In the result, the appeals must fail and are dismissed.
There shall be no order as to costs.
R.S.S. Appeals dismissed.
| A seat in the P.G. course in M.D. in the G.N. Medical College, Gwalior, fell vacant due to the death of a student.
The appellant, Dr. Sanjay Pradhan, staked a claim to this seat under rule 10 of the Madhya Pradesh Selection for Post Graduation Courses (Clinical, Para clinical and Non clinical Courses) in Medical Colleges of Madhya Pradesh Rules, 1984.
Inasmuch as the vacancy arose towards the end of the academic year, the authorities took no steps to fill it up.
The appellant 's writ petition was dismissed By the M.P. High Court.
The High Court construed the words 'filled up in that year ' in r. 10 as meaning that a vacancy in any particular academic year must be filed up in that year.
One seat in the P.G. Course in M.S., which was occupied by Dr. Smt.
Dhurupkar, was transferred from Medical College, Jabalpur, to Medical College, Bhopal, with a view to accommodate her.
The appellant, Dr. Sanjay Kumar, moved the authorities seeking admission against that seat contending that the seat had become available in terms of r. 10.
The authorities disallowed his claim.
His writ petition was dismissed by the High Court in limine holding that the seat occupied by Dr. Smt.
Dhurupkar had been transferred with her and hence the seat, in fact, was not available.
It was submitted before this Court that the High Court has consistently been taking a view that it has the power as well as the duty to issue an appropriate writ, direction or order for the 'backlog ' of seats to be filled up whenever it finds that the authorities have acted in violation of the norms prescribed by the relevant rules and a deserving candidate has been wrongly denied admission to such a professional course of studies.
PG NO 281 PG NO 282 Dismissing the appeals, it was, HELD: (1) Rule 10 must be interpreted by the written text.
If the precise words used are plain and un ambiguous, the Court is bound to construe them in their ordinary sense and give them full effect.
The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are alternative methods of construction.
Where the language is explicit its consequences are for parliament, and not for the Courts, to consider.
[287C D] (2) On a plain construction, rule 10 stipulates that if a seat falls vacant for any reason, and due to inaction on the part of the authorities the seat is not filled up in the academic year to which it pertains, there is no question of the vacancy being carried forward to the next academic year.
[288A B] (3) Normally, the question of a seat being filled up must arise at the commencement of the academic year or soon thereafter.
When a seat falls vacant in any particular academic year there is a corresponding duty cast on the authorities to take immediate steps to fill up the same.
There is no question of a right of admission to a seat falling vacant in the midst of or towards the end of, the academic year.
[288C] (4) it is conceded by learned counsel appearing for the State Government that there is no provision which empowered the State Government to transfer a seat in the M.S. course in MD/MS reserved for a medical college to another medical college.
It must therefore follow that the High Court was obviously wrong in holding that the seat occupied by Dr. Smt.
Dhurupkar had been transferred with her when the seat was, in fact, available.
[285C D] (5) On the construction placed on r. 10 of the Rules, the appellants are not entitled to any relief.
Obviously, the seat that became vacant in the academic year 1986 87 cannot now be filed in terms of section 10.
[295B] (6) It is impressed upon the State Government the desirability of taking immediate steps under rule 10 of the Rules to fill up the vacancy in the P.G. Course in MD/MS or the Diploma course of studies in a particular discipline, the moment the seat in that discipline is available in any particular academic year.
[295C D] PG NO 283 (7) The State Government should ensure that the authorities charged with the duty of granting admission to students under rule 10 of the Rules act with due promptitude, and should not by their lethargy or inaction deprive or otherwise meritorious candidate admission to such a higher course of studies to which he was otherwise entitled.
Perhaps, the solution lies in making a suitable provision in the Rules providing for a reasonable period, say fifteen days, within which the authorities ought to exercise their power under rule 10 of the Rules, failing which the seat available would be deemed to have been filled by the candidate placed first in the waiting list strictly according to merit.
[295D E] King Emperor vs Bensari Lal Sarma, LR (1945) 72 IA 57; Dr. Mrs. Urmilla Shukla vs State of M.P., Misc.
Petition No. 297/83 decided by M.P. High Court on 17.4.84; Rekha Saxena vs State of M.P., [l985] MPLJ 142; Dr. Sunil Gajendragadkar vs State of M.P. (Misc.
Petition No. 57/85 decided by M.P. High Court on 11.3.85.
|
Appeals Nos. 1061 and 1627 to 1629 of 1966.
Appeals by special leave from the judgment and order dated March 9, 10, 1965 of the Bombay High Court in Revision Applications Nos.
1428, 1427, 1430 and 1676 of 1961.
M. C. Chagla, J. L. Hathi, K. L. Hathi and K. N. Bhat for the appellants (in all the appeals).
R. P. Bhat, Janendra Lal, R. A. Gagrat and B. R. Agarwala, for the respondent (in all the appeals).
The Judgment of the Court was delivered 'by Shah, J.
Under an indenture dated August 2, 1950, Dossibai respondent in this appeal granted a lease of 555 sq. yards in village Pahadi, Taluka Borivli to Mathura Prasad appellant herein for constructing buildings for residential or,business purposes.
The appellant constructed buildings on the land.
He then submitted an application in the Court of the Civil Judge, Junior Division, Borivli, District Thana, that the standard rent of the land be determined under section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The Civil Judge rejected the application holding that the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for constructing buildings for residence, education, business, trade or storage.
This order was confirmed on September 28, 1955, by a single Judge of the Bombay High Court in a group of revision applications : Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar : Nos. 233 to 242 of 1955.
But in Vinayak Gopal Limaye vs Laxman Kashinath Athavale(1) the High Court of Bombay held that the question whether section 6(1) of the Act applies to any particular lease must be determined on its terms and a building lease in respect of an open plot is not ex (1) I.L.R. 832 cluded from section 6(1) of the Act solely because open land may be used for residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh petition in the Court of the Small Causes, Bombay, for an order determining the standard rent of the premises.
The application was filed in the Court of Small Causes because the area in which the land was situated had since been included within the limits of the Greater Bombay area.
The Trial Judge rejected the application holding that the question whether to an open piece of land let for the purpose of constructing buildings for residence.
education, business or trade section 6 (1) of the Act applied was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by a Bench of the Court,of Small Causes and by the High Court of Bombay.
With special leave, the appellant has appealed to this Court.
The view expressed by the High Court of Bombay in Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar (Civil) Revision Application No. 233 of 1955 (decided on September 28, 1955) was overruled by this Court in Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1).
In the latter case the Court affirmed the view expressed by the Bombay High Court in Vinayak Gopal Limaye 's case (2).
But all the Courts have held that the earlier decision of the High Court of Bombay between the same parties and relating to the same land is res judicata.
Section II of the Code of Civil Procedure which enacts the general rule of res judicata, insofar as it is relevant, provides : "No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court." The Civil judge, Junior Division, Borivli, was competent to try the application for determination of standard rent, and he held that s 6(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for construction of residential and business premises.
The rule of res judicata applies if "the matter directly and substantially in issue" in a suit or proceeding was directly and sub (1) I.L.R. (2) 833 stantially in issue in the previous suit between the same parties and had been heard and finally decided by a competent Court.
The Civil Judge, Junior Division, Borivli, decided the application between the parties to the present proceeding for determination of standard rent in respect of the same piece of land let for construction of buildings for residential or business purposes.
The High Court has held that a decision of a competent Court may operate as res judicata in respect of not only an issue of fact, but mixed issues of law and fact, and even abstract questions of law.
It was also assumed by the High Court that a decision relating to the jurisdiction of the Court to entertain or not to entertain a proceeding is binding and conclusive between these parties in respect of the same question in a later proceeding.
But the doctrine of res judicata belongs to the domain of procedure : it cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpretation of enactment affecting the jurisdiction of a Court finally between them, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby.
A decision of a competent Court on a matter in issue may be res judicata in another proceeding between the same parties : the "matter in issue" may be an issue of fact, an issue of law, or one of mixed law and fact.
An issue of fact or an issue of mixed law and fact decided by a competent court is finally determined between the parties and cannot be re opened between them in another proceeding.
The previous decision on a matter in issue alone is res judicata : the reasons for the decision are not res judicata.
A matter in issue between the parties is the right claimed by one party and denied by the other, and the claim of right from its very nature depends upon proof of facts and application of the relevant law thereto.
A pure question of law unrelated to facts which give rise to a right, cannot be deemed to be a matter in issue.
When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties.
A previous decision of a competent Court on facts which are the foundation of the right and the relevant law applicable to the determination of the , transaction which is the foundation of the right and the relevant law applicable to the determination of the transactions which is the soured of the right is res judicata.
A previous decision on a matter in issue is a composite decision: the decision of law can not be dissociated from the decision on facts on which the right is founded.
A decision on an issue of law will be as res judicata in a subsequent proceeding between the same parties, if the cause of action of the subsequent Proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor 834 when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law.
The authorities on the question whether a decision on a question of, law operates as res judicata disclose widely differing views.
In some cases it was decided that a decision on a question of law can never be res judicata in a subsequent proceeding between the same parties : Parthasardhi Ayyangar vs Chinnakrishna Ayyangar(1); Chamanlal vs Bapubhai (2) ; and Kanta Devi vs Kalawati(3).
On the other hand Aikman, J., in Chandi Prasad vs Maharaja Mahendra Mahendra Singh(1) held that a decision on a question of law is always res judicata.
But as observed by Rankin, C.J., in Tarini Charan Bhattacharjee vs Kedar Nath Haldar(5) : "Questions of law are of all kinds and cannot be dealt with as though they were all the same.
Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law.
In such questions the rights of parties are not the only matter for consideration.
" We may analyse the illustrative cases retating to questions of law, decisions on which may be deemed res judicata in subsequent proceeding.
In Bindeshwari Charan Singh vs Bageshwari Charan Singh(1) the Judicial Committee held that a decision of a court in a previous suit between the same parties that section 12A of the Chota Nagpur Encumbered Estates Act 6 of 1876 which renders void a transaction to which it applies was inapplicable, was Yes judicata.
In that case the owner of an impartable estate, after his estate was released from management, executed a maintenance grant in favour of his minor son B, but without the sanction of the Commissioner as required by section 12A of the, Act.
B on attaining majority sued his father and brothers for a maintenance grant at the rate of Rs. 4,000 per annum.
The claim was decreed, and the plaintiff was awarded a decree for a grant of Rs. 4,000 inclusive of the previous grant of 1909, and the Court held that the grant of 1909 was valid in law.
The father implemented the decree and made an additional maintenance grant upto the value of the decreed sum.
In an action by the sons of B 's brothers challenging the two grants on the plea that the grants were illegal and not binding upon them, the Judicial Committee held that the plea was barred as res judicata in respect of both the grants in respect of the first because there was an express decision on the validity of the first grant in the earlier suit, and in respect of the second the (1) I.L.R. (3) A.I.R. [1946] Lah. 419.
(5) I.L.R. (2) I L.R, (4) I.L.R. 23 All.
(6) L.R. 63 I.A. 53.
83 5 decision in the first suit was res judicata as to the validity of the second grant which was made in fulfillment of the obligation under the Court 's decision.
The Judicial Committee held that in respect of the first grant, the decision that section 12A did not apply to the grant, was res judicata, and in respect of the second grant the construction between the same parties of section 12A was res judicata.
Validity of the second grant was never adjudicated upon in any previous suit; the second grant was held valid because between the parties it was decided that to the grant of maintenance of an impartible zamindari section 12A of the Chota Nagpur Encumbered Estates Act had no application.
This part of the judgment of the Judicial Committee is open to doubt.
Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same, parties : Tarini Charan Bhattacharjee 's case(1).
It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different.
In a case relating to levy of tax a decision valuing property or determining liability to tax in a different taxable period or event is binding only in that period or event, and is not binding in the subsequent years, and therefore the rule of, res judicata has no application; see Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill(2) A question of jurisdiction of the Court, or of procedure, or a pure question of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit.
Rankin, observed in Tarini Charan Bhattacharjee 's case(1) : "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory by precluding the parties from reopening or recontesting that which has 'been finally decided.
" A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the Court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does.
not possess under the statute, the question cannot operate as res judicata bet (1) I.L.R. (2) 83 6 ween the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
It is true that in determining the application of the rule of res judicata the Court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be, reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned a subsequent proceeding between the same parties.
But, where the decision is on a question law, i.e. the interpretation of a statute, it will be res judicata in a subsequent proceeding between the same parties where the cause of action is the same for the expression "the matter in issue" in section 11 Code of Civil Procedure means the right litigated between the parties, i.e. the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata,for a rule of procedure cannot supersede the law of the land.
In the present case the decision of the Civil Judge, Junior Division, Borivli, that he had no jurisdiction to entertain the application for determination of standard rent, is, in view of the judgment of this Court, plainly erroneous : see Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1) If the decision in the previous proceeding be.
regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction 'of the Court in derogation of the rule declared by the Legislature.
The appeals are allowed, and the orders passed by the High Court and the Court of Small Causes are set aside and the proceedings are remanded to the Court of First Instance to deal with and dispose them of in accordance with law.
There will be no order as to costs throughout.
Y.P. Appeals allowed.
| The appellant obtained lease of an open land for construction of buildings.
After the constructions, the appellant applied for determination of standard rent under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The application was rejected holding that the provi sions of the Act did not apply to open land let for construction.
This view was confirmed by the High Court.
Sometime thereafter in another case the High Court held that the question whether the provisions of the Act applied to any particular lease must be determined on its terms and a building lease in respect of an open plot was not excluded from the provisions of the Act solely because open land may be used from residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh application for determining the standard rent.
The Trial Judge rejected the application holding that question of the applicability of the Act was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by first appellate court and on further appeal by the High Court.
HELD:The judgment did not operate as res judicata.
A question relating.
to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the court holds that it has no jurisdiction, the decision will not, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does not possess under the statute, the decision will not operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
in determining the application of the rule of res judicata the court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned in a subsequent proceeding between the same parties where the cause of action is the same, for the expression "the matter in issue" in section 11, Code of Civil Procedure means the right litigated between the parties, i.e., the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded_ from challenging the validity of that order because of the rule of res judicata, for a rule of procedure cannot supersede the law of the land.
83 1 if the decision in the previous proceeding be regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction of_the Court, in derogation of the rule declared by the Legislature.
[835G 836 F] Parthasardhi Ayyangar vs Chinnakrishna Ayyangar, I.L.R. , Chamanlal vs Bapubhai, I.L.R. , Kanta Devi vs Kalawati, A.I.R. 1946 Lah.
419,, Tarini Charan Bhattacharjee vs Kedar Nath Haldar, I.L.R. , and Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill, , approved.
Chandi Prasad vs Maharaja Mahendra Mahendra Singh, I.L.R. 23 All.
,5, disapproved.
Bindeshwari Charan Singh vs Bageshwari, Charan Singh, L.R. 63 I.A. 53, doubted.
|
Appeal No. 577 of 1963.
Appeal from the judgment and order dated March 8, 1961 of the Bombay High Court in Special Civil Application No. 1120 of 1960.
section G. Patwardhan and M. section Gupta, for the appellant.
N. D. Karkhanis J. B. Dadachanji and A. G. Ratnaparkhi or respondent No. 1.
620 The Judgment of the Court was delivered by Wanchoo, J.
The appellant took on lease two survey numbers from the respondent, Sholapur Borough Municipality on April 1, 1946 for a period of three years.
The land is situate within the municipal limits.
About November 8, 1946, the Bombay Tenancy Act, No. 29 of 1939 (hereinafter referred to as the 1939 Act) was applied to this area and section 3 A of that Act provided that every tenant shall on the expiry of one year from the date of the coming into force of the Bombay Tenancy (Amendment) Act, (No. XXVI of 1946) be deemed to be a protected tenant unless his landlord has within the said period made an application to the Mamlatdar for a declaration that the tenant was not a protected one.
The respondent did not file a suit within one year and therefore the appellant claimed to have become a protected tenant under the 1939 Act.
The 1939 Act was repeated in 1948 by the Bombay Tenancy and Agricultural Lands Act, No. LXVII of 1948 (hereinafter referred to as the 1948 Act).
Section 31 of the 1948 Act provided that for the purposes of this Act, a person shall be recognised to be a protected tenant if such person had been deemed to be a protected tenant under section 3, 3 A or 4 of the 1939 Act.
Ordinarily, therefore, the appellant would have become a protected tenant under this section of the 1948 Act, if he had become a protected tenant under the 1939Act.
But section 88 of the 1948 Act inter alia provided that nothing in the foregoing provisions of the 1948 Act shall apply to lands held on lease from a local authority.
Therefore if section 88 prevailed over section 31, the appellant would not be entitled to the benefit of section 31 and could not claim to be a protected tenant under this section.
The appellant however relied on section 89(2) of the 1948 Act which provided for the repeal of the 1939 Act except for sections 3, 3 A and 4 which continued as modified in Sch. 1 of the 1948 Act.
That sub section provided that nothing in the 1948 Act or any repeal effected thereby shall save as expressly provided in this Act affect or be deemed to affect any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of the 1948 Act.
In the present case the respondent gave notice to the appel lant on May 2, 1955 terminating his tenancy with effect from March 31, 1956.
Subsequently the respondent filed suit No. 42 of 1957 for obtaining possession of the lands and for certain other reliefs.
It was held in that suit that the respondent could not get possession of the lands as the appellant was entitled to the benefit of the 1948 Act and consequently the respondent 's suit for pos 621 session was dismissed.
The respondent then appealed to the, District Court.
During the pendency of that appeal the appellant made an application on September 8, 1958 for a declaration that he was a protected tenant of the lands and also for fixig rent under the provisions of the Tenancy Act.
Further in the appeal filed in the District Court a compromise was arrived at by which the order dismissing the respondent 's suit for possession was set aside and the suit was remanded to the trial court with the direction that the suit be stayed and disposed of after the decision by the Mamlatdar.
The compromise provided that if the appellant was finally held to be tenant by the authorities under the 1948Act the suit for possession would be dismissed.
It also provided that if the decision in the proceedings under the, Tenancy Act went against the appellant, the suit for possession would be decreed.
The Mamlatdar held that the appellant was a tenant and gave him a declaration under section 70 (b) of the 1948 Act.
The respondent then went in appeal to the Collector, and the Collector decided that the Mamlatdar had no jurisdiction to decide whether the appellant was a tenant.
The appellant then went in revision to the Bombay Revenue Tribunal.
The tribunal held, in view of the amendments that had been made in the 1948 Act by the Amendment Act of 1956 by which section 88 B was introduced in the 1948 Act, that the revenue court had jurisdiction to decide whether the appellant was a tenant.
Finally it remanded the matter to the Collector for decision on the question whether the appellant was a tenant or a protected tenant on the merits.
The respondent had contended before the Revenue Tribunal that the appellant could not have the status of a tenant or protected tenant in view of the provisions of the 1948 Act and therefore the respondent filed a petition under article 227 of the Constitution of India before the Bombay High Court.
Its contention before the High Court was that in view of section 88 of the 1948 Act the appellant could not claim to be a protected tenant within the meaning of section 31 of that Act and therefore the order of the Collector was right.
It was also contended that section 88 B would not apply to the case of the appellant as it came into force on April 1, 1956 after the determination of the tenancy of the appellant by notice.
Both these contention were accepted by the High Court and the order of the Revenue Tribunal was set aside and in its place the order of the Collector dismissing the appellant 's application was restored.
Thereupon there was an application to the High Court under article 133 (1) (c) of the Constitution and 622.
the High Court certified the case as a fit one for appeal to this Court; and that is how the matter has come up before us.
This appeal was first heard by a Division Bench of this Court and has been referred to a larger Bench in view of certain difficulties relating to the interpretation and inter relation of sections 31, 88 and 89 of the 1948 Act and in view of two decisions of this Court in Sakharam vs Manikchand(1) and Mohanlal Chunilal Kothari vs Tribhovan Haribhai Tamboli (2).
It has been contended on behalf of the appellant that Sakharam 's case(1) fully covers the present case and on the basis of that case the appeal should be allowed.
On the other hand, learned counsel for the respondent contends that on the ratio of Mohanlal Chunilal Kothari 's case, (2 ) the appellant should be held to be not a protected tenant and that considerations which applied to the interpretation of section 8 8 ( 1 ) (d) equally applied to the interpretation of section 88 (1) (a), (b) and (c).
It is further urged on behalf of the respondent that in view of the latter decision, the decision in Sakharam 's case(1) no longer holds the field.
Before we refer to the two decisions on which reliance has been placed on either side, we may refer to the various provisions of the 1948 Act as they were before the amendments of 1956 to decide the inter relation of sections 31, 88 and 89 of the said Act.
It may be mentioned at the outset that section 89 which repealed the 1939 Act did not repeal sections 3, 3 A and 4 of that Act.
These three sections continued as modified in Sch. 1 of the 1948 Act.
A perusal of the modified sections in Sch.
I shows that protected tenants were only those tenants who satisfied these three sections in the Schedule and that no new protected tenants could come into existence under the 1948 Act after it came into force from December 28, 1948.
Further it seems to us obvious that sections 3, 3 A and 4 of the 1939 Act were not repealed and were continued as modified in Sch. 1 of the 1948 Act for the purpose of section 31 of the 1948 Act.
That section provided as follows: "For the purposes of this Act, a person shall be recognised to be a protected tenant if such person has been deemed to be a protected tenant under section 3, 3 A or 4 of the Bombay Tenancy Act, 1939.
" These sections (sections 3, 3 A and 4) which were continued in a modified form in Sch. 1 of the 1948 Act were so continued only for the purpose of section 31 of the Act and it was not possible for (1) ; (2) ; 623 any tenant to be a protected tenant under the 1948 Act unless he was a protected tenant under the 1939 Act.
The 1948 Act thus recogaised such tenants as protected tenants who were protected tenants under the 1939 Act and even though sections 3, 3 A and 4 of the, 1939 Act were continued as modified by Sch. 1 of the 1948Act The modifications were such as showed that only those tenants would remain protected tenants under the 1948 Act who were protected under the 1939 Act.
Then we come to section 88 of the 1948 Act which is in these terms : " (1).
Nothing in the foregoing provisions of this Act shall apply . (a) to lands held on lease from the Crown, a local authority or a co operative society; (b). . . . . . " Section 8 8 lays down that nothing in the foregoing provisions of the 1948 Act shall apply inter alia to lands held on lease from a local authority, like a municipality.
As section 31 is one of the foregoing sections it will not apply to lands held on lease from a local authority.
In other words, so far as lands held on lease from a local authority are concerned, there will be no provision in the 1948 Act for recognising a protected tenant even if a person was a protected tenant under the 1939 Act.
It is only section 31 which gave recognition to the status of a protected tenant under the 1948 Act and if that provision is in effect omitted so far as lands held on lease from a local authority are concerned, no such lessee can claim to be a protected tenant.
In effect therefore the legislature which had conferred by the 1939 Act the status of a protected tenant on certain persons was taking away that status by enacting section 88 in the 1948 Act so far as inter alia aessees from a local authority were concerned.
If matters had stood only on sq. 31 and 88 there would have been no difficulty in holding that the status of protected tenant conferred by the 1939 Act was taken away from certain lessees including lessees from a local authority under section 88 of the 1948Act.
But the appellant relies on section 89(2)(b) and contends that provision saved his rights as a protected tenant.
We have already mentioned that section 89(1) repealed inter alia the 1939 Act except for sections 3, 3 A and 4 which continued in a modified form 624 in Sch.
1 of Section 89 (2) (b) on which reliance is placed by the appellant is in these terms : "But nothing in this Act or any repeal effected thereby (a) (b) shall, save as expressly provided in this Act, affect or be deemed to affect.
(i) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or (ii) The argument is that the interest acquired as a protected tenant under the 1939 Act would thus not be affected in view of this provision in the 1948 Act; and it is this argument which we have to examine.
Now we have already mentioned that sections 3, 3 A and 4 relating to protected tenants in the 1939 Act were not repealed by the 1948 Act.
Therefore that Part of section 89 (2) (b) which says that any repeal effected thereby shall not affect or be deemed to affect any high title, interest etc.
will not apply.
But learned counsel for the appellant relies on the words "nothing in this Act shall affect or be deemed to affect any right, title or interest.
" and his argument is that even though there might not have been a repeal of sections 3, 3 A and 4 of the 1939 Act by the 1948 Act section 89 (2) would still protect him because it provides that nothing in the 1948 Act shall affect or be deemed to affect any right title, interest etc.
acquired before its commencement.
But the clause "nothing in this Act shall affect or be deemed to affect" is qualified by the words "save as expressly provided in this Act".
Therefore, if there is an express provision in the 1948 Act, that will prevail over any right, title or interest etc.
acquired before its commencement.
Further the words "save as expressly provided in this Act" also qualify the words "any repeal affected thereby" and even in the case of repe al of the provisions of the 1939 Act if there is an express provisi on which affects any title, right or interest acquired before the commencement of the 1948 Act that will also not be saved.
The narrow question then is whether there is anything express in the 1948 Act which takes away the interest of a protected tenant acquired before its commencement.
If there is any such express provision then section 89(2) (b) would be of no help to the appellant.
The contention of the respondent is that section 88 is an 625 express provision and in the face of this express provision the interest acquired as a protected tenant under the 1939 Act cannot prevail.
On the other hand, it is urged on behalf of the appellant that section 88 does not in express terms lay down that the interest acquired by a protected tenant under the 1939 Act is being taken away and therefore it should not be treated as an express provision.
Now there is no doubt that section 88 when it lays down inter alia that nothing in the foregoing provisions of the 1948 Act shall apply to lands held on lease from a 'local authority, it is an express provision which takes out such leases from the purview of sections 1 to 87 of the 1948 Act.
One of the provisions therefore which must be treated as non existent where lands are given on lease by a local authority is in section 31.
The only provision in the 1948 Act which recognised protected tenants is section 31 and if that section is to be treated as non existent so far as lands held on lease from a local authority are concerned, it follows that there can be no protected tenants of lands held on lease from a local authority under the 1948 Act.
It is true that section 88 does not in so many words say that the interest of a protected tenant acquired under the 1939 Act is being taken away so, far as lands held on lease from a local authority are concerned; but the effect of the express provision contained in section 88 (1 ) (a) clearly is that section 31 must be treated as non existent so far as lands held on lease from a local authority are concerned and in effect therefore section 8 8 (1) (a) must be hold to say that there will be no protection under the 1948 Act for protected tenants under the 1939 Act so far as lands held on lease from a local authority are concerned.
It was not necessary that the express provision should in so many words say that there will be no protected tenants after the 1948 Act came into force with respect to lands held on lease from a local authority.
The intention from the express words of section 88(1) is clearly the same and therefore there is no difficulty in holding that there is an express provision in the 1948 Act which lays down that there will be no protected tenant of lands held on lease from a local authority.
In view of this express provision contained in section 88(1) (a), the appellant cannot claim the benefit of section 31 ; nor can it be said that his interest as protected tenant is saved by section 89 (2) (b).
This in our opinion is the plain effect of the provisions contained in section 31, section 88 and section 89(2)(b) of the 1948 Act.
It now remains to refer to Sakharam 's case(1) which certainly supports the contention raised on behalf of the appellant.
With respect, it seems to us that more has been read in that case in section 89 (2) (b) than is justified under the terms of that provision.
It was (1) ; 626 also observed in that case that the provisions of section 88 were entirely prospective and were not intended in any sense to be of confiscatory character, and that section 89(2) (b) showed clearly an intention to conserve such rights as were acquired before the commencement of 1948 Act.
It seems to us, with respect, that in that case full effect was not given to the words "save as expressly provided in this Act" appearing in section 89(2) (b), and it was also not noticed that there could be no new protected tenants after the 1948 Act came into force and that section 88(1) in its application to leases from local authorities will have no meaning unless it affected the rights contained in section 3 1.
It may very well be that the legislature thought that the status of a protected tenant should not be given to lessees of lands from a local authority, in the interest of the general, public and therefore took away that interest by the express enactment of section 8 8 ( 1 ) (a).
The status was after all conferred by the 1939 Act and we can see no difficulty in its being taken away by the 1948Act.
It may be mentioned that section 8 8 (1) (a) applies not only to lands held on lease from a local authority but also to lands held on lease from the State, and one can visualise situations where the State may need to get back lands leased by it in public interest.
It must therefore have been in the interest of the public that a provision like section 88 (1) (a) was made with respect to lessees from a local authority or the State who had become protected tenants under the 1939 Act.
We are supported in the view we have taken by the decision of this Court in Mohanlal Chunilal Kothari 's case(1) where it was held that section 88 (1)(d) would be rendered completely ineffective if it was not to be applied retrospectively, though it was added in that case that it did not affect the rights acquired under the earlier Act of 1939.
The latter observation, with respect, does not seem to be correct for their could be no new protected tenants under the 1948 Act to whom even section 88 (1) (d) could have applied.
Further if a notification under section 88 (1) (d) could be retrospective upto the date of the 1948 Act we can see no reason on the language of this section to hold that it was retrospective only upto 1948 and would not affect the rights acquired tinder the 1939 Act.
We may also mention that by an oversight 'it was stated in Mohanlal Chunilal Kothari 's case(1) that clauses (a), (b) and (c) of section 88(1) apply to things as they were at the date of the enactment.
It is however clear that clauses (a), (b) and (c) of section 88 (1) also apply in the future.
For example cl.
(a) lays down that nothing in the foregoing provisions of this Act shall apply to lands (1) ; 6 2 7 held on lease from Government, a local authority or co operative society.
The words "held on lease" in this clause are only descriptive of the lands and are not confined to lands held on lease on the date the Act came into force; they equally apply to lands ceased before or after the Act became law and the distinction that was drawn in Mohanlal Chunilal Kothari 's case(1) that cls.
(a), (b) and (c) applied to things as they were at the date of the enactment whereas cl.
(d) was with respect to future, with respect, does not appear to be correct.
In this view of the matter, the view taken by the High Court in the judgment under appeal that section 88 (1) (a) is an express provision which takes away the interest of protected tenants under the 1939 Act must be held to be correct.
So far as the argument based on section 88 B is concerned, it IS enough to say that we agree with the High Court that section will not protect the appellant for his lease had already been determined before the section came into force on April 1, 1956.
Besides it may be observed that section 4 A which takes the place of section 31 after the amendment of 1956 still does not apply to a case of lands held on lease from a local authority and therefore what we have said with respect to section 31 will equally apply to section 4 A and the appellant cannot claim the benefit of that section and contend that he is a protected tenant under the 1939 Act and therefore cannot be ejected.
In the result we dismiss the appeal but in the circumstances of this case we order the parties to bear their own costs.
Appeal dismissed.
| In 1946, the Bombay Tenancy Act, 1939 was applied to the respondent Muncipality.
Section 3A of the Act provided that every tenant shall, on the expiry of one year from the date of the coming into force of the Amendment Act of 1946, be deemed to be a protected tenant, unless the landlord had within that period, applied to the Mamlatdar for a declaration that the tenant was not protected.
The appellant had taken on lease lands from the respondent, and since the respondents had not applied lo the Mamltdar, the appellant became a protected tenant. 'Me 1939 Act was repealed by the Bombay Tenancy and Agricultural Lands Act, 1948, Section 31 of the 1948 Act provided that a person shall be recognised to be a protected tenant, if such person had been deemed to be a protected tenant under section 3, 3A or 4 of the 1939 Act.
But section 88 of the same Act provided that nothing in the foregoing provisions of the 1948 Act shall apply to lands held on lease from a local authority, while section 89(2) provided for the repeal of the 1939 Act except for sections 3, 3A and 4 which continued, is modified in Schedule 1 of the 1948 Act, and also provided.
that nothing in the 1948 Act, or any repeal effected thereby shall save as expressly provided in the 1948 Act, affect or be deemed to affect any right, title, interest, obligation or liability, acquired, accrued or incurred before the commencement of the 1948 Act.
In 1955 the respondent gave notice to the appellant terminating his tenancy and subsequently filed a suit for possession.
Pending proceedings arising from the suit, the appellant applied to the Mamlatdar for a declaration that he was a protected tenant of the lads, and the Mamlatdar gave the declaration.
On appeal, the Collector held that the Mamlatdar had no jurisdiction to decide the question.
The Bombay Revenue Tribunal, in revision, set aside the Collector 's order, and the High Court, in application under article 227, restored Collector 's order.
In his appeal to this Court , the appellant contended that (i) the interest acquired by him as a protected tenant under the 1939 Act would not be affected in view of the provisions of section 89(2) in the 1948 Act; and (ii) the Mamlatdar had jurisdiction to decide the question under section 88B.
HELD : (i) The plain effect of the provisions contained in sections 31, 88 and 89(2) (b), is that, in view of the express provision contained in section 88 (1) (a).
the appellant could not claim the benefit of section 31, nor could it be said that his interest as protected tenant was saved by section 89(2) (b), [625 G] Sections 3, 3A and 4 of the 1939 Act were continued in a modified form in Schedule 1 of the 1949 Act only for the purpose of a. 11 of the 1948 Act and a perusal of those shows that protected tenants were only those tenants who satisfied these three sections and that no 619 new protected tenants could come into existence under the 1948 Act As & 31 is one of the foregoing provisions referred to in section 88, it win not apply to lands held on lease from a local authority.
In effect, therfore, legislature, which had conferred by the 1939 Act, the status of a protected tenant on certain persons, took away that status by enacting section 88 in the 1948 Act so far as lessees from a local authority were concerned.
As far as section 89(2)(b) is concerned, that part of it which says that any repeal effected thereby shall not affect or be deemed to affect any right etc., will not help the appellant because sections 3, 3A and 4 of the 1939 Act were not repealed by the 1948 Act.
Nor will the clause "nothing in this Act, shall affect or be deemed to affect" apply, if there is an express provision in the 1948 Act which takes away the interest of a protected tenant acquired before its commencement, because of the qualifying words, "save as expressly provided in this Act", in the section.
Section 88, of the 1948 Act is such an express provision which takes out leases from a local authority from the purview of sections 1 of 87 of the 1948 Act, including section 31 which is the only provision in the 1948 Act which recognised protected tenants.
It follows that there can be no protected tenants of lands held on lease from a local authority under the 1948 Act.
It is true that section 88 does not in so many words say that the interest of a protected tenant acquired under the 1939 Act is being taken away so far as lands held on lease from a local authority are concerned; but in effect, section 88(1)(a) must be held to say that there will be no protection under the 1948 Act for protected tenants under the 1939 Act, so far as lands held on lease from a local authority are concerned.
The intention from the express words of section 88(1) (a) is also the same.
It may very well be that the legislature thought that the status of a protected tenant should not be given to lessees of lands from a local authority, in the interest of the general public, and therefore, took away that status which was conferred by the 1939 Act.
by the express enactment of section 88(1)(a).
[622 F G; 623 E G; 624 F G; 625 B F; 616 C] Further the appellant could not claim the benefit of section 4A, which takes the place of section 31 after the amendment of 1956, and claim that he is a protected tenant, because, section 4A also does not apply to a case of lands held on lease from a local authority.
[627 D E] Sakharam vs Manikchand, ; , disapproved.
Mohanlal Chunilal Kothari vs Tribhovan Haribhal Tamboli, ; , explained.
(ii) Section 88B will not protect the appellant, for his lease had already been determined before the section came into force on 1st April 1956 [627 C D]
|
Civil Appeal No. 147 of 1974.
Appeal by special leave from the Judgment and Order dated 16 10 1973 of the Delhi High Court in LPA No. 238/72.
Dr. L. M. Singhvi and Mahinder Narain for the Appellant.
Lal Narain Sinha Att.
of India, B. P. Maheshwari, Suresh Sethi and section K. Bhattacharyya for Respondent No. 1.
Sardar Bahadur Saharya and Vishnu Bahadur Saharya for Respondent No. 2.
The Judgment of the Court was delivered by PATHAK, J.
Does the failure of the Standing Committee of the Delhi Municipal Corporation to consider under sub section
(3) of section 313, Delhi Municipal Corporation Act, 1957, an application for sanction to a lay out plan within the period specified in the subsection result in a "deemed" grant of the sanction? That is the principal question raised in this appeal by special leave which is directed against the judgment and order of the Delhi High Court allowing a Letters Patent Appeal and dismissing a writ petition filed by the appellant.
The appellant 's father, Amin Chand, owned a large parcel of land in village Chowkhandi near Tilak Nagar, Najafgarh Road, New Delhi.
The land was situated within the municipal limits of Delhi.
Amin Chand decided on developing the land as a residential colony named, after his father, the "Gangaram Vatika Colony".
He submitted a lay out plan for sanction under section 313 of the Delhi Municipal 1076 Corporation Act, 1957.
The plan was sanctioned by the Standing Committee of the Delhi Municipal Corporation by Resolution No. 17 passed on 10th December, 1958.
A revised lay out plan was approved by the Standing Committee by Resolution No. 871 dated 12th November, 1964.
Meanwhile, Amin Chand died, and the appellant, his son, thought it desirable that the lay out plan should include provision for the construction of a cinema.
Plots Nos.
33, 34 and 35 approved as separate units for the construction of residential houses in the lay out plan were selected as an amalgamated unit for the cinema.
An application dated 20th April, 1967, accompanied by a copy of the sanctioned lay out plan indicating the proposed changes, was filed by the appellant and he prayed for "an early sanction in terms of the provisions of section 313" of the Act.
The Town Planner of the Corporation informed him by letter dated 14th June, 1967 that his application did not fall within the purview of section 313 and that, moreover, the Master Plan did not envisage a cinema within a residential area, and therefore the request could not be considered.
Some correspondence followed between the appellant and the Corporation and concluded with a letter of 29th September, 1969 by the Corporation informing the appellant that his proposal could not be accepted because it would contravene the Master Plan of Delhi.
The Appellant filed a writ petition in the High Court of Delhi alleging that the application had not been considered by the Standing Committee, and as the period prescribed by the statute for doing so had expired the revised lay out plan must be treated as having been sanctioned.
Accordingly, he prayed that the respondents be restrained from interfering with his right to raise the construction including the cinema building in accordance with the revised lay out plan.
A learned Single Judge of the High Court while disposing of the writ petition directed the Corporation to treat the revised lay out plan as having been approved, but observed that the appellant would not be entitled to construct a cinema on the land unless due compliance had been effected with other provisions of the law and that it was open to the Standing Committee under sub section
(5) of section 313 to prohibit the construction of the cinema.
The Corporation preferred a Letters Patent Appeal, and a Division Bench of the High Court by its judgment and order dated 16th October, 1973 allowed the appeal, set aside the judgment and order of the learned Single Judge and dismissed the writ petition.
Section 313 of the Corporation Act consists of the following provisions: "313.
(1) Before utilising, selling or otherwise dealing with any land under section 312, the owner thereof shall send to the 1077 Commissioner a written application with a lay out plan of the land showing the following particulars, namely: (a) the plots into which the land is proposed to be divided for the erection of buildings thereon and the purpose or purposes for which such buildings are to be used; (b) the reservation or allotment of any site for any street, open space, park, recreation ground, school, market or any other public purpose; (c) the intended level, direction and width of street or streets, (d) the regular line of street or streets; (e) the arrangements to be made for levelling, paving, metalling, flagging, channelling, sewering, draining, conserving and lighting street or streets.
(2) The provisions of this Act and the bye laws made thereunder as to width of the public streets and the height of buildings abutting thereon, shall apply in the case of streets referred to in sub section (1) and all the particulars referred to in that sub section shall be subject to the sanction of the Standing Committee.
(3) Within sixty days after the receipt of any application under sub section (1) the Standing Committee shall either accord sanction to the lay out plan on such conditions as it may think fit or disallow it or ask for further information with respect to it.
(4) Such sanction shall be refused (a) if the particulars shown in the lay out plan would conflict with any arrangements which have been made or which are in the opinion of the Standing Committee likely to be made for carrying out any general scheme of development of Delhi whether contained in the master plan or a zonal development plan prepared for Delhi or not; or (b) if the said lay out plan does not conform to the provisions of this Act and bye laws made thereunder; or (c) if any street proposed in the plan is not designed so as to connect at one end with a street which is already open.
(5) No person shall utilise, sell or otherwise deal with any land or lay out or make any new street without or otherwise than in conformity with the orders of the Standing Committee 1078 and if further information is asked for, no step shall be taken to utilise, sell or otherwise deal with the land or to lay out or make the street until orders have been passed upon receipt of such information: Provided that the passing of such orders shall not be in any case delayed for more than sixty days after the Standing Committee has received the information which it considers necessary to enable it to deal with the said application.
(6) The lay out plan referred to earlier in this section shall, if so required by the Standing Committee, be prepared by a licensed town planner.
" The principal contention of the appellant before us is that on a true construction of section 313 it must be regarded that 'there is no restriction on his utilising, selling or otherwise dealing with the land in accordance with the lay out plan because the time prescribed by sub section
(3) for the Standing Committee to take action on the application had expired ', and reliance is place on Municipal Corporation of Delhi & ors.
vs Smt.
Kamala Bhandari & ors.(1).
It is necessary to examine for the purpose of this case what Parliament intended when enacting section 313.
Among the obligations vested in the Corporation under the Act are the construction, maintenance and improvement of streets.
Public streets vest in the Corporation and the Commissioner is enjoined to ensure their maintenance and repair.
Sections 313 to 316 related to private streets.
Section 312 provides that if the owner of any land utilises, sells, leases out or otherwise disposes of such land for the construction of buildings thereon, he must lay out and make a street or streets giving access to the plots in which the land is to be divided and connecting with an existing public or private street.
Sub section
(1) of section 313 obliges the owner of the land, before utilising, selling or otherwise dealing with the land under section 312 to apply to the Commissioner with a lay out plan of the land for sanction to the lay out plan.
The particulars detailed in sub section
(1) required in a lay out plan bear on the provisions of section 312.
The lay out plan will indicate in what manner the plots are proposed to be divided and the use to which they will be applied as well as the condition and direction of the streets, which provide access to them, so that it can be determined whether the private streets proposed in the lay out plan will adequately and sufficiently serve the buildings raised on the plots.
Sub section
(3) requires the Standing Committee, within sixty days after receipt of the application, either to accord sanction to the lay out plan or to disallow it 1079 or ask for further information in respect of it.
If further information is asked for, the ban on the owner utilising, selling or otherwise dealing with the land continues to operate until orders have been passed by the Standing Committee on receipt of the information.
That is sub section
Its proviso lays down that the passing of such orders shall not be in any case delayed for more than sixty days after the Standing Committee has received the information which it considers necessary.
Sub sections
(3) and (5) of section 313 prescribe a period within which the Standing Committee is expected to deal with the application made under sub section
But neither sub section declares that if the Standing Committee does not deal with the application within the prescribed period of sixty days it will be deemed that sanction has been accorded.
The statute merely requires the Standing Committee to consider the application within sixty days.
It stops short of indicating what will be the result if the Standing Committee fails to do so.
If it intended that the failure of the Standing Committee to deal with the matter within the prescribed period should imply a deemed sanction it would have said so.
They are two distinct things, the failure of the Standing Committee to deal with the application within sixty days and that the failure should give rise to a right in the applicant to claim that sanction has been accorded.
The second does not necessarily follow from the first.
A right created by legal fiction is ordinarily the product of express legislation.
It seems to us that when sub section
(3) declares that the Standing Committee shall within sixty days of receipt of the application deal with it, and when the proviso to sub section
(5) declares that the Standing Committee shall not in any case delay the passing of orders for more than sixty days the statute merely prescribes a standard of time within which it expects the Standing Committee to dispose of the matter.
It is a standard which the statute considers to be ' reasonable.
But non compliance does not result in a deemed sanction to the lay out plan.
Besides the absence of express language creating the legal consequence claimed by the appellant, there is nothing in the context to persuade us to accept the claim.
Parliament did not apparently view the matter of sanctioning a lay out plan as possessing the immediacy associated with the actual erection of a building or the execution of a work, where on the failure of the Commissioner to refuse sanction or to communicate such refusal within a specified period the applicant is entitled to commence and proceed with the building or work.
There is nothing in section 313 which has the contextual character of sections 336 and 337.
A perusal of sections 336 and 337 confirms that the cases covered there are controlled by a tightly woven time bound 1080 programme strongly indicating Parliament 's intent to regard the direction of a building and the execution of a work as matters of the utmost expedition and urgency.
Sub section
(3) of section 336 requires the Commissioner to communicate the sanction to the applicant and, where sanction is refused, to communicate the refusal with a statement of his reasons for such refusal.
If the period specified in sub section
(1) of section 337 has expired without the Commissioner refusing to sanction or, if refusing, without communicating the refusal, the applicant can commence and proceed with the projected building or work.
If it appears to the Commissioner that the site of the proposed building or work is likely to be affected by any scheme of acquisition of land for a public purpose or by any of the other public works mentioned in the proviso to sub section
(1) of section 337, he may withhold sanction of the proposed building or work, but even therefor not more than three months and the period specified in the sub section is computed as commencing from the expiry of such period.
That is not all.
On the sanction or deemed sanction, the applicant must under sub section
(3) of section 337 commence the erection of the building or execution of the work within one year.
Failure to do so will reduce him to the need for taking fresh steps for obtaining the sanction.
Then, before commencing the erection of the building or execution of the work with the period specified in sub section
(3), he is obliged, by virtue of sub section
(4) to give notice to the Commissioner of the proposed date of such commencement; and if the commencement does not take place within seven days fresh notice is necessary.
This network of provisions demonstrates the urgency attached by Parliament to the case where a building has to be erected or a work executed.
It is conspicuous by its absence in section 313.
We are, therefore, of opinion that if the Standing Committee does not consider the grant of sanction on the application made under sub section
(1) of section 313 within the specified period, it is not open to the applicant to regard the lay out plan as having been sanctioned.
We are unable to endorse the contrary view taken by the High Court in Municipal Corporation of Delhi 's case (supra) and overrule that decision.
The application made by the appellant for sanction to the lay out plan must be regarded as pending before the Standing Committee and must now be disposed of without any further delay.
The appellate Bench of the High Court has taken the view that the application does not lie under section 313.
As we have already observed, the purpose of filing a lay out plan under sub section
(1) of section 313 is related immediately to determining whether the access pro 1081 vided by the proposed private streets sufficiently and adequately serves the purpose enacted in section 312, and that is why the lay out plan must show the particulars specified in sub section
(1) of section 313.
Sanction to the lay out plan is also a preliminary step in the process of utilising the land for the construction of buildings thereon.
It is necessary to obtain that sanction because it is a pre requisite to the grant of sanction for the erection of the building or the execution of the work.
Under sub section
(1) of section 336, it is open to the Commissioner to refuse sanction of a building or work, in cases falling under section 312, if the lay out plans have not been sanctioned in accordance with section 313.
In our view, the appellant was right in making the application under section 313 regard to the amalgamation of the three plots for the proposed construction of a cinema building.
The Standing Committee has to determine whether the lay out plan now proposed can be sanctioned.
It may refuse the sanction by reason of sub section
(4) of section 313 on any of the ground specified therein.
That will be a matter for the Standing Committee to consider.
The Appellate Bench of the High Court has held that the appellant is not entitled to invoke sub section
(3) of section 313 for the grant of sanction to the revised lay out plan.
The High Court was apparently of the view that section 313 is attracted only when the owner of the land has not yet utilised or otherwise dealt with the land and the application for sanction envisaged under section 313 is the first application made for the purpose.
The High Court has referred to the circumstances that the owner had already commenced to act on the sanction granted to the original lay out plan.
We think that the limited view taken by the High Court is not justified.
It is open to the owner of land, after obtaining sanction to the original lay out plan, to apply afresh for sanction to a revised lay out plan.
Circumstances may arise, after the original sanction was granted, requiring the owner to incorporate changes in the original lay out plan.
In that event, when an application is made for the grant of sanction to a revised lay out plan it is, as it were, an application for the grant of a fresh sanction.
There is a fresh lay out plan for which sanction is applied.
It is differently constituted from the original lay out plan.
Such an application will fall under section 313.
It is no bar to making such an application and entertaining it that the owner has commenced to utilise the land or otherwise dealt with it.
Section 312 implies that the land must be utilised in accordance with the lay out plan.
If the land has been utilised to any degree by the appellant before 20th April, 1967, the utilisation must conform to the original sanctioned lay out plan.
No utilisation by the appellant in the manner subsequently proposed is 1082 permissible unless and until sanction is accorded to the revised lay out plan.
If such sanction is refused, it is the original sanction which will continue to operate, and the lay out plan to which such sanction was granted is the one that matters.
In the circumstances, we direct the first respondent, the Municipal Corporation of Delhi, to refer the application dated 20th April, 1967 along with the lay out plan accompanying it to its Standing Committee and the Standing Committee will dispose of the application expeditiously in accordance with law.
The appellant is not entitled to any further relief at this stage.
In the circumstances, the parties will bear their costs.
| The Delhi Municipal Corporation Act, 1957 by sub section (1) of section 313 obliges the owner of the land, before utilising, selling or otherwise dealing with the land under section 312 to apply to the Commissioner with a layout plan of the land for sanction to the lay out plan.
Sub section (3) of the said section requires the Standing Committee, within sixty days after receipt of the application, either to accord sanction to the lay out plan or to disallow it or ask for further information in respect of it.
If further information is asked for, the ban on the owner utilising, selling or otherwise dealing with the land continues to operate until orders have been passed by the Standing Committee on receipt of the information.
The appellant 's father who owned a large parcel of land situated within the Municipal limits, decided on developing the land as a residential colony and submitted a lay out plan for sanction under section 313, which was sanctioned by the Standing Committee on 10th December, 1958.
After the death of the appellant 's father, the appellant thought it desirable that the lay out plan should include provision for the construction of a cinema and he submitted an application dated 20th April, 1967 accompanied by a copy of the sanctioned lay out plan indicating the proposed changes, and prayed for an early sanction in terms of the provisions of section 313.
The Town Planner of the Corporation informed by letter, dated 14th June, 1967 that as the application did not fall within the purview of section 313, and that as the Master Plan did not envisage a cinema within a residential area, the request could not be considered.
Some correspondence followed and ultimately by letter, dated 29th September, 1969 the appellant was informed that his proposal could not be accepted.
Feeling aggrieved, the appellant filed a Writ Petition in the High Court alleging that the application had not been considered by the Standing Committee and as the period prescribed by the statute for doing so had expired the revised lay out plan must be treated as having been sanctioned.
The Single Judge of the High Court allowed the Writ Petition and directed the Corporation to treat the revised lay out plan as having been approved but observed that it was open to the Standing Committee under sub section (5) of section 313 to prohibit the construction of the cinema.
The respondent Corporation preferred a Letters Patent Appeal and the Division Bench of the High Court allowed the appeal, holding that the appellant was not entitled to invoke sub section (3) of section 313.
In the appeal to this Court, on the question, whether the failure of the Standing Committee of the Municipal Corporation to consider under sub section 1074 (3) of section 313 of the Act, an application for sanction to a lay out plan within the period specified in the sub section can result in a deemed grant of the sanction: ^ HELD: 1.
Merely because the Standing Committee does not consider the grant of sanction on the application made under sub section (1) of section 313 within the specified period, does not entitle the applicant to regard the lay out plan as having been sanctioned.
[1080F] 2.
The Municipal Corporation is obliged to refer the application dated 20th April, 1967 alongwith the lay out plan accompanying it, to its Standing Committee to dispose of the application expeditiously in accordance with law.
[1082B] 3.
Sub sections (3) and (5) of section 313 prescribe a period within which the Standing Committee is expected to deal with the application made under sub section (1).
But neither sub section declares that if the Standing Committee does not deal with the application within the prescribed period of sixty days it will be deemed that sanction has been accorded.
The statute merely requires the Standing Committee to consider the application within sixty days.
It stops short of indicating what will be the result if the Standing Committee fails to do so.
[1070C] 4.
If the Act intended that the failure of the Standing Committee to deal with the matter within the Prescribed period should imply a deemed sanction it would have said so.
[1070C] 5.
When sub section (3) declares that the Standing Committee shall within sixty days of receipt of the application deal with it, and when the proviso to sub section (5) declares that the Standing Committee shall not in any case delay the passing of orders for more than sixty days the statute merely prescribes a standard of time within which it expects the Standing Committee to dispose of the matter.
It is a standard which the statute considers to be reasonable.
But non compliance does not result in a deemed sanction to the lay out plan.
[1070E F] 6.
Parliament did not apparently view the matter of sanctioning a lay out plan as possessing the immediacy associated with the actual erection of a building or the execution of a work, where on the failure of the Commissioner to refuse sanction or to communicate such refusal within a specified period the applicant is entitled to commence and proceed with the building or work.
[1070G] 7.
There is nothing in section 313 which has the contextual character of sections 336 and 337.
A perusal of sections 336 and 337 confirms that the cases covered there are controlled by a tightly woven time bound programme strongly indicating Parliament 's intent to regard the erection of a building and the execution of a work as matters of the utmost expedition and urgency.
This network of provisions demonstrate the urgency attached by Parliament to the case where a building has to be erected or a work executed.
[1079H 1080A, E] 8.
Sanction to the lay out plan is also a preliminary step in the process of utilising the land for the construction of buildings thereon.
It is necessary to obtain that sanction because it is a pre requisite to the grant of sanction for the erection of the building or the execution of the work.
[1081B] 9.
The appellant was right in making the application under section 313 in regard to the amalgamation of the three plots for the proposed construction 1075 of a cinema building.
The Standing Committee has to determine whether the lay out plan now proposed can be sanctioned.
It may refuse the sanction by reason of sub section (4) of section 313 on any of the grounds specified therein.
That will be a matter for the Standing Committee to consider.
[1081C D] 10.
It is open to the owner of the land, after obtaining sanction to the original lay out plan to apply afresh for sanction to a revised lay out plan.
Circumstances may arise, after the original sanction was granted, requiring the owner to incorporate changes in the original lay out plan.
In that event, when an application is made for the grant of sanction to a revised lay out plan it is, as it were, an application for the grant of a fresh sanction.
There is a fresh lay out plan for which sanction is applied.
It is differently constituted from the original lay out plan.
Such an application would fall under section 313.
[1081F G] In the instant case the application made by the appellant for sanction to the lay out plan must be regarded as pending before the Standing Committee which must be disposed of without any further delay.
[1080G] Municipal Corporation of Delhi & ors.
versus Smt.
Kamla Bhandari & Ors.
I.L.R. (1970) 1, Delhi 66 disapproved.
|
ivil Appeal Nos.
2309 & 2310 of 1989 etc etc.
From the Judgment and Order dated 23.9.1988 of the Jammu & Kashmir High Court in Writ Petition No. 87/81 and C.M.P. No. 2519 of 1988.
K. Parasaran, D.D. Thakur, M.H. Beg, Raja Ram Agrawal, M.L. Verma, Prashant K. Goswami, Anil B. Divan, Pramod Kohli, P.H. Parekh, Hari Khanna, J.P.Pathak, Sandeep Thakral, S.M.Thakral, B.V. Desai, Ms. Vinita Ghorpade, E.C. Aggarwala, N.N. Bhatt, Dhiraj Singh and Ashok Mathur for the appearing parties.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
Civil Appeal No. 2309 of 1989 arises out of an order made by the High Court of Jammu & kashmir in Writ Petition No.87 of 1981 dismissing the Writ Petition filed by M/s. Pine Chemicals Ltd., which is a public limited company manufacturing Rosin, Turpentine and Rosin Derivatives and carrying on business at Bari Brahmana, Jammu Tawi.
The appellants had prayed in the writ petition for quashing the order of assessment dated 20th January, 1981 made by the Assessing Authority, Incharge Sales Tax Circle, Jammu under the for the year ending 30.6.1980 and the penalty order made on February 2, 1981 under Section 10 of the in respect of the same period.
They had also prayed for a declaration that they are entitled to exemption from payment of tax under the and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, when the Company went into commercial production.
This main relief had been prayed for on the grounds that the appellant were exempt from payment of sales tax in terms of the Government Orders No. 159 Ind. dated 25.3.1971 as amended by Government Order No. 414 Ind.
dated 25th August, 1971 read with section 8(2A) of the .
Their further case was that the Government represented and announced a package of incentive for large and medium scale industries including grant of exemption from sales tax both on the raw materials purchased by the industries and the scale of their finished products, that acting upon such representation and assurances, appellants set up their factory at Bari Brahmana on the land allotted by the State Industrial Development Corporation and that therefore the Government is estopped from charging sales tax on the doctrine of promissory estoppel.
The High Court was of the view that 190 the two Government orders referred to above were only declarations of an intention to exempt from payment of sales tax and that they are not exemption notifications under sections 5 of the General Sales Tax Act.
The High Court was also of the view that the appellant have failed to prove the necessary factual foundation for invoking the principle of promissory estoppel and that, therefore, they are not entitled to any relief under that doctrine.
In that view the writ Petition was dismissed.
It may be mentioned that Civil Appeal No. 2310 of 1985 is against an order made in a Civil Misc.
Petition No. 2519 of 1988 which was also dismissed on 23.9.1988 along with the writ petition.
This miscellaneous petition was filed after the judgment in the writ petition was reserved for permission to file reply affidavit on the ground that the assessment files produced at the time of hearing contained certain documents needing certain explanation by the appellants.
Both on the ground that it was belated and on the ground that the judgment in the writ petition was delivered only relying on the material placed on record and therefore there was no need for giving an opportunity to the writ petitioners to file a reply statement, the learned judgment dismissed this miscellaneous petition also.
Civil appeals 3140 50 of 1989 have been filed by M/s. K.C. Vanaspati, a firm of partnership manufacturing Vanaspati Ghee at Bari Brahmana, Jammu Tawi.
They filed writ petition 52 of 1982 praying to quash a sales tax assessment order dated 16.1.1982 assessing them to sales tax for the period from 2nd September, 1981 till the end of the month under the Jammu & Kashmir General Sales Tax Act.
They also prayed for a mandamus directing the Government and the Assessing officer not to assess them to sales tax or recover any amount on account of sales tax from them for a period of five years from 2nd September, 1981 when their industry started commercial production.
This relief was prayed again on the ground that Government Order 159 Ind.
dated 26.3.1971 as amended by Government Order 414 Ind.
dated 25.8.1971 exempted the sales of their finished product of Vanaspati Ghee from sales tax and also on the ground that in any case the Government is estopped from collecting tax on the principle of promissory estoppel.
When this writ petition was pending as assessment order was made on 14.11.1984 for the assessment year ending 30th September 1982 including the period 2nd September to 30th September, 1981 which was the subject matter of the earlier assessment order and which was questioned in writ petition No. 52 of 1982.
The validity of this assessment order was the subject matter of writ petition No. 822 of 1984 filed by the appellants.
The relief prayed for and the grounds on which the relief prayed for were almost identical as that in writ petition No. 52 of 1982 except that 191 on the question of promissory estoppel, more detailed facts were mentioned in this writ petition.
The respondents filed their counter affidavits contending that the said Government orders were not exemption orders under Section 5 of the General Sales Tax Act and that there is no factual foundation for the plea of promissory estoppel.
Since we will be dealing with contentions in detail at the appropriate place we are not setting out contentions of the petitioners and the replies of the Government in the writ petitions in details.
During the pendency of the writ petitions certain other Government orders came to be passed and certain assessment orders for the subsequent periods were also sought to be made and questioning these actions M/s. K.C. Vanaspati filed Writ petition No. 711 of 1987 for a writ of prohibition restraining the Assessment Officer and Government from recovering any sales tax at any point of sale in the series of sales in respect of Vanaspati Ghee manufactured by them for a period of 10 years from 2nd September, 1981 when their factory went into commercial production and also for a declaration that SRO 448 dated 22nd October, 1982 issued by the Government of Jammu & Kashmir (which will be referred to later) was illegal and unconstitutional.
They had also prayed for a mandamus directing the respondents to refund the sales tax already recovered from them with interest and damages.
In this writ petition also they contended that Government Order No. 159 Ind. dated 26.3.1971 and Government Order 414 Ind.
dated 25.8.1971 were exemption orders referable to section 5 of the General Sales Tax Act.
They have also referred elaborately to the representations, declarations and promises of the Government in support of the plea of promissory estoppel.
The respondents had filed a counter affidavit refuting these contentions of the appellants.
The High Court dismissed all these three writ petitions by a common order dated 22nd February, 1989.
Civil Appeals 3148 50 of 1989 have been filed against this common order.
Civil Appeal No. 3151 of 1989 has been filed by M/s. Kashmir Vanaspati Ltd. against the judgement of the High Court in Writ Petition No.5 of 1989 in which they had prayed for the writ of certiorari to quash certain notices issued to the appellants, their selling agents and the owner of the premises where they have their sale depots, issued under section 17 of the General Sales Tax Act and for a declaration that the Vanaspati Ghee manufactured by the appellants is exempt from payment of tax at all stages upto January, 1992 i.e. for a period of 10 years from the date from which they have started their commercial production.
In this writ petition also the appellants had relied on Government Order 159 Ind.
dated 26.3.1971 and Government Order No. 414 Ind.
dated 25th August, 1971 as orders exempting their goods from sales tax under Section 5 of the General Sales Tax Act.
They have also relied on certain statement of Government as commitments 192 to continue the incentives and exemptions from sales tax for a period of 10 years on the principle of promissory estoppel.
The respondents had filed their counter affidavit.
This writ petition was also dismissed on 17th March, 1989 almost on the same grounds as in earlier two cases.
The first common question that arises for consideration in all these appeals therefore is whether Government Order No. 159 Ind.
dated 26.3.1971 and the amending Government Order No. 414 Ind.
dated 25.8.1971 are orders of exemption referable to section 5 of the General Sales Tax Act, 1962.
The said Government Orders are extracted below : GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to large and Medium Scale industries in the Jammu & Kashmir State Ref: Cabinet Decision No. 101 dated 26.3.1971 Government Order No. 149 Ind.
of 1971 dated 26.3.1971 Sanction is accorded to the grant of the following incentives and facilities to Large and Medium Scale Industries in the State of Jammu & Kashmir : 1.
Land: As provided in Government Order No. 206 Ind. of 1968 dated 5.7.1968.
However, such land. include a reasonable amount of land for the establishment of residential colonies required to house the workers of Large and medium scale Industries and would be granted on the terms and conditions defined in the Government Order No. 206 Ind.
of 1968 dated 5.7.1968.
Grant of exemption from the State Sales Tax both on raw materials and finished products for the period of five years from the date the unit goes into production.
Grant of exemption from levy of additional surcharge on Toll Tax for an initial period of five years from the date the unit goes into commercial production with respect to raw materials and finished goods.
The question of grant of exemption from this levy for further periods would be reviewed thereafter in every 193 individual case and further grant of this concession would only be considered in deserving individual cases.
Grant of exemption from the levy of Urban Immovable Property Tax on the lands and buildings belonging to such industries would be available as admissible under the Urban Immovable Property Taxation Rules.
By order of the Government of Jammu and Kashmir.
Sd/ G.R.Renzu, Secretary to Government" This order was partially modified in G.O. 414 Ind. dated 25.8.1971 which read as follows: " GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to the Large and Medium Scale Industries in the Jammu & Kashmir State Ref: Director Industries and Commerce 's letter No. SSI J/455/2251 52 dated 22 7 1971 Government Order No. 414 Ind.
of 1971 dated 25.8.1971 In partial modification of Government Order No. 159 Ind.
of 1971 dated 26.3.1971, item 2 may be read as under: 2.
Grant of exemption from the sales tax both on raw materials and finished products.
The State Sale Tax paid by Large and Medium Scale Industries on the raw materials procured by them for the initial 5 years of the production would be refunded to such industries.
Similarly such industries will be granted exemption from the payment of any state sales tax on their finished products for a period of five years from the date the unit goes into production.
194 By order of the Government of Jammu and Kashmir.
Sd/ Secretary to Government".
It may be noted at this stage itself that the amending Order G.O. 414 Ind.
dated 25th August, 1971 was also published in the Government Gazette.
Section 5 of the General Sales Tax Act, 1962 empowers the State Government to grant exemption from taxation and that section reads as follows: "Exemption from taxation: The Government may subject to such restrictions and conditions as may be prescribed, including conditions as to licence and licence fees, by order exempt in whole or in part from payment of tax any class of dealers or any goods or class or description of goods.
" The Government orders were made implementing the Cabinet decision No. 101 of the same date.
There is no ambiguity about the class of persons or dealers to whom the Government orders apply, no ambiguity about the class or description of goods and the transactions of sale which are exempt from tax.
It has been duly authenticated in terms of Section 45 of the Constitution of Jammu and Kashmir.
It is well settled that if power to do an act or pass an order can be traced to an enabling statutory provision, then even if that provision is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision.
Thus the Government orders satisfy all the requirements of the provisions of Section 5 of local Act.
The section also does not talk of any notification: it only talks of a Government order exempting in whole or in part from payment of tax.
This is very insignificant, if contrasted with Section 4(1) and 4(5) of the local Act relating to the fixation of the taxable point refers to a notification by the Government.
The Act itself thus makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes.
Moreover, since there is no form prescribed in this behalf if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference.
But we may note from the various orders produced before us that normally in the case of grant of tax exemptions as an incentive to industry the exemption orders have generally taken the form of Government order rather than a notification.
But in the 195 case of other exemptions though they are also under section 5 of the local Act they have taken the form of notification.
Thus the pattern followed in Jammu & Kashmir seems to be that in respect of exemptions from payment of taxes following Cabinet decision on policy matters and incentive they have taken the form of Government order.
It is necessary to refer this aspect because in later modifications while superseding the earlier order or notifications, the Government have followed the specific pattern and have used the word `orders ' in cases of grant of incentive and the word `notifications ' in the other cases.
It may also be pointed out that the Government orders 159 and 414 were also understood and treated as such exemption orders as seen from the publicity given them by the Government while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties.
The booklet published by the Government in December, 1975 under the heading "Incentives to Development of Industries in Jammu & Kashmir" contained incentives available for small scale industries as also large and medium scale industries.
The above said two Government Orders were reproduced in this booklet as the orders relating to incentives available to large and medium scale industries.
Another brochure issued in March, 1978 under the heading `The State Marches Towards Industrial Development ' after noting the efforts made by the Government to invite industrial enterprises from outside the State to locate the industries in Jammu & Kashmir and the response by the industrialist, listed the package of incentives under the heading `Incentives Available to help you establish your beautiful industrial ventures in the J & K State '.
Item 5 of this list related to `exemption from certain taxes '.
This was followed by the Finance Minister 's Budget Speech for the year 1978 79 in which the Finance Minister stated: "We have to continue a consistent policy of support and protection to industry and attract as many new units as we can, both in order to increase the employment opportunity and to achieve better economic growth.
It is as such proposed to continue the grant of exemption from payment of sales tax on the goods manufactured by new units for a period of ten years from the date the unit goes into production.
" Subsequent to this speech of the Finance Minister another Brochure was published by the Government on the 7th September, 1978 which referred to the sustained efforts made by the Government to involve successful and experienced entrepreneurs from all over the country in 196 setting up the industries in J & K and incentives available to the industries.
In page 14 of this Brochure "Exemption from Sales Tax and toll tax for 10 years and exemption from CST" is listed as one of the incentives available in the State.
Obviously these announcements, references and statements relating to exemption from sales tax refer to G.O. 159 Ind.
dated 26.3.1971 and G.O. 414 Ind.
dated 25.8.1971.
No other Government order of notification relating to exemption from payment of sales tax by large and medium industries were bought to our notice as relating to these references in the Brochures and speeches.
Thus on a plain reading there could be no doubt that the two Government orders are referable to the power of the Government under Section 5 of the General Sales Tax Act and are exemption orders falling within the scope of that provision.
In this connection, we may also refer to three decisions of this Court cited at the Bar wherein similar orders of Government without specifying the source of power under which they were made and also not in the form of a notification, were considered to be orders granting exemption.
In Pournami Oil Mills & Ors.
vs State of Kerala & Anr., [1986], Supp.
SCC 728, this Court had occasion to consider almost identical Government orders as those we are concerned with in these appeals.
The first was a Government Order dated 11th April, 1979 and the relevant portion of the same reads as follows: "The Government has considered the recommendations and suggestions of the Committee in detail and they are pleased to approve the following package of measures for promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales Tax Concessions: New industrial units under small scale industries set up after April, 1979, will be exempted from the payment of sales tax for a period of five years from the date of production.
The second was a notification dated 21st October, 1980 made under Section 10 of the Kerala General Sales Tax Act which read as follows: "In exercise of the power conferred by Section 10 of the Kerala 197 General Sales Tax (15 of 1963) the Government of Kerala have considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act on the turnover of the sale of goods produced and sold by the new industrial units under the small industries for a period of five years from the date of commencement of sale of such goods by any such units by way of tax on their sales shall be paid over to Government and that the sales tax, if any, already paid by such units to Government shall not be refunded.
Provided that such units shall produce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemption from sales tax.
Provided further that the cumulative sales tax concessions granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit.
Explanation For the purpose of this notification new industrial unit under the Small scale Industries shall mean undertakings set up on or after April 1, 1979 and registered with the Department of Industries and Commerce as a small scale industrial unit.
This notification shall be deemed to have come into force with effect from April 1, 1979.
" Section 10 of the Kerala General Sales Tax Act empowered the Government if they consider it necessary in the public interest, by notification in the Gazette, to make an exemption or reduction in rate either prospectively or retrospectively in respect of any tax payable under the Act.
It may be seen that the first Government Order dated 11th April, 1979 did not refer to any statutory power under which that order was made and it was generally in the nature of an order approving package of measures and incentives for promoting industrial development in Kerala and not in the form of a notification, while the second notification was made specifically in exercise of the statutory powers under section 10 of the Kerala Act.
It may also be seen that the first Government Order gave more tax exemption while the second notification did not give any exemption relating to purchase tax and also confined the exemption from sales tax to the limits specified in the proviso to the notification.
Two main questions were 198 considered by this Court.
The first was whether the first Government Order dated 11th April, 1979 was an exemption order referable to the powers of the Government under section 10 of the Kerala Act.
On this issue this Court held that it was an exemption order and that since there was an enabling provision in the statute empowering the Government to give exemption, though the Government Order did not refer to the statutory provision conferring such powers the order should be deemed to have been made under the said enabling provision and that therefore both the orders were made in exercise of the powers under section 10 of the Kerala Act.
The second important point that was decided was that the second notification was prospective in operation and that industries set up on or after Ist April, 1979 and before the 21st October, 1980 would be entitled to the benefit of the whole exemption under the first Government order for the full period of five years from the date they started production and that right could not have been curtailed by the second notification dated 21st October, 1980.
As the Govt. was bound by the rule of estoppel from taking away the right which had accrued to them under the first Government order.
Only new industries set up after the 21st October, 1980 would have the restricted benefit as provided in the second notification.
In Bakul Oil Industries & Anr.
vs State of Gujarat & Anr.
, ; , the effect of two exemption notifications made in exercise of the Government 's power under section 49(2) of the Gujarat Sales Tax Act, 1960 was considered.
Under the first notification dated 29.4.1970 certain exemption from payment of sales tax or purchase tax was given in respect of certain specified classes of sales and purchases described in the Schedule to that notification without any specification of period.
The second notification dated 11.11.1970 amended the first notification by adding a new entry in the Schedule exempting a manufacturer who established a new industry from the whole of purchase tax and sale tax for a period of five years from the date of commissioning of the industry .
This second notification stated that for the benefit of claiming the exemption the industry shall have been commissioned at any time during the period from Ist April, 1970 to 31st March, 1975.
The assessee in that case had commissioned his plant on the 17th May, 1970 and when the Industries Commissioners refused to give him the eligibility certificate for claiming exemption he filed a writ petition under Article 226 before the Gujarat High Court.
During the pendency of the writ petition the State Government issued another notification dated 17th July, 1971 amending the definition of `new industry ' and excluding among others decorticating, expelling, crushing, roasting, parching, frying of oil, seeds and colouring, decolouring and scenting of oil, from the purview of the exemption notification.
This Court 199 held that under the first notification dated 9.4.1990 the exemption granted was general and did not stipulate as to how long the exemption would remain in operation and that would mean that the exemption granted under the notification was to have operative force till such time that exemption was allowed to remain before being withdrawn by a subsequent notification.
Though the second notification dated 11.11.1970 gave exemption for a period of five years from the date of commissioning of the industry this Court was of the view that, that exemption cannot be invoked by the assessee in that case for claiming the benefit of tax exemption for five years because the second notification was prospective in operation and would apply only to those new industries which were commissioned subsequent to the issue of that notification and since the assessee in that case commissioned the Mill on 17.5.1970 before the second notification he was not eligible for the benefit of second notification.
However, the learned counsel for the respondents relied on the observation in the first paragraph at page 192 of the Bakul Oil Industries case (supra) wherein the learned Judges have held that the State Government was under no obligation in any manner known to law to grant exemption and that it was fully within its powers to revoke the exemption by means of a subsequent notification.
These observations will have to be understood in the light of the earlier statement that the second notification dated 11.11.1970 was prospective; that is to say if the industry had been commissioned subsequent to 11.11.1970 the assessee would have been entitled to the exemption for the full period of five years.
These observations are apposite only to the notification dated 9.4.1970 which was the one which the assessee was entitled to.
In correctly understanding the ratio of this judgment we have to keep in mind that the date of commissioning of the industry was the relevant factor to the entitlement of the relief.
Therefore this is an authority only for the proposition that if the exemption notification did not stipulate as to how long the exemption would remain in operation it would be open to the Government to withdraw the same at any time by a subsequent notification.
But the learned Judges did not stop with that but make a further observation that if the exemption notification gave exemption from payment of tax for a particular period and an industry was commissioned after the date of the exemption order but before the exemption was withdrawn, the said industry would be entitled to the benefit of exemption for the period specified in the exemption order though the exemption was withdrawn before the expiry of that period if the industry could rely on any estoppel.
This is also clear as the learned Judges themselves have observed that the industry commissioned subsequent to the notification could also plead estoppel and observed: "We must, however, observe that the power of revocation or 200 withdrawal would be subject to one limitation viz. the power cannot be exercised in violation of the rule of Promissory Estoppel.
In other words, the Government can withdraw an exemption granted by it earlier if such withdrawal could be done without offending the rule of Primissory Estoppel and depriving an industry entitled to claim exemption from payment of tax under the said rule.
If the Government grants exemption to a new industry and if on the basis of the representation made by the Government an industry is established in order to avail the benefit of exemption, it may then follow that the new industry can legitimately raise a grievance that the exemption could not be withdrawn except by means of legislation having regard to the fact that Primissory Estoppel cannot be claimed against a statute.
" The Government Order which was considered by this Court in Assistant Commissioner of Commercial Taxes (Asstt.).
Dharwar & Ors.
vs Dharmendra Trading Company and Ors., ; read as follows: "Consequently, the Governor of Mysore is pleased to sanction the following incentives and concessions to the entrepreneurs for starting new industries in Mysore State: (1) Sales Tax A cash refund will be allowed on all sales tax paid by a new industry on raw material purchased by it for the first (five) years from the date the industry goes into production, eligibility to the concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce. " Though this again was in the form of a Government order giving incentives and concessions, this Court held that since there is a power to grant an exemption or concessions under the Statue the mere fact that it did not specify the power under which it was issued will make no difference and that the assessee would be entitled to the benefit of this order.
The High Court was of the view that the Government orders are, as such, not exemption orders but only a policy decision.
The learned Judges observed that Section 5 of the General Sales Tax Act "does not speak of general order of exemption as the power to grant exemption is related to 201 a class of dealers or goods and that too subject to restrictions and conditions as may be prescribed.
So there could no general order of exemption and hence the need for specific order in favour of the petitioner is quite obvious.
" On this interpretation the High Court held that the appellant has to first establish that he had set up an industry in the State which conforms to the intent of 1971 order and thereafter ask for an exemption and that on being satisfied the Government will have to make an order of exemption under section 5 of the General Sales Tax Act.
We are unable to agree with this reasoning of the learned Judges on the interpretation of section 5 of the General Sales Tax Act.
We are of the view that the High Court was in error in thinking that the exemption order should be specific in favour of the appellant.
The exemption as can be seen from the provisions of section 5 of the General Sales Tax Act could be in respect of any class of dealers of any goods or class or description of goods.
There could be an exemption in an individual also but the power of exemption is not restricted to such cases alone.
It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of dealers or a combination of both.
Of course even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him.
But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him.
When the appellants sought to rely on the decision of this Court in Pournami Oil Mills case (supra) the learned Judges of the High Court sought to distinguish the same on the ground that the Government order in Pournami Oil Mills case (supra) used the words `will be exempted ' whereas in the Government orders now under consideration the words used are `will be granted exemption. ' According to the learned Judges there is a vast difference between the two expressions.
Whereas the expression `will be exempted ' is in the nature of an order the expression `will be granted exemption ' clearly implies a declaration of intention which could result in an order of exemption being issued by taking further follow up action.
We have carefully considered this reasoning of the learned Judges.
The Government orders follow an earlier Cabinet decision to give incentives to large medium scale industries.
The intention was clear that they wanted to attract entrepreneurs from all over the country to come and establish industries in the State of Jammu and Kashmir.
It is not with reference to any particular industrialist or industry that the order was intended to be operative.
The subject in both the Government orders show that it is grant of incentives.
In the light of the context in which expressions came to be used we are 202 of the view that `will be granted exemption ' has the same meaning as `will be exempted ' and does not in any way show that it requires a further follow up action.
Even in Pournami Oils Mills case (supra) under the Government order dated 11th April, 1979 the industries which are to be benefited are those which are to be set up on or after 1st of April, 1979.
The exemption is thus with are to be set up on or after 1st of April, 1979.
The exemption is thus with reference to an industry which is to be established subsequent to the Government order.
Therefore in that sense both expression mean the same.
It was then pointed out by the learned Judges of the High Court that this Government Order No. 159 dated 26.3.1971 dealt with to grant four different types of facilities and incentives and three out of them are covered by different legislative enactments and, therefore, it was futile to contend that without any follow up action the said order can be treated as notification of exemption under the different statutes.
We are unable to agree with this reasoning of the learned Judges also.
As we have already pointed out there is no prescribed form for granting exemption under section 5 of the General Sales Tax Act.
There is also no prohibition against reference to any other matter or matter in exemption orders under section 5 of the General Sales Tax Act.
If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of Sales Tax.
In fact it appears to be that factually the submission of the learned counsel for the State that follow up action was taken in pursuance of the Government order in respect of exemption from the levy of Urban immovable property tax and the exemption from levy of an additional surcharge on toll tax is not correct.
Mr. Verma, learned senior counsel appearing for the State of Jammu & Kashmir in two of the appeals referred to what he called as a follow up action in relation to the exemption from payment of tax under the Urban Immovable Property Act, a notification issued on the 3rd of June 1971 in SRO 214 of that date, in exercise of the powers conferred by section 23 of the Jammu and Kashmir Urban Immovable Property Tax Act, 1962 amending the Immovable Property Tax Rules, 1962 by inserting Rule 20A.
The relevant portion of this Rule 20A stated that under the provisions of clause (f) of sub section (1) of section 4 of the Act "all buildings and lands owned by proprietors of a factory and used by him for the purposes thereof shall be exempted from the levy of tax etc. ".
It is true that this notification was subsequent to GO 159 Ind.
dated 26.3.1971.
But it is seen from the notification itself that the same was previously published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby informing that notice is given thereby that it 203 will be taken up for consideration on 7.4.1971 and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government.
It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules." Thus on the day when the Government order was made there was already the draft amendment rules, and therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order.
Rather the Government order refers to the draft and says as per the amendment they will be entitled to the exemption.
So far as the toll tax is concerned the notification dated 18.7.1977 relied on by the learned counsel for the respondents only extended the benefit of exemption to large and medium scale industries in respect of additional toll leviable `till the construction phase is completed ' that is in respect of tax on construction materials and it did not relate to the grant of exemption of additional surcharge on toll tax.
But it is significant to note that this notification itself stated that `the raw materials brought into the stage for the purpose of manufacturing and finished products marketed outside the State by the said industries shall remain exempt from payment of additional toll for a period of ten years in respect of all the units from the date of commencement of production by them." (emphasis supplied).
This definitely shows that there is already an exemption from payment of additional toll in respect of raw materials brought and finished product marketed and the Government order related only to an extension of exemption benefit in respect of the construction phase as well.
These notifications under the Immovable Property Tax Act and Toll tax act rather reinforce thus contention of the learned counsel for the appellant that the Government orders themselves are exemption orders under section 5 of the General Sales Tax Act and no follow up action was intended under those orders and the said orders operate as exemption orders.
Thus there could be no doubt the Government Order 159 Ind.
dated 26.3.1971 and the amending Government Order 414 dated 25.8.1971 are orders of exemption from payment of sales tax issued under section 5 of the General Sales Tax Act.
Though the learned counsel for M/s Kashmir Vanaspati Limited and the learned counsel appearing tr M/s K.C. Vanaspati strenuously argued that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel.
We think there is absolutely no factual foundation for such a plea.
The only reference to 10 years was in 204 the Finance Minister 's speech and in the Brochure dated September, 1978.
The Brochure only lists the concessions and incentives available generally.
It does not refer to any Government decision or Cabinet decision or any order of the Government.
No decision of the Government, let alone a Cabinet decision, or any Government order extending the period of exemption was produced before us.
It is not clear on what basis the Brochure mentioned 10 years.
Further the reference in the Brochure is not for sales tax alone, but also refers to toll tax and central sales tax.
It is noticed that so far as toll tax is concerned there are Government orders exempting the industries covered by the notifications for a period of 10 years.
The Finance Minister 's statement made in March, 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years.
This statement also is not unambiguous.
It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same.
This is merely a budget proposal which could give rise to no right to the appellants.
As no decision order or notification is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel.
In exercise of the powers under section 4(7) of the General Sales Tax Act the Government notified that "In supersession of all the previous notifications on the subject, the Government hereby specify, in column 3 of the Schedule appended thereto, the point of tax on the turnover in the series of sales of goods specified in column 2 of the said schedule.
"This was notified and published as SRO 195 dated 31.3.1978.
The schedule in column 2 gave the description of the goods and the column 3 point of tax.
This schedule was amended by SRO 448 dated 22nd October, 1982 the relevant portion of which read as follows: "SRO 448 .
In exercise of the powers conferred by sub section (7) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962), the Government hereby direct that in notification SRO 195 dated 31.3.1978, the following amendments shall be made namely : (1) Sub item (C) in column 2 under the heading "Goods manufactured in the State" appearing against serial No. 2 shall be numbered as sub item (d) and before sub item (d) as so numbered the following shall be inserted as sub item (c) (c) Vanaspati and edible Oils.
205 (i) When sale is made by 2nd sale in the State manufacturer to another i.e. Sale is made by dealer in the State for such dealer who purchases re sale.
goods from the manufact urer.
(ii) When sale is made by Ist sale in the State i.e. manufacturer to when sale is made by the consumer direct.
manufacturer.
By order of the Government of Jammu & Kashmir.
" Before the High Court the vires of SRO 448 was questioned on various grounds.
However, the High Court rejected all those contentions and held that it is valid and that it has superseded the exemption, if any, granted under G.O. 159 and 414.
Mr. Thakur, the learned counsel for M/s Kashmir Vanaspati and Mr. Beg, learned senior counsel for M/s. K.C. Vanaspati, apart from contending that SRO 448 was ultra vires also contended on merits that this had no effect of superseding exemption granted under the said orders.
Since we are agreeing with the learned counsel that this SRO did not and could not supersede the exemption granted under the said Government orders we are not going into the question of vires of the same.
As may be seen from SRO 195 dated 31.3.1978 the notification was made by the Government in exercise of the power under section 4(7) of the State Act which related to the power to fix a point of sale for purposes of taxation in the series of sales of goods.
In fact the notification specifically stated that it is made in supersession of all previous notifications on the subject and specified the point of tax on the turnover in the series of sales of goods specified in column 2 of the Schedule (emphasis supplied).
The said notification therefore could not have and did not supersede the exemption notification SRO 448 dated 22nd October, 1982 that vanaspati and edible oils are taxable at the point specified therein it only means that those vanaspati and edible oils which are not exempted are taxable at the points specified in the Schedule.
It may be noted that the Government order gave exemption only for five years from the date of commencement of the industry and those industries who had been manufacturing for more than that period and also those industries who were not entitled to the benefit of the said Government order would be liable to pay sales tax on the vanaspati manufactured by them and the said goods were 206 liable to tax at the point specified in the Schedule.
In the Scheme of levy of single point taxation, there could be no doubt, the Government could fix and point in the series of sales for the Government have fixed the sale by the dealer, that if the second sale, as the taxable point no exception can be taken.
In that sense no question of vires on the ground of lack of power would arise.
Under Section 4(1) of Jammu & Kashmir General Sales Tax Act the goods are taxable only once, that is it could be taxed only at one point of sale.
We have already held that the Government Orders 159 and 414 are exemption orders and exempt the sale by appellants of their manufactured products.
The exemption would not arise unless the goods are taxable at the point of their sale.
Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend section 4(1) which provides for single point levy.
In case where there are no exemption orders and the state fixed the second or subsequent sale as point of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales.
Therefore, SRO 448 fixing the sale of vanaspati ghee by a dealer would not be applicable to vanaspati ghee manufactured by the appellant which are exempt under the said Government orders.
No question of vires of SRO 448 thus arises in these cases.
Thus we are not called upon to decide the vires of SRO 448 on the ground of discrimination as in our view the goods manufactured by the appellants are exempt under Government Orders 159 and 414 and that exemption covers entire series of sales of that very goods.
As already noticed in the case of Pine Chemicals the assessment orders related to their liability for tax under the in respect of their interstate sales.
The High Court has not considered their claim for exemption under section 8 (2 A) of the .
They seem to have proceeded on the assumption that if Government orders 159 and 414 above referred to are exemption orders or if the dealers were entitled to exemption under the State Act on the principle of promissory estoppel they would automatically be entitled to the benefit of section 8 (2 A) of the .
However, probably since the High Court was of the view that the said Government orders are not exemption orders and that the appellant had not laid the factual foundation for claiming the benefit of promissory estoppel, the question of consideration of the applicability of section 8 (2 A) of the did not arise and was not considered.
In fact the appellants in the special leave petition after claiming that the Government orders above referred to are exemption orders 207 and that in any case on facts they have established their case of promissory estoppel and the Government is bound to give exemption, stated as a ground that in the High Court the Advocate General made a concession to the effect that "he was not disputing that if the appellants were entitled to exemption in respect of finished goods under section 5 of the Jammu & Kashmir Sales Tax Act they would automatically be exempted under section 8 (2 A) of the in respect of interstate transaction.
" On the basis of this concession it appears that the appellants have also filed a review petition against certain observations made in the judgment of the High Court.
However, in the reply filed by the State in the special leave petition in this Court of the Government have denied that any concession was made by the Advocate General of the State in the High Court and that in any case the concession referred to related to a question of Law and that the State is entitled to press that point in this Court.
In these circumstances we have permitted the State to raise the question that even if the said Government orders were exemption orders under section 5 of the General Sales Tax Act the appellants are not eligible for exemption in respect of their interstate sales under section 8 (2 A) of the .
Under section 6(1) of the every dealer who sells goods in the course of interstate trade or commerce shall be liable to pay tax under that Act.
A sale of goods shall be deemed to take place in the course of interstate trade or commerce if the sale occasions the movement of goods from one state to another or if effected by a transfer of documents of title to the goods during their movement from one State to another.
The rate of tax on sales in the course of inter state trade of commerce is fixed under section 8 of the .
The tax payable by any dealer under the Act shall be collected in the State from which the movement of the goods commenced by the assessment officers of that State on behalf of the Government of India in accordance with the provisions of section 9(2) of the .
The learned Advocate General of Jammu & Kashmir contended that even if the sale of a particular commodity is exempted from payment of tax under the local Act the dealer selling the same in interstate trade or commerce would be liable to pay central sales tax under the provisions of section 6(1A) of the .
His further submission was that if section 6(1A) of the is applicable to a particular transaction of sale section 8 (2A) of the would not be applicable to that transaction.
Section 6(1A) of the Act reads as follows: 208 "(1 A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter state trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.
" In other words the liability of a dealer to pay Central Sales Tax on his interstate transactions of sale will not be affected merely on the ground that if the same dealer had sold the goods locally he would not have been liable to pay tax under the local Sales Tax Act.
This is part of the general provisions of Section 6 of the making a dealer liable to tax on inter state sales.
The rate of tax payable on inter state sale is fixed at 4% in the case of sales to a registered dealer of goods of the description coming under section 8 (2) of the or where the sale is to a Government and at 10% under Section 8 (2) (b) of the in the case of goods other than declared goods.
In respect of declared goods under section 8(2) (a) of the shall be payable at twice the rate applicable to sale or purchase of such goods inside the appropriate State.
In view of the provisions of Section 15 the State law can impose tax on sale of declared goods only at a rate not exceeding four per cent of the sale price and such tax also shall not be levied at more than one stage.
If the tax has been levied under the State Law on declared goods and such goods are sold in the course of inter state trade and tax has been paid under the Central Sales Tax the tax levied under the State law shall be reimbursed to the person making such sale in the course of inter state trade.
Section 8 (2A) of the is in the nature of an exception to these general provisions.
That sub section reads as follows: "8(2 A) Notwithstanding anything contained in sub section (1 A) of section 6 or in sub section (1) of this section, tax payable under this Act by a dealer on this turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale of, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation For the purpose of this sub section a sale or 209 Purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods".
It may be seen from these provisions that Section 8 (2 A) of the does not have any overriding affect on the scheme of taxation relating to inter state sale of declared goods.
There is also scope for the applicability of Section 6 (1 A) of the when the inter state sale takes place when the goods are in transit and is effected by transfer of documents of title to the goods during their movement from one State to another.
There may be other instances also which may not affect the levy under section 6(1A) of the as in case where Section 8(2 A) of the was not applicable though the transaction was not taxable under the State law.
Suffice it to say that only certain cases which would have been covered by Section 6(1 A) of the have been carved out for the purpose of exemption subject to the applicability of section 8 (2 A) of the .
Section 6 (1 A) of the has not become otiose by reason of inclusion of that section in the non obstante clause in section 8(2 A).
Both provisions, therefore, operate and they should not be read so as to nullify the effect of one another.
On a plain reading of section 8(2 A) of the it deals with the liability of a dealer to pay tax under the Act on his inter state sales turnover relating to any goods on the turnover relating to such goods if the sale had taken place inside the State is exempt from payment of sales tax under the sales tax law of the appropriate State.
It provides that if an intra state sale or purchase of a commodity by the dealer is exempted from tax generally or subject to tax generally at a rate which is lower than 4 per cent then his liability to tax under the when such commodity is sold on inter state trade would be either nil or as the case may be shall be calculated at the lower rate.
Explanation states as to when the sale or purchase shall not be deemed to be exempt from tax generally under the sales tax law.
That is to say an intra state sale or purchase of a commodity shall not be deemed as exempt from State tax generally if the exemption is given only (1) in specified circumstances or under specified conditions or (2) the tax is leviable on the sale or purchase of such goods at specified stages or (3) otherwise than with reference to the turnover of 210 the goods.
These conditions or limitations are therefore with reference to the transaction of sale or purchase.
The main clause deals with the turnover of `a dealer ' which the term would include `any dealer ' or `any class of dealers '.
The existence or otherwise of the three limitations under the explanation above referred to on claiming exemption under section 8(2 A) of the will therefore, have to be tested with reference to the transaction of sale or purchase as the case may be of the dealer who claims the transaction of sale or purchase as the case may be of the dealer who claims the exemption in respect of his intra state sale of purchase of the same goods.
Thus the specified circumstances and the specified conditions referred to in the explanation should be with reference to the local turnover of the same dealer who claims exemption under section 8(2 A) of the .
The learned Advocate General for the state contended that the conditions that the industry should have been set up and commissioned subsequent to the Government orders 159 and 414 above referred to and the commodity sold by him in order to claim the exemption under the said Government order, shall be those manufactured by that industry are conditions or specified circumstances within the meaning of the explanation and, therefore, the dealer (Pine Chemicals) is not entitled to any exemption under section 8 (2 A) of the .
We are unable to agree with this submission of the learned counsel for the state.
The facts which the dealer has to prove to get the benefit of the Government orders are intended only to identify the dealer and the goods in respect of which the exemption is sought and they are not conditions or specifications of circumstances relating to the turnover sought to be exempted from payment of tax within the meaning of those provisions.
The specified circumstances and the specified conditions referred to in the explanation should relate to the transaction of sale of the commodity and not identification of the dealer or the commodity in respect of which the exemption is claimed.
These conditions relating to identity of the goods and the dealer are always there in every exemption and that cannot be put as a condition of sale.
We have already held that not only sale by the manufacturer to dealer that is exempt under the Government orders but since the General Sales Tax Act had adopted only a single point levy, even the subsequent sales would be covered by the exemption order.
Therefore, the question whether the tax is leviable on the sale or purchase at "specified stages" does not arise for consideration.
This is not also a case where the exemption is with reference to some thing other than the turnover of the goods.
In this connection we may refer to two decisions of this Court reported as Indian Aluminium Cables Ltd. & Anr.
vs State of Haryana (38 211 STC 108) and Industrial Cables India Ltd. vs Assessing Authority.
[1986] sup.
SCC 695.
The question for consideration in this case was whether the transaction of sale which would be covered by section 5 (2)(a) (iv) of the Punjab Sales Tax Act could be said to be exempt from tax generally within the meaning of section 8(2)(a) of the .
Section 5 (2A) in effect provided that in determining the taxable turnover of a dealer his turnover on "(iv) sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910(IX of 1910), of goods for use by it in the generation or distribution of such energy" is to be deducted.
That is to say that the transaction covered by this clause are exempt from Punjab Sales Tax Act.
As may be seen from the provision the two conditions relate to the purchaser company being a licensed undertaking supplying electrical energy to the public and the goods sold are for use by the said undertaking in generation or distribution of such energy.
This court rejected the contention of the dealer that they are descriptive of the goods and not conditions and held that they are conditions under which exemption is granted and that therefore section 8(2A) of the was not attracted.
As may be seen, the two conditions are attached to the sale of the dealer who is liable to pay sales tax.
The description of the person who is to be the purchaser is not intended to identify the seller but relate to a condition of the sale being to a person of that description.
The condition that the goods sold are for use by the licensed undertaking in the generation or distribution of electrical energy is again a condition attached to the sale and not identification of the goods .
The goods are already identified.
If the same goods had been sold to a person who is not a licensed undertaking and/or not for purposes of use in the generation or distribution of electrical energy the transaction would be liable to levy of tax under local Sales Tax Law.
If the conditions specified are satisfied then that transaction which would have otherwise formed part of the taxable turnover is allowed to be deducted from the total taxable turnover.
Clearly, therefore, they are specified circumstances or specified conditions within the meaning of the explanation to section 8(2A) of the and therefore cannot be treated as exempted from tax generally.
There is also another judgment of this Court, namely, International Cotton Corporation (P) Ltd. vs Commercial Tax Officer & Ors., (35 STC 1) wherein they have generally considered the scope of section 8 (2A) of the .
After a consideration of the arguments the learned Judges observed: 212 "Reading section 6(1 A) and section 8(2A) together along with the explanation the conclusion deducible would be this: Where the intra state sales of certain goods are liable to tax, even though only at one point, whether of purchase or of sale, a subsequent inter state sale of the same commodity is liable to tax, but where that commodity is not liable to tax at all if it were an intra state sale the inter state sale of a particular commodity is taxable at a lower rate than 3 per cent then the tax on the inter state sale of tax commodity will be at that lower rate.
A sale or purchase of any goods shall not be exempt from tax in respect of inter state sales of those commodities if as an inter state sale the purchase or sale of those commodities is exempt only in specific circumstances or under specified conditions or is leviable on the sale or purchase at specified stages.
On this interpretation section 6(A) as well as section 8 (2A) can stand together." In view of the pronouncement of this Court in above decisions and on our interpretation we do not consider it necessary to refer to the decisions of the High Courts cited at the bar.
In the result we hold that the dealer "Pine Chemicals" is entitled to claim the benefit of exemption under G.O. 159 dated 26.3.1971 and G.O. 414 Ind. dated 25.8.1971 in respect of his turnover on inter state sales and the benefit of exemption is available for a period of five years from the commencement of commercial production.
Mr. Verma learned counsel appearing for the State Government then contended that the said Government orders were superseded by SRO 80 dated 12.3.1982 (hereinafter referred to as SRO 80/82) and Vanaspati Ghee has been made liable to tax at the rate of eight per cent.
The goods manufactured by M/s. Pine Chemicals are also made taxable as falling under the residuary item at the rate of 8 per cent.
S.R.O. 80 dated 12th March, 1982 reads as follows: "In exercise of the powers conferred by sub section (1) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962) and in supersession of all the previous notifications issued on the subject, the Government hereby direct that the tax on the taxable turnover shall be payable at the rates specified in schedule A 1 to A XI annexed hereto : Further the Government, in exercise of the powers conferred by section 5 of the said Act and in supersession of all the previous notifications issued on the subject, hereby direct that the goods, 213 persons and classes of persons as specified in Schedule "B" annexed hereto shall be exempt from payment of tax leviable under said Act.
Explanation: Nothing contained in schedule `B ' shall be deemed to exempt any goods specified in Schedule A I to A XI (both inclusive).
This notification shall come into force with effect from 1 4 1982.
By order of the Government of Jammu & Kashmir.
" It then sets out the description of the goods and the rates at which they are taxable in Schedule A, Annexures I to XI.
Items 1 to 3 schedule "A" Annexures IV, reads: SCHEDULE A IV Goods chargeable to tax at 8% 1.
Hydrogenated vegetable oil (Vanaspati) and palm oil of all sorts.
Lubricants.
All goods other than items (1) & (2) above and those specified in other Schedules.
x x x" In Schedule B goods except under section 5 of the General Sales Tax Act are set out.
Vanaspati Ghee is not one of the items of goods exempted under Schedule B.
The learned counsel for the appellants contended that the second paragraph in the SRO only superseded the `notification ' under Section 5 of the General Sales Tax Act made earlier and did not supersede and did not have the effect of superseding the Government orders made, in pursuance of policy decisions taken by the Cabinet, exempting from payment of tax as an incentive to the industries.
In any case the exemption for five years granted under the said Government orders could not be withdrawn so far as the appellants are concerned both on the ground that SRO 80/82 was prospective in operation and also on the ground of promissory estoppel.
214 There could be no doubt that SRO 80/82 was prospective in operation.
We have noticed in the earlier part of this judgment that the Government seems to have been following as a pattern that is in the case of incentives to industries the exemption orders had taken the form of a Government order.
Government order 159 and 414 were also in pursuance of a Cabinet decision.
SRO 80/82 though a Government notification under the Business Rules it is issued by the Ministry concerned.
In the circumstances we have also a serious doubt whether the said incentives could have been superseded by the said SRO 80/82.
In this connection we may also refer to Government order No. 54 Ind. of 1983 dated 26.2.1983 again an order made in pursuance of Cabinet decision which reads as follows: "CIVIL SECRETARIAT INDUSTRIES & COMMERCE DEPARTMENT GOVERNMENT OF JAMMU AND KASHMIR Incentives for development of Large/Medium/Small Scale and Tiny Sector Industries in Jammu & Kashmir.
Cabinet Decision No. 57 dated 5.2.1983 GOVERNMENT ORDER NO.
54 IND OF 1983 Dated 26 2 1983 In supersession of all previous orders it is ordered that the package of incentives as per Annexure to this order will now be applicable to the existing and new Large Medium/Small Scale and Tiny Industrial Units.
Such of the Industrial Units which have partly availed of the package of incentives, sanctioned under Government Order No. 391 Ind.
of 1972 dated 21.6.1972 and subsequent orders issued in amplification thereof, as well as such units which have become entitled to the availment of the earlier package of incentives, shall have the option to get benefit under the new package of incentives, sanctioned hereunder, for the remaining period of their entitlement.
215 3.
X X X 4.
X X X 5.
X X X 6.
X X X By order of the Government of Jammu & Kashmir.
J.A. Khan Secretary to Government Industries and Commerce Department.
" The annexures to this order contain the incentives, benefits privileges and priorities given to large, medium and small scale industries and tiny industries.
So far as sales tax payable by large and medium scale industries which is relevant for our purpose paragraph XII/XIII states as follows: "XII/XIII.
GST/CST/Additional Toll Tax on SSI Units and Medium/Large Units: (i) No GST shall be charged on any raw material purchased by any industrial units except on items brought on a negative list.
(ii) X X X (iii) X X X (iv) An equivalent amount of loan would be granted interest free to Medium and Large Units for a period of 10 years against GST/CST paid in the State, each installment of loan shall be recoverable in 7 years after a moratorium of 3 years, the total amount of tax loan at any point of time not to exceed 33% of capital investment or Rs. 25 Lakhs whichever is less.
Penal rate of interest may be prescribed for delay in repayment of loan.
(v) X X X (vi) X X X" 216 It may be seen that paragraph I of this order refers to `supersession of all previous orders ' and then speaks of package of incentives and then states as applicable to existing large and medium scale industries also.
If SRO 80/82 had superseded G.O. 159 and 414 does it mean that this Government order has superseded SRO 80/82 and if that is so what are incentives available after SRO 80/82 to the existing industries? This Government order is thus consistent with the pattern followed and deals only with incentives to industries.
In the second paragraph an option has been given to the industry which has not utilised the full benefit of the earlier exemption either to continue to enjoy the earlier exemption given by way of incentive or to opt for the scheme of incentive under the new Government order.
Thus all, these provisions are consistent with the case of the appellants that neither SRO 80/82 superseded GO 159 and 414 nor Government order 54 dated 26.2.1983 took their right to continue to enjoy the exemption benefit for the total period of five years as provided in the said Government orders.
The learned counsel for the appellants also contended that they are entitled to enjoy the benefit for the full period of five years both on law as also on the ground of estoppel.
We have already noticed that in Bakhul Oil case (supra) this Court held that in the case of a grant of exemption without specifying any period for which the exemption is available the Government could withdraw the same at any time.
Though in that case on facts no further question can arise since it was held that the dealer was not entitled to the benefit of the subsequent notification giving the exemption for a period of five years on the ground that the notification was prospective in operation and therefore not applicable to the dealer in that case, this Court made certain further observations to the effect that even in the case of exemption for a particular period it could be withdrawn at any time subject of course to the plea of estoppel.
In Pournami Oil Mills case also the learned Judges appear to have given the benefit of exemptions for the full period even after the withdrawal on the basis that the industry was set up in pursuance of some representation made by the Government amounting to estoppel.
In the present appeals also there are lot of materials to show that the Government made representations to industry that they would give tax exemptions and other incentives and invited entrepreneurs to establish their industries in J. & K. Relying on those representations each of these appellants have set up their industries.
It is not necessary to set out these factual details in the judgment.
Suffice it to say that we have carefully considered all the materials and are of the view that the appellants acting on the representations had set up their industries.
Therefore they are entitled to claim the benefit of the exemption for the entire period of five years calculated 217 as per the terms of the Government orders, even if it were to be held that SRO 80/82 superseded the earlier exemption orders.
It was then contended by Mr. Verma learned counsel appearing for the State that in the assessment order relating to Assessment Year 1981 82 for the period from 1.9.1981 to 30.8.1982 in the case of K.C. Vanaspati there is a finding that the assessee had collected sales tax in respect of their sales turnover for which the exemption is now claimed and that under section 8 B of the J&K General Sales Tax Act the said amount is refundable to the Government.
As has already been seen there was an assessment order for the period covering from 2nd September, 1981 to 30th September, 1981 which was the subject matter of Writ Petition No. 52 of 1982.
The same period merged in the assessment order 1.9.1981 to 30.8.1982 and consolidated assessment order was made and that was subject matter of Writ Petition No. 882 of 1984.
Both these assessment orders were regular assessment orders and they are not section 8 B orders of the Local Act.
They were made on the findings that Government Orders 159 and 414 above referred to are not exemption orders and the assessee could not be said to have acted upon any representation by the Government that they are exemption orders on the ground that if they had relied on those orders as exemption orders they would not have collected any tax in respect of their sales and that therefore the Government was not precluded by any principle of promissory estoppel from assessing their sales turnover.
The assessees had challenged these assessment orders mainly on the ground that the Government orders were exemption orders and that in any case the State is precluded from levying any sales tax on the ground of promissory estoppel.
The learned Judges of the High Court held, as already stated that, the said Government orders were not exemption orders but were only in the nature of declaration of intention to exempt the said industries from payment of sales tax and that the assessee had also not established any right for non payment of tax on any ground of promissory estoppel.
For holding that the assessees could not be said to have relied on any representation from the Government that they would be exempted from payment of tax the learned Judges relied on the facts that the assessees had collected sales tax or the sales tax element had gone into the fixation of price of Vanaspati Ghee showing thereby that the appellants had not relied on any representation from the Government that their sales are exempt from payment of tax.
Since the assessment orders were regular assessment orders on the ground that their sales are taxable sales the question of applicability of section 8 B of the local Act does not arise.
That question arises in view of our finding that their sales turnover are exempt but still under section 8 B of the Local Tax they are liable to refund any money collected "by way of a tax".
Since 218 neither the High Court had any occasion to decide this question of applicability of section 8 B of the Local Act on the basis that the sales turnover were exempt from payment of tax nor the assessing authorities had any opportunity to decide or made any order under section 8 B of the Local Act separately, we think that the entire question relating to the applicability of section 8 B of the Local Act and even the question whether there was any collection of sales tax will have to be left open.
The learned counsel Mr. Verma strenuously contended that there is a finding in the assessment orders that the appellants had collected tax and that finding had not been either challenged or set a side by the High Court and that therefore they should be directed to refund the amount collected.
We are not able to agree with this contention of the learned counsel.
As already stated the assessment order itself was questioned in the writ petitions filed by the assessees.
The High Court had proceeded on the basis that the Government orders are not exemption orders and that the Government also was not precluded from collecting tax on any ground of promissory estoppel and that therefore the question of applicability of section 8B of the Local Act did not arise before the High Court.
It may be mentioned it is not the case of the State that they had collected any amount in excess of the percentage of sales tax i.e. collectable in respect of taxable Vanaspati sales.
In the light of our findings that the sales were exempt the question now arises whether the assessees had collected any tax and whether the amount was collected by way of tax and whether any element of sales tax has merged in the fixation of the price and that amounts to collection of sales tax.
These questions will have to be decided if the State considers that the assessees had collected sales tax, in separate proceedings that may have to be initiated under Section 8 B of the Local Act or when the State demands payment of the money under section 8 B of the Local Act.
Suffice it so say that we are unable to agree with the observations of the learned Judges of the High Court that merely because in the balance sheet a reserve fund is made for payment of sales tax or on basis of a letter of Kashmir Vanaspati giving a break up of the sales price of Rs. 238 it can be said to be conclusively established that sales tax had been collected.
Any way we do not want to say anything because the matter will have to be considered by the authorities concerned in case they want to invoke Section 8 B of the Local Act on the basis that the said government orders gave exemption from payment of sales tax in respect of these assessees for a period of five years as we have held.
In this view we are also not going into the question as to the validity of section 8 B of the Local Act and we leave open that question which was outlined before us.
Thus interpretation of section 8 B of the Local Act and the question of fact of collection and the liability to refund all have to wait till a demand is made by the competent authority for refund of the amounts 219 in exercise of their power under section 8 B of the Local Act.
The assessees have made some deposits in pursuance of interim orders made by this Court pending the appeals.
It is also stated that during the pendency some other amounts were also paid by the assessees in addition to the amounts paid as per the directions given by the Court.
The refunds of this money and the liability of the State Government to pay any interest while refunding the deposits will all have to await the demand, if any, that may be made by the Government under section 8 B of the Local Act.
However, we make it clear that the stay of refund of money collected as aforesaid will be only for a period of six months by which time the Department should initiate proceedings, if any, under Section 8 B of the Local Act, if so advised.
To sum up : G.O. 159 Ind dated 26.3.1971 and G.O. 414 dated 25.8.1971 are exemption from payment of sales tax orders referable to the powers of the Government under Section 5 of the J & K General Sales Tax Act and that exemption covers the entire series was available only for a period of five years from the date of commissioning of the industries and not for ten years.
The benefit of the exemption under the said Government orders are also available in respect of the inter State sales of the same commodities for a period of five years from the commencement of the commercial production.
The appeals are accordingly allowed to the extent mentioned above.
However, there will be no order as to costs.
V.P.R. Appeal allowed.
| The appellant a public limited company was manufacturing Rosin, Turpentine and Rosin Derivatives and was carrying on business at Bari Brahmana and Jammu Tawi.
On 20.1.1981, the Assessing Authority assessed the appellant company under the , for the year ending 30.6.80.
On 22.2.1981 an assessment order under section 10 of the Act was made.
A penalty order was also made.
The appellants challenged the order of the Assessing Authority before the High Court filing Writ Petition No. 87 of 1987, contending that they were exempt from payment of sales tax under the and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, in terms of the Government Orders No. 159 Ind.
dated 26.3.1971 as amended by Government Order No. 414 Ind.
dated 25th August, 1971 read with Section 8(2A) of the ; that the Government represented and announced a package of incentives for large and medium scale industries grant of exemption from sales tax both on the raw materials purchased by the industries and the sale of their finished products; and that the Government was estopped from charging sales tax.
The High Court dismissed the Writ Petition holding that the two Government Orders were only declarations of an intention to exempt 181 from payment of sales tax and that they were not exemption notifications under section 5 of the General Sales Tax Act and that the appellants failed to prove the factual foundation for invoking the principle of promissory estoppel.
Against the High Court 's decision by special leave C.A. No. 2309 of 1989 was filed by the appellant company.
C.A. No. 2310 of 1989 The appellant company had filed a miscellaneous petition, after the judgement in the W.P.No. 87 of 1987 (the writ petition of the High Court against which C.A.No. 2309 of 1989 was filed) for permission to file reply affidavit on the ground of that the documents produced at the time of hearing needed explanation.
The High Court dismissed the Misc.
Petition as it was belated and the judgement in the writ petition was delivered relying on the materials placed on record.
C.C.No.
3148 50 of 1989 The appellant partnership firm was manufacturing Vanaspati Ghee.
It was assessed for the period from 2.9.1981 till 30.9.1981 under the Jammu & Kashmir General Sales Tax Act.
The appellants moved the High Court in a writ petition (W.P.No. 52 of 1982) to quash the assessment order, contending that the Government order 159 Ind.
dated 26.3.1971 as amended by Government Order 414 Ind.
dated 25.8.1971 exempted the sales of the finished product of Vanaspati Ghee from sales tax and that the Government was estopped from collecting tax.
When the Writ Petition (W.P.No. 52 of 1982) was pending an assessment order was made on 14.11.1984 for the assessment year ending 30th September, 1982, including the period 2nd September to 30th September, 1981 (which was questioned in W.P.No. 52 of 1982).
The assessment order dated 14.11.1984 was challenged by the assessees appellants in the writ Petition No. 822 of 1984.
During the pendency of the writ petitions certain other Government Orders were passed and certain assessment orders for the subse 182 quent periods were passed and those were questioned in the Writ Petition No. 711 of 1987.
The assessees contended that Government Order No. 159 Ind. dated 26.3.1971 and Government Order 414 Ind.
dated 25.8.1971 were exemption orders referable to section 5 of the Jammu & Kashmir General Sales Tax Act.
The respondents contended that the said Government orders were not exemption orders section 5 of the General Sales Tax Act and that there was not factual foundation for the plea of promissory estoppel.
The High Court dismissed all the three writ petitions by a common order, against which Civil Appeals 3148 50 of 1989 were filed.
C.A.No. 3151 of 1989 : The appellant assessee filed a writ petition praying to quash certain notices issued under section 14 of the and for a declaration that the Vanaspati Ghee manufactured by them was exempt from payment of tax upto January, 1992, i.e., for a period of 10 years from the date from which they started their commercial production as per the Government Order 159 Ind.
dated 26.3.1971 and Government Order No. 414 Ind.
dated 25th August 1971 as orders exempting their goods from sales tax under Section 5 of the Jammu & Kashmir General Sales Tax Act.
The Writ Petition was also dismissed against which C.A.No. 3151 of 1989 was filed by special leave.
The assessee contended that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel; that SRO 448 which superseded the exemption granted under the Govt.
Orders was ultra vires and that the SRO 448 had no effect of superseding exemption granted under the G.O. 159 and 414; and that the exemption for 5 years granted under the Government Orders could not be withdrawn on the ground that SRO 80/82 was prospective in operation and also on the ground of promissory estoppel.
The State contended that even if the sale of a particular commod 183 ity was exempted from payment of tax under the local Act, the dealer selling the same in inter state trade or commerce would be liable to pay Central Sales Tax under the provisions of Section 6(1A) of the ; that if Section 6(1A) of the was applicable to a particular transaction of sale, Section 8(2 A) of the General Sales Tax Act would not be applicable to that transaction; that the conditions that the industry should have been set up and commissioned subsequent to the Government Orders 159 and 414 and the commodity sold in order to claim the exemption under the Government Orders, should be those manufactured by that industry were the conditions or specified circumstances within the meaning of the Explanation and, therefore, the appellants in C.A.Nos.
2309, 2310/89 were not entitled to any exemption under Section 8(2 A) of the ; that the Government Orders were superseded by SRO 80/82 and Vanaspati Ghee was made liable to tax at the rate of 8 per cent; that the goods manufactured by the appellants in C.A.Nos.
2309, 2310/89 were also made taxable as falling under the residuary item at the rate of 8 per cent; that in the assessment order relating to Assessment Year 1981 82 for the period from 1.9.1981 to 30.8.1982 in the case of appellants in C.A. Nos.
3148 3150 of 1989 there was a finding that the assesses collected sales tax in respect of their sales turnover for which the exemption was now claimed and that under Section 8 B of the J&K General Sales Tax Act the said amount was refundable to the Government.
As the questions, arose in these appeals were common, appeals were heard together and allowing the appeals of the assessees by a common judgment, this court, HELD :1.
If power to do an act or act or pass an order can be traced to an enabling statutory provision, then often if that provisions is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision.
[194D] 2.1 Normally in the case of grant of tax exemption as an incentive to industry the exemption orders have generally taken the form of Government Order rather than a notification.
But in the case of other exemptions though they are also under section 5 of the local Act (J&K General Sales Tax Act, 1962) they have taken the form of notification.
[194G H] 2.2 The pattern followed in Jammu & Kashmir is that in respect 184 of exemptions from payment of taxes following Cabinet decision on Policy matters and incentive they have taken the form of a Government order.
[194H 195A] 2.3 The Jammu & Kashmir General Sales Tax Act, 1962 itself makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes.
Since there is no form prescribed in this behalf, if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference.
[194F G] 2.4 From the publicity given to the Government Orders 159 and 414 by the Government, while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties, it is be understood that the Government orders 159 and 414 were treated as exemption orders satisfy all the requirements of the provisions of section 5 of the local Act.
[195B C, 194E] 2.5 Even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him.
But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him.
[201C D] 2.6 There is no prescribed form for granting exemption under section 5 of the Jammu & Kashmir General Sales Tax Act.
There is also no prohibition against reference to any other matter or matters in exemption orders under section 5 of the General Sales Tax Act.
If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of sales tax.
[202C D] 2.7 The High Court was in error in thinking that the exemption order should be specific in favour of the appellant.
The exemption as can be seen from the provisions of section 5 of the Jammu & Kashmir General Sales Tax Act could be in respect of any class of dealers or any goods or class or description of goods.
There could be an exemption to an individual also but the power of exemption is not restricted to such cases alone.
It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of 185 dealers or a combination of both.
[201B] 3.1 `Will be granted exemption ' has the same meaning as `will be exempted ' and does not in any way show that it requires a further follow up action.
[201G H] 3.2 The exemption is with reference to an industry which is to be established subsequent to the Government order.
Therefore in that sense both expressions mean the same.
[202A] 4.
The notification issued on the 3rd of June 1971 in SRO 214 under section 23 of the Jammu & Kashmir Urban Immovable Property Tax Act, 1962, amending the Immovable Property Tax Rules, 1962 by inserting Rules 20 A was subsequent to GO 159 Ind. dated 26.3.1971.
It was published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government.
It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules".
Thus on the day when the Government Order was made there was already the draft amendment rules, and, therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order.
The Government order refers to the draft and says as per the amendment they will be entitled to the exemption.
[202E 203B] 5.1 The only reference to 10 years was in the Finance Minister 's speech and in the Brochure dated September 1978.
The Brochure only lists the concession and incentives available generally.
It does not refer to any Government decision or Cabinet decision or any order of the Government.
[203G H] 5.2 The Finance Minister 's statement made in March 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years.
This statement also is not unambiguous.
It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same.
This is merely a budget proposal which could 186 give rise to no right to the appellants.
As no decision order or notifications is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel.
[204 B C] 6.1 The SRO No. 195 dated 31.3.1978 did not and could not supersede the exemption granted under the Government orders 159, 414.
[205D] 6.2 When it stated in the amending notification SRO 448 dated 22nd October, 1982 that vanaspati and edible oils are taxable at the point specified therein it only means that those vanaspati and edible oils which are not exempted are taxable at the points specified in the Schedule.
The Government order gave exemption only for five years from the date of commencement of the industry and those industries who had been manufacturing for more than that period and also those industries who were not entitled to the benefit of the said Government order would be liable to pay sales tax on the vanaspati manufactured by them and the said goods were liable to tax at the point specified in the Schedule.
[205F G] 7.1 In the scheme of levy of single point taxation, the Government could fix any point in the series of sales for the Government have fixed the sale by the dealer, that if the second sale, as the taxable point no exception can be taken.
In that sense no question of vires on the ground of lack of power would arise.
[205H 206A] 7.2 Under section 4(1) of Jammu & Kashmir General Sales Tax Act the goods are taxable only once, that is it could be taxed only at one point of sale.
The government orders 159 and 414 are exemption orders and exempt the sale by appellants of their manufactured products.
The exemption would not arise unless the goods are taxable at the point of their sale.
Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend section 4(1) which provides for single point levy.
In cases where there are no exemption orders and the State fixed the second or subsequnt sale as point of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales.
Therefore SRO 448 fixing he sale of vanaspati ghee by a dealer would not be applicable to vanaspati ghee manufactured by the appellants which are exempt under the Government orders.
[206B D] 187 7.3 The goods manufactured by the Appellants are exempt under Government Orders 159 and 414 and that exemption covers entire series of sales of that very goods.
[206D] 8.1 Under section 6(1) of the every dealer who sells goods in the course or inter state trade or commerce shall be liable to pay tax under that Act.
A sale of goods shall be deemed to take place in the course of inter state trade or commerce if the sale occasions the movement of goods from one state to another or if effected by a transfer of documents of title to the goods during their movement from one State to another.
[207D E] 8.2 In view of the provisions of Section 15 the State Law can impose tax on sale of declared goods only at a rate not exceeding four per cent of the sale price and such tax also shall not be levied at more than one stage.
If the tax has been levied under the State Law on declared goods and such goods are sold in the course of inter state trade and tax has been paid under the Central Sales Tax the Law levied under the State law shall be reimbursed to the person making such sale in the course of inter state trade.
[208C E] 8.3 Section 8(2 A) of the does not have any over riding effect on the scheme of taxation relating to inter State sale of declared goods.
There is also scope for the applicability of section 6(1 A) of the when the inter state sale takes place when the goods are in transit and is effected by transfer of documents of title to the goods during their movement from one State to another.
[209B C] 8.4 Only certain cases which would have been covered by section 6(1 A) of the have been carved out for the purpose of exemption subject to the applicability of section 8(2 A) of the .
Section 6(1 A) of the has not become otiose by reason of inclusion of that section in the non obstante clause in section 8(2 A).
Both provisions, therefore, operate and they should not be read so as to nullify the effect of one another.
[209C E] 9.
The facts which the dealer had to prove to get the benefit of the Government orders are intended only to identify the dealer and the goods in respect of which the exemption is sought and they are not conditions or specifications of circumstances relating to the turnover sought 188 to be exempted from payment of tax within the meaning of those provisions.
The specified circumstances and the specified conditions referred to in the explanation should relate to the transaction of sale of the commodity and not identification of the dealer or the commodity in respect of which the exemption is claimed.
The conditions relating to identity of the goods and the dealer are always there in every exemption and that cannot be put as a condition of sale.
[210D F] 10.1.
SRO 80/82 was prospective in operation.
The Government seems to have been following as a pattern that is in the case of incentives to industries the exemption orders had taken the form of a Government order.
Government orders 159 and 414 were also in pursuance of a Cabinet decision.
SRO 80/82 though a Government notification under the Business Rules it is issued by the Ministry concerned.
In the circumstances there is also a serious doubt whether the said incentives could have been superseded by the SRO 80/82.
[213H 214B] 10.2.
In the case of a grant of exemption without specifying any period for which the exemption is available the Government could withdraw the same at any time.
The appellants acting on the representations of the Government had set up their industries.
Therefore they are entitled to claim the benefit of the exemption for the entire period of five years calculated as per the terms of the Government orders, even if it were to be held that SRO 80/82 superseded the earlier exemption orders.
[216D E, 216G 217A] 11.
Since the assessment orders were regular assessment orders on the ground that their sales are taxable sales the question of applicability of Section 8B of the local Act does not arise.
That question arises in view of the finding that their sales turnover are exempt but still under section 8B of the Local Act, they are liable to refund any money collected "by way of tax".
[217G H] Pournami Oil Mills & Ors.
vs State of Kerala & Anr.
, [1986] Supp.
SCC 728; Bakul Oil Industries & Anr.
vs State of Gujrat & Anr.
, ; ; Assistant Commissioner of Commercial Taxes (Asstt), Dharwar & Ors.
vs Dharmendra Trading Company and Ors., ; ; Indian Aluminium Cables Ltd. & Anr.
vs State of Haryana, 38 STC 108; Industrial Cables India Ltd. vs Assessing Authority, [1986] Supp.
SCC 695; International Cotton Corporation (P) Ltd. vs Commercial Tax Officer & Ors., 35 STC 1; referred to. 189
|
Appeals Nos. 174 and 175 of 1967.
Appeals by special leave from the judgment and order dated June 16, 1966 of the Mysore High Court in exhibit Regular Appeals Nos.
33 34 of 1961.
V.S. Desai, Naunit Lal and Swaranjit Sodhi, for the appellant (in both the appeals).
D.V. Patel, O. P. Malhotra, P. C. Bhartari, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Mathew, J.
These two appeals, by special leave, are from the common judgment passed by High Court of Mysore on 16 6 1966 confirming the order of the District Court, Bangalore, allowing an application for execution of the compromise decree passed on 24 6 1959 in appeal from the decree in O.S. 85 of 1949 50 of that court.
The appellant was the defendant in the suit and the respon dent the plaintiff.
As matter in controversy between the parties in the appeal turns upon the construction of the compromise decree, it is necessary to set out its terms : (i) The defendant agrees to receive from the plaintiff a lakh of rupees paid as consideration for the sale of the property No. 44, Mahatma Gandhi Road, Bangalore, together with stamp charges of Rs. 3,300/ (rupees three thousand 517 and three hundred only) with interest at six per cent per annum of the above two sums from 16 3 1947 up to date together with Rs. 7,000/ (rupees seven thousand only) deducted by the Corporation minus the rent received viz., Rs. 22,500/ (rupees twenty two thousand and five hundred only) and give up all rights to the said property.
The plaintiff will be entitled to the materials lying on the premises.
(ii)The period of time fixed for the payment by the plaintiff to the defendant of this amount stated above is till 1 1 1960.
(iii)The plaintiff agrees to deposit the amount in court for payment to the defendant.
(iv)On failure of the plaintiff to deposit the amount in court by 1 1 1960 his suit now in appeal will be dismissed with costs throughout.
(v) It is agreed by the parties that time is the essence of the contract and no further extension of time would be allowed and the dismissal of the suit with costs would be automatic.
The respondent applied for challan on 22 12 1959 to deposit the amount and a challan was issued to him on 24 12 1959, the last working day before the court closed for Christmas holidays.
December 31, 1959 and January 1, 1960, were holidays.
Neither the lower courts nor the banks were open on these days.
The respondent made the deposit on 2 1 1960 and sought to enforce his right under the decree by compelling the appellant to execute the conveyance in terms of the compromise decree by filing execution case No.25/1960.
The appellant also filed execution case No. 45 of 1960 for cost on the basis that the suit stood dismissed as per the provision in the decree on the failure of the respondent to deposit the amount by 1 1 1960, These two petitions were heard together, and the court passed an order holding that the respondent had made the deposit in substantial compliance with the decree and allowing execution case No. 25 of 1960 and dismissing execution case No. 45 of 1960.
Against this order, the appellant filed appeals 33 and 34 of 1960 before the High Court of Mysore.
A Division Bench of the High Court, by its judgment dated 16 6 1966, dismissed the appeals with costs.
The short question for consideration in these appeals is whether the deposit made by the respondent on 2 1 1960 was within the time specified in the compromise decree and would 518 enable him to compel the appellant to execute the sale deed in accordance with the provisions of the compromise decree.
It was argued on behalf of the appellant that the respondent had practically six month 's time to deposit the amount, that he should not have waited for the last day of the period allowed to him by the decree to deposit the amount and if he was not diligent to deposit the amount earlier, he must suffer the consequences if the court happened to be closed on the last.
day on which he should have made the deposit.
Counsel said that there is a distinction between a case where under a decree an act has to be performed by a party on a day certain and a ease where the party has the liberty to perform the act within a certain time a certain day .
that in the former case, if the act cannot be pet formed by reason of circumstances beyond his control, he will be relieved against the consequences of his default by reason of the maxim Lexnon cogit ad impossibility (the law does not cornpel a man to do that which he cannot possibly perform) if he performs the act at the next available opportunity, but where he has to per form an act within a certain period or by a certain date, as in this case, the law will not take notice of the circumstance that the act became incapable of performance by reason of circumstances beyond his control on the last day of the period.
Whether there is any logical or reasonable basis for making the distinction, we clear that in this case the respondent had the right or, perhaps, more accurately, the liberty to deposit the amount in court till and including 1 1 196O.
In Halsbury 's Laws of England vol.
37, 3rd Edition, page 96, :it is observed "Subject to certain exceptions, the general rule is that, when an ,let may be done or a benefit enjoyed benefit enjoyed upto the last moment of the last of that period.
" if the respondent had the right or liberty to deposit the amount III court on 1 1 1960 under the compromise decree the fact that he did not choose 'Lo make the deposit earlier would not affect his right or liberty to deposit the amount in court on 1 1 1960.
In Fateh Khan and another vs Chhajju and others(1), an argument similar to the one addressed by counsel for the appellant was advanced but was not countenanced by the court.
That was a case where a pre emptor was unable to deposit the purchase money in court on the last day of the period allowed by the decree; the period expired when the court was closed for the vacation and he deposited the amount on the reopening day.
It was argued that the decree allowed the preemptor a period of time within which to deposit the amount, that he could have deposited (1) A.I.R. 1931 Lahore 386.
519 the amount earlier, that he should not have waited till the last day of the period and that if the last day happened to be a holiday, he can take no advantage of that circumstance.
The court repelled the argument by saying that if the argument is accepted it will have the effect of curtailing the days allowed to him by the decree without any reason.
It was next contended for the appellant that it was open to the respondent to pay the amount to the appellant either on December 31, 1959, or January 1, 1960, and that he should not have waited till the 2nd to deposit the amount in court.
Counsel submitted that under Order XXI Rule 1, the respondent could have paid the amount to the appellant on January 1, 1960, or earlier, that he should not have waited till the 2nd to deposit the amount in court and if the last day of the period happened to be a day on which the court was closed, that is not a circumstance which would relieve the respondent from his obligation to pay the amount within the time specified.
In support of this argument counsel referred to Kunj Bihari and others vs Bindeshri Prasad and others(1), Roshan Lal vs Ganpat Lal (2), Indal vs Chaudhary Ram Nidh(3), and Ram Kinkar Singh and another vs Smt.
Kamal Basini Devi(4), Kunj Behari and others vs Bindeshri Prasad and others(1) was a case where an installment decree provided that the first installment was payable on a certain date; the date specified expired during the vacation of the court and the amount was deposited in court on the re opening day.
It was held that the judgment debtors had the power to make the payment direct to the decree holder, that depositing in court was not the only course open to them and so they could not take advantage of the fact that the court was closed on the specified date and the payment made by them was not made in time.
The other cases cited are to the, same effect.
The Principle underlying these decisions is that when the judgment debtor has the option to pay the decree amount to the decree holder or to deposit it in court, he cannot choose one of them and act in a manner so as to prejudice the rights of the other party.
Although under Order XXI, Rule 1.
it is open to a judgment debtor to pay the amount direct to the decree holder or to deposit in court, he cannot choose the alternative when that will prejudice the decree holder.
Even here there is a conflict of opinion among the High Courts.
In Chatlapali Suryaprakasa Rao vs Polisetti Venkataratnam and others(5), the compromise decree there in question provided that the decretal amount should be paid in certain yearly (1) I.L.R. Vol.
51, 1929 Allahabad 527.
(2) A.I,R, 1938 Allahabad 199 (3) A.I.R. (33) 1946 Oudh 156.
(4) A.I.R. 1938 Patna 451.
(5) A.I.R. 1938 Madras 523.
520 instalment on certain fixed date in each year.
The decree further provided that in case of default of two successive instalments the whole amount would be recovered.
The decree however did not provide to whom the money was to be paid.
The judgment debtor failed to pay the first instalment.
On a day previous to that on which the second instalment was due he obtained a challan.
The day on which the instalment was due being a holiday, he paid the instalment next day in the Bank.
It was held by the Madras High Court that the judgment debtor did not commit default in payment of the second instalment and consequently there was no default of two successive instalments.
This is also the view that was taken in Premchand Bhikabhai vs Ramdeo Sukdeo Marwadi(1).
It is not necessary to resolve the conflict of opinion on this aspect; as we are concerned with a decree which specifically provided that the respondent should deposit the amount in court.
He had, therefore, no option to pay the same to the appellant and the appellant, perhaps, would have been within his right if he refused a tender of the amount to him.
Ile parties, for obvious reasons, agreed that the amount should be deposited in court and that was made a rule of the court and, therefore, the principle of the decision in Kunj Behari and others vs Bindeshri Prasad and others and the other cases cannot be applied here.
The question then arises as to what is the principle which should be applied in a case where a party to a consent decree is given time to do an act within a specified day or by a specified (lay and fails to do it on the ground of impossibility of performance on the last day specified but does it on the next practicable day.
This question arose for consideration in Muhammad Jan vs Chiam Lal(2).
There a decree in a pre emption suit gave the plaintiff a period of one month within which to deposit the purchase money in order to obtain the benefit of the decree in his favour, and the period expired on a date on which the court Was closed for the vacation and the plaintiff made the deposit on the day on which the court re opened.
Piggott, Lindsay and Sulaiman, JJ.
held that the deposit was in time under the terms of the decree.
They said that there is a generally recognised principle of law under which parties who are prevented from doing a thing in court on a particular day, not by an act of their own but by the court itself, are entitled to do it at the first subsequent opportunity.
The court quoted with approval the decision in Shooshee Bhusan Rudro and another vs Gobind Chunder Roy(3) where it was observed that the broad principle is that although the parties themselves cannot extend the time for doing an act in court, yet (1) A.I.R. (36) 1949 Nagpur 141.
(2) I.L.R. Allahabad Series, Vol.
XLVI, 1924, p. 328.
(3) I.L.R. Calcutta, Vol. XVIII (1891) p. 231.
521 If the delay is caused not by any act of their own, but by some act of the court itself such as the fact of the court being closed they are entitled to do the act on the first opening day.
In Satnbasiva Chari vs Ramasami Reddi(1), the Madras High Court held that there is a generally recognised principle of law under which parties who are prevented from doing a thing in court on a particular day, not by any act of their own, but by the court itself, are entitled to do it at the first subsequent opportunity.
We have already referred to Fateh Khan and another vs Chhajju and others where the Lahore High Court applied this principle to a pre emption decree.
Mayor vs Harding(2) is a case in point.
In that case the appellant had applied to justices to state a case under the Summary Jurisdiction Act, 1857.
He received the case from them on Good Friday, and transmitted it to the proper court on the following Wednesday.
It was held that he had complied sufficiently with the requirement of the Act directing him to transmit the case within three days after receiving it, as it was impossible for him to transmit the case earlier than he did because of the closure of the offices of the court from Friday till Wednesday.
Mellor, J., dealt with the matter as follows : "Here it was impossible for the appellant to lodge his case within three days after he received it.
As regards the conduct of the parties themselves, it is a condition precedent.
But this term is sometimes used rather loosely.
I think it cannot be considered strictly a condition precedent where it is impossible of performance in consequence of the offices of the court being closed, and there being no one to receive the case.
The appellant lodge the case on Wednesday, that is, he did all that it was practicable for him to do." In Halsbury 's Laws of England, Vol. 37, 3rd Edition, page 97, para 172, it is observed : "172.
The fact that the last day of a prescribed period is a Sunday or other non juridical day does not as a general rule give the person who is called upon to Act an extra day; it is no excuse for his omission to do the act on some prior day.
This general rule does not hold good where the effect of it would be +Lo render performance of the act impossible.
This would be the case if the whole of the prescribed period consisted of holidays, in Which case the act may lawfully be done on the next possible day.
(1) I.L.R. 22 Madras (1899) p. 179 (2) 522 Again the general rule does not hold good where the last day is a Sunday and the act be done is one the performance of which on a Sunday is prohibited by the Sunday Observance Act, 1677, or where the act has to be done, not by the party only, but by the court or by the party in conjunction with the court.
In such cases the act may, when the last day limited for the performance of it happens to be a day when the court or its office is closed, be done on the next practicable day.
" We think that the second exception to the general rule stated in the passage and in effect followed in the rulings cited above must apply to the facts here.
But counsel for the appellant argued that the compromise decree provided that on default of the respondent to deposit the amount in court on 1 1 1960, there was to be an automatic dismissal of the suit by virtue of clause (v) thereof and the execution court had no right to alter or modify the terms of the decree and hold that the deposit made on 2 1 1960 shall be deemed to be a deposit made on 1 1 1960, and order the execution of the decree on that basis.
A court executing the decree shall execute it as it stands.
It cannot modify or vary the terms of the decree.
No exception can be taken to that general principle.
But the execution court has the right to construe a decree in the light of the applicable provisions of law and if in this case on a construction of the decree in the light of the applicable provision of law, it found that the deposit made by the respondent on 2 1 1960 was according to law a deposit in compliance with the terms of the decree, then the execution court was not varying the terms of the decree but executing the decree as it stood after considering the effect of the deposit in the light of the relevant law.
Counsel then contended that a compromise decree is none the less a contract, notwithstanding the fact that an order of court is super added to it and, a provision in a contract that an act shall be done within a certain period or by a particular day by a party is absolute.
In other words counsel said that duties are either imposed by law or undertaken by contract and the ordinary rule of law is that when the law creates a duty and a party is disabled from performing it without any default of his own, the law excuses him, but when a party by his own contract imposes a duty upon himself, he is bound to make it good not withstanding any accident by inevitable necessity .
Counsel in this connection referred to the passage in Halsbury 's Law, , of England Volume XIV, page 622, para 151, which reads as under 523 " 1151.
Where under a contract, conveyance, or will a beneficial right is to arise upon the performance by the beneficiary of some act in a stated manner, or a stated time, the act must be performed accordingly in order to obtain the enjoyment of the right, and in the absence of fraud, accident or surprise, equity will not ,relieve against a breach of the terms".
Although a contract is not the less a contract because it is embodied in a judge 's order, or, as said by Parke J. in Went worth vs Bullen(1) B. & C. 840, 850 "the contract of the parties is not the less a contract, and subject to the incidents of a contract.
because there is super added the command of a judge".
still we think it is something more than a contract.
The Judicial Committee of the Privy Council in Charles Hubert Kinch vs Edward Keith Walcott and others (2) observed " 'An order by consent, not discharged by mutual agreement and remaining unreduced is as effective as an order of the court made otherwise than by consent and not discharged on appeal.
A party bound by a consent order must when once it has been completed, obey it, unless and until he can get it set aside in proceedings duly constituted for the purpose.
The only difference in this respect between an order made by consent and one not so made is that the first stands unless and until it is discharged by mutual agreement or is s et aside by another order of the court : the second stands unless and until it is discharged on appeal.
" In Govind Waman vs Murlidhar Shrinivas and others(3), the Bombay High Court held that a consent decree passed by a court of competent jurisdiction cannot be treated on the same footing as a contract between the parties, that although it is true that before a court passes a consent decree, it can and should examine the lawfulness and validity of the terms of the proposed compromise, but when once that stage is passed and a decree follows, different considerations arise and therefore, where I compromise decree contains a term against alienating certain property and gives the other party right to its possession on such alienation, the decree is not a nullity in spite of the fact that the term is opposed to section 10, T.P. Act.
And the fact that it is contrary to law would not affect its binding character, unless it is set aside by taking proper proceedings.
That different conside (1) English Law Reports, (2) A.I.R. 1929 journal & Privy Council, P. 289.
(3) A.I.R. 1953 Bombay 412.
524 ration would apply when a contract is embodied in a judge 's order is also clear from Morris vs Barret(1).
In that case by a consent order it was provided that, upon payment of 341.
, the debt and costs as agreed, in installments on the 28th of May, on the 25th of June and on the 25th of every succeeding month until the whole is paid, all further proceedings in the cause be stayed.
The order further provided that, in case default be made in any payment as aforesaid, the plaintiff be at liberty to sign final judgment for the said sum of 341., and issue execution for the amount unpaid.
The first and two following installments were duly paid.
The 25th of October, the day on which the fourth installment became payable, being a Sunday, the defendant called at the office of the planitiff 's attorney on Monday the 26th, and offered to pay it, but was told he was too late, and that judgment had been signed.
No judgment, however, was signed until the following morning.
The defendant took out a summons to set aside the judgment, on the round that under the circumstances he had the whole of Monday to pay the money, and that the judgment signed after the money was offered was irregular.
The court held that the defendant had the whole of Monday to pay the money.
One of the arguments advanced in that case was that as the judge 's order was a consent order, the principle governing contract must regulate the rights of parties and therefore the defendant was not excused from performing the contract by the accident of the day being a Sunday.
In repelling this contention Erle, C.J. said : "I desire not to be understood as giving any decision as to the rights of parties under a contract : but, in arriving at the conclusion I come to, I seek only to give effect to the duty which the law imposes upon a party who is directed by a judge 's order to pay money.
The defendant was ready and offered to pay it on Monday; but the plaintiff, conceiving that the offer came too late.
declined to receive it, and on the following day signed the judgment for the balance due.
Confining myself to the judge 's order and the remedy and duty thereon and to what ought to be the fair meaning and understanding of the instrument, I find no authority for saying that the defendant was bound to search for his creditor and pay him the money on the Sunday.
" Crowder, J. said : "This is not like the case of an ordinary contract; and I de sire not to be understood as at all interfering (1) English Law Reports 141, p. 768.
525 with any of the cases which have been referred to with reference to contracts.
The cases upon the construction of statutes are also founded upon an entirely different consideration.
" We may also state that there is no evidence in this case that at the time when the compromise was entered into, either of the parties knew that the 31st of December, 1959 and the 1st of January, 1960, would be holidays.
In these circumstances we think that the deposit made by the respondent on 2 1 1960 was in substance and in effect a deposit made in terms of the compromise decree and that the High Court was right in its conclusion.
We dismiss the appeals but in the circumstances without any order as to costs.
K.B.N. Appeals dismissed.
| Under a compromise decree the respondent plaintiff agreed to deposit in court the sale amount by January 1, 1960.
December 31, 1959 and January 1, 1960 were holidays.
The respondent made the deposit on January 2, 1960 and sought to enforce his right under the decree compelling the appellant defendant to execute the conveyance.
The appellant filed execution for cost on the basis that the suit stood dismissed as per the provision in the compromise decree on the failure of the respondent lo deposit the amount by January 1, 1960.
, The Court held that the respondent had made the deposit in substantial compliance with the decree.
appeals against this order were also dismissed.
In appeals to this Court it was contended (i) where a party had to perform an act within a certain of by a certain date, the law would not take notice of the circumstance that the act became incapable of performance by reason of circumstances beyond his control on the last day of the period; (ii) the executing court had no right to alter or modify the terms of the decree and hold that the deposit made on January 2, 1960 had to be deemed to be a deposit made on January 1, 1960 and (iii) a compromise decree was a contract notwithstanding the fact that an order of court was superadded to it and a provision in a contract that an act had to be done within a certain period or by a particular day by a party was absolute dismissing the appeal.
HELD : (i) The respondent had the right or the liberty to deposit the amount in court till and including January 1, 1960.
That being so, the fact that be did not choose to make the deposit earlier would not affect his right or liberty to deposit the amount in court on January 1, 1960.
[518 F G] Halsbury vol.
37 3rd Edn.
p. 96; Fateh Khan vs Chhajju & Ors., A.I.R. 1931 Lah. 386, referred to.
It is a generally recognised principle of law that parties who are prevented from doing a thing in court on particular day, not by an act of their own, but by the court itself, are entitled to do it at the first subsequent opportunity.
[520 G] Halsbury Vol.
37, 3rd Ed.
p. 97, para 172, Muhammad Jan vs Shiam Lal; I.L.R. XLVI All. 328 (1924); Shooshee Bushan Rtidro vs Gobind Chander Roy, I.L.R. Cal.
XVIII (1891) 231, Sambasiva Chari vs Ramasaini Reddi, I.L.R. 22 Mad.
(1899) 179 and Mayor vs Harding, , referred to.
The present case is concerned with a decree which specifically provided that the respondent should deposit the amount in court.
He had, therefore, no option to pay the same to the appellant [520 C D] Kunj Bihari vs Bitndeshri Prasad, I.L.R. vol.
51, 1929, All.
527, Roshan Lal vs Ganpat Lal.
A.I.R. 1938 All.
, Indal vs Chaudhary 516 Ram Nidh, A.I.R. 33 [1946] oudh.
156 and Rain Kinkar Singh V. Smt.
Kamal Basini Devi, A.I.R. 1938 Pat. 451, distinguished.
Chatlapali Suryaprakasa Rao vs Polisetti Venkataratnam, A.I.R. 1938 Mad.
523, referred to.
(ii)The executing court has the right to construe the decree in the light of the applicable provisions of law, If in this case, on such a construction.
the court found that the deposit made by the respondent on January 2, 1960, was according to law a deposit in compliance with the terms of the decree, then, the executing court was not varying the terms of the decree but executing the decree as it stood.
[522 E] (iii)Although a contract is not the less a contract because it is embodied in a Judge 's order, it is something more than a contract.
Different considerations would apply when a contract is embodied in a Judge ' .; order [523 C] Wentworth vs Bullen, E.L.R. 141 769, Charles Hubert Kinch vs Fdward Keith Walcott, A.I.R. 1929 Journal & P.C. 289, Govind waman vs Murlidhar Shrinivas, A.I.R. 1953 Bom, 412 and Morris vs Barret, E.I.R. 141, 768, referred to.
|
Civil Appeal No. 2752 of 1972.
Appeal by Certificate from the Judgment and Order dated the 5th November, 1970 of the Punjab and Haryana High Court in Income Tax Reference No. 38 of 1969.
G. A. Shah & Miss A. Subhashini for the appellant.
Naunit Lal & Mr. Kailash Yasudev for respondent.
The Judgment of the Court was delivered by PATHAK, J.
Is a smuggler, who is taxed on his income from smuggling under the Income Tax Act, 1922, entitled to a deduction under Section 10(1) of the Act on account of the confiscation of currency notes employed in the smuggling activity? The respondent, Piara Singh, was apprehended in September, 1958 by the Indian Police while crossing the Indo Pakistan border into Pakistan.
A sum of Rs. 65,500/ in currency notes was recovered from his person.
On interrogation he stated that he was taking the currency notes to Pakistan to enable him to purchase gold in that country with a view to smuggling it into India.
The Collector of Central Excise and Land Customs ordered the confiscation of the currency notes.
The Income Tax Officer now took proceedings under the Indian Income Tax Act, 1922 for assessing the assessee 's income and determining his tax liability.
He came to the finding that out of Rs. 65,500/ an amount of Rs. 60,500/ constituted the income of the assessee from undisclosed sources.
An appeal by the assessee was dismissed by the Appellate Assistant Commissioner.
In second appeal before the Income Tax Appellate Tribunal the assessee represented that if he was regarded as engaged in the business of smuggling gold he was entitled to a deduction under Section 10(1) of the Income Tax Act of the entire sum of Rs. 65,500/ as a loss incurred in the business on the confiscation of the currency notes.
The Appellate Tribunal upheld the 1124 claim to deduction.
It proceeded on the basis that the assessee was carrying on a regular smuggling activity which consisted of taking currency notes out of India and exchanging them for gold in Pakistan which was later smuggled into India.
At the instance of the Revenue, a reference was made to the High Court of Punjab and Haryana on the following question: "Whether on the facts and in the circumstances of the case the loss of Rs. 65,500/ arising from the confiscation of the currency notes was an allowable deduction under section 10(1) of the Income tax Act, 1922?" The High Court answered the question in the affirmative.
And now this appeal by the Revenue.
In our Judgment, the High Court is right.
The Income Tax authorities found that the assessee was carrying on the business of smuggling They held that he was, therefore, liable to income tax on income from that business.
On the basis that such income was taxable, the question is whether the confiscation of the currency notes entitles the assessee to the deduction claimed.
The currency notes carried by the assessee across the border constituted the means for acquiring gold in Pakistan, which gold he subsequently sold in India at a profit.
The currency notes were necessary for acquiring the gold.
The carriage of currency notes across the border was an essential part of the smuggling operation.
If the activity of smuggling can be regarded as a business, those who are carrying on that business must be deemed to be aware that a necessary incident involved in the business is detection by the Custom authorities and the consequent confiscation of the currency notes.
It is an incident as predictable in the course of carrying on the activity as any other feature of it.
Having regard to the nature of the activity possible detection by the Customs authorities constitutes a normal feature integrated into all that is implied and involved in it.
The confiscation of the currency notes is a loss occasioned in pursuing the business, it is a loss in much the same way as if the currency notes had been stolen or dropped on the way while carrying on the business.
It is a loss which springs directly from the carrying on of the business and is incidental to it.
Applying the principle laid down by this Court in Badridas Daga vs Commissioner of Income tax the deduction must be allowed.
In Commissioner of Income tax, Gujarat vs S.C. Kothari this Court held that for the purpose of Section 10(1) of the Income Tax Act, 1922 a loss incurred in carrying on an illegal business must be 1125 deducted before the true figure of profits brought to tax can be computed.
Grover, J., speaking for the Court, observed: If the business is illegal, neither the profits earned nor the losses incurred would be enforceable in law.
But, that does not take the profits out of the taxing statute.
Similarly, the taint of illegality of the business cannot detract from the losses being taken into account for computation of the amount which can be subjected to tax as "profits" under Section 10(1) of the Act of 1922.
The tax collector cannot be heard to say that he will bring the gross receipts to tax.
He can only tax profits of a trade or business.
That cannot be done without deducting the losses and the legitimate expenses of the business.
" Reliance was placed by the Revenue on Haji Aziz and Abdul Shakoor Bros. vs Commissioner of Income tax, Bombay City II.
In that case, however, the assessee carried on the lawful business of importing dates from abroad and selling them in India.
The import of dates by steamer was prohibited.
Nonetheless he imported dates from Iraq by steamer, and the consignments were confiscated by the customs authorities.
But the dates were released subsequently on payment of fine.
The assessee 's claim to deduction under section 10(2) (xv) of the Income Tax Act was rejected on the ground that the amount was paid by way of penalty for a breach of the law.
An infraction of the law was not a normal incident of business carried on by the assessee, and the penalty was rightly held to fall on the assessee in some character other than that of a trader.
Reference was made by the Revenue to Soni Hinduji Kushalji & Co. vs Commissioner of Income tax, A.P.
The assessee 's claim to the deduction of the value of gold confiscated by the customs authorities was found unsustainable by the court.
The decision in that case can be explained on the ground that the assessee was carrying on a lawful business in gold, silver and jewellery and committed an infraction of the law in smuggling gold into the country.
Our attention has also been invited to J. section Parkar vs V. B. Palekar and Others where on a difference of opinion between two learned Judges of the Bombay High Court a third learned Judge agreed with the view that the value of gold confiscated by the customs authorities in smuggling operations was not entitled to deduction against the estimated and assessed income from an undisclosed source.
It was observed that the loss arose by reason of an infraction 1126 of the law and as it had not fallen on the assessee as a trader or business man a deduction could not be allowed.
Apparently, the true significance of the distinction between an infraction of the law committed in the carrying on of a lawful business and an infraction of the law committed in a business inherently unlawful and constituting a normal incident of it was not pointedly placed before the High Court in that case.
We hold that the assessee is entitled to the deduction of Rs. 65,500/ , and accordingly we affirm the view taken by the High Court on the question of law referred to it.
The appeal fails and is dismissed with costs.
S.R. Appeal dismissed.
| The respondent Piara Singh was apprehended in September 1958 by the Indian Police while crossing the Indo Pakistan border into Pakistan.
A sum of Rs. 65,500/ in currency notes was recovered from his person.
On interrogation he stated that he was taking the currency notes to Pakistan to enable him to purchase gold in that country with a view to smuggling it into India.
The Collector of Central Excise and Land Customs ordered the confiscation of the currency notes.
In the proceedings initiated by the Income Tax Officer, he found that Rs. 60,500/ constituted the income of the assessee from undisclosed sources.
An appeal by the assessee was dismissed by the Appellate Assistant Commissioner.
In second appeal before the Income Tax Appellate Tribunal, the assessee represented that if he was regarded as engaged in the business of smuggling gold he was entitled to a deduction under section 10(1) of the Income Tax Act, 1922 of the entire sum of Rs. 65,500/ as a loss incurred in the business on the confiscation of the currency notes.
The Tribunal upheld the claim to deduction.
It proceeded on the basis that the assessee was carrying on a regular smuggling activity which consisted of taking currency notes out of India and exchanging them with gold in Pakistan which was later smuggled into India.
The High Court on a reference at the instance of the Revenue answered the reference against the Revenue.
Hence the appeal.
Allowing the appeal, the Court.
^ HELD: 1.
The assessee is entitled to the deduction of Rs. 65,500/ under section 10(1) of the Income Tax Act, 1922.
[1124 C, 1126 B] 2.
The assessee was carrying on the business of smuggling and, therefore, was liable to income tax on income from that business.
The currency notes carried by the assessee across the border was an essential part of the smuggling operation.
If the activity of smuggling can be regarded as a business, those who are carrying on that business must be deemed to be aware that a necessary incident involved in the business is detection by the Customs authorities and the consequent confiscation of the currency notes.
It is an incident as predictable in the course of carrying on the activity as any other feature of it.
Having regard to the nature of the activity possible detection by the Customs authorities constitutes a normal feature integrated into all that is implied and involved in it.
The confiscation of the currency notes is a loss occasioned in pursuing the business; it is a loss in much the same way as if the currency 1123 notes had been stolen or dropped on the way while carrying on the business.
It is a loss which springs directly from the carrying on of the business and is incidental to it.
Applying the principle laid down by this Court in Badridas Daga vs Commissioner of Income Tax the deduction must be allowed.
[1124 D E] Badridas Daga vs Commissioner of Income Tax, ; Commissioner of Income Tax, Gujarat vs section C. Kothari ; applied.
Haji Aziz and Abdul Shakoor Bros. vs Commissioner of Income Tax, Bombay City II, , Sari Hinduji Khushalji 7 Co. vs Commr.
of Income Tax, A.P. ; J. section Parkar vs V. B. Palekar and Ors.
; distinguished and explained.
|
Civil Appeal No. 897 of 1987 From the Judgment and order dated 5.8.1986 of the Central Administrative Tribunal, New Delhi in Regn.
No. T 853 of 1985 (CWP No. 2709 of 1985).
G. Ramaswamy, Additional Solicitor General, P. Parmeshwaran and B. Parthasarthy for the Appellant.
Harish N. Salve, Pramod Dayal and Badri Dass Sharma for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The short question involved in this case is whether the members of the All India Services who had retired prior to 1.1.1973 are entitled to payment of gratuity as a part of retirement benefits at the rates specified in the Notification No. 33/12/73 AIS (ii) dated 24.1.
This appeal by special leave is filed against the decision of the Central Administrative Tribunal dated August 5, 1986 declaring that rule 28(6) of the All India Services (Death cum Retirement Benefits) Rules, 1958 insofar as it tended to restrict pensioners to retirement benefits to which they were entitled on the date of their retirement and sought to deny them the benefits of the liberalised pension and 700 gratuity in the amended notification No. 33/12/73 AIS (ii) dated 24.1.1975 was violative of Article 16 of the Constitution of India and further directing that all the members of the All India Services would be entitled to liberalised pensionary benefits including gratuity as per the said notification irrespective of whether they had retired prior to 1.1.1973 or thereafter.
The above decision was given by the Central Administrative Tribunal, New Delhi in REGN No. T 853/85 (C.W. No. 2709185) which was a petition filed by the All India Services Pensioners Association (Rajasthan) and one R.D. Mathur, an IAS officer who had retired from service prior to 1.1.1973.
The Union of India, the appellant herein, has not questioned the order of the Central Administrative Tribunal insofar as its liability to pay the pension in accordance with the judgment of the Tribunal is concerned.
This appeal by special leave is confined only to that part of the order of the Tribunal by which the Union of India is directed to pay gratuity in accordance with the aforesaid notification even to those members of the All India Services who had retired prior to 1.1.1973.
The crucial point for consideration in this appeal is whether the members of a service who had retired prior to the date on which there is an upward revision of the gratuity on retirement to the members of such service would also be entitled to claim the difference between the gratuity payable to members of such service on such upward revision and the gratuity which had been actually paid to them on their retirement, even though the Government order revising the gratuity does not either expressly or by necessary implication state that the members of the service who had retired earlier should also be paid gratuity at the revised rates because of the decision of this Court in D.S. Nakara vs Union of lndia; , A similar question came up for consideration before this Court in the State Government Pensioners Association & others vs State of Andhra Pradesh., [1986] 3 S.C.C. 501.
The facts of that case are these The Government of Andhra Pradesh by its order G.O.Ms.
No. 88 dated 26.3.1980 directed that retirement gratuity was payable to the officers to whom the said Government order was applicable as follows: "Retirement gratuity may be 1/3rd of pay drawn at the time of retirement for every six monthly service subject to maximum of 20 months ' pay limited to Rs.30,000. " The said order was made effective from April 1, 1978.
The question which arose for consideration in some writ petitions filed in the High Court of Andhra Pradesh was whether the pensioners who had 701 retired prior to 1.4.1978 would also be entitled to the payment of gratuity in accordance with the provision made in the aforesaid notification.
The High Court of Andhra Pradesh held that the decision of this Court in D.S. Nakara 's case (supra) was not applicable to the payment of gratuity and that pensioners who had retired prior to April 1, 1978 would not be entitled to claim the difference between the gratuity payable under the Government order and the gratuity which they had actually received at the time of their retirement.
In the Special Leave Petitions filed before this Court against the said decision two of the learned Judges of this Court Thakkar and Ray, JJ.
affirmed the view taken by the High Court of Andhra Pradesh and dismissed the petitions.
In the course of their order the learned Judges observed as follows: "We fully concur with the view of the High Court.
The upward revision of gratuity takes effect from the specified date (April 1, 1978) with prospective effect.
The High Court has rightly understood and correctly applied the principle propounded by this Court in Nakara 's case . . . .
An illustration will make it clear.
Improvements in pay scales by the very nature of things can be made prospectively so as to apply to only those who are in the employment on the date of the upward revision.
Those who were in employment say in 1950, 1960 or 1970, lived, spent, and saved, on the basis of the then prevailing cost of living structure and pay scale structure, cannot invoke article 14 in order to claim the higher pay scale brought into force say, in 1980.
If upward pay revision cannot be made prospectively on account of Article 14, perhaps no such revision would ever be made.
Similar is the case with regard to gratuity which has already been paid to the petitioners on the then prevailing basis as it obtained at the time of their respective dates of retirement.
The amount got crystalized on the date of retirement on the basis of the salary drawn by them on the date of retirement.
And it was already paid to them on that footing.
The transaction is completed and closed.
There is no scope for upward or downward revision in the context of upward or downward revision of the formula evolved later on in future unless the provision in this behalf expressly so provides retrospectively (downward revision may not be legally permissible even).
It would be futile to contend that no upward revision of gratuity amount can be made in har 702 mony with Article 14 unless it also provides for payment on the revised basis to all those who have already retired between the date of commencement of the Constitution in 1950, and the date of upward revision.
There is therefor no escape from the conclusion that the High Court was perfectly right in repelling the petitioners ' plea in this behalf.
" When the above decision was brought to the notice of the Tribunal in the case out of which the present appeal arises the Tribunal declined to follow it and gave the following reasons for doing so: "We must, however, observe that the Supreme Court in that case was dismissing Special Leave Petition (Civil) Nos. 14179 and 14180 of 1985 and was not disposing of an appeal.
Further, the Supreme Court, in that case was considering the Andhra Pradesh Pension Rules and not rule 28(6) of the All India Services (Death cum Retirement Benefit) Rules, 1958 and the liberalisation pension scheme of Andhra Pradesh notified on 24.1.1985 and not the notification dated 24.1.1975 amending the All India Services (Death cum Retirement Benefit) Rules, 1958 with which we are now concerned in this application.
Moreover, the Special Leave Petition against the Andhra Pradesh High Court 's judgment was rejected by a Bench of two Judges while the judgment in V.P. Gautam 's case which expressly dealt with Rule 28(6) and the liberalised pension scheme notified on 24.1.1975 in respect of Members of All India Services was the subject matter of an appeal before a bench of three judges of the Supreme Court.
The relevant portion of the judgment of the High Court of Punjab and Haryana which must be deemed to have been affirmed by the three member Bench of the Supreme Court when it dismissed Civil Appeal Nos 2738 and 2739 of 1985 on 12.2.1985 reads as follows: In other words, the provisions of rule 28(6) of the retirement benefits rules, 1958 in so far as they were entitled on the date of their retirement and seeks to deny them liberalised pension under the amended rules referred to above which came into effect subsequent to that date are unconstitutional and are also accordingly struck down.
It follows that the liberalised pensionary benefits including death 703 cum retirement gratuity granted to pensioners by the amendment made in 1975 and 1979 shall be payable to all persons entitled to pensionary benefits under the Retirement benefits rules, 1958 irrespective of the date of the retirement from service.
It has been repeatedly laid down by the Supreme Court that the decision of the larger Bench prevails over the decision of the smaller benches vide Ganapati Sitaram Balvalkar vs Waman Shripad Mage, A.I.R. 1981 S.C. 1956; Mattulala vs
Radhe Lal, A.I R. ; Union of India vs K.S. Subramanian, A.I.R. 1976 S.C. 433.
Even assuming that some aspects have not been taken into account by the Supreme Court, no Court or Tribunal of India can take a view different from that taken by the Supreme Court.
As held by the Supreme Court in T. Govindaraja Mudaliar vs State of Tamilnadu, ; "merely because the aspect presented in the present appeal was not expressly considered or a decision given, that will not take away the binding effect of those decisions of the Supreme Court.
" Vide Somavanti vs State of Punjab; , It may be pertinent to note that even in the Andhra Pradesh State Government Pensions Association case the judgment in V.P. Gautam 's was specifically referred to but the Supreme Court did not state that it was not correctly decided.
Further, in all the above cases special leave applications were rejected following the principle laid down in Nakara 's case.
In Gautam 's case the appeal filed by the Union of India was dismissed applying Nakara 's case.
In dealing with the claim of the other members of the All India Services who like V.P. Gautam had retired prior to 1.1.1973, we cannot hold otherwise in construing rule 28(6 ' in the context of the liberalised pension scheme of 1975, The conflict if any must be resolved by the Supreme Court.
We must follow the decision in V.P. Gautam 's case which is directly in point.
" With great respect to the Tribunal it should be stated that the way in which it has tried to ignore the decision of this Court in the Andhra Pradesh State Government Pensioners Association case 704 (supra) is not correct.
In the above decision the two learned Judges, who decided that case have given reasons for not applying the rule in D.S. Nakara 's case (supra) insofar as the liability of the Government to pay gratuity on retirement is concerned.
The first ground relied on by the Tribunal not to follow the said decision is that it had been rendered by this Court while dismissing some special leave petitions.
This is a wholly untenable ground.
The special leave petitions were not dismissed without reasons.
This Court had given reasons for dismissing the special leave petitions.
When such reasons are given the decision becomes one which attracts Article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India.
The second ground given by the Tribunal is that the decision was one rendered in a case involving a notification issued by the Andhra Pradesh Government but not one touching the notification dated 24.1.1975 involved in this case.
This is also not tenable.
The Supreme Court was considering the question of applicability of the principle enunciated in D.S. Nakara 's, case to the case of gratuity.
The views expressed by this Court should, therefore, apply to all cases of gratuity where similar features exist and it should apply to the present case too.
If what the Tribunal has held is correct then D. section Nakaras case will not be applicable to any order of pension passed by any State Government.
That would indeed be a startling proposition with which we do not agree.
As regards the third ground it is no doubt true that the High Court of Punjab & Haryana in its decision in V. P. Gautama vs Union of India and Ors., [1984] Labour and Industrial Cases 154 had observed that "it follows that the liberalised pensionary benefits including death cum retirement gratuity granted to pensioners by the amendment made in 1975 and 1979 shall be payable to all persons entitled to pensionary benefits under the Retirement Benefits Rules, 1958 irrespective of the date of the retirement from service".
But at the end of its decision the High Court passed the following order: "In the result, a writ of mandamus is issued to the Union of India and the other respondents directing them to compute and pay pensionary benefits to the petitioner along with interest on the amounts becoming payable to him in terms of this order.
The petitioner shall also be entitled to the costs of this petition.
" When the Special Leave Petition was filed against the said decision this Court passed the following order: 705 "Special leave to appeal was confined only to two questions (1) whether the enhanced pension under the liberalised pension scheme was payable with effect from 1st October, 1974 and (2) whether the High Court had any jurisdiction to award interest at 12% per annum.
So far as the first question is concerned, it is fully covered by D.S. Nakara & Ors.
vs Union of India.
We are not inclined to go into the second question in the present appeals.
The appeals are therefore, dismissed.
No costs.
" The above decision was rendered by a bench of three Judges of which one of us was a member.
It is seen from the above order that there is no reference to the liability of the Union of India and the State of Haryana to pay the gratuity to the pensioner who was involved in that case.
The first question considered related to the payment of enhanced pension.
It is not known whether the question relating to gratuity was pressed before this Court or not.
There is no reference to the liability to pay gratuity in the said order.
The only point considered by this Court by the above order was the point involved in question No. 1, referred to therein, namely, whether the enhanced pension under the liberalised pension scheme was payable with effect from 1st October, 1974 and insofar as that question was concerned, the view taken by the High Court of Punjab & Haryana was affirmed.
It may be that the decision of the High Court of Punjab and Haryana may be binding on the parties to that petition as res judicata.
But the above order of this Court cannot be considered as a precedent under Article 141 of the Constitution to hold that the liability to pay gratuity was also governed by the decision in D.S. Nakara 's case.
It may be pointed out that in M.L. Abhyankar and others etc.
vs Union of India, (Writ Petition (Civil) Nos.
3531 34 of 1983 and connected cases decided on April 24, 1984) a bench of three Judges of this Court, which consisted of two of the Judges who dismissed the appeal filed against the judgment of the High Court of Punjab & Haryana referred to above, has observed thus: "In view of our decision in D.S. Nakara vs Union of India; , and for the reasons mentioned by the Allahabad High Court in Writ Petition No. 3201 of 1979 dated 21311983 in the case of Bidhubhushan Malik and others vs Union of India which we have accepted as correct in Special Leave Petition No. 9616 of 1983 just now dismissed by us we allow the writ petitions.
The judges of the High Court and of the Supreme Court will be entitled to the pensionary benefits under the amended Act of 1973 706 irrespective of the dates of their retirement.
They will be so entitled with effect from 1.10.1974.
Arrears of pension calculated under the provision of the new Act will be paid to those to whom it is due within four months from today.
In the case of Judges who have died after 1.10.1974 the amounts due will be paid to the legal heirs of the Judges within four months from today.
The family pension due to the widows will be calculated under the provisions of the 1976 Amending Act and paid to them.
Ad hoc payments made, if any, will be adjusted while making such payments.
The writ petitions are disposed of accordingly.
What we have said about pensionary benefits does not apply to payment of gratuity. " (underlining by us) From the foregoing it is clear that this Court has made a distinction between the pension payable on retirement and the gratuity payable on retirement.
While pension is payable periodically as long as the pensioner is alive, gratuity is ordinarily paid only once on retirement.
No other decision of this Court which has taken a view contrary to the decision of Thakkar and Ray, JJ.
in the Andhra Pradesh State Government Pensioners Association 's case (supra) and to the decision in M. L. Abhyankar 's case (supra) has been brought to our notice.
The observations made in these two cases are binding on us insofaras the applicability of the rule in D.S. Nakara 's case (supras to the liability of the Government to pay gratuity on retirement.
We respectfully agree with the views expressed in those decisions.
It is also not shown that the Government notification in question either expressly or by necessary implication directs that those who had retired prior to 1.1.1973 would be entitled to any additional amount by way of gratuity.
The Tribunal was, therefore, in error in upholding that gratuity was payable in accordance with the Government Notification No. 33/12/73 AIS(ii) dated 24.1.1975 to all those members of the All India Services who had retired prior to 1.1.1973.
The Judgment of the Tribunal is set aside to the extent indicated above.
We make a declaration that the members of the All India services who had retired prior to 1.1.1973 are not entitled to claim gratuity on the basis of the Notification referred to above.
The appeal is allowed to the above extent.
There will be no order as to costs.
N.V.K. Appeal allowed.
| % In a petition filed by the All India Services Pensioners ' Association, and an I.A.S. Omcer who had retired from service prior to l.1.1973 (respondents in the Appeal) the Central Administrative Tribunal by its decision dated August 5, 1985, declared that Rule 28(6) of the All India Services (Death cum Retirement Benefits) Rules; 1958 insofar as it tended to restrict pensioners to retirement benefits to which they were entitled on the date of their retirement, and sought to deny them the benefit of the Iiberalised pension and gratuity in the amended Notification No. 33/12/73 AIS (ii) dated January 24, 1975 was violative of Article 16 of the Constitution, and directed that all the members of the All India Service would be entitled to liberalised pensionary benefits including gratuity as per the said Notification irrespective of whether they had retired prior to January 1, 1973 or thereafter.
The Appellant Union of India in its appeal by Special Leave to this Court had not questioned the Tribunal 's order insofar as its liabil H 698 ity to pay pension was concerned, but sought leave against the direction to pay gratuity in accordance with the Notification even to those members of the All India Services who had retired prior to January 1, 1973.
On the question: whether the members of the All India Services who had retired prior to January 1, 1973 are entitled to payment of gratuity as a part of retirement benefits at the rates specified in the Notification No. 33;12 73 AIS (ii) dated 24.
1. 1975.
Allowing the appeal, ^ HELD:1.
In the Andhra Pradesh State Government Pensioners ' Association vs State of Andhra Pradesh, [1986] 3 SCC 501 this Court had given reasons for not applying the rule in D.S. Nakara vs Union of India, [1983]2 SCR 165 insofar as the liability of the Government to pay gratuity on retirement is concerned.
[704A B] 2.
The views expressed by this Court apply to all cases of gratuity where similar features exist and it should apply to the instant case too.
[704D] 3.
The way the Tribunal in the instant case, has tried to ignore the decision of this Court in the Andhra Pradesh State Government Pensioners ' Association case is not correct.
The first ground relied on by the Tribunal not to follow the said decision is that it had been rendered by this Court while dismissing some special leave petitions is a wholly untenable ground.
The second ground given by the Tribunal that the decision was one rendered in a case involving a Notification issued by the Andhra Pradesh Government and not one touching the Notification dated January 24, 1975 is also not tenable.
[704C D] 4.
When reasons are given for dismissing Special Leave Petitions the decision becomes one which attracts Article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India.
[704B C] 5.
This Court has made a distinction between the pension payable on retirement and the gratuity payable on retirement.
While pension is payable periodically as long as the pensioner is alive, gratuity is ordinarily paid only once on retirement.
[706C D] 6.
The observation made by this Court in Andhra Pradesh State Government Pensioners ' Association case and in M.L. Abhyankar vs U.O.I, are binding insofar as the applicability of the 699 rule in D.S. Nakara 's case to the liability of the Government to pay gratuity on retirement.
[706D E] 7.(i) The Government Notification No. 33/12/73 AIS (ii) dated January 24, 1975 neither expressly nor by necessary implication directs that those who had retired prior to January 1, 1973 would be entitled to any additional amount by way of gratuity.
[706E F] 7.(ii) The Tribunal was in error in upholding that gratuity was payable in accordance with the Government Notification No. 33/12/73 AIS (ii) dated January 24, 1975 to all those members of the All India Services who had retired prior to January t, 1973.
It is declared that the members of the All India Services who had retired prior to January 1, 1973 are not entitled to claim gratuity on the basis of the said Notification.
[706F G]
|
ivil Appeal No. 1546 of 1969.
V.M. Tarkunde, section K. Dholakia and section K. Bagga, for appelIants Nos. 1 and 3.
section K. Bagga, for appellant No. 2.
D. V. Patel, A. G. Parikh and B. R. Agarwala, for the respondents.
The Judgment of the Court was delivered by Mathew, J.
This is an appeal by special leave, from the judgment of the High Court of Bombay dismissing a petition filed under Article 227 of the Constitution praying for issue of an approprivate writ or order quashing the order dated 28 2 1968 passed by the Full Bench, Small Causes Court, Bombay, in appeal No. 95 of 1963 from the order dated 21 2 1963 passed by the Judge, Small Causes Court, Bombay, in R.A.E. Suit No. 9293 of 1959.
In this appeal we are concerned with a plot of land admeasuring 2108 square yards in Survey No. 171, Hissa No. 7, at 892 Ghatkopar.
This plot belonged to one Jamnadas Chhotalal Dani.
On 15 11 1948, Jamnadas executed two leases in favour of one Bhawani Laksamsi and Maojibhai Jethabhai, defendants 1 and 2.
The subject matter of the first lease was two plots, the one referred to above and another in the same area measuring 805 square yards.
The subject matter of the second lease was a third plot in the same area.
The leases were for a period of ten years and in respect of the first plot, the rent payable was Rs. 75/ a month.
In both the leases there was an option clause which entitled the lessees to surrender the leased property by 30 9 1953.
The lessees surrendered the two plots, other than the plot with which we are ,concerned, in pursuance of the option clause, on 15 1 1951, with the result that the lease in respect of the first plot continued.
Jamnadas died on 14 8 195 1, but before his death he had made a gift of the leased property in favour of the three respondents.
The lease in respect of the plot in question here determined by efflux of time on 30 9 1958.
But the lessees continued to remain in possession paying rent at the rate of Rs. 75/ per month.
On 7 8 1959, the lessors gave notice purporting to Terminate the tenancy by the end of September, 1959.
They stated in the notice that the lessees had sub let the premises and that the lessors required the plot for the purpose of putting up constructions on it.
Since the lessees did not vacate the premises, the lessors filed suit on 22 10 1959 in the Small Causes Court of Bombay.
The lessees contended that they did not sub let the premises and that the lessors did not bona fide require the premises for the purpose of construction.
They also contended that by the acceptance of rent by the lessors after the termination of the tenancy by efflux of time, a fresh tenancy was created, that the original lease was granted for erecting a saw mill a manufacturing purpose and so the lease created by holding over was, by implication, also for a manufacturing purpose, and therefore, lessees were entitled to six months ' notice expiring with the end of the year of the tenancy, and that the tenancy created by holding over was not validly determined by the one month 's notice.
The trial court held that there was no clear evidence of the subletting of the premises, but that the plaintiffs required the plot bona fide for constructing a new building within the meaning of ,clause (1) of sub section (1) of Section 13 of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, hereinafter called the Act.
The court also held that the tenancy terminated by efflux of time, but that the lessees continued in possession by virtue of the immunity from eviction conferred by the Act and so, they were not holding over within the meaning of section 116 893 of the Transfer of Property Act, notwithstanding the fact that rent was accepted by the lessors from month to month after 30 9 1958, and that it was not necessary to give the lessees six months ' notice expiring with the end of the year of the tenancy, for terminating that tenancy.
In appeal, the Full Bench of the Small Causes Court confirmed the decree of the trial court.
It was to quash this decree that the petition under Article 227 was filed before the High Court.
Before the High Court, the main contention of the appellants was that, since a fresh tenancy by holding over was created by the acceptance of rent by the lessors after the determination of the lease by efflux of time, the appellants were entitled to six months ' notice expiring with the end of the year of the tenancy, as the lease originally granted was for a manufacturing purpose, and therefore, the lease created by the holding over was also for same purpose.
The High Court was of (the opinion that in view of the decision of this Court in Ganga Dutt Murarka vs Kartik Chandra Das(l) no case was made out for new tenancy by holding over under section 116 of the Transfer of Property Act as the appel lants had obtained the status of irremovability under the Act, and as there was no contractual tenancy, the tenants were not entitled to any notice.
The Court also held that the lease which was granted for erecting a saw mill was not a lease for manufacturing purpose.
Counsel for the appellants argued that the appellants were holding over as the lessors were receiving the rent from the appellants after the termination of the tenancy by efflux of time on 30 9 1958 and the fact that appellants gained immunity from eviction by virtue of the Act was quite immaterial in deciding the question whether the appellants were holding over under section 116 of the Transfer of Property Act.
He submitted that as there was a new contractual tenancy created by the holding over, the appellants were entitled to six months ' notice as the purpose of the original lease was for a manufacturing purpose and that purpose became incorporated in the new lease by implication of law.
Counsel said that certain vital points were omitted to be considered in the decision of this Court in Ganga Dutt Murarka vs Kartik Chandra Das,(1) and therefore, the decision requires re consideration.
In Ganga Dutt Mararka vs Karlik Chandra Das, this Court held that where a contractual tenancy, to which rent control legislation applied, had expired by efflux of time or by determination by notice to quit and the tenant continued in possession of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord had assented to a new contractual tenancy.
It was further.
held (1) ; 894 that acceptance by the landlord from the tenant, after the contractual tenancy had expired, of amounts equivalent to rent, or amounts which were fixed as standard rent, did not amount to acceptance of rent from a lessee within the meaning of section 1 1 6 of the Transfer of Property Act.
The act of holding over after the expiration of the term does not create a tenancy of any kind.
If a tenant remains in possession after the determination of the lease, the common law rule is that he is a tenant on sufferance.
A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doing so without his consent.
The former is a tenant at sufferance in English Law and the latter a tenant holding over or a tenant at will.
In view of the concluding words of section 116 of the Transfer of Property Act, a lessee holding over is in a better position than a tenant at will.
The assent of the landlord to the continuance of possession after the determination of the tenancy will create a new tenancy.
What the section contemplates is that on one side there should be an offer of taking a new lease evidenced by the lessee or sub lessee remaining in possession of the property after his term was over and on the other side there must be a definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise.
In Kai Khushroo Bezonjee Capadia vs Bai Jerbai Hirjibhoy Warden and another(), the Federal Court had occasion to consider the question of the nature of the tenancy created under section 116 of the Transfer of Property Act and Mukberiea J. speaking for the majority said, that the tenancy which is created by the "holding over" of a lessee or under lessee is a new tenancy in law even though many of the terms of the old lease might be continued in it, by implication; and that to brine a new tenancy into existence, there must be a bilateral act.
It was further held that the assent of the landlord which is founded on acceptance of rent must be acceptance of rent as such and in clear recognition of the tenancy right asserted by the person who pays it.
Patanjali Sastri J., in his dissenting judgment, has substantially agreed with the majority as regards the nature of the tenancy created by section 116 of the Transfer of Property Act, and that is evident from the following observations : "Turning now to the main point, it will be seen that the section Postulates the lessee remaining in possession after the determination of the lease which is conduct indicative, in ordinary circumstances of his desire to continue as a tenant under the lessor and implies a tacit offer to take a new tenancy from the expiration of the (1) 895 old on the same terms so far as they are applicable to the new situation, and when the lessor assents to the lessee so continuing in possession, he tacitly accepts the latter 's offer and a fresh tenancy results by the implied agreement of the parties.
When further the lessee in that situation tenders rent and the lessor accepts it, their conduct raises more readily and clearly the implication of an agreement between the parties to create a fresh tenancy.
" Mere acceptance of amounts equivalent to rent by a landlord from a tenant in possession after a lease had been determined, either by efflux of time or by notice to quilt, and who enjoys statutory immunity from eviction except on well defined grounds as in the Act, cannot be regarded as evidence of a new agreement of tenancy.
In Ganga Dutt Murarka vs Kartik Chandra Das,(1) this Court observed as follows : " By the Rent Restriction Statutes at the material time, Statutory immunity was granted to the appellant against eviction, and acceptance of the amounts from him which were equivalent to rent after the contractual tenancy had expired or which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 116, Transfer of Property Act.
Failure to take action which was consequent upon a statutory prohibition imposed upon the courts and not the result of any voluntary conduct on the part of the appellant did not also amount to "otherwise assenting to the lessee continuing in possession".
Of course, there is no prohibition against a landlord entering into a fresh contract of tenancy will a tenant whose right of occupation is determined and who remains in occupationtion by virtue of the statutory immunity.
Apart from an express contract, conduct of the parties may un doubtedly justify an inference that after determination of the contractual tenancy, the landlord had entered into a fresh contract with the tenant, but whether the conduct justifies such an inference must always depend upon the facts of each case.
Occupation of premises by a tenant whose tenancy is determined is by virtue of the protection granted by the statute and not because of any right arising from the contract which is determined.
The statute protects his possession so long as the conditions which justify a lessor in obtaining an order of eviction against him do not exist.
Once the prohibition against the exercise of jurisdiction by the, (1) ; 896 Court is removed, the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of the lessor 's right to evict the tenant will not unless the statute provides otherwise, be conditioned.
" In Davies vs Bristow(1) the Court held that where a tenant of a house to which the Increase of Rent, & c. (War Restrictions) Acts apply, holds ever after the expiry of a notice to quit, and pays rent, the landlord is not to be taken by accepting it to assent to a renewal of the tenancy on the old terms, for he has no choice but to accept the rent; he could not sue in trespass for mesne profits, for those Acts provide that the tenant, notwithstanding the notice to quit, shall not be regarded as a trespasser so long as he pays the rent and performs the other conditions of the lease.
In Morrison vs Jacobs(2), Scott L.J. said : "The sole question before the court is whether after the expiration of the contractual tenancy the mere fact of the landlord receiving rent for the dwelling house from the tenant affords any evidence that the landlord had entered on a new contractual tenancy to take the place of the tenancy which had expired.
In my opinion, it does not.
The true view is that the landlord takes the rent, knowing that the tenant is granted a statutory tenancy by the Rent Restrictions Acts and that his right to gain possession of his dwelling house depends entirely on his establishing that he brings himself within the conditions laid down by the Acts.
" In the same case, MacKinnon J. said: "At common law, if at the expiration of a tenancy a landlord has acquired a right to claim possession against his tenant and instead of exercising that right he allows him to remain in the house and accepts rent from him as before, the parties by their conduct may, with reason, be held to have entered into a new contract of demise.
But the essential factor in those circumstances is that the landlord voluntarily abstains from turning the tenant out.
When the tenant remains in possession, not by reason of any such abstention by the landlord, but because the Rent and Mortgage Interest Restrictions Acts deprive the landlord of his former power of eviction, no such inference can property be drawn.
That is the very obvious and cogent basis of the decision in Davies vs Bristow".
It was argued on behalf of the appellants, on the basis of the ,decision of this Court in Manujendra Dutt vs Purendu Prosad Roy (1) [1920]3 K.B. p. 428.
(2) [1945] 1 K.B. p. 577.
897 Chowdhury & others(l) that if in the case of a tenancy to which Rent Restriction Acts applied, the Provision of section 106 of the Transfer of Property Act was applicable, there is nothing incongruous in making section 116 also applicable in the case of a statutory tenancy.
In the said decision, the appellant before this Court was a tenant of a piece of land.
The lease was for a period of ten years but the lessee was given the option of renewal on his fulfilling certain conditions.
The lease deed also provided that if the lessor required the lessee to vacate the premises, whether at the time of the expiry of the lease or thereafter (in case the lessee exercised his option to renew the lease) six month notice to the lessee was necessary.
The lessee exercised his option to renew the lease and offered to fulfill the condition therefore.
In the meanwhile the Calcutta Thika Tenancy Act, 1949, was passed.
One of the questions which arose for consideration was whether the Thika tenant was entitled to the notice provided under the lease.
This Court held that the Act did not give a right to the landlord to evict a contractual tenant without first determining the contractual tenancy.
After referring to the decision of this Court in Mangilal vs Sigam Chand(2), it was held that section 3 of the Act in question was similar to section 4 of the Madhya Pradesh Accommodation Control Act (XXIII of 1965).
It was further held that on the construction placed upon the section, name IV, that the provisions of the section are in addition to those of the Transfer of Property Act, it follows that, before a tenant can be evicted, a landlord must comply with both the provisions of section 106 of the Transfer of Property Act and those of section 3.
In the case before us, admittedly, the tenancy has been determined by efflux of time and what is contended for is that by the acceptance of rent, a new tenancy has been created by virtue of the provisions of section 116 of the Transfer of Property article In other words, the question here is whether the conditions for the application of section 116 of the Transfer of Property Act are fulfilled.
Learned counsel for the appellants argued that whenever rent is accepted by a landlord from a tenant whose tenancy has been determined, but who continues in possession, a tenancy by holding over is created.
The argument was that the assent of the lessor alone and not that of the lessee was material for the purposes of section 116.
We are not inclined to accept this contention.
We have already shown that the basis of the, section is a bilateral contract between the erstwhile landlord and the erstwhile tenant If the tenant has the statutory right to remain in possession, and if he pays the rent, that will not normally be referable to an offer for his continuing in possession which can be converted into a contract by acceptance thereof by the landlord.
We do not say (1) ; (2) A.I.R. 1965 S.C. 101.
898 that the operation of section 116 is always excluded whatever might be the circumstances under which the tenant pays the rent and the landlord accepts it.
We have earlier referred to the observations of this Court in Ganga Dutt Murarka vs Kartik Chandra Das(1) regarding some of the circumstances in which a fresh contract of tenancy may be inferred.
We have already held the whole basis of section 116 of the Transfer of Property Act is that, in case of normal tenancy, a landlord is entitled, where he does not accept the rent after the notice to quit, to file a suit in ejectment and obtain a decree for possession, and so his acceptance of rent is an unequivocal act referable only to his desire to assent to the tenant continuing in possession.
That is not so where Rent Act exists; and if the tenant says that landlord accepted the rent not as statutory tenant but only as legal rent indicating his assent to the tenant 's continuing in possession, it is for the tenant to establish it.
No attempt has been made to establish it in this case and there is no evidence, apart from the acceptance of the rent by the landlord, to indicate even remotely that he desired the appellants to continue in possession after the termination of the tenancy.
Besides, as we have already indicated, the animus of the tenant in tendering the rent is also material.
If he tenders the rent as the rent payable under the statutory tenancy, the landlord cannot, by accepting it as rent, create a tenancy by holding over.
In such a case the parties would not be id idem and there will be no consensus.
The decision in Ganga Dutt Murarka vs Kartik Chandra Das(l), Which followed the principles laid down by the Federal Court in Kai Khushrao Bezonjee Capadia vs Bai Jerbai Hirjibhoy Warden and another(1) is correct and does not require reconsideration.
We, therefore, come to the conclusion that there was no holding over by the appellants and if that be so, the question whether the tenancy created by holding over was for manufacturing purpose and therefore the landlord was bound to give six months ' notice for the determination of the tenancy by holding over does not arise for consideration.
Appellants ' counsel prayed that the appellants may be given some time for vacating the premises.
This Court, when passing the order on July 31, 1969, on the application for stay by the appellants had observed : "Petitioner undertakes to vacate the premises within such time as may be fixed by this Court." (1) ; (2) 899 We accordingly grant three months, time from today to the appellants to vacate the premises, and they have to comply with the undertaking given to this Court and referred to above.
We dismiss the appeal with costs, G.C. Appeal dismissed.
| The appellants were lessees of a plot of land in Bombay.
The lease Was granted in 1948 and was determined by efflux of time on September 30, 1958.
However the appellants continued to occupy the land and to pay rent to the lessors.
On August 7, 1959 the lessors gave notice purporting to terminate the tenancy in the land by the end of September 1959 on the ground inter alia that the lessors required the plot for the purpose of putting up construction on it.
Since the appellants did not vacate the premises the lessors filed a suit on October 22, 1959 in the Small Causes Court, Bombay.
The appellants contended in defence that the land was not required by the lessors bona fide for purposes of construction.
They further contended that they were tenants holding over within the meaning of section 116 of the Transfer of Property Act, and that since the landlord had accepted rent after the tenancy had determined by afflux of time a new lease had come into being and as the original lease was for a manufacturing purpose the new lease was by implication for the same purpose and consequently six months ' notice was required for its termination by the lessors.
The Trial Court held that the, plaintiff required the plot bona fide for constructing a new building within the meaning of clause (1) of sub section (1) of 'section 13 of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947.
The Court also held.
that the tenancy terminated by efflux of time, but that the lessees continued in possession by virtue of the immunity from eviction conferred by the aforesaid Bombay Act and so they were not holding over within the meaning of section 116 of the Transfer of Property Act.
The Trial Court accordingly decreed the suit.
In appeal the appellate Court confirmed the decree.
The High Court rejected the appellants ' petition under article 227 of the Constitution.
In appeal to this Court by Special leave, HELD : The act ofholding over after the expiration of the term does not create tenancy ofany kind.
if a tenant remains in possession after the determination of the lease the common law rule is that he is a tenant on sufferance.
A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doing so without his consent.
The former is a tenant on sufferance in English law and the latter a tenant holding over a tenant at will.
In view of the concluding words of section 116 of the Transfer of Property Act a lease holding over is in a better position than a tenant at will.
The assent of the landlord to the continuance of possession after the determination of the tenancy will create a new tenancy.
What the section contemplates is that on one side their should be an offer of taking a new lease evidenced by the lessee or sub lessee remaining 891 in Possession of the property after his term was over and on the other side there must be a definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise.
The bases of the section is thus a bilateral contract between the erstwhile landlord and the erstwhile tenant.
If the tenant has the statutory right to remain in possession, and if he pays the rent, that will not normally be referable to an offer for his continuing in possession which can be converted into a contract by acceptance thereof by the landlord.
[894 B D; 897 G H] In the case of normal tenancy a landlord is entitled where he does not accept the rent after the notice to quit, to file a suit in ejectment and obtain a decree for possession, and so his acceptance of rent is an unequivocal act referable only to his desire to assent to the tenant con tinuing in possession.
That is not so where a Rent Act exists; and if the tenant says that landlord accepted the rent not as statutory tenant but only as legal rent indicating his assent to the tenant 's continuing in pos session it is for the tenant to establish it.
[898 B C] In the present case neither the landlord 's desire that the appellants should continue in possession nor the necessary animus on the part of the tenant had been proved.
The parties had not been shown to be ad idem.
[898 D] Acccordingly it must be held that there was no holding over by the appellants and the appeal must be dismissed.
Ganga Dutt Murarka vs Kartik Chandra Das, [1961] 3 S.C.R. 813, reaffirmed.
Kai Khushroo Bezonjee Capadia vs Bai Jerbai Hirjibhoy Warden K.B. 428, Morriwon vs Jacobs, and Mangilal vs Sugan Chand, A.I.R. 1965 S.C. 101, applied.
Manujendra Dutt vs Purendu Prosad Roy Chowdhury & Ors.
, ; , distinguished.
|
Civil Appeal No. 310 of 1960.
Appeal by special leave from the judgment and decree dated July 24, 1954, of the Board of Revenue (Uttar Pradesh) Allahabad, in Revision No. 20A of 1952/53.
section P. Sinha and J. P. Goyal, for the appellants, N. N. Keswani, for respondent No. 2. 1962.
December 7.
The Judgment of the Court was delivered by AYYANGAR, J.
This is an appeal by special leave against an order of the Board of Revenue, Uttar Pradesh which declined to order restitution under section 144, Civil Procedure Code in the following circumstances.
The father of the 1st respondent was the Zamindar who filed a suit in the court of SubDivisional Officer, Tehsil Iglas at Aligarh for the eviction of Ram Prasad father of the appellants from certain plots of land situated in village Kanchiraoli in The district of Aligarh.
The suit was decreed and in execution of that decree the Zamindar took possession.
Thereafter Ram Prasad filed an appeal to the Additional Commissioner but this was dismissed in November, 1944.
He then preferred a further appeal to the Board of Revenue but before it came on for hearing the dispute was settled and on March 28 1948 an application was filed for recording this compromise.
The term of the compromise which is of relevance to the present appeal is that Ram Prasad was to be recognised as tenant of the land in dispute; in other words, the order for evicton 830 was nullified.
The compromise was recorded and a decree in terms thereof was passed.
Some attempt was made by the Zamindar to have the compromise set aside on grounds which it is not necessary to mention, but these attempts failed with the result, that it left the compromise decree passed by the Board in full force.
It might however, be mentioned that the Zamindar immediately obtained possession in execution of the decree of the Sub Divisional officer, admitted one Data Ram and certain others as tenants and put them in possession of the property and this has led to all the subsequent complications in this case.
On the strength of the compromise decree Ram Prasad applied for restitution of possession under section 144 of the Civil Procedure Code.
This application was resisted particularly by Data Ram and others who had been inducted as tenants on the land, while the eviction proceedings were pending before the Additional Commissioner on appeal.
The trial court allowed the application on the ground that Data Ram and others were bound by the rule of lis pendens and were not, therefore, entitled to retain the possession which they obtained during the proceedings for ejectment.
From this order an ' appeal was taken by Data Ram and others to the additional commissioner who, for reasons which it is not necessary now to canvass, held that the newly inducted tenants could not be dispossessed and that Ram Prasad was entitled only to Symbolical possession as against the Zamindar.
This order was taken to the Board in revision where, however, it was dismissed.
It is to challenge the correctness of this order that this appeal has been filed.
Learned Counsel for the respondent raised two preliminary objections to the hearing of this appeal The first objection was that this appeal was barred by res judicate.
To understand this objection it is 831 necessary to state a few more facts.
When the Board of Revenue upheld the order of the Additional Commissioner declining the prayer of the appellants for restitution they filed an application for review and when this was dismissed they brought the matter before the High Court by an application made to it under article 226 of the Constitution.
The actual judgment rendered by the High Court is not on record but it was admitted before us by learned Counsel for the appellant that the High Court dismissed the petition after 'elaborately discussing the merits of the contentions raised and on that ground Data Ram and others who had been let into possession by the Zamindar obtained a statutory right to possession under the U. P. Zamindari & Land Reforms Act, 1950 and could not therefore be evicted by the application of the rule of lis pendens.
No attempt was made by the appellant to prefer any appeal against this judgment by either applying to that court and obtaining a certificate of fitness or by moving this Court for the grant of special leave.
The result is that there is now a decision of the High Court which has become final and binding on the parties.
Learned Counsel for the respondent therefore contends that without the correctness of the decision of the High Court being challenged before us and the finality of that judgment impaired, the appellant is not entitled to bypass that decision and seek to practically obtain a reversal of it by attacking the correctness of the decision of the Board of Revenue.
We consider this preliminary objection wellfounded.
Learned Counsel for the respondent relied in supportof his submission on the decision of this Court in Daryao vs The State of U. P. (1).
The question before the Court was whether, when the High Court dismissed a writ petition under article 226 after hearing a matter on the merits on the ground that no fundamental right was proved or contravened, (1) ; 832 a subsequent petition to the Supreme Court under article 32 of the Constitution on the same facts and for the same reliefs filed by the same party was permissible.
This Court held that where such a petition was heard on the merits and dismissed by the High Court the decision pronounced was binding on the parties unless it was modified or reversed in appeal or by other appropriate proceedings.
If thus the rule of res judicata were a bar even to a petition under article 32 which is a Constitutionally guaranteed right, it looks to us that it would be afortiori so as regards an appeal under article 136 where the right to relief is discretionary.
Learned Counsel for the appellant invited our attention to the decision of this Court in Chandi Prasad Chokhani vs State of Bihar (1) as lying down a rule not quite so inflexible as the decision in Daryao 's case ' would suggest, that it depended upon the facts of each case and that in a proper case dependent upon the discretion of the Court, this Court was competent to waive this rule and here the appeal notwithstanding that it meant that the decision of the High Court was bypassed.
No doubt, there are a few observations of section K. Das, J., who spoke for the Court which are capable of being understood in the manner suggested by learned Counsel but as ultimately the learned judges upheld the preliminary objection and dismissed the appeal, these observations are only by way of obiter and cannot outweigh the expressdecision on the point in Daryao 's case.
We might, however, point out that in Indian Aluminium Co.Ltd.
vs Commissioner of Income tax, West Bengal (2) in which also the judgment was delivered by section K. Das,J., the reasoning of the learned judge who upheld a similar preliminary objection is more in line with the decision in Daryao 's(3) case though the latter judgment which was delivered on the same day as in the Indian Aluminium Co. 's case (2) is not naturally referred to.
The learned judge observed : (1) ; (3) [1962) I S.C.R, 574. 833 "The question which has arisen in this appeal by way of a preliminary objection is whether in the circumstances set out above (no appeal was preferred against the order of the High Court refusing to make a reference under section 66(2) of the Income Tax Act) special leave to appeal from the decision of the Tribunal dated May 29, 1956, was properly given under article 136 of the Constitution and whether the appellant is entitled to ask this Court to exercise its discretion under the said article when it did not move against the subsequent orders of the Board and the High Court under section 66 of the Act. . . .
We hold that special leave to appeal from the decision of the Tribunal dated May 29, 1956, was not properly granted in this case and the appellant is not entitled to ask us to exercise our power under article 136 of the Constitution, when it did not move against the subsequent orders of the Board and the High Court." This preliminary objection therefore has to be upheld.
The other preliminary objection raised was this.
The application for special leave filed by the appellant was out of ' time and the delay in filing it was condoned by this Court without notice to the respondent.
Learned Counsel sought to urge that there were no grounds for condoning the delay and that for this reason the leave granted should be revoked.
In view, however, of our decision on the first objection raised we do not consider it necessary to deal with this.
The result is that the appeal failes and is dismissed with costs.
| The father of respondent No. 1, who was the Zamindar, filed a suit for the eviction of Ramprasad, the father of appell ants, from certain plots of land.
The suit was decreed and the Zamindar took possession of the land.
Ramprasad filed an appeal before the Additional Commissioner but the same was dismissed .
He preferred a second appeal before the Board of Revenue during the pendency of which the matter was compromised whereunder he was recognised as tenant of the land in dispute and the order of eviction was; thus nullified.
He applied for restitution of possession under section 144 of the Code of Civil Procedure.
The application was resisted by Dataram and others who had been inducted as tenants on these plots of land during the pendency of the appeals.
The trial court allowed the application but its order was reversed by the Additional Commissioner who held that the newly inducted tenants could not be dispossessed.
Its order was affirmed by the Board of Revenue in revision.
Thereafter fie filed a petition under article 226 of the Constitution in the High Court challenging the decision of the Board of Revenue, but that petition was dismissed on merits.
No appeal was attempted to be filed against the order of the High Court either by applying for a certificate or moving this Court for special leave under article 136.
The appellants have instead come to this Court in appeal by special leave against the order of the Board of Revenue.
A preliminary objection was raised on behalf of of the respondent that the appeal was not maintainable as it was barred by res judicata.
Held, that the appeal was barred by res judicata as the decision of the High Court was on merits and would bind the parties unless it was modified or reversed in appeal or by other appropriate proceedings. 829 Daryao vs State of U. P., [19621 1 section C. R. 574 and Indian Aluminium Co. Ltd. V. The Commissioner of Income tax, West Bengal, (1961) 43 , relied on.
Chandi Prasad Chokhani vs State of Bihar, [1962] 2 section C. R. 276, explained.
|
Appeal No. 86 of 1959.
Appeal by special leave from the judgment and order dated March 27, 1957, of the Patna High Court in Appeal from Original Decree No. 359 of 1948.
A. V. Viswanatha Sastri and section P. Varma, for the appellant.
882 H. N. Sanyal, Additional Solicitor General of India, R. Ganapathy Iyer and T. M. Sen, for the respondent.
July, 24.
The Judgment of the Court was delivered by SHAH, J.
Bikhraj Jaipuria hereinafter called the appellant is the sole proprietor of a grocery business conducted in the name and style of "Rajaram Vijai Kumar" in the town of Arrah in the State of Bihar.
In the months of July and August, 1943, the, Divisional Superintendent, East Indian Railway under three " 'purchase orders ' agreed to buy and the appellant agreed to sell certain quantities of food grains for the employees of the East Indian Railway.
The 'following table sets out the purchase prices, the commodities, the dates of purchase orders, the quantities and the rates and the method of supply.
Purchase Date of Kinds Quantity Rates.
Order purchase of of No. orders.
commo commo dity.
dities.
(1) (2) (3) (4) (5) 69.
20 7 1943.
Gram 1st 1000 mds. @ Rs. 15/ quality.
per md.
(plus cost of new bags not exceeding Rs. 75/ per 100 bags) F.O.R. any E.I.Rly.
sta tion in Bihar.
:4 7 1943.
Rice 1000 mds.
@ Rs. 22 8 0 Dhenki (plus cost of Medium bags not ex quality.
ceeding Rs.75 883 (1) (2) (3) (4) (5) per cent) per md.
F.O.R. any station on the division.
Wheat 5000 mds.
@ Rs. 20 8 0 white per md.
with as per bags F.O.R. sample.
any station on E.I.R. on the Division.
24 8 1943.
Rice 15000 mds. @ Rs. 24/ medium per md.
with quality.
out bags F.O.R. E.I. Rly.
station in Bihar.
Purchase orders Nos. 69 and 76 were signed by S.C. Ribbins, Personal Assistant to the Division at Superintendent and purchase order No. 106 was signed by the Divisional Superintendent.
Under the purchase orders delivery of grains was to commence within seven days ' of acceptance and was to ' be completed within one month.
The appellant delivered diverse quantities of foodgrains from time to time but was unable fully to perform the contracts within, the period stipulated.
Between July.), 20, 1943 and August of 4, 1943, he supplied 3465 maunds of rice and between September 1, 1943 and September 19, 1943 he supplied 1152 maunds 35 seers of wheat.
In exercise of the powers conferred by cl.(b) of Sub r.
(2) of r.81 of the Defence of India Rules, the Government of Bihar by notification No. 12691 P.C. dated September 16, 1943 directed that commodities named in column I of the schedule shall not, from and including September 20, 1943 and until further notice, be sold at any primary source of supply or by the proprietor, manager or employee of any mill in the Province of Bihar at prices exceeding those 884 specified in the second column of the schedule.
The controlled rat . of rice (medium) was Rs. 18/ per standard maund, of wheat (red) Rs. 17/ , of wheat (white) Rs. 18/ and of gram Rs. 12 8 0.
The Sub Divisional Magistrate, District Arrah issued on September 21, 1943, a price list of controlled articles fixing the same prices as were fixed for wheat, rice and gram by the notification issued by the Government of Bihar.
By cl.
(2) of the notification, a warning was issued that in the event of the dealers selling controlled articles at rates exceeding those fixed or with holding stocks of such articles from sale, "they will be liable to prosecution under r.81 (1) of the Defence of India Rules.
" By a telegraphic communication dated Sep. tember 28, 1943, the Divisional Superintendent informed the appellant that under the purchase orders, foodgrains tendered for delivery will not, unless despatched before October 1, 1943, be accepted, and barring a consignment of 637 maunds 20 seers accepted on October 7, 1943, the Railway Administration declined to accept,delivery of food grains offered to be supplied by the appellant after October 1, 1943.
The appellant served a notice upon the Divisional Superintendent coraplaining of breach of contract and sold between February la and February 23, 1944 the balance of foodgrains under the purchase orders which were lying either at the various railway stations or in his own godowns.
The appellant then called upon the Railway Administration to pay the difference between the price realised by sale and the contract price and failing to obtain satisfaction, commenced an action (Suit No. 359/48A) in the court of the First Additional Subordinate Judge, Patna for a decree for Rs. 2,89,995 15 3 against the Dominion of India.
The appellant claimed Rs. 2,32,665 12 0 being the difference between the contract price and the price realised, Rs.42,709 10 3 as interest and Rs. 14,620 9 0 as freight, wharf.
885 age, cartage, price of packing material, labour charges and costs incurred in holding the sale.
The appellant submitted that under the terms of the purchase orders, supply was to commence within seven days of the date of receipt of the orders and was to be completed within one month, but it was not intended that time should be of the essence of the contract, and in the alternative that the Railway Administration had waived the stipulation as to time in the performance of the contracts and therefore he was entitled, the Railway Administration having committed breach of ,the contracts, to recover as compensation the difference between the contract price and the price for which the grains were sold.
The suit was resisted by the Dominion of India contending inter alia that the appellant had no cause of action for the claim in the suit, that the contracts between the appellant and the Divisional Superintendent Dinapur were not valid and binding upon the Government of India and that the contracts were liable to be avoided by the Government, that time was of the essence of the contracts, that stipulations as to time were not waived, and that no breach of contract was committed by the East Indian Railway Administration and in any event, the appellant had not suffered any loss as a result of such breach.
By the written statement, it wag admitted that the East Indian Railway through the Divisional Superintendent, Dinapur had by three orders set out in the plaint agreed to buy and the appellant had agreed to sell the commodities specified therein, but it was denied that the Divisional Superintendent had been ""given complete authority to enter into contracts for the supply of foodgrains.
" The trial court held that time was not of the essence of the contracts and even if it was, breach of the stipulation in that behalf was waived.
It further_held that the plea that the contracts were void because they were not in accordance with the 886 provisions of section 175 (3) of the Government of India Act, 1935, could not be.permitted to be urged, no such plea having been raised by the written statement.
Holding that the Divisional Superintendent was authorised to enter into the contracts for purchase of foodgrains, and that he had committed breach of contracts the trial Judge awarded to the appellant Rs. 1,29,460 7 0 with interest thereon at the rate of 6% per annum from October 1, 1943, to the date of the institution of the suit and further interest at 6% on judgment.
Against that decree, an appeal was preferred by the Union of India to the High Court of Judicature at Patna and the appellant filed cross objections to the decree appealed from.
The High Court held that time was of the essence of the contracts, but the Railway Administration having a accepted the goods tendered after the expiration of the period prescribed thereby, the stipulation as to time was waived.
The High Court further held that by the notification under r. 81 of the Defence of India Rules, performance of the contracts had not been rendered illegal but the Divisional Superintendent had no authority to enter into contracts to purchase food grains on behalf of the Railway Administration and that in any event, the contracts not having been expressed to be made by the Governor General and not having been executed on behalf of the Governor General by an officer daily appointed in that behalf and in manner prescribed, the contracts were unenforceable.
The High Court also held that the appellant was not entitled to a decree for compensation because he had failed to prove the ruling market rate on the date of breach viz, October 1, 1943.
The High Court also observed that the trial court erred in awarding interest prior to the date of the suit and in so holding, relied upon the judgment of the Privy Council in Bengal Nagpur Railway Co., Ltd. vs Ruttanji Ramji and others (1).
(1) L. R. (1938) 65 J. A. 66. 887 In this appeal by the appellant, two questions fall to be determined, (1) whether relying upon the purchase orders signed by the Divisional Superintendent which were not made and executed in the manner prescribed by s.175 (3) of the, Government of India Act 1935, the appellant could sue the Dominion of India for compensation for breach of contract, and (2) whether the appellant has proved the ruling market rate on October 1, 1943 for the commodities in question.
, The finding that the Railway Administration had waived the stipulation as to the performance of the contracts within the time prescribed though time was under the agreement of the essence, is not challenged before us on behalf of the Union of India.
If the finding as to waiver is correct, manifestly by his telegraphic intimation dated September 28, 1943, that the foodgrains not despatched before October 1, 1943, will not be accepted the Divisional Superintendent committed a breach of the contract.
Section 175 (3) of the Government of India Act as in force at the material time provided : "Subject to the provisions of this Act, with respect to the Federal Railway Authority, all contracts made in the exercise of the executive authority of the Federation or of a Province shall be expressed to be made by the Governor General, or by the Governor of the Province, as the case may be, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor General or Governor by such persons and in such manner as he may direct or authorise.
" The Federal Railway Authority had not come.
into being in the year 1943: it was in fact never set up.
The contracts for the supply of foodgrains were undoubtedly_ made in the exercise of executive 888 authority of the Federation.
The contracts had therefore under section 175(3), (a) to be expressed to be made by the Governor General, (b) to be executed on behalf of the Governor General, and (e) to be execrated by officers duly appointed in that behalf and in such manner as the Governor General may direct or authorise.
But no formal contracts were executed for the supply of foodgrains by the appellant : he had merely offered to supply foodgrains by letters addressed to the Divisional Superintendent and that officer had by what are called "purchase orders" accepted those offers.
These purchase orders were not expressed to be made in the name of the Governor General and were not executed on behalf of the Governor General.
The purchase orders were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant.
In the first instance it has to be considered whether the Divisional Superintendent had authority to contract on behalf of the Railway Administration for buying foodgrains required by the Railway Administration.
By Ex.
M 2 which was in operation at the material time, all instruments relating to purchase or hire, supply and conveyance of materials, stores, machinery, plant, telephone lines and connections, coal etc. could be executed amongst others by the Divisional Superintendent; but contracts relating to purchase of foodgrains are not covered by that authority.
Under item 34 which is the residuary item, all deeds and instruments relating to railway matters other than those specified in items 1 to 33 may be executed by the Secretary of the Railway Board.
It is common ground that there is no other item which specifically authorises the making and execution of contracts relating to purchase of foodgrains; deeds and instruments relating to purchase of food grains therefore fall within item 34.
The Secretary to the Railway Board had not executed these purchase orders : but the trial Court held 889 that the Divisional Superintendent was authorised to enter into contracts with the appellant for the supply of foodgrains.
In so holding, the trial judge relied upon the evidence of Ribbins, Grain Supply Officer and Personal Assistant to the Divisional Superintendent, Dinapur.
The High Court disagreed with that view.
The High Court observed that the authority of the officer acting on behalf of the Governor General "must be deduced from the express words of the Governor General himself expressed by rules framed or by notification issued, under section 175(3).
No notification has been produced in this case showing that the Divisional Superintendent had been authorised by the Governor General to execute such contracts on his behalf, nor has any rule been produced which conferred authority upon the Divisional Superintendent to make such contracts.
" After referring to paragraph 10 of the notification, exhibit M 2 items 1 to 34, the High Court observed: "Therefore this notification rather shows that the Divisional Superintendent had no authority to execute the contracts for the purchase of food grains." In our view, the High Court was in error in holding that the authority under section 175(3) of the Government of India Act, 1935 to execute the contract could only be granted by the Governor General by rules expressly promulgated in that behalf or by formal notifications.
This court has recently held that special authority may validly be given in respect of a particular contract or contracts by the Governor to an officer other than the officer notified under the rules made under section 175(3).
In The State of Bihar vs M/s. Karam Chand Thapar and Brothers Ltd.(,), Venkatarama Aiyar J. speaking for the court observed : (1) ; 890 It was further argued for the appellant that there being a Government notification of a formal character we should not travel outside it and find authority in a person who is not authorised thereunder.
But section 175 (3) does not prescribe any particular mode id which authority must be conferred.
Normally, no doubt, such conferment will be by notification in the Official Gazette, but there is nothing in the section itself to preclude authorisation being conferred ad hoc on any person, and when that is established, the requirements of the section must be held to be satisfied." In that case, an agreement to refer to arbitration on behalf of the Government of Bihar was executed by the Executive Engineer whereas by the notification issued by the Government of Bihar under s.175 (3) all instruments in that behalf had to be executed by the Secretary or the Joint Secretary to the Government.
This Court on a consideration of the correspondence produced in the case agreed with the High Court that the Executive Engineer had been specially authorised by the Governor acting through his Secretary to execute the agreement for reference to arbitration.
Section 175 (3) in terms does not provide that the direction or authority given by the Governor General or the Governor to a person to execute contracts shall be given only by rules or by notifications, and the High Court was in our judgment in error in assuming that such authority can be given only by rules expressly framed or by formal notifications issued in that behalf.
In para 5 of the plaint, the appellant pleaded: " 'That for the purposes and under the authority conferred as noted in the para 3 above in July and August, 1943 the said E. 1.
through its then Divisional Superintendent, Dinapur, by three diverse orders agreed to buy and the plaintiff agreed to sell the following commodities at the rates mentioned against them, 891 By para 3 of the written statement, the Dominion of India accepted the allegations made in para 5 of the plaint.
It is true that by paragraph 1, the authority of the Divisional Superintendent to enter into contract with, trading firms dealing in foodgrains for the supply of foodgrains was denied and it was further denied that the Divisional Superintendent "was invested with complete authority to enter into contracts for the purchase of food supplies and to do all that was necessary in that connection.
" There was some inconsistency between the averments made in paragraphs 1 and 3 of the written statement, but there is no dispute that the purchase orders were issued by the Divisional Superintendent for and on behalf of the East Indian Railway Administration.
Pursuant to these purchase orders, a large quantity of foodgrains was tendered by the appellant: these were accepted by the Railway Administration and, payments were made to the appellant for the grains supplied.
Employees of the Railway Administration wrote letters to the appellant calling upon him to intimate the names of the railway stations where grains will be delivered and about the date when the supply.
will commence.
They fixed programmes for inspection of the goods, kept 'wagons ready for accepting delivery, held meetings on diverse occasions for settling programmes for the supply of grains, rejected grains which were not according to the contract, entered into correspondence with the appellant about the return of empty bags accepted bills and railway receipts and made pay ments, returned certain bills in respect of the grains tendered beyond the period of contract and did diverse other acts in respect of the goods which could only be consistent with the contracts having been made with the authority of the Railway Administration granted to the Divisional Superintendent.
There is also the evidence of Ribbins which clearly supports the vie* that the agreements to purchase foodgrains by the Divisional 892 Superintendent were part of a. scheme devised by the Railway Administration at the time of the, serious famine in 1943 in Bengal.
In cross examination, Ribbins stated: "When the Bengal famine arose in April May 1943, the (necessity for a scheme of) arrangement of supplying foodgrains to E. I. Railway employees arose .
A scheme was drawn up for carrying out this work in writing.
In other words orders were received from Head Office Calcutta about it.
The Deputy General Manager, Grains, Calcutta issued the necessary orders .
The agent or General Manager as he is called appropriated the above functionary.
He must have done so presumably under orders .
The entire scheme did subsequently get the assent of the Railway Board.
From time to time order came with instruction from Head Office.
All such directions should be in the office of D. Supdt., Dinapur.
Some posts had to be created for carrying out this scheme.
Originally one post of Asstt.
Grain Supply Officer was created.
Subsequently, two posts were created one on a senior scale and the other as Asstt.
in Dinapur Dv.
staff had to be appointed to be in charge of the grain shops.
They were exclusively appointed to work the grain shop Organisation.
The Railway made some arrangement in some places for accommodation and additional storage.
Grain shops were located At these places when accommodation was made for additional storage.
" Ribbins was for some time a Grain Supply Officer under the East Indian Railway and he admitted that orders similar.to the purchase orders in question in this litigation were drawn up in cyclostyled forms "as per orders from the Head Office.
" The witness stated that the instructions of the Head Office were "in the office file".
None of these documents were, however, produced or tendered in evidence by the Railway Administration. 893 The evidence on the whole establishes that with a view to effectuate the scheme devised by the Railway Board for distributing foodgrains to their employees at concessional rates, arrangements were made for procuring foodgrains.
This scheme received the approval of the Railway Board and Railway Officers were authorised to purchase, transport and distribute foodgrains.
If, in the implementation of the scheme, the foodgrains were received by the Railway Administration, special wagons were provided and goods were carried to different places and distributed and payments were made for the foodgrains received by the Railway Administration after testing the supplies, the inference is inevitable that the Divisional Superintendent who issued the purchase orders acted with authority specially granted to him.
The evidence of Ribbins supported by abundant docu mentary evidence establishes beyond doubt that the Divisional Superintendent though not expressly authorised by the notification exhibit M 2 to contract for the purchase of foodgrains, was specially authorised to enter into these contracts for the purchase of foodgrains.
The question still remains whether the purchase orders executed by the Divisional Superintendent but which were not expressed to be made by the Governor General and were not executed on behalf of the Governor General, were binding on the Government of India.
Section 175(3) plainly requires that contracts on behalf of the Government of India shall be executed in the form prescribed thereby ; the section however does not set out the consequences of non compliance.
Where a statute requires that a thing shall be done in the prescribed manner or form but does not set out the consequences of non compliance, the question whether the provision was mandatory or directory has to be adjudged in the light of the intention of the legislature as disclosed by the 894 object, put pose and scope of the statute.
If the statute is mandatory, the thing done not in the manner or form prescribed can have no effect or validity : if it is directory, penalty may be incurred for non compliance, but the act or thing done is regarded as good.
As observed in Maxwell on Interpretation of Statutes 10th Edition p. 376 : "It has been said that no, rule can be laid down for determining whether the command is to be considered as a mere direction or instruction involving no invalidating consequences in its disregard, or as imperative, with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope.
and object of the enactment.
It may perhaps be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is, in the main governed by considerations of convenience and justice, and when that result would involve general inconvenience or injustice to innocent persons, or advantage to those guilty of the neglect, without promoting the real aim and object of the enactment such an intention is not to be attributed to the legislature.
The whole scope and purpose of the statute under consideration must be regarded.
" Lord Campbell in Liverpool Borough Bank vs Turner(1) observed "No universal rule 'can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience.
It is the duty of Court of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed.
" It is clear that the Parliament intended in enacting the provision contained in section 175(3) that (1) ; 895 the State should not be saddled with liability for unauthorised contracts and with that object provided that the contracts must show on their face that they are made on behalf of the State, i. e., by the Head of the State and executed on his behalf and in the manner prescribed by the person authorised.
The provision, it appears, is enacted in the public interest, and invests public servants with authority to bind the State by contractual obligations incurred for the purposes of the State.
It is in the interest of the public that the question whether a binding contract has been made between the State and a private individual should not be left open to dispute and litigation ; and that is why the legislature appears to have made a provision that the contract must be in writing and must on its face show that it is executed for and on behalf of the head of the State and in the manner prescribed.
The whole aim and object of the legislature in conferring powers upon the head of the State would be defeated if in the case of t contract which is in form ambiguous, disputes are permitted to be raised whether the contract was intended to be made for and on behalf of the State or on behalf of the person making the contract.
This consideration by itself would be sufficient to imply a prohibition against a contract being effectively made otherwise than in the manner prescribed.
Itm is true that in some cases, hardship may result to a person not conversant with the law who enters into a contract in a form other than the one prescribed by law.
It also happens that the Government contracts ,ire sometimes made in disregard of the forms prescribed ; but that would not in our judgment be a ground for holding that departure from a provision which is mandatory and at the same time, salutary may be permitted.
There is a large body of judicial opinion in the High Courts in India on the question whether 896 contracts not ill form prescribed by the Constitution Acts are binding upon the State.
The view has been consistently expressed that the provisions, under the successive Constitution Acts relating to the form of contract between the Government and the private individual are mandatory and not merely directory.
In Municipal Corporation of Bombay vs Secretary of State (1), the true effect of section 1 of Si. 22 and 23 Vic.
c. 41 fell to be determined.
The Governor General of India in Council and the Governors in Council and officers for the time being entrusted with the Government were, subject to restrictions prescribed by the Secretary of State in Council, empowered to sell and dispose of real and personal estate vested in Her Majesty and to raise money on such estate and also to enter into contracts within.
the respective limits for the purposes of the Act.
it was provided that the Secretary of State in Council.
may be named as a party to such deed, contract, or instrument and the same must be expressed to be made on behalf of the Secretary of State in Council by or by the order.
of the Governor General in Council or Governor in Council, but may be executed in other respects in like manner as other, instruments executed by or on behalf of him or them respectively in his or their official capacity, and may be enforced by or against the Secretary of State in Council for the time being.
In a suit between the Government of Bombay and the Municipal Corporation of Bombay, the latter claimed that it was entitled to remain in occupation on payment of a nominal rent, of an extensive piece of land because of a resolution passed by the Government of Bombay sanctioning such user.
Jenkins C. J. in delivering the judgement of the Court observed.
"I think that a disposition in 1865 of Crown ' (1) I. L. R. 897 lands by the Governor in Council was dependent for its validity on an adherence to the forms prescribed, and that therefore the Resolution was not a valid disposition of the property for the interest claimed.
" In Kessoram Poddar and Co. vs Secretary of State for India (1), it was held that in order that a contract may be binding on the Secretary of State in Council., it must be made in strict conformity with the provisions laid down in the statute governing the matter and if it is not so made, it is not valid as against him.
The same view was expressed in section C. Mitra and Co. vs Governor General of India in Council (2), Secretary of State vs Yadavgir Dharamgir(3), Secretary.
of State and another vs G. T. Sarin and, Company U. P. Government vs Lala Nanhoo Mal Gupta Devi Prasad Sri Krishna Prasad Ltd. vs Secretary of State (6), and in section K. Sen vs Provincial P. Way D. State of Bihar(7).
But Mr. Viswanatha Sastri on behalf of the appellant contended that this court in Chatturbhuj Vithaldas Jasanth vs Moreshwar Parashram (8) has held that a contract for the supply of goods to the Government which is not in the form prescribed by article 299 (1) of the Constitution which is substantially the same form as section 175 (3) of the Government of India Act, 1935) is not void and unenforceable.
In that case, the election of Chatturbhuj Jasani to the Parliament was challenged on the ground that he had a share or interest in a contract for the supply of goods to the Union Government.
It was found that Jasani was partner of a firm, which had entered into contracts with the Union Government for the supply of goods and these contracts subsisted on November 15, 1951 and (1) I.L.R. I.L.R. , (3) I.L.R. I.L.R. (1930) 11 Lah.375.
(5) A.I.R. (1960) All.
(6) I.L.R. (1941) All. 741 (7) (7) A.I.R. (1960) Pat.
(8) ; 898 February 14, 1952 respectively the last date for filing nominations and the date of declaration of the results of the election.
This court held that Jasani was disqualified from being elected by virtue of the disqualification set out in section 7 (b) of the Representation of the People Act 43 of 1951.
The contracts in that case were admittedly not in the form Prescribed by article 299 (1) of the Constitution, and relying upon that circumstance, it was urged that the contracts were void and had in law no existence.
In dealing with this plea, Bose J. speaking for the court observed : "We feel that some reasonable meaning must be attached to article 299(1).
We do not think the provisions were inserted for the sake of mere form.
We feel they are there to safeguard Government against unauthorised contracts.
If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded.
On the other hand, an officer entering into a contract on behalf of the Government can always safeguard himself by having recourse to the proper form.
In between is a large class of contracts, probably by far the greatest in numbers, which though authorised, are for one reason or other not in proper form.
It is only right that an innocent contracting party should not suffer because of this and if there is no other defect or objection we have no doubt Government will always accept the responsibility.
If not, its interests are safeguarded as we think the Constitution intended that they should be.
" The learned Judge also observed: "It would, in our opinion, be disastrous to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effect ed by a ponderous legal document couched in a particular form." 899 The rationale of the case in our judgment does not support the contention that a contract on behalf of a State not in the form prescribed is enforceable against 'the State.
Bose J. expressly stated that the "Government may not be bound by the contract, but that is a very different thing from saying that the contract ",as void and of no effect, and that it only meant the principal (Government) could not be sued; but there will be nothing to prevent ratification if it was for the benefit of the Government.
" The facts proved in that case clearly establish that even though the contract was not in the form prescribed, the Government had accepted performance of the contract by the firm of which Jasani was a partner, and that in fact there subsisted a relation between the Government and the firm under which the goods were being supplied and accepted by the Government.
The agreement between the parties could not in the case of dispute have been.enforced at law, but it was still being carried out according to its terms : and the Court held that for the purpose of the Representation of the People Act, the existence of such an agreement which was being carried out in which Jasani was interested disqualified him.
It was clearly so stated when Bose J. observed: "Now section 7 (d) of the Representation of the People Act does not require that the contracts at 'which it strikes should be enforceable against the Government ; all it requires is that the contracts should be for the supply of goods to the Government.
The contracts in question are just that and so are hit by the section".
Reliance was also placed by counsel for the appellant upon cases decided under s.40 of the Government of India Act, 1915, which was continued in operation.
even after the repeal of the Act, 1915, by the 9th schedule to the Government of India Section 40 prescribed the manner in which the business of the Governor General in Council was to be conducted.
It provided that all orders and other proceedings of the Governor General in Council shall be expressed to be made by the Governor General in Council and shall be signed by a Secretary to the Government of India or otherwise as the Governor General in Council may direct and shall not be called in question in any legal proceeding on the ground that they were not duly made by the Governor General in Council.
In J.K. Gas Plant Manufacturing Co., (Rampur) Ltd., vs King Emperor (1), certain persons were accused of offences committed by them in contravention of cls.
(5) and (8) of the Iron and Steel (Control of Distribution) Order, 1941, which order was not expressed to be made by the Governor General in Council as required by section 40(1) of the 9th schedule to the Constitution Act.
The Federal Court held that the scope and purpose of the Act did not demand a construction giving a mandatory rather than a directory effect to the words in section 40: for, in the first instance, the provision that all orders of the Governor General in Council shall be expressed to be made by the Governor General in Council did not define how orders were to be made but only how they are to be expressed; it implied that the process of making an order preceded and was something different from the expression of it.
Secondly, it was observed, the provision, was not confined to orders only and included proceedings and in the case of proceedings, it was still clearly a method of recording proceedings which had already taken place in the manner prescribed rather than any form in which the proceedings, must take place if they are valid.
Thirdly, it was observed, that the provision relating to the signature by a Secretary to the Government of India or other person indicated that it was a provision as (1) 901 to the manner in which a previously made order should be embodied in publishable form, and it indicated that if the previous directions as to the expression of the order and proceedings and as to the signature were complied with, the order and proceedings shall not be called in question in a court of law on one ground only.
The rule contained in section 40 (1) was in the view of the court one of evidence which dispensed with proof of the authority granted by the GovernorGeneral in respect of orders or proceedings which complied with the requirements prescribed : the making of the order or the proceedings was independent of the form of the order or proceedings expressing it.
But it cannot be s aid that the making of the contract is independent of the form in which it is executed.
The document evidencing the contract is the sole repository of its terms and it is by the execution of the contract that the liability ex contracti of either party arises.
The principle of J. K. Gas Plant Manufacturing Co. 's case has therefore no application in the interpretation of section 175 (3) of the Government of India Act, 1935.
Reliance was also placed upon Dattatreya Moreshwar Pangarkar vs The State of Bombay (1) and The State of Bombay vs Purshottam Jog Naik(2).
In both these cases, orders made by the Government of Bombay under the Preventive Detention Act were challenged on the ground that the orders did not comply with the requirements of article 166 of the Constitution.
Article.
166 substantially prescribes the same rules for authentication of the orders of the Governor of a State as section 40 to the 9th schedule of the Government of India Act, 1935 prescribed for the authentication of the orders of the Governor General and the Governors.
In the former case, this court observed that (1) ; (2) ; 902 the Preventive Detention Act contemplates and requires the taking of an executive decision for confirming a detention order under section 11 (1) and omission to make and authenticate that decision in the form set out in article 166 will not make the decision itself illegal,for the provisions in that arti cle are merely directory and not mandatory.
In the latter case, an order which purported to have been made in the name of the Government of Bombay instead of the Governor of Bombay as required by article 166 was not regarded as defective and it was observed that in any event, it was open to the State Government to prove that such an order was validly made.
The court in those cases therefore held that the provisions of article 166 are directory and not mandatory.
, These cases proceed on substantially the same grounds on which the decision in J. k. Gas Plant and Manufacturing Co. 's case , proceeded, and have no bearing on the interpretation of section 175 (3) of the Government of India Act, 1935.
Reliance was also placed upon the State of U.P. vs Manbodhan Lal Srivastava(1) in which case this court held that the provisions of article 320 el.
(3) (e) of the Constitution relating to the consultation with the Public Service Commission before discharging at public servant are merely directory.
The fact that certain other provisions in the Constitution are regarded as merely directory and not mandatory, is no ground for holding that the provisions relating to the form of contracts are not mandatory.
It maybe said that the view that the provisions in the Constitution relating to the form of contracts on behalf of the Government are mandatory may involve hardship to the unwary.
But a person who seeks to contract with the Government must be deemed to be fully aware of (1) ; 903 statutory requirements as to the form in which the contract is to be made.
In any event, inadvertence of an officer of the State executing A contract in manner violative of the express statutory provision, the other contracting party acquiescing in such violation out of ignorance or negligence will not justify the court in not giving effect to the intention of the legislature, the provision having been made in the interest of the public.
It must therefore be held that as the contract was not in the form required by the Government of India Act, 1935, it could not be enforced at the instance of the appellant and therefore the Dominion of India could not be sued by the appellant for compensation for breach of contracts.
We are also of the view that the High Court was right in holding that the appellant failed to prove that he was entitled to compensation assuming that there was a valid and enforceable contract.
The appellant claimed that he was entitled to the difference between the contract price and the price realised by sale of the foodgrains offered after October 1,1943 but not accepted by the Railway Administration.
The High Court rightly pointed out that the appellant was, if at all, entitled only to compensation for loss suffered by him by reason of the wrongful breach of contract committed by the State, such compensation being the difference between the contract price and the ruling market rate on October 1,1943, and that the appellant had failed to lead evidence about the ruling market rate on October 1,1943.
The trial judge held that the "control price list xxx was reliable for ascertaining the measure of damages in the case".
This document was a notification relating to the controlled rates in operation in the district of Arrah, by which the sale of foodgrains at prices exceeding the rates prescribed was made an offence.
The appellant had obviously the option of delivering foodgrains at an railway station F. O. R. in the Province of 904 Bihar, and there is no evidence on the record whether orders similar to exhibit
M 2 were issued by the authorities in other districts of the Bihar State.
But if the grains were supplied in the district of Arrah, the appellant could evidently not seek to recover price for the goods supplied and accepted on and after October 1, 1943, at rates exceeding those fixed by the notification; for, by the issue of the control orders, on the contracts must be deemed to be superimposed the condition that foodgrains shall be sold only at rates specified therein.
If the grains were to be supplied outside the district of Arrah, the case of the appellant suffers from complete lack of evidence as to the ruling rates of the foodgrains in dispute on October 1, 1943.
The High Court was therefore right in declining to award damages.
On the view taken by us, this appeal must stand dismissed with costs.
Appeal dismissed.
| In the year 1943 the Divisional Superintendent, East Indian Railway placed certain purchase orders with the appellant for the supply of foodgrains for the employees of the East Indian Railway.
The orders were not expressed to be made in the name of the Governor General and were not "executed on behalf of the Governor General as required by section 175 (3) of the Government of India Act, 1935.
They were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant.
Some deliveries of foodgrain s were made under these orders and were accepted and paid for by the Railway Administration.
But the Railway Administration declined to accept further deliveries of foodgrains.
The appellant sold the balance of foodgrains under the purchase orders and filed a suit to recover the difference between the price realised by sale and the contract price.
The respondent resisted the suit inter alia on the ground that the contracts were not binding on it.
Held, that the contracts were not binding on the respondent and it was not liable for damages for breach of the contracts.
Under s 175 (3) of the Government of India Act, 1935, as it stood at the relevant time, the contracts had: (a) to be expressed to be made by the Governor General, (b) to be executed on behalf of the Governor General and (F) to be executed by officers duly appointed in that behalf and in such mariner as the Governor General directed or authorised.
The 881 authority to a person to execute contracts may be conferred not only by rules expressly trained and by formal notifications issued in this behalf but may also be specially conferred.
The evidence in the case showed that such authority was specially conferred upon the Divisional Superintendent.
But the contracts were not expressed to be made by the Governor General and were not executed on his behalf The provisions of section 175(3) were mandatory.
The object of enacting these provisions was that the State should not be saddled with liability for unauthorised contracts and hence it was provided that the contracts trust show on their face that they were made by the Governor General and executed on his behalf in the manner prescribed by the person authorised.
State of Bihar vs M/s. Karam Chand Thapar and Bros., Ltd. ; , followed.
Liverpool Borough Bank vs Turner, ; , Municipal Corporation of Bombay vs Secretary of State, I. L. R. , Kessoram Poddar and Co., vs Secretary of State for India, I. L. R. section C. Mitra and Co., vs Governor General of India in Council, I.L.R. , Secretary of State vs Yadavgir Dharamgir, I. L. R. , Secretary of State vs G.T. Sarin and Co., 1.
L. R. , U. I '.
Government vs Lal Nanhoo Mal Gupta, A. 1.
R. (1960) All. 420, and Devi Prasad Sri Krishna Prasad Ltd. vs Secretary of State, I. L. R. (1941) All. 741, referred to.
section K. Sen vs Provincial P. W. D., State of Bihar, A. 1.
R. (1960) Pat., Chatturbhui Vithaldas Jasani vs Moreshwar Prashram, ; ,J. K. Gas Plant Mfg., Co. (Rampur) Ltd. vs King Emperor, , Moreshwar Pangarkar vs State of Bombay, ; , State of Bombay vs Purshottam Jog Naik, ; and State of U.P. vs Manbodhan Lal Srivastava, (1958) section C. R. 533, distinguished.
|
Criminal Appeal No. 205 of 1989.
From the judgment and Order dated 24.2.1987 of the Bombay High Court in Crl.
W.P.No. 67 of 1986.
A.M. Khanwilkar for the Appellant.
Syed Ali Ahmad, Tanweer Ahmad, Mohan Pandey and Ms. J. Ahmed for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
1.
Special leave granted.
The respondent was served with an externment order passed under Section 56 of the Bombay Police Act (hereinaf ter referred to as the Act) directing him to leave the districts of Aurangabad and Jalna for a period of two years.
The order stated that from 11.5.1980 the respondent was found to be frequently engaged in illegal business of nar cotics and since he was involved in several cases of riot and criminal intimidation causing physical hurts to the residents of the locality on account of his suspicion that they were supplying information to the police about his illegal activities, witnesses were not willing to come forward and depose against him.
He filed an appeal under Section 60 of the Act and while the appeal was pending he moved the Bombay High Court with a writ application under Article 226 of the Constitution.
During the pendency of the writ application the State Government dismissed, the re spondent 's appeal by a short order.
The writ petitioner thereafter challenged the appellate order also in the pend ing writ case.
At the time of the final hearing of the writ case before the High Court, four points were raised on behalf of the petitioner.
As the 972 first point, it was urged that since the State Government omitted to give reasons in support of the order of dismissal of the appeal, the same was vitiated in law.
The High Court agreed with the petitioner and allowed the writ application quashing the appellate order as well as the initial extern ment order on this ground alone without going to the other questions.
The State Government has challenged the High Court judgment in the present appeal.
On behalf of the appellant reliance has been placed on the decision of this Court in Pandarinath Sridhar Rangne kar vs Deputy Commissioner of Police, where in a similar plea was taken by the appellant before this Court.
It was contended that the failure on the part of the State Government indicated non application of mind.
The appellant had also urged that the allegations contained in the show cause notice were too vague in absence of details to afford him reasonable opportunity to defend himself.
Rejecting the argument, this Court held that a full and complete disclosure of particulars, as is requisite in an open prosecution, will frustrate the very purpose of an externment proceeding.
There is a brand of lawless elements in society which it is impossible to bring to book by estab lished methods of judicial trial because in such trials there can be no conviction without legal evidence.
And legal evidence is impossible to obtain, because out of fear of reprisal witnesses are unwilling to depose in public.
While dealing with the contention that the State Government was under a duty to give reasons in support of its order dis missing the appeal, the point was rejected in the following terms: "Precisely for the reason for which the pro posed externee is only entitled to be informed of the general nature of the material allega tions, neither the externing authority nor the State Government in appeal can be asked to write a reasoned order in the nature of a judgment.
" As observed, if the authorities were to discuss the evidence in the case, it would be easy to fix the identity of the witnesses who were unwilling to depose in public against the proposed externee.
A reasoned order containing a discussion would probably spark off another round of harassment.
We are, therefore, of the view that the High Court was in error in quashing the order as confirmed by the state Government in appeal.
The externment order was made several years back and the learned counsel for the appellant rightly stated that although the 973 impugned order need not be revived now, it was necessary to correct the error in the High Court 's judgment as it is likely to prejudice ' other similar cases.
Accordingly in the circumstances we set aside the impugned judgment but make it clear that the externment order shall not be enforced against the respondent any further, the appeal is according ly allowed to this extent.
R.S.S. Appeal al lowed.
| An externment order was passed against the respondent under section 56 of the Bombay Police Act on the ground that he was found to be frequently engaged in illegal business of narcotics and was also involved in several cases of riot and criminal intimidation.
The respondent filed an appeal under section 60 of the Act and while the appeal was pending moved the High Court with a writ application.
The State Government dismissed the appeal by a short order.
Before the High Court it was urged that since the State Government omitted to give reasons in support of the order of dismissal of the appeal, the same was vitiated in Law.
The High Court agreed with the petitioner and allowed the writ application quasing the appellate order as well the initial externment order.
Allowing the appeal by the State to the extent of cor recting the error of law only, it was, HELD: (1) The High Court was in error in quashing the order of externment as confirmed by the State Government in appeal, on the ground that the State Government omitted to give reasons.
(2) A full and complete disclosure of particulars, as is requisite in an open prosecution, will frustrate the very purpose of an externment proceeding.
There is a brand of lawless elements in society which it is impossible to bring to book by established methods of judicial trial because in such trials there can be no conviction without legal evi dence.
And legal evidence is impossible to obtain, because out of fear of reprisal witnesses are unwilling to depose in public.
[972C E, G] 971 (3) If the authorities were to discuss the evidence in the case, it would be easy to fix the identity of the wit nesses who were unwilling to depose in public against the proposed externee.
A reasoned order containing a discussion would probably spark off another round of harassment.
[972G] Pandarinath Sridhar Rangnekar vs Deputy Commissioner of Police, , followed.
|
Civil Appeal No. 1101 of 1969.
From the Judgment and Order dated the 26th April 1968 of the Calcutta High Court in Wealth Tax Matter No. 421 of 1964.
section T. Desai, B. B. Ahuja, S P. Nayar and R. N. Sachthey, for the Appellant.
section K. Sen, A. K. Nag and D. P. Mukherjee for the Respondents.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by certificate has come before us as the question of law arising for decision is said to be of great importance.
The facts giving rise to the appeal are quite simple and may be shortly stated.
One Bireswar Chatterjee, who was admittedly governed by the Dayabhaga School of Hindu law, was assessed to income tax as an individual.
He died intestate on January 7, 1957, leaving his widow, sons and daughters.
The Wealth tax officer rejected their plea that on the death of Bireswar Chatterjee they held definite and determined shares in his properties and were liable to separate assessment, and assessed them as a Hindu undivided family for the assessment year 1958 59.
On appeal, the Appellate Assistant Commissioner held that since the assesses was governed by the Dayabhaga School of Hindu law, the properties could not belong to the Hindu undivided family and were to be taxed "in the hands of the co sharers separately.
" The department took an appeal to the Income tax Appellate Tribunal, 'B ' Bench, Calcutta.
There was difference of opinion between the members of the Tribunal, and in accordance with the opinion of the majority of the members it was ordered that "notwithstanding that there was no unity of ownership amongst members governed by the Dayabhaga School of Hindu law in respect of the family property and each member thereof had definite shares in it, such property, until partitioned, was assessable to wealth tax in the hands of the Hindu undivided family.
" The Tribunal however referred the following question of law to the Calcutta High Court for decision "Whether on the facts and in circumstances of the case, the Tribunal was right in holding that properties possessed jointly by the members governed by the Dayabhaga School of Hindu law were assessable to wealth tax jointly in the status of a Hindu undivided family?" 1098 The High Court accepted the contention that the question assumed that the property was owned jointly by the members of a Hindu undivided family governed by the Dayabhaga School of Hindu law, and reframed it as follows, "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the property possessed by the heirs of a Hindu male governed by the Dayabhaga School of Hindu law were assessable to wealth tax jointly in the status of a Hindu undivided family?" It took the view that the matter was covered by its earlier decisions including Commissioner of Wealth tax.
West Bengal vs Gouri Shankar Bhar where it had been held that on the death intestate of a Dayabhaga male, his heirs do not inherit his estate as members of a Hindu undivided family, and remain as co owners with definite and ascertained shares in the properties left by the deceased unless they voluntarily decide to live as members of a joint family.
The High Court also took notice of the fact that a suit for partition had been filed and a preliminary decree had been obtained on July 4, 1959, and answered the reframed question in the negative.
As has been stated, the High Court has certified this to be fit case for appeal to this Court.
Mr. section T. Desai appearing for the Commissioner of Wealth tax has challenged the view taken by the High Court and has argued that under the Dayabhaga School of Hindu law the property left by the father is taken by the sons jointly by descent, as coparceners, as their joint family comes into existence by operation of law.
He has accordingly argued that the father 's property is liable to be taxed under section 3 of the Wealth tax Act, hereinafter referred to as the Act, as a unit until it is partitioned amongst its members by metes and bounds.
Reference has in this connection been made to certain commentaries and judgments and we shall refer to them as and when necessary.
Section 3 of the Act is the charging section and the correctness or otherwise of the view taken by the High Court depends on its meaning and content.
The section provides for the charge of wealth tax in these terms. "3.
Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as Wealth tax) in respect of the net wealth on the corresponding valuation date of every individual Hindu undivided family and company at the rate or rates specified in the Schedule.
" The liability to wealth tax therefore arises in respect of the "net wealth" of the assessee, which expression has been defined as follows in section 2(m), "(m) "net wealth" means the amount by which the aggregate value computed in accordance with the provisions 1099 of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owned by the assessee on the valuation date other than, . " The expression "belong" has been defined as follows in the Oxford English Dictionary. "To be the property or rightful possession of.
" So it is the property of a person, or that which is in his possession as of right, which is liable to wealth tax.
In other words, the liability to wealth tax arises out of ownership of the asset, and not otherwise.
Mere possession, or joint possession, unaccompanied by the right to, or ownership of property would therefore not bring the property within the definition of net wealth" for it would not then be an asset "belonging" to the assessee.
The question is whether the estate or property of Bireswar Chatterjee could be said to belong jointly to his heirs, after his death? It is not in controversy, and is in fact admitted, that the property in question belonged to Bireswar Chatterjee who was its sole owner in his life time and was assessed to income tax as an individual.
His family consisted of his widow, sons and daughters and was governed by the Dayabhaga School of Hindu law.
Bireswar Chatterjee 's property was therefore the heritage, or the wealth, which vested in his heirs on his death.
According to Jimuta Vahana, his wife or sons or daughters had no ownership in his property during his life time for "sons have not ownership while the father is alive and free from defect." (Hindu Law by Colebrooke, P.9) ownership of wealth is however vested in the heirs "by the death of their father" (page 54, supra) when they become coheirs and can claim partition.
It is on this basis that "Dayabhaga" (partition of heritage) has been expanded by Jimuta Vahana.
According to him, "since anyone parcener is proprietor of his own wealth, partition at the choice even of a single person is thence deducible." (page 16, supra).
The heritage does not therefore become the joint property of the heirs, or the joint family, on the demise of the last owner, but becomes the fractional property of the heirs in well defined shares.
This concept of fractional ownership has been stated as follows by Krishna Kamal Bhattacharya in his "Law relating to the Joint Hindu Family" (Tagore Law Lectures) with reference to the doctrine of negation of the son 's right by birth (page 168), "As a corollary of the doctrine set forth above, negativing the son 's right by birth, is another peculiar doctrine of the Bengal School, that of what is called the 'fractional ownership ' of the heirs, contrasted with the doctrine of 'aggregate ownership expounded by all other schools.
" That is why 'partition ' in Dayabhaga is defined as an act of "particularising ownership", and is not the act of fixing diverse ownerships on particular parts of an aggregate of properties as in Mitakshara.
The 1100 learned author has clarified the position in unmistakable terms as follows (pages 172 73), "From what has been said above, it is evident that there is no unity of ownership in Bengal joint family, although there may be something like a unity of possession." (Emphasis added) This is why Mitashara is designated as the School of "aggregate ownership", while Dayabhaga is known as the School of "fractional ownership.
" As has been stated in Gopalchandra Sarkar Sastri 's "Hindu law" (eighth edition page 465), while the joint family system prevails in Bengal, "there cannot be a real joint family consisting of father and sons during the father 's life time, inasmuch as joint property which is the essence of the conception of joint family, would be wanting to make them joint.
" This is why, according to the Bengal School, the sons become tenants in common and not joint tenants in respect of the estate inherited by them from their father.
The position of joint family under the Dayabhaga law has been stated as follows in Mayne 's Treatise on "Hindu Law and Usage" (eleventh edition, page 364), "It follows therefore that under the Dayabhaga law, a father and his sons do not form a joint family in the technical sense having coparcenary property.
But as soon as it has made a descent, the brothers or other co heirs hold their shares in quasi severalty.
Each coparcener has full powers of disposal over his share which is defined and not fluctuating with births and deaths as in the case of a Mitakshara family and his interest, while still undivided, will on his death pass on to his own heirs male or female or even to his legatees.
" That was stated to be the law in Sreemutty Soorjeemoney Dossee vs Denobundoo Mullick The position has been dealt with in Mulla 's "Principles of Hindu Law" (fourteenth edition, at page 348), as follows, "The essence of a coparcenary under the Mitakshara law is unity of ownership.
On the other hand, the essence of a coparcenary under the Dayabhaga law is unity of possession.
It is not unity of ownership at all.
The ownership of the coparcenary property is not in the whole body of coparceners.
Every coparcener takes a defined share in the property, and he is the owner of that share.
That share is defined immediately the inheritance falls in.
It does not fluctuate with births and deaths in the family.
Even before partition any coparcener can say that he is entitled to a particular share, one third or one fourth.
Thus if A dies leaving three sons, B, C, and D, each one will be the owner of his on third share.
The sons are coparceners in this sense that 1101 possession of the property inherited from A is joint.
It is the unity of possession that makes them coparceners.
So long as there is unity of possession, no coparcener can say that a particular third of the property belongs to him; that he can say only after a partition.
Partition then, according to the Dayabhaga law, consists in splitting up joint possession and assigning specific portions of the property to the several coparceners.
According to the Mitashara law, it consists in splitting up joint ownership and in defining the share of each coparcener.
" In fact we find that a case somewhat similar to the one before us arose when one Prafulla Chandra Bhar, a Hindu governed by the Dayabhaga School, died intestate.
His mother, widow, three sons and one daughter survived him.
Since the death took place before the came into operation, he was succeeded by his widow and three sons, each inheriting one fourth share in the estate.
Gouri Shankar Bhar, one of the sons, took out letters of administration and filed, a wealth tax return in his capacity as ad ministrator descrth the status of the assessee as a Hindu undivided family.
The Wealth Officer also treated the status as such, and made the assessment.
Gouri Shankar however filed an appeal and contended that the family being governed by the Dayabhaga School,the shares of the coparceners in the property of the deceased were definite and ascertained and the assessment should not have been made in their status as a Hindu undivided family and each member should have been assessed separately upon the value of his share in the inherited property.
The Appellate Assistant Commissioner overruled the contention and took the view that even though the shares of the coparcencrs were definite and ascertained, the income from the prperty of the family did not belong to the several members in specified shares but continued to belong to the Hindu undivided family as a whole.
On further appeal, the Tribunal held that as the coparcener under the Dayabhaga law had a definite share in the property left by the deceased and was legally the owner thereof, he had a defined share and that since the wealth tax was levied on the basis of ownership, it was proper that the assessment should have been made on the individual coparceners on their respective shares and assessment of the total wealth in the hands of the undivided family would be illegal.
The matter was referred to the High Court at the instance of the Commissioner of Wealth tax.
The High Court of Calcutta in Commissioner of Wealth tax case (supra) made a reference, inter alia, to the decision in Biswa Ranjan Sarvadhikari vs Income tax officer, F. Ward District, (2) Calcutta and upheld the view that where property is owned by two or more persons governed by the Dayabhaga School and their shares are.definite and ascertainable, then, although they are in Joint possession, the tax will be assessed on the basis of the share of the income in the hands of the assessee and not as of a Hindu undivided family.
It was held that the position was not different under the Wealth tax Act.
The matter was brought to this Court on appeal and it was conceded by Solicitor General appearing for the Commissioner of Wealth tax that as the property was the individual property of the 1102 deceased, it devolved on his heirs in severalty.
It was held that as each of them took a definite and separate share in the property, each of them was liable, in law, to pay wealth tax as an individual.
While upholding the decision of the High Court it was however observed by this Court that it was not necessary to decide, in that case, whether a Dayabhaga family could be considered as a Hindu undivided family within the meaning of section 3 of the Act.
That decision is Commissioner of Wealth tax, West Penal vs Gauri Shankar Bhar.
In the case before us, it is not in dispute that the property in question was the individual property of Bireswar Chatterjee and that it devolved on his heirs according to the provisions of the .
It will be recalled that a suit for partition was filed on June 21, 1957 and a preliminary decree was passed on July 4, 1959.
For reasons already stated, the coparcenary had unity of possession but not unity of ownership on the property.
Eac coparcener therefore took a defined share in the property and was the owner of his share.
Each such defined shar thus "belonged" the coparcener.
It was his "net wealth" within the meaning of section 2(m) of the Act and was liable to wealth tax as such under section 3.
The High Court was therefore right in answering the reframed question in the negative, and as we find no force in the argument of Mr. Desai, the appeal fails and is dismissed with costs.
| Rejecting the respondents ' plea that as persons governed by the Dayabhaga School of Hindu Law they had held definite and determined shares in the properties inherited by them from their father and were liable to separate assessment of wealth tax, the Wealth Tax Officer assessed them as a Hindu Undivided Family.
On appeal the Appellate Assistant Commissioner held that the properties should be taxed in the hands of the co sharers separately.
On further appeal, the Appellate Tribunal held that notwithstanding that there was no unity of ownership amongst members governed by the Dayabhaga School of Hindu Law in respect of family property and each member thereof had no definite share in it, such property, until partitioned, was assessable to wealth tax in the hands of the Hindu Undivided Family.
On reference, the High Court held in favour of the assesses.
Dismissing the appeal to this Court, ^ HELD: Dayabhaga means partition of heritage.
A Dayabhaga male 's wife or sons or daughters have no ownership in his property during his lifetime.
Ownership of wealth is vested in the heirs by the death of their father, when they become co heirs and can claim partition.
The heritage of a Dayabhaga male does not become the joint property of the heirs or of the joint family on the demise of the last owner but becomes the fractional property of the heirs in well defined shares.
That is why partition in Dayabhaga is defined as an act of particularising ownership.
In Dayabhaga, the sons become tenants in common and not joint tenants in respect of the estate inherited by them from their father.
While Mitakshara is known as the School of "aggregate ownership", Dayabhaga is known as the school of "fractional ownership".
The essence of a coparcenary under the Mitakshara Law is unity of ownership; under the Dayabhaga it is unity of possession, not unity of ownership at all.
Under the Dayabhaga school every coparcener takes a definite share in the property and he is the owner of that share which is defined immediately the inheritance falls in.[1099D G: 1100B H] Sreemutty Soorjeemoney Dossee vs Denobundoo Mullick, 6 M.I.A. 526 at p. 553.
Hindu Law by Colebrooke p. 9. 2.
Law relating to the Joint Hindu Family (Tagore Law Lecrures) by Krishna Kamal Bhattacharya p. 168 and 3.
Principles of Hindu Law by Mulla (14th Edition) p. 348.
Hindu Law & Usage, by Mayne,11th Edition 364, approved.
(i) Under section 3, the liability of wealth tax arises in respect of the net wealth of the assesses.
The term "net wealth" means all the assets belonging to the assesses, on the valuation date.
The expression "belong" according to the Oxford Dictionary means "to be the property or rightful possession of".
[1098G H] (ii) The liability to wealth tax arises out of ownership of the asset and not otherwise.
Mere possession or joint possession unaccompanied by the right to or ownership of property would, therefore, not bring the property within the 1097 definition of "net wealth", for it would not then be the asset belonging to the assesses.
[1099C] In the instant case, the property in question was the individual property of the father of the respondents and it devolved on the heirs according to the provisions of the .
The coparcenary had unity of possession but not unity of ownership on the property.
Each coparcener took a defined share in the property and was the owner of his share.
Each such defined share thus belonged to the coparcener.
It was his net wealth within the meaning of section 2(m) of the Wealth Tax Act and was liable to wealth tax, as such, under section 3.
[1102C D] Commissioner of Wealth tax West Bengal vs Gouri Shankar Bhar, explained.
|
Appeal No. 649 of 1967.
411 Appeal by special leave from the order dated May 4, 1966 of the Calcutta High Court in Income tax Reference No. 114 of 1965.
Jagadish Swarup, Solicitor General, Ram Panjwani, R. N. Sachthey and B. D. Sharma, for the appellant.
C. K. Daphtary, B. P. Maheshwari and K. R. Khaitan, for the respondent.
The Judgment of the Court was delivered by Shah, C.J.
Burlop Dealers Ltd. hereinafter referred to as 'the assessee is a limited company.
For the assessment year 1949 50 the assessee submitted a profit and loss account disclosing in the relevant year of account Rs. 1,75,875/ as profit in a joint venture from H. Manory Ltd. and claimed that Rs. 87,937/ being half the profit earned from H. Manory Ltd. was paid to Ratiram Tansukhrai under a partnership agreement.
The assessee stated that on June 5, 1948, it 'had entered into an agreement with H. Manory Ltd. to do business in plywood chests and in consideration of financing the business the assessee was to receive 50% of the profits of the business.
The assessee claimed that it had entered into an agreement on October 7, 1948, with Ratiram Tansukhrai for financing the transactions of H. Manory Ltd. in the joint venture, and had agreed to pay to Ratiram Tansukhrai 50% of the profit earned by it from the business with H. Manory Ltd. The Income tax Officer accepted the return filed by the assessee and included in computing the total income for the assessment year 1949 50 Rs. 87,937/ only as the profit earned on the joint venture with H. Manory Ltd. In the assessment year 195051 the assessee field a return also accompanied by a profit and loss account disclosing a total profit of Rs. 1,62,155/in the relevant account ear received from H. Manory Ltd., and claimed that it had transferred Rs. 81,077/ to the account of Ratiram Tansukhrai as his share.
The Income tax Officer on examination of the transactions brought the entire amount of Rs. 1,62,155/ to tax holding that the alleged agreement of October 1948 between the assessee and Ratiram Tansukhrai had merely been "got up as a device to reduce the profits, received from H. Manory Ltd.".
This order was confirmed by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
The Tribunal then stated a case under section 66(1) of the Income tax Act to the High Court of Calcutta.
The High Court agreed with the view of the Tribunal and answered the question against the assessee.
412 In the meanwhile on May 13, 1955, the Income tax Officer issued a notice under section 34 to the assessee for the assessment year 1949 50 to re open the assessment and to assess the amount of Rs. 87,937/ allowed in the assessment of income tax as paid to Ratiram Tansukhrai.
The assessee filed a return which did not include the amount paid to Ratiram Tansukhrai.
The Income tax Officer re assessed the income under section 34(1) (a) and added Rs. 87,937/ to the income returned by the assessee in the assessment year 1949 50.
The Appellate Assistant Commissioner held that the Income tax Officer was entitled to take action under section 34(1) (a) of the Income tax Act 1922 after the ,amendment in 1948, and to re open the assessment if income had been under assessed owing to the failure cf the assessee to disclose fully and truly all material facts necessary for the assessment.
He confirmed the order observing that the assessee had misled the Income tax Officer into believing that there was a genuine arrangement with Ratiram Tansukhrai and had stated in the profit and loss account that the amount paid to Ratiram Tansukhrai was the share of the latter in the partnership, whereas no much share was payable to Ratiram Tansukhrai.
In appeal against the order of the Appellate Assistant Com missioner the Income tax Appellate Tribunal held that the assessee had produced all the relevant accounts and documents necessary for completing the assessment, and the assessee was under no obligation to inform the Income tax Officer about the true nature of the transactions.
The tribunal on that view reversed the order of the Appellate Assistant Commissioner and directed that the amount of Rs. 87,937/ be excluded from the total income of the assessee for the year 1949 50.
An application under section 66(1) of the Indian Income tax Act for stating a case to the High Court was rejected by the Tribunal.
A petition to the High Court of Calcutta under section 66(2) for ,directing the Tribunal to submit a statement of the case was also ,rejected.
The Commissioner has appealed to this Court.
Section 34(1) of the Indian Income tax Act, 1922, as it stood in the assessment year 1949 50 provided: "If (a) the Income tax Officer has reason to elieve that by reason of the omission or failure on the part of an assessee to make a return of income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains 413 chargeable to income tax have escaped assessement for that year, or have been under assessed.
(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, or have been under assessed.
he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, a notice containing all or any of the requirements which may be included in a notice under sub section(2) of section 22, and may proceed to assess or re assess such income, profits or gains" The Income tax Officer had in consequence of information in his possession that the agreement with Ratiram Tansukhrai was a sham transaction reason to believe, that income chargeable to tax had escaped assessment.
Such a case would appropriately fall under section 34(1)(b).
But the period prescribed for serving a notice under section 34(1) (b) had elapsed.
Under section 34 (1 )(a) the Income tax Officer had authority to serve a notice when he had reason to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year, income chargeable to tax had escaped assessment.
As observed by this Court in Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District 1, Calcutta and another(1).
"The words used are "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year".
It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment.
What facts 'are material and necessary for assessment will differ from case to case.
In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion.
From the primary facts (1) 41 ; , 200. 414 in his possession whether on disclosure by the assessee, or discovered by him on the basis of the facts disclose, or otherwise, the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable".
We are of the view that under section 34(1) (a) if the assessee has disclosed primary facts relevant to the assessment, he is under no ,obligation to instruct the Income tax Officer about the inference which the Income tax Officer may raise from those facts.
The terms of the Explanation to section 34(1) also do not impose a more onerous obligation.
Mere production of the books of account or other evidence from which material facts could with due diligence have been discovered does not necessarily amount to disclosure within the meaning of section 34(1), but where on the evidence and the materials produced the Income tax Officer could 'have reached a conclusion other than one which he has reached, a proceeding under section 34(1) (a) will not lie merely on the ground that the Income tax Officer has raised an inference which he may later regard as erroneous.
The assessee had disclosed his books of account and evidence from which material facts could be discovered : it was under no obligation to inform the Income tax Officer about the possible inferences which may be raised against him.
It was for the Income tax Officer to raise such an inference and if he did not do so the income which has escaped assessment cannot be brought to lay under section 34(1) (a).
The appeal fails and is dismissed with costs.
K.B.N. Appeal dismissed.
| For the assessment year 1949 50 the assessee submitted a profit and loss account disclosing a certain amount as profit in a joint venture and claimed that half of this profit was paid to R under a partnership agreement.
The Income tax Officer accepted the return and included only half of the profit in the joint venture in computing the assessee 's total income.
In the next assessment year the assessee filed a return accompanied by a profit and loss account and claimed that it had transferred half the profit to R as his share.
But the Income tax Officer on examination of the transactions brought the entire amount of profit in the joint venture to tax, holding that the partnership agreement was got up a devise to reduce the profits received from the joint venture.
This order was confirmed by the Tribunal and the High Court.
Meanwhile, the Income tax Officer issued a notice under section 34 of the Income tax Act, 1922 to reopen the assessment for the assessment year 1949 50 and to assess the amount allowed in that assessment as paid to R. The Income tax Officer re assessed the income under section 34(1) (a) and added that amount to the income returned by the assessee in the assessment year 1949 50.
The Appellate Assistant Commissioner confirmed that order but the Tribunal reversed.
The High Court, on reference, answered in favour of the assessee.
Dismissing the appeal by the Revenue, HELD : Under section 34(1) (a,), if the assessee has disclosed primary facts relevant to the assessment, he is under no obligation to instruct the Income tax Officer about the inference which the Income tax Officer may raise 'from these facts.
The terms of the Explanation to section 34(1) also do not impose a more onerous obligation.
Mere production of the books of account or other evidence from which material facts could with due diligence, have been discovered does not necessarily amount to disclosure within the meaning of section 34(1); but where on the evidence and the materials produced the Income tax Officer could have reached a conclusion other than the one which he has reached, a proceeding under section 34(1) (a) will not lie merely on the ground that the Income tax Officer has raised an inference which he may later regard as erroneous.
The assessee had disclosed his books of account and evidence from which material facts could be discovered.
It was 'for the Income tax Officer to raise the necessary inference and if he did not do so the income which has escaped assessment cannot be brought to tax under section 34(1) (a).
[413 C] Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District 1, Calcutta & Anr. , 200, referred to.
|
Civil Appeal No. 14 of 1968.
Appeal from the judgment and decree, dated December 12, 1964 of the Allahabad High Court in F.A.F.O. No. 401 of 1963.
R.M. Hazarnavis, K.L. Hathi and Atiqur Rehman, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
By a contract, dated March 8, 1945, the appellant agreed to supply meat to the Government of India.
The contract contained an arbitration clause for reference of disputes arising out of the contract to the officer named in the contract.
The appellant claims that a sum of Rs. 8,38,994/10/6/ is due to him in respect of the supplies of meat made by him during the period between April 1, 1945 and March 31, 1946.
He made representations to.
the Government for payment and for arbitration of the disputes.
On or about July 10, 1958 the Government refused to.
refer the matter to.
arbitration.
On July 11, 1961 the appellant filed an application in the Court of the District Judge, Jhansi, under sections 8 and 20 of the for filing the arbitration agreement and for an order of reference of the disputes to an arbitrator appointed by the Court.
The respondent contended that the application was barred by limitation.
The District Judge allowed the application.
He held that there was no period of limitation for making an application under sections 8 and 20.
The defendant filed an appeal against the order.
The High Court dismissed the appeal as incompetent in so far as it challenged the order under section 8, and allowed it in so far as it challenged the order under section 20.
The High Court held that the application was governed by article 181 of the Indian Limitation Act, 1908 and was barred by limitation as it was made more than three years after the disputes had arisen.
The appellant has filed this appeal after obtaining a certificate from the High Court.
The point in issue is whether an application under section 20 of the is governed by article 181 of the Indian L2Sup.
CI 69 16 234 Limitation Act.
Since the decision in Bai Manekbai vs Manekli Kavasji(1) it is well settled that the operation of article 181 is limited to applications under the Code of Civil Procedure.
In that case Westropp, C.J. after referring to the corresponding article 178 in the second schedule to the Limitation Act of 1877 observed: "An examination of all the other articles in the second schedule relating to "applications", that is to say of the Third division of that schedule, shows that the applications therein contemplated are such as are made under the Code of Civil Procedure.
Hence it is natural to conclude that the applications referred to in Article 178 are applications ejusdem generis, i.e., applications under the Code of Civil Procedure.
The preamble of the Act, moreover, purports to deal with 'certain applications ' only, and not with all applications.
" This decision was followed in numerous cases and was approved in Hansraj Gupta vs Official Liquidator Dehra Dun, Mussourie Electric Tramway Company(2).
Having regard to these decisions, Das, J. said in Shah Mulchand & Co., vs Jawahar Mills Ltd. (3): "This long catena of decisions may well be said to have as it were, added the word 'under the Code ' in the first column of that Article=." The Court held that the amendment of articles 15 8 and 178 and the insertion of the words "under the " in place of the words "under the Code of Civil Procedure, 1908" did not alter the settled meaning of article 181.
To the same effect is the decision in Bombay Gas Ca.: vs Gopal Bhiva.(4) Following these decisions the Court held in Wazirchand Mahajan & Anr.
vs Union of India(5) that an application under section 20 of the not being an application under the Code of Civil Procedure was not governed by article 181.
The High Court has come to the conclusion that an application under section 20 of the is governed by article 181 for the following reasons: Article 181 should be construed as if the words "under the Code" were added in it.
The repealed paragraph 17 of the second schedule to the Code and re enacted it in section 20 with minor modifications.
That being so, section 8(1) of the applied and the implied reference in article 181 to paragraph 17 of the second schedule to the Code should be construed as a reference to section 20 of the .
No different intention is to be found in the and there is nothing to indi (1) Bom.
213, 214.
(2) [1933] L.R. 60 I.A.13, 20.
(3) ; ,371.
(4) ; (5) ; 235 cate that an application under section 20 can be made at any time without any limitation.
The argument that the implied reference in article 181 to paragraph 17 of the second schedule to the Code should be construed as a reference to section 20 of the and not raised and considered in Wazirchand Mahalan 's case(1).
It is, therefore, our duty to examine this contention.
Section 8 (1) of the corresponds to the Interpretation Act, 1889 (52 & 53 vict.
c. 63) and runs as follows: "Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed, shall, unless a different intention appears, be construed as references to the provision so reenacted.
" The section embodies the rule of construction that where the provision of an Act is repealed and re enacted with or without modification, a reference to the repealed provision in any other enactment should be regarded as a reference to the provision re enacted in the new form unless it appears that the legislature had a different intention.
The was passed with a view to consolidate and amend the law relating to arbitration.
Formerly the general law relating to arbitration was to be found in the Indian Arbitration Act, 1899 and the Code of Civil Procedure, 1908.
Paragraphs 1 to 16 of the second schedule to the Code applied to all arbitrations in suits.
As to arbitrations otherwise than in suits, the Indian Arbitration Act, 1899 applied to cases where, if the subject matter submitted to arbitration were the subject of a suit, the suit could be instituted in a Presidency town; in other cases, the Code of Civil Procedure, 1908 applied The repealed both the enactments.
It extends to the whole of India except the State of Jammu and Kashmir, and save as provided in section 47 applies to all arbitrations.
As to the provisions of the new Act under which applications can be made to Court, sections 8, 14, 16, 28 and 30, correspond to provisions which are found in both the repealed enactments, sections 5 and 9 correspond to similar provisions in the Indian Arbitration Act, 1899, and sections 15 and 20 correspond to similar provisions in the second schedule to the Code and some sections such as sec.
11, are entirely new.
In the circumstances, a question may arise whether the provisions of the new Act can be regarded as reenactments of the repeated provisions of the Indian Arbitration Act, 1899 or of the Code.
But for the purpose of this case we shall ,assume that section 20 of the new Act is a re enactment with (1) ; 236 modification of paragraph 17 of the second schedule to the Code.
We shall also assume that article 181 of the Limitation Act as construed by the Courts should be regarded as containing a reference to the Code of Civil procedure including paragraph 17 of the second schedule thereof.
Even after making those two assumptions it appears to us that the implied reference in article 181 to the Code of Civil Procedure cannot be construed as a reference to the .
Before their amendment by the Indian , article 158 of the Limitation Act applied to applications "under the Code of Civil Procedure, 1908 to set aside an award" and article 178 applied to applications.
"under the same Code for the filing in Court of an award".
The amended articles 158 and 178.
The amended article 158 applies to applications "under the to set aside an award or to get an award remitted for consideration", that is to say, to application under sections 16 and 30 of the Act.
The amended article 178 applies to applications "under the for the filing in Court of an award", that is to say to applications under section 14 of the Act.
In amending articles 158 and 178 the legislature acted upon the view that the references to the Code of Civil Procedure, 1908 in the second schedule t9 the Limitation Act could not in the absence of the amendment be construed as references to.
At the same time the legislature refrained from amending article 181 and providing that the article will apply to other applications under the .
It is manifest that the legislature intended that save as provided in articles 158 and 178 there would not be any limitation for other applications under the Act, Take the case of an application under section 28 of the Act for enlargement of the time for making the award.
A similar application under paragraph 8 of the second schedule to the Code was governed by article 181,but a like application under section 12 of the Indian Arbitration Act,1899 was not subject to any period of limitation.
There is nothing to indicate that for the purpose of limitation section 20 of the new Act should be regarded as a re enactment of the corresponding provision of the.
Code and not of the Indian Arbitration Act, 1899.
An application under section 8 of the new Act corresponding to paragraph 5 of the second schedule to the Code and section 8 of the Indian Arbitration Act, 1899 stand on the same footing.
In the circumstances, it is not possible to construe the implied reference in article 181 to the Code of Civil Procedure as a reference to the , or to hold that article 181 applies to applications under that Act.
The rule of construction given in section 8 (1) of the cannot be applied, as it appears that the legislature had a different intention.
It follows that an application under sections 8 and 20 of the is not 237 governed by article 181.
The Limitation Act does not prescribe any period of limitation for such an application.
It follows that the present application under sections 8 and 20 is not barred by limitation.
In conclusion we must observe that the appellant 's claim relates to supplies during the period between April 1, 1945 and March 31, 1946.
There is a serious contention whether the claim is barred by limitation.
It will be the duty of the arbitrator to consider this matter carefully and to decide whether or not the claim is so barred.
In the result, the appeal is allowed, the order of the High Court is set aside and the order of the District.
Judge, Jhansi, is restored.
In the circumstances of the case, there will be no order as to costs in this Court.
G.C. Appeal allowed.
| The appellant entered into a contract with the Government of India.
The contract contained an arbitration clause.
For certain supplies made under the contract the appellant made representations to the Government or payment and for arbitration of disputes.
On or about July 10, 1958 Government refused to refer the matter for arbitration.
On July 11, 1961 the appellant flied an application in the Court of the District Judge under sections 8 and 20 of the , for filing the arbitration agreement and for an order of reference of the disputes to an arbitrator appointed by the court.
The respondent contended that the application was barred by Limitation.
The District Judge allowed the application, holding that there was no limitation for making an application under sections 8 and 20.
The defendant 's appeal was dismissed by the High Court as incompetent in so far as it challenged the order under section 8 but was allowed in so far as it challenged the order under section 20.
The High Court held that an application under section 20 is governed 'by article 181 of the Indian Limitation Act, 1908.
In coming to this conclusion the High Court took into account the settled judicial view that the.
operation of article 181 is limited to applications under the Code of Civil Procedure.
and reasoned as follows: Article 181 should be construed as if the words 'under the Code ' were added in it.
The repealed paragraph 17 of the second schedule to the Code and re enacted it in section 70 with minor modifications.
That being so section 8(1) of the applied and the implied reference in article 181 to paragraph 17 of the second schedule to the Code should be construed as a reference to section 20 of the .
Appeal against the High Court 's judgment was filed with certificate.
HELD: The 'appeal must be allowed.
By the the Legislature amended articles 158 and 178 of the Limitation Act and made them applicable to the relevant proceedings under the but no similar change was made in article 181.
It is manifest that save as provided in articles 158 and 178 there would not be any limitation for other applications under the Act.
Further there is nothing to indicate that for the purpose of limitation section 20 of the 1940 Act should be regarded as a re enactment of the corresponding provision of the Code and not of the Indian Arbitration Act, 1899.
[236 D G] In the circumstances it is not possible to construe the implied reference in article 181 to the Code of Civil Procedure as a reference to the or to hold that article 181 applies to applications under that Act.
The rule of construction given in section 8(1)of the cannot be applied, as it appears that the legislature had a 233 different intention.
It follows that an application under sections 8 and 20 of the is not governed by article 181.
The Limitation Act does not prescribe any period of limitation for such an application.
[236 G H] The present application under sections 8 and 20 was therefore not barred by limitation.
[237 A] Bai Manekbai vs Manekji Kavasji, Born.
213, 214 Hansraj Gupta vs Official Liquidator Dehra Dun Mussourie Electric Tramway Company, (1933) L.R. 60 I.A. 13, 20, Shah Mulchand & Co. vs Jawahar Mills Ltd. ; , 371, Bombay Gas Co. vs Gopal Bhiva, ; and Wazirchand Mahajan & Anr.
vs Union of India, ; , referred
|
ION: Criminal Appeal No. 120 of 1961.
Appeal by special leave from the judgment and order dated March 17, 1961 of the Punjab High Court in Criminal Writ No. 2 of 1961.
WITH Petition No. 147 of 1961.
Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
The appellant/petitioner in person.
H. section Doabia, Additional Advocate General, Punjab, Gopal Singh and P. D. Menon.
for respondent (in the appeal and the petition.) 1961.
November 2. 'The Judgment of Sinha, C. J., Subba Rao, Shah and Mudholkar, JJ, was delivered by Subba Rao, J. Dayal, J. delivered a separate Judgment.
SUBBA RAO, J.
Both these matters are connected and raise the same questions, and they may be disposed of together.
Ranbir Singh Sehgal, the petitioner in the writ petition, is now a prisoner in the Central Jail Ambala, in the State of Punjab.
He was prosecuted for committing offence in different places.
On June 13, 1961, he was convicted by the Additional District Magistrate, Ambala, under section 5 of the Indian Explosive Substances Act and sentenced to 298 5 years rigorous imprisonment and to pay a fine of Rs. 2,000/ .
The petitioner has preferred an appeal against the said conviction and sentence, and the said appeal is now pending the High Court of Punjab.
On January 30, 1961, the Additional Sessions Judge (II), Ambala, convicted the petitioner under sections 120 B and 399 of the Indian Penal Code and sentenced him to 7 years rigorous imprisonment and a fine of Rs. 2,000/ under the former section, d to 5 years rigorous imprisonment and a fine of Rs. 2,000/ under the latter section.
The petitioner preferred an appeal against this conviction and sentence to the High Court of Punjab and the same is now pending there.
The other eases are not disposed of and they are still pending in various courts.
The petitioner was arrested by the Ambala, police on September 11, 1958, and was detained in police custody for a period of about 8 months, and on May 7, 1959, he was transferred to judicial custody at Ambala.
On June 13,1960, he was convicted under the Indian Arms Act, and from that date he is in the Central Jail, Ambala,, as a convicted prisoner.
On December 15, 1960, the Governor of Punjab ordered that the petitioner should be treated as a 'B ' class prisoner.
On February 9, 1961, he filed a petition under article "26 of the Constitution in the High Court of Punjab at Chandigarh, questioning inter alia his confinement in that prison on the ground that para.
575 of the Punjab Jail Manual where under he was confined to a separate cell in the prison, offended article 14 of the Constitution, and that in fact discriminatory treatment was meted out to him not for the maintenance of discipline but for extraneous reasons.
That petition was dismissed by the said High Court on March 17, 1961, and Criminal Appeal No. 120 of 1961 was filed against the said order by special leave granted by this Court.
That apart he also filed the present writ petition (Writ Petition No. 147 of 1961) in this Court under article 32 of the Constitution covering the same ground.
The prisoner 299 argued his own case.
He raised before us two points, namely, (1) para.
575 of the Punjab Jail Manual offends article 14 of the Constitution in as much as it confers arbitrary power on the Superintendent of Jail to deal with a prisoner under the colour of the said provision in a brutal way circumventing other stringent provisions of the Prisons Act and other paragraphs of the Punjab Jail Manual conceived in the interest and fair treatment of prisoners, (2) the Superintendent of Jail, for extraneous reasons on the pretext of disciplinary action, gave him solitary confinement in a cell since the date he was transferred to that Jail, and thus acted with mala fide.
that apart, he discriminated him in the matter of treatment from other prisoners and even from the co accused, who were convicted along with him, and thus offended article 14 of the Constitution.
The first question falls to be decided on the relevant provisions of the Indian Penal Code, the Prisons Act, and the Punjab Jail Manual.
There are three types of punishment, namely, (i) solitary confinement,(ii) cellular confinement, and (iii) separate confinement.
Solitary Confinement means such confinement with or without labour as entirely secludes the prisoner both from sight of, and communication with, other prisoners.
The punishment of solitary confinement can be imposed by a Court only, and, in view of its dangerous potentialities stringent conditions are imposed thereon.
No person can be sentenced to undergo solitary confinement for more than three months.
There is a limit prescribed on the punishment of solitary confinement that can be imposed on a prisoner: it shall not exceed (a) one month, if the term of imprisonment does not exceed six months, (b) two months, if the term of imprisonment exceeds six months, but does not exceed one year, and (c) three months if the term exceeds one year: (vide section 73 of the Indian Penal Code).
Section 74 of the Indian Penal Code says, 300 In executing a sentence of solitary confinement, such confinement hall in no case exceed fourteen days at a time with intervals between the periods of solitary confinement of not less duration than such periods, and when the imprisonment awarded shall exceed three months, the solitary confinement shall not exceed seven days in any one month of the whole imprisonment awarded, with intervals between the periods of solitary confinement of not less duration than such periods.
" Section 29 of the Prisons Act reads, "No cell shall be used for solitary confinement unless it is furnished with the means of enabling the prisoner to communicate at any time with an officer of the prison, and every prisoner so confined in a cell for more than twenty four hour, whether as a punishment or otherwise, shall be visited at least once a day by the Medical officer or Medical Subordinate." Cellular confinement is a punishment which can be imposed on a prisoner by a Superintendent of Jail.
A Superintendent of Jail can punish in a suitable case a prisoner by imposing on him cellular confinement for a period not exceeding fourteen days, provided that after each period of cellular confinement an interval of not less than such period must elapse before the prisoner is again sentenced to cellular or solitary confinement.
Cellular confinement in defined to mean such confinement with or without labour as entirely secludes a prisoner from communication with, but not from sight of, other prisoners.
Separate confinement is defined to mean such confinement with or without labour as secludes a prisoner from communication with, but not from sight of, other prisoners, and allows him not less than one hour 's exercise per diem and to have his meals in association with one or more 301 other prisoners.
Separate confinement for a period not exceeding three months can be imposed on prisoner in a suitable case by the Superintendent of Jail.
(Vide section 46(8) of the Prisons Act).
Section 47 of the Prisons Act prohibits the combination of cellular confinement with separate confinement so as to prolong, the total period of seclusion to which a prisoner shall be liable.
Solitary confinement can he given only by a court and the other two by a Superintendent of Jail for jail offences.
The provisions conceived in the interest of the physical, moral and mental health of prisoners impose stringent conditions in carrying out those sentences in order to prevent their abuse.
But in the interest of maintaining discipline among the inmates of jail, the Prisons Act and the Jail Manual prescribe rules for a separation of prisoners.
The separation of prisoners depends upon the nature of the prisoner, the class to which he belongs and the availability of adequate number of cells.
Section 27 of the Prisons Act provides that, (1) in a prison containing female as well as male prisoners, the females shall be imprisoned in separate buildings, or separate parts of the same building, in such manner as to prevent their seeing, or conversing or holding any intercourse with the male prisoners (2) in a prison where male prisoners under the age of twenty one are confined, means shall be provide for separating them altogether from the other prisoners and for separating those of them who have arrived the age of puberty from those who have not (3) unconvicted criminal prisoners shall be kept apart from convicted Criminal prisoners; and (4) civil prisoners shall be kept apart from criminal prisoners.
Section of the said Act says, "Subject to the requirements of the last foregoing section, convicted criminal prisoners may be confined either in association or 302 individuals in cell or partly in one way and partly in the other".
Presumably in exercise of the power conferred on the State Government by section 59 of the Prisons Act, certain rules were framed for the separation of prisoners and they are contained in the Jail Manual.
Under para.
571 of the Jail Manual, 'shall convicts shall, so far as the requirements of labour and the cell accommodation of the Jail will allow, be kept separate both by day and by night.
" Paragraph 572 deals with the occupation of vacant cells, and para.
573 says that " 'convicts of the habitual class shall be subjected to the system of separation prescribed in the preceding rules, in rotation.
" Paragraph 574 provides.
If, at any time, there are more cells in any jail than suffice for the separation of all convicts of the habitual class, prisoners of the casual class shall be confined in cells, both by day and night, in rotation.
" Then comes the impugned provision, namely, para.
576, which reads: "A convict who would ordinarily came under the operation of any of the preceding rules relating to the separation of prisoners, but cannot be confined in a cell by day, by reason that he is required for some jail service, shall be confined in a cell by night.
" There rules, along with the provisions of the Prisons Act, form an integrated scheme conceived for the maintenance of discipline of prisoners, and the preferential treatment in the allotment of cells is based upon sex, age, nature of the crime committed and the nature of the prisoners, and also the availability of cells.
The question is whether para.
575 of the Jail Manual offends Act.
14 of the Constitution.
The said provision is only in a group of rules providing for the separation of prisoners and it only says that if a prisoner to whom any of the prison rules 303 applies cannot be confined to a cell by day shall be confined in a cell by night.
It pre supposes that the prisoner concerned belongs to the category to whom a separate cell is allotted and, by reason of his being required for jail service, cannot be confined to the cell by day: in such a case it says that he shall be confined to the cell by night.
It is only a rule providing for a contingency when a prisoner who should be so confined in a cell both by day and night cannot be confined by day in such a cell.
But the objection may be taken to mean that the other rules, along with this rule enable a Superintendent of Jail to put a prisoner in a cell offends article 14 of the Constitution.
It is settled law that article 14 of the Constitution permits classification, and the said classification must bear just and reasonable relation to the object of the legislation.
The object of the said provision is to maintain discipline among the inmates of jail.
The classification is made on the basis of sex and the nature of the prisoners and also on the availability of cells.
The classification has certainly a reasonable relation to the object sought to be achieved by the legislation nor can the power conferred on the Superintendent to separate prisoners be said to be arbitrary.
The object of the conferment of the said power is very limited, and the provisions clearly lay down the conditions for separation.
The power to separate is entrusted to the highest officer in the jail premises, who may ordinarily be expected to not reasonably, objectively and without bias.
In these circumstances, we must hold that para.
575 of the Jail Manual in it setting does not offend the provisions of article 14 of the constitution.
The next question is whether in purported exercise of the said power the Superintendent in the present case acted with mala fide and meted out discriminatory treatment to the petitioner and thus offended article 14 of the constitution the 304 affidavit filed in the Writ Petition, the petitioner made certain allegations against the Superintendent in respect of his treatment in jail.
The said allegations may be summarized thus: The petitioner was transferred to the judicial custody at the Central Jail Ambala, on May 7, 1959, after protracted police custody of over eight months.
On the very day of his arrival in the Jail, the petitioner was looked up in solitary confinement in a cell in the condemned prisoners block and lock up period of 24 hours inside the cell was clamped." Though several representations were made by the relatives of the petitioner to the higher authorities, no redress was given to him.
He was sought to be kept in the cell for 13 months till June 13, 1 when he was convicted in one of the cases filed against him.
On June 14, 1960, the Superintendent of the Jail again ordered the petitioner to be looked up in complete solitary confinement under para.
575 of the Punjab Jail Manual, and again a confinement of 24 hours inside the cell was "clamped".
On December 15, 1960, the Governor of Punjab ordered that the petitioner should be treated as a 'B ' class prisoner, and even thereafter he was not transferred to the general ward of the prison where others ' class prisoners were kept confined, but he was kept in the same condemned prisoners wards Though the look up period of 24 hours inside the cell was considerably reduced the ban imposed on his association with other prisoners had not been relaxed.
The petitioner was not allowed even to meet his co accused who were in the general ward of the prison.
While the other prisoners in the jail including the petitioner 's co accused were given numerous facilities i.e. of association work and recreation he was completely segregated in a cell without any such facilities.
The jail authorities adopted this method of torture for ulterior purposes, 305 The Superintendent of the Jail filed a counter affidavit.
His answer to the grave allegations may be stated thus: on the very day of his arrival in the jail the petitioner behaved rudely and impertinently towards the jail staff and in a defiant way tried to undermine jail discipline.
he was not kept in solitary cell for ulterior motives.
He committed 12 jail offences and he was punished for them.
After he was convicted he was put in a separate cell and that he was allowed one hour in the morning and one hour in the evening for exercise and also to have his bath outside the courtyard.
After he was classified as a 'B ' class prisoner, he was given amenities to which a 'B ' class prisoner was entitled under the rules, but in the interest of jail discipline he was segregated from other prisoners.
The cell in which the petitioner was kept was one of the cells in block of 32 cells out of which only were allocated for condemned prisoners and the rest were utilized for separate confinement for the segregation of hardened and troublesome convicted criminal prisoners.
The petitioner was confined in the cell only for the night and he could move about in the open compound of the cell throughout the day.
The affidavit and the counter affidavit disclose the following admitted facts: The cell in which the petitioner was and is confined is one of the cell in the block of 32 cells out of which 8 cells are used for condemned prisoners.
The cell has a small separate enclosure of its own.
From the date the petitioner entered the prison, that is, on May. 7, 1959, till he was convicted, that is, on June 13, 1960, when he was an under trial prisoner, he was separately confined to a cell.
though the superintendent vaguely says that the petitioner was not looked up in a solitary cell, he practically admits that the petitioner was given separate confinement in a cell as punishment for jail offences committed by him.
Though he 306 denies that the petitioner was kept in a cell for 24 thee hours, he does not say what facilities were provided for him to move about or mix with other prisoners.
The statement of offences committed by the J. petitioner and the punishments inflicted on him filed by the Superintendent does not contain any details and is thus vague.
Section 12 of the Prisons Act enjoins on a Superintendent to maintain a punishment book, and section 51 thereof requires him to enter the details therein.
But the statement before us does not strictly comply with that section and it is represented in court that no other register is maintained in the jail.
The statement, vague as it is, shows that even on the first day of imprisonment, the petitioner was kept in a separate cell and the offence alleged to have been committed by him is that he was rude and impertinent.
The subsequent entries show that the petitioner attempted to break articles and even struck his head against wall or door.
These acts of the petitioner appear to us to be more due to the effect of the inhuman and discriminatory treatment given to him even when he was an under trial prisoner rather than a conscious attempt on his part to commit any jail offences.
Be that as it may, we are not concerned at this stage whether the petitioner had committed those offences, for those were committed at a time when he was an under trial prisoner with which we are not now directly concerned.
The facts remain that even as an under trial prisoner from the date he entered the premises of the jail, he was segregated from other prisoners and kept in a separate cell.
Now coming to the second period, that is, the period commencing from the date he was convicted till he was classified as a 'B ' class prisoner, that is from June 14 1960 to December 15, 1960, the petitioner alleges that he was kept in solitary confinement as before throughout 24 hours of the day.
In the counter affidavit of the Superintendent 307 it is not denied that the petitioner was kept in a separate cell, but it is stated therein that he was given one hour in the morning and one hour in the evening for exercise and also he was allowed to have his bath outside the courtyard of the cell.
The Superintendent does not state that he allowed the petitioner to communicate with others or to talk to other prisoners.
It is not stated whether he was allowed for exercise to go out of the separate enclosure of the cell or whether he was allowed to mix up with other prisoners or to talk to them.
During this period, the petitioner did not commit any jail offences and, therefore, his separate confinement in a cell could not be a punishment for an offence, but only for the maintenance of discipline in the jail and for convenience of accommodation.
There is nothing on the record to suggest that he was guilty of any indiscipline during this period.
If so, his confinement in a separate cell for a period of six months without allowing`him to communicate with others is a punishment of either cellular confinement, separate confinement or solitary confinement.
The restrictions imposed on the prisoner on the pretext of separate allotment of a cell ignored even the limitations on the said confinements prescribed by section 73 of the Indian Penal Code or section 46 of the Prisons Act.
The confinement of the prisoner in a separate cell in the manner it was done was certainly illegal.
Coming to the third period after he was classified as a 'B ' class prisoner, the petitioner says that he was kept in the same condemned prisoners ' book with the exception that the look up period of 24 hours inside the cell was considerably reduced, but the ban imposed on his association with other prisoners was not relaxed.
The Superintendent does not say that the petitioner was allowed to communicate or to speak with other prisoners.
He also admits that the petitioner was continued to the 308 cell only in the night and that he can move about within the open compound of the cell throughout the days to put it in other words, the Superintendent admit that the petitioner is confined in a cell J. with a small separate enclosure and that the prisoner can only move in that enclosure in the morning.
This kind of confinement is either a solitary confinement or cellular confinement, for it secludes the prisoner from communicating with or from the sight of other prisoners.
If it is not a solitary confinement, it would certainly be a cellular confinement.
Even in a separate confinement as a punishment the prisoner should be allowed to have one hour 's exercise per diem and to have his meals in association with one or more prisoners.
The Superintendent therefore, acted illegally in confining the prisoner in the manner he did, and he is not entitled to do so under the rules prescribed for separation of prisoners.
It may also be mentioned that during this period, there is no allegation that the petitioner 's conduct was otherwise bad.
It is said that the confinement is neither solitary, cellular or separate, for he is allowed to go to courts.
The fact that a prisoner is to be sent to a court on summons has no bearing on the question whether the confinement is legal or not.
On the facts disclosed in the case, we have no doubt that, for one reason or other, which is not clear from the record, the petitioner was discriminated from other prisoners and, under the colour of the rules for separation, was illegally confined in a manner not authorized by law.
Before closing we would like to make some general remarks.
The modern development of criminology has revolutionized the system of treatment of convicted prisoners.
The old brutal treatment has given place to more humane one.
The concept of vengeance by society and of the deterence is fast disappearing and is being replaced by the concept of correction and rehabilitation.
309 Though our jail administration is moving with times, it is not keeping pace with advanced countries.
A statute may reflect the modern trend and may contain salutary provisions for fair treatment of prisoners; but in practice much depends upon the Superintendent, who is expected to implement them in the spirit in which they are conceived.
A superintendent of a jail may be a good disciplinarian, but it is not enough: he should also be a humanitarian possessing conscience and having an awareness that to his care is entrusted an abnormal class of society deserving more a sympathetic approach and sincere attempt at rehabilitation than that of vindictiveness.
In this case, the Superintendent, as we have already stated, not only did not carry out the spirit of the rules but also broke the letter of the law and illegally placed the petitioner practically in solitary confinement from May 7, 1959 up to date.
In the result we hold that the confinement of the petitioner in a separate cell in the manner it is being done in this case is illegal and we direct the respondent to confine the petitioner in the prison in strict compliance with the provisions of the Prisons Act and the rule made thereunder.
It is for the Government to consider, in the circumstances of this case, whether it is a fit case for transferring the petitioner to some other jail.
Writ Petition No. 147 of 1961 is allowed to the said extent, and there will be a similar order in criminal Appeal No. 120 of 1961.
RAGHUBAR DAYAL, J.
I have had the advantage of perusing the judgment prepared by my learned brother, Subba Rao J., and agree with him that paragraph 575 of the Punjab Jail Manual does not offend the provisions of the Constitution.
I however do not agree that there had been any illegal confinement of the appellant.
310 The appellant was admitted to the jail as an undertrial prisoner for offences under section 19 of the Indian Arms Act and under section 5 of Indian Explosive Substances Act and the allegation was that he was concerned in a conspiracy with others to muder certain persons and to create disorder and anarchy in India.
He behaved rudely and impertinently on admission into jail and showed a defiant attitude.
In there circumstances, according to the affidavit of the Superintendent of the Jail, the appellant was ordered to be kept in cell under paragraph 569 A of the Jail Manual to maintain jail discipline.
The entry in the punishment register, in this connection, states in the column meant for noting the offences: 'He is very rude and impertinent.
He has defiant attitude and tries to undermine the jail discipline. ' I am of opinion that it was not necessary for the jail authorities to make a more detailed note in the register with respect to the various acts committed or words spoken by the appellant on the occasion.
Section 51 of the Prisons Act provides what is to be recorded in this punishment book and requires to be recorded, among other matters, the prison offence of which the prisoner is guilty.
It does not require a detailed account of the actions of the prisoner which constituted the prison offences.
The description of the offences committed, suffices for the purpose of this register.
The entry is not made for the purpose of adjudication of the offences or for the purposes of the appellate authority, if any.
It is just a record of the conduct of the accused and the action taken.
The Superintendent, in this case, did not inflict any punishment of solitary confinement or separate confinement on the appellant for his conduct.
He simply ordered that the appellant be kept in a cell under paragraph 469 A of the Jail Manual.
There had been eleven other occasions when the appellant committed prison offences.
Those 311 offences and the action taken there are also mentioned in the punishment register and a copy of those entries has been filed in Court.
What I have said in connection with the nature of the entry in connection with the incident on the day of admission, applies equally to the other entries mentioned above.
The Superintendent has denied the allegations made by the appellant that he was kept in a separate cell, not in the interests of the jail discipline, but for ulterior motives or under orders of a vindictive Government.
There is no material on the record to suggest that the Superintendent of the jail was actuated, in passing the order for keeping the appellant in a separate cell, by any consideration other than that of the interests of jail discipline.
Therefore, the mere fact that the appellant was kept in a separate cell from the moment of his admission in jail does not indicate malafides on the part of the jail Superintendent.
The appellant was kept segregated in a separate cell after his conviction as well, in view of paragraph 575 of the Jail Manual.
He was allowed an hour in the morning and an hour in the evening for exercise.
He was allowed to have a bath in the court yard outside the cell.
The fact that the Superintendent did not state in his affidavit that he allowed the petitioner to communicate with others or to talk to other prisoners or that the appellant was allowed to mix up with other prisoners or to converse with them, does not necessarily mean that he disallowed any such thing or that, if he did so, the Superintendent acted against rules of law.
The Superintendent denied that the appellant 's request to meet Hari Das was disallowed.
There is no allegation that he had not been afforded the facilities which are to be provided to a prisoner or to a B class prisoner kept in a cell and therefore there was no occasion for the Superintendent to state about matters not complained of.
312 The mere fact that a person is kept in a separate cell will not make his confinement solitary, cellular or separate, though the difference between it and any of them be not appreciable.
Section 27 of the prisons Act provides for separation of prisoners.
If there happens to be only one prisoner of a particular category, he is necessarily to be kept separate from others.
His being kept alone from other prisoners and his not being allowed to mix with other prisoners will not be called solitary or cellular or separate confinement.
It is just an incident that he happens to be the only prisoner of a particular category and had therefore to be kept separated from all other prisoners in the jail.
Section 28 allows convicted criminal prisoners to be confined either in association or individually in cells or partly in one way and partly in the other.
The discretion is with the Superintendent of the Jail.
The Act contemplates an individual prisoner to be kept in a cell.
It is clear from the provisions of paragraphs 571 to 575 of the Jail Manual that the rules contemplate convicted prisoner to be kept separate.
Paragraph 571 of the Jail Manual provides that all convicts, subject to cell accommodation and requirements of labour, be kept separate both by day and by night, and justifies the segregation of the appellant as a convicted criminal in a separate cell.
Paragraphs 572, 573 and 574 lay down the order in which convicted prisoners are to be selected for being kept separate in cells when each of them cannot be so kept.
All these provisions are consistent with what is enacted in section 28 of the Prisons Act.
Paragraph 575 reads: "A convict who would ordinarily come under the operation of any of the preceding 313 rules relating to the separation of prisoners, but cannot be confined in a cell by day, by reason that he is required for some jail service, shall be confined in a cell by night.
Note 1 Separation under paragraphs 571 to 575 is distinct from 'solitary ' confinement and 'separate ' confinement inflicted as a punishment under section 46 of the Prisons Act, and is restricted merely to the separation of individual prisoners either by day or night for purposes of jail management; such separation is not to have any irksome conditions attached to it.
Note 2 Paragraphs 571 to 575 are of general application.
If, in the opinion of the Superintendent, the presence of any convict in association with others, is detrimental to good order and discipline or is likely to encourage or lead to the commission of any offence, such convict should be kept separate, in preference to others of his class.
" These provisions provide an exception to the provisions of paragraphs 571 to 574 and allow the convicted prisoner to be kept in a cell during night only instead of both by day and by night, in case he cannot be confined in the cell by day for reasons that he be required for jail service.
Note 1 makes it clear that keeping prisoners separate in view of the provisions of paragraphs 571 to 575 is not 'solitary ' or 'separate ' confinement which can be inflicted as punishment and is merely separation of the prisoner for purposes of jail management.
Further, Note 1 enjoins that no irksome conditions be attached to such separation.
We are not shown that any such conditions were attached to the order for keeping the appellant in a cell.
Note 2 further empowers the Superintendent of the Jail to keep a convict separate if he be of opinion that his association with others of his class 314 is detrimental to good order and discipline in the jail.
The Superintendent states in his affidavit he that he was of such opinion.
The entire scheme of the Act and the rules is that ordinarily a prisoner should be kept separated from others and that it is only in view of limitations of providing separate cells for each prisoner that prisoners of a particular category are kept together in a large hall.
The order classifying the appellant as a B class prisoner further necessitated his being kept separate from other prisoners.
There is no provision in the Act or the rules that a prisoner kept in a cell be specially allowed to associate or mix with other prisoners.
The main grievance of the appellant is that he was not allowed to associate with his co accused, even for purpose of consultation with respect to the defence to be put up and the grounds to be taken in the appeal.
The whole object of keeping convicted prisoners segregated in jail is defeated if they are allowed to meet and discus matters even when they are under special orders for being kept separate on account of their conduct being considered detrimental to jail discipline.
If it was really necessary for the appellant to have consultations with his co accused for the purpose of the case, it was open to him to obtain orders of the Court and facilities for such consultations, if considered necessary, could have been given just as facilities are provided for accused to consult their counsel.
I am therefore of opinion that the Jail authorities committed no discriminatory or illegal act against the appellant in keeping him in a separate cell.
I would therefore dismiss both the writ petition and the appeal.
BY COURT.
In accordance with the opinion of the majority, the Writ Petition and the Appeal are allowed to the extent indicated in the majority judgment.
| In May, 1959, the appellant was sent to Ambala Jail as an undertrial prisoner.
On account of certain jail offences alleged to have been committed by him the Superintendent of Jail segregated him from other prisoners and kept him in a separate cell.
He was convicted in June, 1960.
Though he was 296 not alleged to be guilty of any jail offence or indiscipline after this date he was still confined in a separate cell without being allowed to communicate with other prisoners; he was only allowed to come out in the compound attached to the cell for one hour in the morning and for one hour in the evening.
In December, 1960, the Governor ordered that the appellant be treated as a B" class prisoner.
Even after this he was still kept in a separate cell with this difference that he locked up only at night and was allowed to move in the compound attached to the cell during the day.
But he was still not allowed to communicate with others.
The Prisons Act provided for the separation of prisoners and s.28 thereof permitted convicted criminal prisoners to be confined in cells either in association or individually.
Paragraph 571 of the Punjab Jail Manual provided that so far as possible all convicts shall be kept separate both by day and by night.
Paragraph 575 provided that a convict who could not be confined in a cell by day by reason that he was required for some jail service shall be confined in a cell by night.
The appellant contended that his confinement was under para 575, that para 575 offended article 14 of the Constitution and that the Superintendent of Jail acted mala fide and discriminated against him by keeping him in solitary confinement. ^ Held, that para 575 of the Punjab Jail Manual did not offend article 14 of the Constitution.
This paragraph was a part of an integrated scheme for the maintenance of discipline of prisoners by providing for their separation.
The classification was made on the basis of sex and the nature of the prisoners and depended on the availability of cells; is had a reasonable relation to the object sought to be achieved.
The power to separate was entrusted to the highest officer in the jail who was ordinarily expected to act reasonably, objectively and without bias.
Held, further (per Sinha, C. J., Subba Rao, Shah and Mudholkar, JJ.) that the confinement of the appellant in a separate cell in the manner it was being done was illegal.
The separation of the appellant so as to seclude him from communicating with or from the sight of other prisoners certainly amounted to cellular confinement if not to solitary confinement.
This could only be done as a measure of punishment, and even then the prisoner was entitled to have one hour 's exercise every day and to have his meals in association with one or more prisoners.
The appellant was discriminated from other prisoners and, under the colour of the rules for separation, was illegally confined in a manner of authorised by law.
Per Dayal,J. There was no discrimination or illegality in keeping the petitioner in a separate cell.
The mere fact 297 that a person was kept in a separate cell did not make his confinement solitary, cellular or separate.
Paragraph 571 of the Jail Manual provided that subject to cell accommodation and requirement of labour all convicts be kept separate both by day and by night.
Paragraph 575 provided an exception that where the convict could not be kept separate by day he could be kept separate by night.
The entire scheme of the Prisons Act and the rules was that ordinarily a prisoner was to be kept separate and that only in cases of limitation of providing separate cells were prisoners to be kept together.
There was no provision that a prisoner kept in a cell was to be specially.
allowed to associate or mix with other prisoners.
|
Civil Appeal No. 1365 of 1968 From the Judgment and Decree dated the 8 12 66 of the Madras High Court in Appeal No. 609 of 1961.
K. N. Balasubrahmaniam and Miss Lily Thomas for the Appellant.
K. Jayaram for the Respondent.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This is an appeal by certificate granted by the High Court of Judicature at Madras under Article 133(1) (a) and (b) of the Constitution of India against its judgment and decree dated December 8, 1966 in A. section No. 609 of 1961.
The facts culminating in this appeal lie in a short compass and may be briefly stated thus: Kota Venkatachala Pathy whose legal representatives are the respondents herein and Kota Narayanan, the appellant herein, were real brothers being the sons of one Kota Rangaswami Chettiar.
Together with their cousin Subramanyam Chettiar, the son of Kota Kuppuswami Chettiar, the brother of Kota Rangaswami Chettiar, they formed a joint family which was a trading one.
Prior to 1927, Subramanyam Chettiar was the manager and karta of the family.
After 1927 Kota Venkatachala Pathy took over the management of the family and its properties.
By registered deed dated May 29, 1929 (Exh.
A 1) a partition of joint family properties was effected between Subramanyam Chettiar on the one hand and Kota Venkatachala Pathy and his brother, Kota Narayanan, who was then a minor, on the other, each branch taking a half share.
As karta of the joint family.
Subramanyam Chettiar had, before November 20, 1927 incurred debts to the tune of Rs. 9,506/ from several creditors.
Five items of joint family properties detailed in Schedule D 1 to the deed of partition were earmarked for the discharge of the aforesaid debts and were given over to Kota Venkatachala Pathy who was made responsible for the discharge of the debts.
These debts were discharged by Kota Venkatachala Pathy before March 26, 1934.
On September 7, 1956, Kota Venkatachala Pathy brought a suit, being No. O. section 87 of 1956, in the Court of the Subordinate Judge of Vellore, North Arcot, for partition and separate possession of 3/4th of the properties set out in Schedule 'A ' to the plaint, 1/2 of the properties set out in Schedule A 1 to the plaint and whole of the properties set out in Schedule 'B ' to the plaint.
One of the items namely, item No. 1 of Schedule 639 'B ' to the plaint which consists of four shops is what remains undisposed out of the properties mentioned in Schedule 'D 1 ' to the deed of partition which were set apart for the purpose of discharging the aforesaid debts incurred by Subramanyam Chettiar before 1927.
The case as set out by Kota Venkatachala Pathy in his plaint was that the properties set out in Schedule 'B 1 ' to the deed of partition were given over to him absolutely for the discharge of the aforesaid debts set out in Schedule 'D ' to the deed of partition and it was provided in the said deed that either he would discharge the debts mentioned in the deed or undertake to pay the same himself within a month from the registration of the document and obtain and hand over to Subramanyam Chettiar receipts from the creditors specifically mentioned there that Subramanyam Chettiar was not liable for payment of the aforesaid debts and that if the aforesaid conditions were not satisfied by him i.e. by Kota Venkatachala Pathy and any loss was occasioned to the former, the latter would be liable for those losses.
The case of Kota Venkatachala Pathy further was that since he had discharged the debts detailed in Schedule 'D ' to the deed of partition, he was entitled to the exclusive possession of item No. 1 of Schedule 'B ' to the plaint as his self acquired property by virtue of the terms of deed of partition and also to the rest of the properties detailed in the said Schedule 'B ' as he had purchased the same with his own funds.
Kota Venkatachala Pathy based his claim of 3/4th share in properties detailed in Schedule 'A ' to the plaint on the ground that he was entitled to 1/4th by birth as a coparcener and the rest of the half share allotted to Subramanyam Chettiar as he had purchased the same from auction purchasers.
The relief for accounts was based by Kota Venkatachala Pathy on the ground that there was an oral division in status in 1938 and it was the appellant who was managing the properties either as a co owner or as an agent since then.
The appellant resisted the claim of extra share made by Kota Venkatachala Pathy and contended that the latter was entitled only to half share in all the suit properties.
According to the appellant, the family debts set out in Schedule 'D ' to the aforesaid deed of partition was discharged by Kota Venkatachala Pathy not only by the sale of the properties set out in Schedule 'D 1 ' to the deed of partition but also by substantially utilising other joint family properties available for division.
It was also contended by the appellant that since Kota Venkatachala Pathy acted as Karta of his branch, the aforesaid deed of partition should be construed as meaning that any item salvaged or saved after the discharge of the aforesaid family debts would be ancestral property and not exclusive property of the plaintiff.
As regards the properties other than item No. 1 of Exhibit 'B ' of the plaint, it was contended by the appellant that they were also to be shared half and half between him and Kota Venkatachala Pathy as they were purchased from the joint family funds.
With regard to the relief for rendition of accounts, the appellant contended that he became the Karta of the joint family in 1947 and Kota Venkatachala Pathy was not entitled to the relief of rendition of account till the date of the suit when alone there was a division of status and not in 1938 as claimed by Kota Venkatachala Pathy.
640 On a consideration of the evidence adduced in the case, the Trial Court by its judgment and decree dated September 12, 1960, held that there was no division in status till the date of the suit.
With regard to item No. 1 of Schedule 'B ' to the plaint, the Trial Court held that the total amount of debts paid was Rs. 15,669 6 2 and out of D 1 Schedule properties of the estimated value of Rs. 9,506/ only Rs. 2,575/ were realized from the sale of four items thereof and the balance of the debts were discharged from out of the joint family assets like jewels, outstandings realized and other immovable properties allotted to Rangaswamy Chettiar 's branch in 1929 partition and that the conversion of such joint family assets was made by Kota Venkatachala Pathy who was managing the family till 1957.
The Trial Court accordingly held that the properties namely item No. 1 of Schedule 'B ' to the plaint should be deemed to have been salvaged by detriment to the paternal estate.
The Trial Court also found that as the defendant appellant herein was a minor at the time of 1929 partition and Kota Venkatachala Pathy, the original plaintiff had acted as his guardian, the latter must be deemed to have acted for the former also when he undertook to discharge the debts and that as between the original plaintiff and defendant to whom the properties were jointly allotted under Exhibit A 1, there was a position of implied trust in respect of properties set out in Schedule 'A ' and 'B ' to the plaint.
The Trial Court also upheld the appellant 's plea of blending of all the properties by Kota Venkatachala Pathy.
The Trial Court also found that properties covered by sale deeds Exhibit B 1 and Exhibit B 4 which originally formed part of the half share allotted to Subramanyam Chettiar though purchased by the original plaintiff in his own name were joint family properties and as such were liable to partition in equal shares.
The Trial Court negatived the claim of Kota Venkatachala Pathy for a share in excess of one half in the aforesaid properties and held that he was entitled to only one half of all the suit properties.
The Trial Court also decreed that the appellant shall render true and proper accounts in respect of the income and expenses regarding half share of the respondents in the properties mentioned in Schedule A, A 1 and to the plaint from 1947 onwards but did not give directions as to the assets and funds of capital nature withdrawn by Kota Venkatachala Pathy from out of the joint family utilised for his own separate and independent business.
Aggrieved by this judgment, Kota Venkatachala Pathy, the original plaintiff, whose legal representatives are the respondents herein, preferred an appeal to the High Court of Judicature of Madras.
By its judgment dated December 8, 1966, the High Court allowed the appeal in part, set aside the judgment and decree of the Trial Court and decreed the suit brought by the original plaintiff with regard to item No. 1 of Schedule to the plaint holding that the properties mentioned in Schedule D 1 to the partition deed were conveyed absolutely to the original plaintiff in lieu of his undertaking to be liable to discharge the entire debts mentioned in Schedule 'D ' to the partition deed whether the properties were sufficient or insufficient to discharge the same and if there was any surplus out of the properties he was to have the same absolutely, but if the properties were not sufficient, he was to dis 641 charge the debts on his own responsibility without making Subramanyam Chettiar liable for the same; that though a portion of the debts were discharged out of the joint family funds that only cast on the legal representatives of the original plaintiff a liability to account to the appellant for such drawings as the original plaintiff might have made and whatever amount was found to be so drawn would have to be debited against his i.e. the original plaintiff, after giving him credit for whatever amount he might have put into the common fund.
The High Court further held that in determining the net drawals by the original plaintiff from the joint family funds, credit would be given to him for drawings made by the appellant by way of receipts of rents from item No. 1 of Schedule 'B ' to the plaint; that the original plaintiff was not liable to account for the joint family properties as there was no proof of mismanagement, mishandling or improper application of joint family properties or funds and that the defendant was also not liable to account to the original plaintiff for the management of the properties of which he was in charge.
The High Court affirmed the judgment of the Trial Court in regard to the properties covered by Exhibits B 1 and B 4 holding that these were acquired with the common funds of the original plaintiff and the appellant which he was managing.
Dissatisfied with this judgment and decree, the defendant has come up in appeal to this Court.
The learned counsel for the appellant has, while supporting the appeal, strenuously urged that the properties mentioned in Schedule D 1 to the deed of partition (Exh.
A 1) were not intended by the parties thereto to be given to Kota Venkatachala Pathy as his separate properties but were given to him only for a specific purpose viz. for discharging the family debts; that the ancestral properties could not be converted into separate properties by means of an arrangement arrived at between Subramanyam Chettiar and Kota Venkatachala Pathy; that the character of a property has to be decided after considering whether it is saved as a result of detriment to the paternal estate and as in the instant case, property mentioned at item No. 1 of Schedule D 1 to the deed of partition was saved by using the joint family assets, the said property could not but be regarded as the ancestral property of the parties which was subject to partition.
He has further urged that in any event D 1 Schedule properties lost the character of separate properties as they were blended by Kota Venkatachala Pathy with the joint family properties.
He has lastly urged that the directions given by the High Court with regard to accounting cannot be sustained as they are neither clear nor justified.
The principal question for determination in this case is whether the properties mentioned in D 1 Schedule to the deed of partition were separate properties of Kota Venkatachala Pathy or retained the character of ancestral properties.
The answer to this question depends largely on the construction of the deed of partition (Exh.
A 1), material portion whereof is reproduced below for facility of reference: "Venkatachala Pathy the individual No. 2 shall discharge the debts described in 'D ' Schedule, the debts payable to outsiders by Subramanyam Chetti amongst us for the 642 amount borrowed for conducting the family business prior to 20 11 27 and individual No. 2 for discharging the loans, shall enjoy absolutely the properties mentioned in Schedule D 1.
Venkatachalapathi Chetti, the individual No. 2 shall either discharge the debts within a month from the date of registration of this document and obtain receipt for the creditors stating that Subramanyam Chetti is not liable to the aforesaid loans and shall give those receipts to Subramanyam Chetti.
If it is not done so and thereby any loss is caused to Subramanyam Chetti by creditors, Venkatachalapathi Chetti shall be liable for those losses.
The aforesaid Venkatachalapathi Chetti himself shall get possession of D 1 Schedule properties given to him in lieu of discharging the aforesaid debts whether those properties are adjusted to the aforesaid debts, or whether there remain any balance or any deficit".
The salient features of the deed as extracted above are: (1) sole responsibility for discharge of the debts detailed in Schedule D 1 to the deed of partition which were payable to the outsiders was placed on Kota Venkatachala Pathy.
(2) The liability cast on Kota Venkatachala Pathy for the discharge of the debts was not to the extent of the properties detailed in Schedule D 1 to the deed of partition but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively.
(3) The debts were to be discharged by Kota Venkatachala Pathy within a month of the registration of the deed and he was required to have it in writing from the creditors that Subramanyam Chettiar was no longer liable for the debts.
(4) In case, there was a default on the part of Kota Venkatachala Pathy to discharge the debts as undertaken by him and any loss was caused to Subramanyam Chettiar, to the former was to indemnify the latter.
(5) Exclusive dominion, control and enjoyment of the properties mentioned in Schedule D 1 was vested in Kota Venkatachala Pathy in consideration of the obligation undertaken by him to discharge the debts.
The aforesaid salient features leave no manner for doubt that the properties mentioned in D 1 Schedule to the deed of partition were given to Kota Venkatachala Pathy in lieu of the personal undertaking given by him to discharge the aforesaid debts.
In other words, the conveyance of the properties to Kota Venkatachala Pathy was in the nature of remuneration for the services to be rendered by him.
It will be useful in this connection to refer to the decision of this Court in Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax, Madhya Pradesh where on the question whether the managing director 's remuneration received by the assessee was assessable in his individual hands or in the hands of the assessee 's Hindu undivided family, this Court expressed the view that the remuneration was assessable as the assessee 's individual income and not as the income of his Hindu undivided family.
We are, therefore, of the 643 view that Schedule D 1 properties were given absolutely to Kota Venkatachala Pathy as his separate properties.
Let us now see as to whether the aforesaid arrangement entered between the members of the Hindu undivided family whereby properties mentioned in Schedule D 1 to the deed of partition were made over to Kota Venkatachala Pathy was valid according to Hindu Law.
A reference to page 426 of Mayne 's Treatise on Hindu Law and Usage (11th Edition) makes it clear that while dividing the family estate, it is necessary for the joint family to take account of both the assets and the debts for which the undivided estate is liable and to make provision for discharge of the debts.
It is also well settled by the decisions of this Court in Sahu Madho Das vs Pandit, Mukand Ram Maturi Pullaian vs Maturi Narasimham and section Shanmugam Pillai & Ors.
vs K. Shanmugam Pillai Ors.
that if family arrangements which are governed by a special equity peculiar to themselves or entered into bonafide to maintain peace or bring about harmony in the family and the terms thereof are fair taking into consideration the circumstances of the case, every effort must be made by the Court to recognise and sustain it.
Examining the matter in the light of these principles, we find that by the aforesaid arrangement both Subramanyam Chettiar and the defendant appellant were absolved of the responsibility to discharge the family debts and liability was cast on Kota Venkatachala Pathy alone to discharge the same irrespective of the fact whether the properties mentioned in Schedule D 1 to Exhibit A 1 ultimately turned out to be sufficient or insufficient to meet the burden.
Thus the arrangement being bonafide and its terms being fair, we cannot but hold that it was valid and the properties detailed in Schedule D 1 to the deed of partition became separate properties of Kota Venkatachala Pathy from the date of the execution of the deed of partition and are not liable to partition.
This takes us to the question as to whether there was, as contended by the appellant, any blending of the properties mentioned in Schedule D 1 to the deed of partition with the rest of the properties of the joint family consisting of Kota Venkatachala Pathy and the appellant.
It is true that property separate or self acquired of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with intention of abandoning his separate claim therein but the question whether a coparcener has done so or not is entirely a question of fact to be decided in the light of all the circumstances of the case.
It must be established that there was a clear intention on the part of the coparcener to waive his separate rights such an intention cannot be inferred merely from the physical mixing of the property with his joint family or from the fact that other members of the family are allowed to use the property jointly with himself or that the income of the separate property is utilised out of generosity or kindness to support persons whom the holder is not bound to support or from the failure to maintain separate accounts for an 644 act of generosity or kindness cannot ordinarily be regarded as an admission of a legal obligation.
(See Lakkireddi Chinna Venkata Reddi & Ors.
vs Lakkireddi Lakshmama and G. Narayana Ram vs G. Chamaraju & Ors.
In the instant case we are unable to find that there was any intention on the part of Kota Venkatachala Pathy of abandoning his separate rights over the properties set out in Schedule D 1 to the deed of partition.
The mere fact that these properties were not separately entered by Kota Venkatachala Pathy in the account books or that no separate account of the earning from these properties was maintained by him cannot rob the properties of their character of self acquired properties.
We are accordingly of the view that there was no blending of the properties by Kota Venkatachala Pathy as contended by the appellant.
The mere fact that some amount out of the joint family funds was used for discharge of the debts mentioned in Schedule to the deed of partition is also of no consequence.
If any amount out of the joint family funds was used for the discharge of the outstandings payable to the outside debtors, the legal representatives of Kota Venkatachala Pathy would, as pointed out by the High Court be liable for them.
There is also no substance in the last contention advanced on behalf of the appellant.
The legal position is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager of a joint family a coparcener seeking partition is not entitled to call upon the manager to account for his past dealing with the family property.
The coparcener is entitled only to an account of the joint family property as it exists on the date he demands partition.
In the instant case there being no evidence to establish any misappropriation or fraudulent conversion of the joint family property by Kota Venkatachala Pathy during the period he acted as karta of the family, we are unable to interfere with the direction issued by the High Court which is just and proper.
For the foregoing reasons, the appeal fails and is hereby dismissed but in the circumstances of the case without any order as to costs.
V.P.S. Appeal dismissed.
| The appellant and V, father of respondents, were brothers.
They, together with their cousin, formed a joint Hindu family.
In a partition in 1929 between the two branches, certain properties were given to V for discharging some family debts.
V took over the management of his branch of the family and after discharging the debts, filed in 1956 a suit for partition against the appellant claiming, inter alia, that one of the items earmarked for the discharge of the debts which remained undisposed of, was his exclusive property as it was given to him absolutely; and also for accounts on the ground that the appellant took over the management from 1938.
The trial court negatived the claim in respect of the property, but directed the appellant to give accounts from 1947 when admittedly he took over management.
On appeal, the High Court upheld V 's claim with respect to the property and gave modified directions for accounts by the parties.
Dismissing the appeal to this Court, ^ HELD: (1) The properties given to V became his separate properties from the date of the partition deed of 1929 and were not liable to partition.
[643A] (a) The salient features of the deed are, (i) the sole responsibility for discharge of the debts was placed on V; (ii) V 's liability was not to the extent of the properties but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively; (iii) the cousin was no longer liable for the debts; (iv) in case there was a default on V 's part, and if, any loss was caused to the cousin he was to be indemnified by V; and (v) exclusive dominion and control over, and enjoyment of, the properties was vested in V in consideration of the obligation undertaken by him to discharge the debts.
The properties were thus given to V in view of his personal undertaking to discharge the debts, and, the conveyance was in the nature of remuneration for services to be rendered by him.
[642 C G] Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax Madhya Pradesh referred to.
(b) The arrangement was valid because it was bona fide and its terms were fair.
[643E] Sahu Madho Das vs Pandit Mukand Ram ; , Maturi Pullaiah vs Maturi Narasimham AIR 1966 SC 1836 and section Shanmugam Pillai & Ors.
vs K. Shanmugam Pillai & Ors. ; referred to.
(c) There was no blending of the properties by V with other joint family properties.
There was no evidence of any intention on V 's part to abandon his separate rights over the properties.
The mere fact that they were not separately entered by him in the account books or that no separate account of the earnings from them was maintained by him cannot rob them of their separate character.
[644B C] Lakkireddi Chinna Venkata Reddi & Ors.
vs Lakkireddi Lakshmama ; and G. Narayana Ram vs C. Chamaraju & Ors. ; referred to.
638 (d) If any amount of the joint family funds was used by V for the discharge of the debts, the respondents (legal representatives of V) would be liable for them, but that would not affect the character of the properties.
[644 C D] (2) It is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager, a coparcener, seeking partition, cannot call upon the manager to account for his past dealings with the family property.
Since there was no evidence of any misappropriation by V, he was not liable for accounts during his period of management.
[644E F]
|
view Petition Nos.
571 586 & 586A of 1985.
In Transfer Cases Nos. 52 to 68 of 1982.
By Circulation.
The Order of the Court was delivered by ORDER We have considered the grounds urged in the Review Petition and since we find no substance in them.
the Review Petition are dismissed.
PER THAKKAR, J.
While it is not agreeable to disagree with the. majority.
my conscience commands.
and my sense of duty demands.
that I should disagree.
Disagree with the proposed order dismissing the Review Petitions in limine with the remark that "we find no substance in them", without affording to the Petitioners any opportunity of hearing in the Court to substantiate the grounds urged by them.
One of the grounds urged.
ground No. 8 in the Petitions, is: "8.
That during the course of arguments the parties had proceeded on the assumption that the Hon 'ble Court would 901 decide only the 7 questions framed by the then Hon 'ble Chief Justice and the individual petitions on merits would be dealt with either by the Division Benches of this Hon 'ble Court or by the respective High Courts.
It was on this assumption that the parties addressed their arguments and submissions only on those general questions.
It is for this reason that written submissions were made only in T.C. No. 55 of 1982 amongst all the Railway matters.
None of the Petitioners had been given any opportunity to argue their cases on merits.
The judgment under review dismissed all the Transferred Cases and thus all these petitions stand decided on merits also.
It is, therefore, necessary that in the interest of justice, the petitioner should be given another opportunity to argue their petitions on merits.
This has caused serious prejudice to their cases is apparent from the facts of a few cases reference whereto is made herein after.
" It is not possible to say that there is no substance in this ground because no notices have been issued on the Review Petitions and the averments have not been controverted by the other side.
So also it is not stated in the majority judgment that the averment is factually untrue.
Reference may be made to ground number 9 in Review Petitions Nos.
57 1 to 586A of 1985 which reads as under: ' '9.
That it may be submitted 'that the petitioner Shri Narpat Singh had been served with the Office Order identical to the one reproduced in para 3 above and was charged with stoppage of work from 3.2.
1981 and missing from his place of duty and for intimidating and pressurising the loyal employees for not joining duty.
The fact is that the petitioner, Narpat Singh is a patient of Asthama and was under the treatment of the Rail way Medical Authorities between December 1980 to 1.2.1981 as outdoor patient.
On 2.2.
1981 while on duty as Shed man is DSL/Shed BGKt in shift 6 hours to 14 hours, he developed breathing difficulties and was unable to perform his duties.
He obtained sick memo G/92 on 2.2.1981 from GFO/DSL BGKt and while leaving duty proper charge was handed over by the petitioner.
He was advised complete rest and sick certifi cate No. 62 of 2.2.1981 for 27 days was submitted.
902 In these circumstances the petitioner could not be treated as on un authorised absence from work from 3.2.1981 when he had obtained G 92 on 2.2.1981 and had sent in his sick certificate and had observed all clue formalities of reporting sick as required under the rules.
Had the cases been argued on merits, the petitioner, Narpat Singh would have shown to the Hon 'ble Court as to how he could not be treated on un authorised absence and that the dismissal order has been malafidely issued in a mechanical manner and cannot be substained.
" That the matter of Narpat Singh was not argued on its individual merits is correct.
Unless the factual averments made in para 9 are shown to be untrue, these may be consid ered adequate to vitiate the impugned order on the ground that it manifests non application of mind and is built on 'no evidence '.
This is a good ground to entertain the Review Petition and issue notice to the other side for heating in the Court.
In the majority judgment ; (451) paragraph 59 the proposition of law has been enunciat ed that the pleasure under Article 310(1) can be exercised even by an authority specified in the Act or rules made under Article 309 (proviso) in the passage quoted below: "Thus, though trader Article 310(1) the tenure of a govern ment servant is at the pleasure of the President or the Governor, the exercise of such pleasure can be either by the President or the Governor acting with the aid and on the advice of the Council of Ministers or by the authority specified in the Acts made under Article 309 or in rules made under such Acts or made under the proviso to Article 309 and in the case of clause (c) of the second proviso to Article 311 (2), the inquiry is to be dispensed with not on the personal satisfaction of the President or the Governor but on his satisfaction arrived at with the aid and on the advice of the Council of Ministers . " (Emphasis supplied) Serious Constitutional questions, such as the following, arise in this context: When the Constitution advisedly invests powers in regard to the exercise of pleasure on the incumbents of highest executive office can these powers be exercised by any other official, say Divl.
Mechani 903 cal Engineer (DME)? By a process of interpretation (and not amendment) can it be so construed that what the President by virtue of Article 310 (1) can do, the DME of the Railway can do by virtue of the same Article? It would virtually amount to amending Article 310 (1) by adding the words "or by any other authority . ".
That is to say to rewrite an article in the Constitution.
Is this permissible? What is more, the power under Article 310 (1) is exercisable even by the President or the Governor, not on his personal satisfaction, but with the aid and on the advice of the Council of Ministers.
Can the same power be exercised by a D.M.E. or any other lower functionary acting on his own, there being no question of his acting with the aid or advice of the council of Ministers? Can the DME who does not even act in the name of the President, surrogate for the President? It is certainly an important Constitutional issue which requires to be examined, but has not been examined, from this perspective though the point was debated.
This is another ground to entertain the Review Petition and to issue a notice to the other side for heating in the Court.
Another ground for entertaining the Review Petition is this: Will it not be tantamount to speaking in two voices to hold that principles of Natural Justice need not be complied with even in regard to the quantum of punishment to be inflicted on a workman, even though the law declared so far demands that even a black marketeer cannot be black listed without observing the principles of Natural Justice? Is a workman who 'sweats ' for the Nation not entitled to the same treatment as a black marketeer who 'bleeds ' the Nation? 5.
An extremely serious and important ground for review also arises in the context of the doctrine enunciated in the following passages ; (522,523), paragraphs 170, 173: "It may be that the railway servants went on these strikes with the object of forcing the Government to meet their demands.
Their demands were for their private gain and in their private interest.
In seeking to have these demands conceded they caused untold hardship to the public and prejudicially affected public good and public interest and the good and interest of the nation.
. . . In the context of an all India strike where a very large, number of railway servants had struck work, the railway services paralysed, loyal workers and superior officers assaulted and intimidated, the country 904 held to ransom, the economy of the country and public inter est and public good prejudicially affected, prompt and immediate action was called for to bring the situation to normal.
In these circumstances, it cannot be said that an enquiry was reasonably practicable." The workers certainly have a right to struggle and strive for economic justice in a country the Constitution of which, in the preamble, proclaims it to be a "Sovereign SOCIALIST Secular Democratic Republic".
Going on strike in the course of such a struggle cannot be characterized as holding the country to ransom and be frowned upon.
Nor can they be condemned as seekers of private gain for endeavouring to remove their economic distress and plight to bring about a just society.
And it cannot be said on that account that it is not "reasonably practicable" to hold the inquiry in the case of any workman if there is a country wide general strike by workers.
Article 311 (2)(b) was surely not de signed by the Founding Fathers in order to ' enable 'braking ' a strike called in support of workers ' demands for socio economic justice.
The issue therefore deserves to be exam ined in the light of this perspective and the Review Peti tions deserve to be admitted.
On these grounds and in the light of the other grounds urged in the Review Petitions, the Review Petitions deserve to be heard in the Court.
It is therefore directed that the Review Petitions be admitted, notices be issued to the Respondents, and the matters may be placed in the Court for further hearing.
| The petitioners, who were Railway employees, were either dismissed or removed from service without holding any en quiry for striking work, paralysing railway services, as sualting and intimidating loyal workers and superior offi cers, etc.
The writ petitions flied in the High Courts challenging the orders of dismissal or removal stood trans ferred to this Court, heard along with other writ petitions and civil appeals and by judgment dated 11th July, 1985 dismissed.
The, petitioners sought review of the said judgment alleging that during the course of arguments, parties had proceeded on the assumption that the Court would decide only the seven questions framed by the then Hon 'ble the Chief Justice, and the individual petitions on merits would he dealt with either by the Division Benches of this Court or by the respective High Courts, that the parties addressed their arguments and submissions only on those general ques tions, that written submissions were made only in transfer case No. 55 of 1982 amongst all the railway matters, that none of the petitioners had been given any opportunity to argue their cases on merits, that the judgment under review dismissed all the transferred cases and thus all these petitions stand decided on merits also, that this has caused serious prejudice to their cases and, therefore, in the interest of justice, another opportunity should he given to argue the petitions on merits.
Dismissing the Review Petitions, HELD: Per P.N. Bhagwati, C.J., V.D. Tulzapurkar, R.S. Pathak and D.P. Madon, JJ.
899 The Review Petitions are dismissed as there is no sub stance in the grounds urged.
Per M.P. Thakkar, J. dissenting.
There is good ground to entertain the Review Peti tions and issue notice to the other side for hearing.
[904E] 2.
There is substance in the grounds because no notices have been issued on the Review Petitions and the averments have not been controverted by the other side.
In the majori ty judgment also it has not been stated that the averments are factually untrue.
[901D E] 3.
That the matter of Narpat Singh was not argued on its individual merits is correct.
Unless the factual averments made in Para 9 of the Review Petition are shown to be un true, these may be considered adequate to vitiate the im pugned order on the ground that it manifests non application of mind and is built on 'no evidence '.
[902C] 4.
In the majority judgment the proposition.
of law has been enunciated that the pleasure under Article 310(1) can be exercised even by an authority specified in the Act or rules made under the proviso to Article 309.
[902D E] 5.
The power under Article 310(1) is exercisable even by the President or Governor, not on his personal satisfaction, but with the aid and on the advice of the Council of Minis ters.
Can the same power be exercised by a Divisional Me chanical Engineer or any other lower functionary acting on his own, there being no question of his acting with the aid or advice of the Council of Ministers? Can the D.M.E. who does not even act in the name of the President, surrogate for the President? It is certainly an important Constitu tional issue which requires to be examined, but has not been examined from this perspective though the point was debated.
[903B D] 6.
Will it not tantamount to speaking in two voices to hold that principles of Natural Justice need not be complied with even in regard to the quantum of punishment to be inflicted on a workman, even though the law declared so far demands that even a black marketeer cannot be black listed without observing the principles of Natural Justice? Is a workman who 'sweats ' for the Nation not entitled to the same treatment as a black marketeer, who 'bleeds ' the Nation? [903D E] 900 7.
The workers certainly have a right to struggle and strive for economic justice in a country the Constitution of which in the Preamble, proclaims it to be a "Sovereign SOCIALIST Secular Democratic Republic".
Going on strike in the course of such a struggle cannot be characterized as holding the country to ransom and be frowned upon.
Nor can they be condemned as seekers of private gain for endeavour ing to remove their economic distress and plight to bring about a just society.
And it cannot be said on that account that it is not "reasonably practicable" to hold the enquiry in the case of any workman if there is a country wide gener al strike by workers.
[904B 904D] 8.
Article 311(2)(b) was surely not designed by the Founding Fathers in order to enable 'breaking ' of a strike called in support of workers ' demands for socio economic justice.
The issue therefore deserves to be examined in the light of this perspective.
[904D]
|
297 of 1951.
Petition under article 32 of the Constitution of India for enforcement of fundamental rights by quashing the orders of the Deputy Commissioner and House Rent Controller, Banga lore, allotting the petitioner 's house to the 3rd respondent and for taking forcible possession of the same.
S.K. Venkataranga Iyengar for the petitioner.
A.R. Somanatha Iyer, Advocate General of Mysore, (R. Ganapathy Iyer, with him) for the respondent No. 1.
K. Ramaseshayya Chowdhury for the respondent No. 2. 1952.
May 26 The Judgment of the Court was delivered by 746 CHANDRASEKHARA AIYAR J.
This is an application under article 32 of the Constitution for quashing the orders of the Deputy Commissioner and House Rent Controller, Banga lore, (2nd respondent) allotting house No. 291, Fifth Main Road, Gandhi Nagar, Bangalore City, for the use of Sri Aswathanarayana Rao (3rd respondent) and taking forcible possession of the same.
The State of Mysore has been im pleaded as the first respondent, The facts are these.
The petitioner D.K. Nabhirajiah is a merchant and is the owner of the premises aforesaid.
After lengthy litigation, the previous tenant of the premises vacated it on 1st September, 1949.
On 2nd Septem ber, 1949, the petitioner notified the vacancy to the 2nd respondent as required by law but added that he wanted the premises for his own use to set up one.of his grown up sons in a business in electrical goods.
The third respondent Aswathanarayana Rao however wanted the house for a chil dren 's school which he was running under the name of Bala Mandir and so he not only applied to the Rent Controller for allotting to him that house but also moved the Minister for Law and 'Labour for the same purpose.
The second respondent made an order on 13th September, 1949, in the following terms: "With reference to your vacancy report in respect the above place you are informed under clause 3 (2) of the Mysore House Rent and Accommodation Control Order, 1948 that the building is required for the occupation of Balamandira Home for the children and for residential use of the Direc tor.
You are therefore directed under clause 3 (4) of the Mysore House Rent and Accommodation Control Order, 1948 to hand over possession of the above house to the said Sri Aswathanarayana Rao, Director, Balamandira.
" By an order dated 20th September, 1949, made on an appli cation by the petitioner dated 16th September, 1949, the Deputy Commissioner refused to reconsider the allotment and required the petitioner to give effect to the same at once and deliver possession to the allottee, 747 The petitioner preferred an appeal to the Commissioner of Labour who is the House Rent Control Appellate Authority and obtained a stay, but the appeal was eventually dismissed and the said order vacated on 28th December.
He filed a Revision Petition No. 97 of 1949 50 before the Government of Mysore but without success and the Government declined to interfere by their order dated 14th March, 1950.
He then resorted to the High Court of Mysore by means of a petition under section 45 of the Mysore Specific Relief Act.
This again was dismissed on the ground that the party who seeks to obtain an order under the said section cannot do so on the allegation that the statute which enjoins the doing or for bearing of the act is itself illegal or ultra vires.
Applications moved under article 226 of the Constitution in the course of the same proceedings also failed.
This was on 5th January, 1951.
Some intermediate steps may now be set out.
The third respondent complained that he had not been given possession.
On this complaint, the second respondent passed an order on the 20th March, 1950, to the following effect : "Sri Aswathanarayana Rao, the allottee of the above house, has reported that you have not handed over possession of the house to him.
You are required to show cause immedi ately why you should not be prosecuted for failure t0 obey the order.
Please note that if the house is not handed over to the allottee, action will be taken under clause 3 (6) to take forcible possession of the house through police.
" The petitioner lodged a protest against this order pointing out that the House Rent Accommodation Control Order did not vest the Controller with jurisdiction to allot the house, but on 23rd March, 1950, he received the following reply: "Your letters under reference have been examined care fully.
It is not correct to say that allotment of a house to any party (private)is illegal.
Clause 3 of 97 748 the Mysore House Rent Control Order, 1948, is amended to include any person also.
I do not find any other reason except that you are evading to give possession to the allot tee.
You are hereby finally warned that if possession is not given to the allottee action will be taken to prosecute you and take forcible possession of the house.
" On 11th April, 1950, the second respondent made the following order: "Whereas premises No. 291, Fifth Main Road, Gandhi Nagar was allotted to Sri Aswathanarayana Rao of Balamandira The owner 's appeal before the Labour Commissioner and Government having been rejected the owner filed a petition before the High Court of Mysore who passed an interim order and which was vacated by the order referred to above.
A subsequent appeal before the Labour Commissioner has also been reject ed and stay vacated in Endorsement in H.R.C. 1/1940 50 dated 10th April, 1950.
I therefore direct the owner Sri D. K Nabhirajiah to hand over possession of the said house to Sri Aswathanarayana Rao at once, failing which, I authorise the Superintendent of Police, Bangalore City or any other offi cer empowered by him in his behalf to take possession of the house and hand over to the allottee, Sri Aswathanarayana Rao." As this order was not obeyed by the petitioner, forcible possession was taken of the house with police help and the third respondent was given possession.
The petitioner seeks to quash the above mentioned orders of the second respondent dated 20th September, 1949, 20th March, 1950, 23rd March, 1950, and 11th April, 1950.
The prayer in the petition is thus worded: "for quashing the orders of the second respondent No. 522 Acc.
(b) 49 dated 20th September, 1949, confirmed by Appellate Authority in H.R.C. Appeal No. 117 of 1949 1950 dated 28th December, 1949, and by the Government of Mysore in H.R.C. Revision Petition No. 97 of 1949 1950 dated 14th March 749 1950, and also the subsequent orders of the second respondent No. 562 Acc.
(b) 50 dated 20th March, 1950, 23rd March, 1950, and 11th April, 1950, respectively allotting and taking over forcible possession of the property No. 291, Fifth Main Road.
Gandhi Nagar, Bangalore City, for the use of a private individual, the third re spondent, and for costs.
" The contention of the petitioner is a threefold one, namely : (1) The order allotting the premises to the third re spondent contravenes the provisions of article 31, sub clause (2) and article 19 (1} (f) of the Constitution.
(2) The order is discriminatory and offends article 14 of the Constitution.
(3) Under the Defence of India Rules under which the Accommodation Control Order was made, the allotment can only be of houses available for letting.
It will be convenient here to set out the relevant legis lative provisions.
The Mysore House Rent and Accommodation Control Order, 1948, (hereinafter referred to for the sake of convenience as the Control Order) was made in exercise of the powers conferred by clause (bb) of sub rule (2) of Rule 81 of the Defence of India Rules as applied to Mysore, and it came into force with effect from 1st July, 1948.
Clause 3 of the Control Order provides, subject to two exceptions, for notice being given by the landlord to the Controller within seven days after a house becomes vacant.
Subclause (2), as it originally stood, was in the following terms : "(2) If within ten days of the receipt by the Controller of a notice under sub clause (1), the Controller does not intimate the landlord in writing that the house is required for the purposes of the Government of Mysore, or of the Central Government, or of the Government of an Indian Prov ince or State, or of any local authority or public body, or of any educational or other public institution for the occupation of any 750 officer of any such Government authority, body or institu tion, the landlord shall be at liberty to let the house to any tenant, or if the Controller, on application made by the landlord permits the landlord to do so, to occupy the house himself.
" By a notification dated 4th May, 1949, the words: "or for the occupation of any individual" were added after the words "body or institution" in the said sub section.
The sub clause as amended runs thus: "(2) If within ten days of the receipt by the Controller of a notice under sub clause (1), the Controller does not intimate the landlord in writing that the house is required for the purposes of the Government of Mysore, or of the Central Government, or of the Government of an Indian Prov ince or State, or of any local authority or public body, or of any educational or other public institution, or for the occupation of any officer of any such Government authority.
body or institution or for the occupation of any individual, the landlord shall be at liberty to let the house to any tenant, or if the Controller on application made by the landlord, permits the landlord to do so, to occupy the house himself.
" Sub clause (8) says : "The landlord shall not let the house to a tenant or occupy it himself, before the expiry of the period of ten days specified in sub clause (2), unless he has received intima tion that the house is not required for the purposes re ferred to in that sub clause or the permission referred to therein, earlier." To this sub clause, a proviso was added by a notification to the following effect: "Provided that the Controller, before requiring the house for any of the purposes stated above, shall take into consideration such representation, if any, as may be made by the owner regarding his bona fide requirements for personal occupation.
" Then comes sub clause (4) which reads as follows : "(4) If the house is required for any of the purposes or for the occupation by any of the officers 751 specified in sub clause (2)the landlord shall deliver pos session of the house to the Government authority, body or institution concerned and such Government authority or body or institution shall be deemed to be the tenant of the landlord, with retrospective effect from the date on which the Controller received notice under sub clause (1), the terms of the tenancy being such as may be agreed upon be tween the landlord and, the tenant: Provided that the rent payable shall not exceed the fair rent which may be payable for the house under the provisions of this Order.
" The Mysore House Rent and Accommodation Control Order of 1948 was repealed by the Mysore House Rent and Accommodation Control Act XXX of 1951.
But what is relevant and material for disposal of this petition is the earlier Control Order as all the proceedings now in question were taken under it.
If the allotment had been made under the Control Order prior to the date of its amendment on 4th May, 1949, the petitioner would have had a good case to urge.
Sub clause (2) as it then stood spoke of the house being required for certain specified purposes or for any educational or other public institution, or for the occupation of an officer of any Government authority, body or institution;and the house could not have been required for the occupation of a private individual.
But the amendment has enlarged the scope of the power of the Controller by providing that the requirement may also be for the occupation of any individu al.
The answer to the first contention based on article 31 (2) or article 19(1) (I) of the Constitution is a short one.
The Constitution came into force on the 26th January, 1950, after the impugned orders were made and at a time when there was nothing like a chapter of Fundamental Rights.
The argu ment that the requisition in the present case was not for any public purpose and the restriction on the respondent to hold property must be in the interests of the general public presupposes that the Constitution governs the case.
This 752 assumption, however, is not well founded.
The order of allotment was made before the Constitution came into force and at a time when the Control Order provided, validly, that a house could be taken for the occupation of a private individual.
During the period of 10 days specified in sub clause (2), the landlord could not let the house or occupy it himself, and on allotment, he was bound to deliver up possession to the allottee.
His rights as landlord were thus at an end so far as possession was concerned.
Whether retrospective effect could be given to article 13 (1) of the Constitution arose for decision in Keshavan Madhava Menon vs The State of Bombay(1).
Dealing with the argument that the said article rendered voidab initio and for all purposes an earlier law which was inconsistent with fundamental rights, it was laid down by this Court in that case "that such laws existed for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution." (Per Das J., at page 234).
Mr. Justice Mahajan observed at pages 249 and 250: "It is admitted that after the 26th January, 1950, there has been no infringement of the appellant 's right of freedom of speech or expression.
In September, 1949, he did not enjoy either complete freedom of speech or full freedom of expression.
It is in relation to the freedom guaranteed in article 19 (1) of the Constitution to the citizen that the provisions of article 13 (1) come into play.
the article does not declare any law void independ ently of the existence of the freedoms guaranteed by Part III.
A citizen must be possessed of a fundamental right before he can ask the court to declare a law which is incon sistent with it void; but if a citizen is not possessed of the right, he cannot claim this relief.
" These remarks have application here.
The learned Advocate for the petitioner sought to get over this difficulty by pointing out that the (1) ; 753 dispossession took 'place on 11 4 1950.
This, however, is no answer.
The dispossession was a mere consequence which followed under clause '3, sub clause (6) of the Control Order.
The right to possession was lost earlier and the landlord merely held on to the property.
Article31 (2)does not apply for another reason.
There was no acquisition by the State of the house.
The taking of possession can only be from a person who is entitled to possession.
The petitioner landlord lost his right to possession by reason of the Controller 's order.
As soon as the allotment is made, the allottee becomes a tenant and the owner becomes the landlord by reason of sub clause (4)of the Control Order and the learned Advocate General of the Mysore State contended that a statutory tenancy was thereby created.
It is no doubt true that it is provided by sub clause (4) that the terms of the tenancy may be such as may be agreed upon between the landlord and the tenant, and there is no provision, as found in the later Act, as to what is to happen in the event of there being no agreement.
If it is correct that a tenancy is brought into existence by the operation of the statute, it is possible that in case the terms are not the subject of any agreement between the landlord and the tenant, the ordinary law of landlord and tenant will apply in the absence of any provision for the fixation of terms by the Controller.
But the point does not arise for decision in this case and nothing.
further need be said about it.
The applicability of sub clause (4) of the Control Order was sought to be avoided in another manner.
It was pointed out that sub clause (2) referred in its first part "to the purposes of the Government of Mysore" etc., and in its later part "for the occupation of any officer or any such Govern ment authority, body or corporation, or for the occupation of an individual", but that when we come to sub clause (4), the two categories are kept distinct or separate and in referring to the second category the Control Order 754 speaks only of the requirement of the house for the occupa tion by any of the officers and nothing is said about the occupation of any individual.
The amending Act did not introduce the words "or for the occupation of any individu al" into sub clause (4).
Therefore, it was urged that the whole basis of the Advocate General 's contention about a statutory tenancy being created fell to the ground.
At first sight, there seems to be something in the point.
But if sub clause (2) is read as a whole, having in 'view the object sought to be achieved by the legislation, it is fairly clear that there is no such necessary antithesis between the two categories or clauses and that the words "for the purposes" can be so read as to include "occupation" also. 'the omission of the words "for the purposes" in the latter part of sub clause (2) was perhaps to avoid inartis tic phraseology.
"For the occupation" certainly reads better than "for the purposes of the occupation".
Ground No. 2 regarding discrimination was not pressed.
Then, we come to ground No 3.
Clause (bb) of sub clause (2) of Rule 81 of the Defence of India Rules is in these terms: "(bb) for regulating the letting and sub letting of any accommodation or class of accommodation, whether residential or non residential, whether furnished or unfurnished and whether with or without board, and in particular, (i) for controlling the rents for such accommodation (either generally or when let to specified persons or classes of persons or in specified circumstances); ((ii) for preventing the eviction of tenants and sub tenants from such 'accommodation in specified circumstances and); (iii) for requiring such accommodation to be let either generally, or to specified persons or classes of persons, or in specified circumstances; . ," 755 It was urged that the power conferred under this sub clause applied only to those cases where the house was available for letting or sub letting and not to eases where a house was not so available, in other words, if the land lord of any premises said that they were required for his own occupation, the Government had no power to requisition the same, Emphasis was laid on the word "regulating".
This, however, is an obviously unsound interpretation to be placed upon the words.
They mean that the Government might provide for and regulate the letting and sub letting etc., and that such is the scope is clear from the words in sub clause (2) "may by order provide".
The argument for the petitioner, if accepted, would render the powers entirely nugatory, as it would then be open to every landlord to say that the prem ises are required for self occupation, or even that he has already let it out to another and that therefore it is not available for being let.
There was no requisition of property in this case under section 75 (A) of the Defence of India Rules.
The Control Order was promulgated under rule 81 (2) (bb) which provides for the regulation of letting and sub letting houses.
It is rather the exercise of a police power of regulation in public interest than anything done in the exercise of a power of eminent domain, in which case alone questions relating to compensation and public purpose will arise.
In the course of the arguments, it was suggested that the amendment notification of 4th May, 1949, introducing the words "or for the occupation of any individual" was invalid because the regulation of letting and sub letting under clause (bb) could only be for the Defence of British India or for the efficient prosecution of the war, or for main taining supplies and services essential to the life of the community, and that the taking of property for the occupa tion of a private individual was outside the scope of the power.
Apart from the fact that no such ground has been taken in the petition, it has also to be noted that 98 756 the Control Order purports to have been made not only under clause (bb) of sub rule (2) of rule 81 of the Defence of India Rules, but also under the Supplies, Services and Miscellaneous Provisions (Temporary Powers) Act of 1947.
We have not got this Act before us and it was not even referred to in the course of the arguments.
Hence no decision is called for on this point.
The petition fails and is dismissed without any order as to costs.
Petition dismissed.
Agent for the petitioner: K.R. Krishnaswarny.
| A house belonging to the petitioner in the Bangalore City fell vacant on the 1st September, 1949, and on the 13th September, 1949, an order was passed by the Rent Con troller 745 under the Mysore House Rent and Accommodation Control Order, 1948, allotting the house to another person and directing the petitioner to deliver possession to the lat ter.
The petitioner protested and took various steps to get the order vacated but he was unsuccessful and forcible possession was taken from him under an order made on the 11th April, 1950.
He applied to the Supreme Court under article 32 of the Constitution for quashing the order allotting the house and the subsequent orders made to enforce that order, on the ground, infer alia, that these orders contravened the provisions of articles 31 (2) and 19 (1) (f) of the Consti tution: Held, (i) that as the order of allotment was made before the Constitution came into force and at a time when the Control Order provided, validly, that a house could be taken for the occupation of a private individual, the order could not be impugned on the ground that it contravened article 31 (2) or 19 (1)(f) of the Constitution: (ii) the fact that possession was actually taken only in pursuance of an order made on the 11th April, 1950, was immaterial as the peti tioner 's right to possession was lost earlier; (iii) article 31 (2) was inapplicable for another reason also, namely, that there was no acquisition of the house by the State, as taking of possession can only be from a person who is enti tled to possession and the landlord lost his right to pos session by reason of the Controller 's order.
Held also, that the power conferred by cl.
(bb) of sub cl.
(2) of Rule 81 of the Defence of India Rules (under which the Control Order was made) was not confined to cases where the house was available for letting or subletting in the sense that the landlord did not require the house for his own use or had not let it to another himself.
|
: Special Leave Petition (Crl.) No. 405 of 1980.
Appeal by special leave from the judgment and Order dated 31 10 1979 of the Punjab & Haryana High Court in Crl.
Appeal No. 986/77.
N. C. Talukdar, Shrinath Singh and M. section Dhillon for the Petitioner.
The Judgment of the Court was delivered by DESAI, J.
While we decline to grant special leave in this case, an unsavoury feature of the judgment which rather stares into our 1154 face, and surfaces at regular intervals, makes it obligatory to make a few observations.
Petitioner was convicted for having committed offences under Section 161 of the I.P.C. and Section 5(2) of the Prevention of Corruption Act and was sentenced to suffer R.I. for one year on each count and on the second count, also to pay a fine of Rs. 400/ or in default to suffer further R.I. for three months by the learned Special Judge.
Both the Substantive sentences of imprisonment were directed to run concurrently.
Petitioner preferred Criminal Appeal No. 989 of 1977 against his conviction and sentence to the High Court of Punjab and Haryana at Chandigarh.
This appeal came up for final hearing before a learned single judge of the High Court on 31st October, 1979.
When the appeal was taken up for hearing, learned counsel for the petitioner appearing in the High Court did not question either the correctness or the legality of the conviction.
This is unquestionable as the High Court has observed while disposing of the appeal that "no arguments on merits are advanced".
The High Court then proceeded to consider adequacy or otherwise of sentence imposed on the appellant before it.
The High Court then proceeded to reduce the substantive sentence of the appellant of rigorous imprisonment for one year to the sentence undergone till the date of the judgment of the High Court.
While so reducing the substantive sentence the High Court noticed the following circumstances which in the opinion of the High Court were sufficient to enable it to interfere with the sentences imposed upon the present petitioner.
It would be advantageous to extract the relevant observations: "The learned counsel for the appellant has only submitted that the appellant has already been dismissed from service; that he is a family man, and that his sentence may be reduced to that already undergone.
In my view no useful purpose will be served by sending him again to jail to serve his unexpired period of sentence.
He has already lost his job.
The ends of justice will be amply met if his sentence of imprisonment is reduced to that already undergone and instead sentence of fine is enhanced from Rs. 400 to Rs. 4000 (four thousand) or in default to suffer further R.I. for one year.
I order accordingly.
" The judgment of the High Court throws no light on the question as to how much sentence the appellant had undergone by the time the 1155 High Court released him on bail while admitting his appeal.
But it cannot be more than a few days only.
Petitioner as pointed out earlier is convicted for committing offences under Section 161 IPC and 5(2) of the Prevention of Corruption Act.
Section 5(2) of the Prevention of Corruption Act reads as under: "Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine: Provided that the court may, for any special reasons recorded in writing, impose a sentence of imprisonment of less than one year." (underlining ours) The language of the proviso makes it abundantly clear that court is under an obligation to impose a minimum punishment once the conviction is recorded under Section 5(2) and the minimum punishment of imprisonment is for a term not less than one year.
Undoubtedly the proviso confers power on the Court to award less than the minimum punishment, if the Court convicting and sentencing the accused, is of the opinion that for any special reasons which the court is under an obligation to record in writing, sentence of imprisonment for a term less than the minimum is called for.
Conceding that the quantum of sentence is in the discretion of the trial court, where the Legislature stepped in and circumscribed and fettered the discretion by directing imposition of a minimum sentence, the court can exercise its discretion within the limited sphere left open by legislature.
The Legislature circumscribed the discretion by requiring the court to impose minimum sentence but left it open to award less than the minimum statutorily prescribed for special reasons.
The reasons have to be special reasons.
The words 'special reasons ' in the context in which they are used could only mean special to the accused on whom sentence is being imposed.
The court has to weigh reasons advanced in respect of each individual accused whose case is taken up for awarding sentence.
The word 'special ' has to be understood in contradistinction to word 'general ' or 'ordinary '.
Now what does term 'special ' connote ? "Special" means distinguished by some unusual quality; out of the ordinary.
(See Words and Phrases, Permanent Edition, Volume 39A p. 82.) Webster defines "special" as particular; peculiar; different from others; designed for a particular purpose, occasion, or person; limited in range; confined to a definite field of action.
Thus anything which is common to a large class 1156 governed by the same statute cannot be said to be special to each of them.
It would thus unquestionably appear that "special reasons" in the context of sentencing process must be special to the accused in the case or special to the facts and the circumstances of the case in which the sentence is being awarded.
The High Court then was under an obligation to award minimum sentence unless the accused advanced special reasons, i.e. special to him in the facts and circumstances of the case and successfully invoked the discretion vested in the Court to award less than the minimum sentence prescribed by law.
The Court observes that this appellant corrupt officer whose corruption was proved to its satisfaction because the High Court declined to interfere with the conviction of the appellant for corruption and who must consequently or of necessity be dismissed from service, considered his dismissal from service as a special reason.
Frankly speaking the High Court honestly did not expect any corrupt officer to be retained in service.
Ordinarily a corrupt official whose corruption is proved to the hilt is liable to be dismissed, and therefore, this aspect is not special to the appellant.
Accordingly if an officer proved to be corrupt to the satisfaction of the court is liable to be dismissed it cannot influence the question of sentence.
Also because it would be true of all public servants dealt with under Section 5(2) of the Prevention of Corruption Act.
Another special reason that appealed to the High Court is that appellant is a 'family man '.
Possibly the High Court considered marriage and children of the appellant as special to him.
An unusually large number of the Government officers from amongst those charged with corruption and convicted for the same would be married men with family, unless they joined service before marriage and became corrupt very soon at the inception of the career.
And ordinarily speaking a family of corrupt officer in some cases if not all benefits by the corrupt activity unless shown to the contrary which is not the case.
If large number of public servants from those convicted under section 5(2) of the Prevention of Corruption Act are married men with children it passes comprehension how this fact can be styled as special to the appellant influencing his sentence.
It may be mentioned without fear of contradiction that the only two reasons, special according to the High Court for awarding less than the minimum sentence are (i) appellant has lost his job and (ii) he is a married man with children.
These two reasons would be common to ninety nine per cent of cases tried under Prevention of Corruption Act and if they can be styled as special reasons for awarding less than the 1157 minimum sentence the proviso would be rendered wholly nugatory.
The Court should not be oblivious to the fact that while conferring discretion in the matter of awarding adequate sentence within limits prescribed by the statute, the Legislature finding cases of misplaced sympathy in sentencing process fettered the Court 's discretion by prescribing a minimum sentence and making it obligatory to record special reasons for awarding less than the minimum.
If still the notice of encroachments on court 's discretion is not taken, time may not be far when the Legislature out of exasperation may resort to what it has done in Section 16 of Prevention of Food Adulteration Act where minimum sentence is prescribed and Courts ' discretion to award less in any case is wholly taken away.
In this context it would be timely to recall the warning uttered by this Court in Jagdish Prasad vs West Bengal This Court said: "Offences under the Act being anti social crimes affecting the health and well being of our people, the Legislature having regard to the trend of courts to impose in most cases only fines or where a sentence of imprisonment was passed a light sentence was awarded even in cases where a severe sentence was called for, a more drastic step was taken by it in prescribing a minimum sentence and a minimum fine to be imposed even for a first offence.
" In this case, there was no justification, much less special reasons statutorily required, for awarding less than the minimum sentence.
stricto sensu Court exceeded its jurisdiction while interfering with the quantum of sentence.
And with this observation we dismiss the special leave petition.
S.R. Petition dismissed.
| Section 5(2) of the Prevention of Corruption Act, 1947 prescribes a minimum sentence of one year, in all cases of conviction under the Act, with a proviso that the Court may for any special reasons recorded in writing impose a sentence of imprisonment of less than one year.
The petitioner was convicted for having committed offences under section 161 I.P.C. and Section 5(2) of POCA and was sentenced to suffer R.I. for one year on each count and on the second count, also to pay a fine of Rs. 400/ or in default to suffer further R.I. for three months by the learned Special Judge.
Both the substantive sentences of imprisonment were directed to run concurrently.
In appeal the High Court, while maintaining the conviction, reduced the substantive sentence of rigorous imprisonment for one year to the sentence undergone till the date of the Judgment of the High Court and increased the fine to Rs. 4,000/ (Rupees four thousand) or in default to suffer further R.I. for one year.
The High Court, while so altering the sentence, took into consideration two facts, namely, (i) that the petitioner was dismissed from service and (ii) that he is a family man.
Dismissing the special leave petition of the convict against his conviction, there being no appeal by State, the Court ^ HELD: 1.
The language of the proviso to Section 5(2) of the Prevention of Corruption Act makes it abundantly clear that court is under an obligation to impose a minimum punishment once the conviction is recorded under Section 5(2) and the minimum punishment of imprisonment is for a term not less than one year.
Undoubtedly the proviso confers power on the Court to award less than the minimum punishment if the Court convicting and sentencing the accused, is of the opinion that for any special reasons which the Court is under an obligation to record in writing, sentence of imprisonment for a term less than the minimum is called for.
Conceding that the quantum of sentence is in the discretion of the trial Court, where the Legislature stepped in and circumscribed and fettered the discretion by directing imposing of a minimum sentence, the court can exercise its discretion within the limited spheres left open by legislature.
The Legislature circumscribed the discretion by requiring the Court to impose minimum sentence but left it open to award less than the minimum statutorily prescribed for special reasons.
The reasons have to be special reasons.
The words 'special reasons ' in the context in which they are 1153 used could only mean special to the accused on whom sentence is being imposed.
The Court has to weigh reasons advanced in respect of each individual accused whose case is taken up for awarding sentence.
[1155C G] In the instant case, there was no justification much less special reasons statutorily required, for awarding less than the minimum sentence.
Stricto sensu court exceeded its jurisdiction while interfering with the quantum of sentence.
[1157E] Jagdish Prasad vs West Bengal, [1972] 2 S.C.R. p. 845 @ 851, relied on.
The word "special" has to be understood in contradistinction to word "general" or "ordinary".
"Special" means distinguished by some unusual quality, out of the ordinary.
Again "special" means 'particular '; peculiar; different from others; designed for a particular purpose, occasion, or person; limited in range; confined to a definite field of action.
Thus, anything which is common to a large class governed by the same statute cannot be said to be special to each of them.
And, "special reasons" in the context of sentencing process must be special to the accused in the case or special to the facts and circumstances of the case in which the sentence is being awarded.
[1155G H, 1156A] 3.
In the instant case, the only two reasons special according to the High Court for awarding less than the minimum sentence are (i) appellant before it has lost his job and (ii) and he is a married man with children.
These two reasons would be common to ninety nine percent of cases tried under Prevention of Corruption Act and if they can be styled as "special reasons" for awarding less than the minimum sentence the proviso would be rendered wholly nugatory.
[1156G H, 1157A] Observation: The Court should not be oblivious to the fact that while conferring discretion in the matter of awarding adequate sentence within limits prescribed by the statute, the Legislature finding cases of misplaced sympathy in sentencing process fettered the Court 's discretion by prescribing a minimum sentence and making it obligatory to record special reasons for awarding less than the minimum.
If still the notice of encroachments on court 's discretion is not taken, time may not be far when the Legislature out of exasperation may resort to what it has done in Section 16 of Prevention of Food Adulteration Act where minimum sentence is prescribed and Court 's discretion to award less in any case is wholly taken away.
[1157A C]
|
iminal Appeal No. 3 of 1962.
Appeal by special leave from the judgment and order dated September 20, 1961 of the Patna High Court in Criminal Appeal No. 124 of 1960.
D. Goburdhan, for the appellant.
S.P. Ferma, for the respondent.
July 31, 1963.
The judgment of the Court was delivered by AYYANGAR J.
This is an appeal by special leave against the judgment of the High Court of Patna dismissing an appeal by the appellant against his conviction and the sentence passed on him by the Sessions Judge, Champaran.
The appellant was charged with an offence under section 304A of the Indian Penal Code for causing the death of one Mst.
Madilen by contact with an electrically charged naked copper wire which he had fixed up at the back of his house with a view to prevent the entry of intruders into his latrine.
The deceased Madilen was an inmate of a house near that of the accused.
The wall of the latrine of the house of the deceased had fallen down about a week prior to the day of the occurrence July 16, 1959, with the result that her latrine had become exposed to public view.
Consequently the deceased among others, started using the latrine of the accused.
The accused resented this and made it clear to them that they did not have his permission to use it and protested against their coming there.
The oral warnings, however, proved inef 201 fective and it was for this reason that on the facts, as found by the courts below, the accused wanted to make entry into his latrine dangerous to the intruders.
Though some of the facts alleged by the prosecution were disputed by the accused, they are now concluded by the findings of the courts below and are no longer open to challenge and, indeed, learned Counsel for the appellant did not attempt to controvert them.
The facts, as found, are that in order to prevent the ingress of persons like the deceased into his latrine by making such ingress dangerous (1) the accused fixed up a copper wire across the passage leading up to his latrine, (2) that this wire was naked and uninsulated and carried current from the electrical wiring of his house to which it was connected, (3) there was no warning that the wire was live, (4) the deceased managed to pass into the latrine without contacting the wire but that as she came out her hand happened to touch it and she got a shock as a result of which she died soon after.
On these facts the Courts below held that the accused was guilty of an offence under section 304A of the Indian Penal Code which en acts : "304A. Whoever causes the death of any person by doing any rash or negligent act not amounting to culpable homicide shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
" The accused made a suggestion that the deceased had been sufficiently warned and the facts relied on in this connection were two : (1) that at the time of the accident it was past day break and there was therefore enough light, and (2) that an electric light was burning some distance away.
But it is manifest that neither of these could constitute warning as the conditions of the wire being charged with electric current could not obviously be de tected merely by the place being properly lit.
The voltage of the current passing through the naked wire being high enough to be lethal, there could be no dispute that charging it with current of that voltage was a 'rash act ' done in reckless disregard of the serious consequences to people coming in contact with it.
It might be mentioned that the accused was also cliar 14 2 section C. India/64 202 ged before the learned Sessions Judge with an offence under section 304 of the Indian Penal Code but on the finding that the accused had no intention to cause the death of the deceased he was acquitted of that charge.
The principal point of law which appears to have been argued before the learned judges of the High Court was that the accused had a right of private defence of property and that the death was caused in the course of the exercise of that right.
The learned judges repelled this defence and in our opinion, quite correctly.
The right of private defence of property which is set out in section 97 of the Indian Penal Code is, as that section itself provides, subject to the provisions of section 99 of the Code.
It is obvious that the type of injury caused by the trap laid by the accused cannot be brought within the scope of section 99, nor of course of section 103 of the Code.
As this defence was not pressed before us with any seriousness it is not necessary to deal with this at more length.
Learned Counsel, however, tried to adopt a different approach.
The contention was that the deceased was a trespasser and that there was no duty owed by an occupier like the accused towards the trespasser and therefore the latter would have had no cause of action for damages for the injury inflicted and that if the act of the accused was not a tort, it could not also be a crime.
There is no substance in this line of argument.
In the first place, where we have a Code like the Indian Penal Code which defines with particularity the ingredients of a crime and the defences open to an accused charged with any of the offences there set out we consider that it would not be proper or justifiable to permit the invocation of some Common Law principle outside that Code for the purpose of treating what on the words of the statute is a crime into a permissible or other than unlawful act.
But that apart, learned Counsel is also not right in his submission that the act of the accused as a result of which the deceased suffered injuries resulting in her death was not an actionable wrong.
A trespasser is not an outlaw, a Caput lupinem.
The mere fact that the person entering a land is a trespasser does not entitle the owner or occupier to inflict on him personal in jury by direct violence and the same principle would 203 govern the infliction of injury by indirectly doing some thing on the land the effect of which he must know was likely to cause serious injury to the trespasser.
Thus in England it has been held that one who sets springguns to shoot at trespassers is guilty of a tort and that the person injured is entitled to recover.
The laying of such a trap, and there is little difference between the spring gun which was the trap with which the English Courts had to deal and the naked live wire in the present case, is in truth "an arrangement to shoot a man without personally firing a shot".
It is, no doubt true that the trespasser enters the property at his own risk and the occupier owes no duty to take any reasonable care for his protection, but at the same time the occupier is not entitled to do willfully acts such as set a trap or set a naked live wire with the deliberate intention of causing harm to trespassers or in reckless disregard of the presence of the trespassers.
As we pointed out earlier, the voltage of the current fed into the wire precludes any contention that it was merely a reasonable precaution for the protection of private property.
The position as to the obligation of occupiers towards trespassers has been neatly summarised by the Law Reform Committee of the United Kingdom in the following words: "The trespasser enters entirely at his own risk, but the occupier must not set traps designed to do him bodily harm or to do any act calculated to do bodily harm to the trespasser whom he knows to be or who to his knowledge is likely to be on his premises.
For example, he must not set man traps or spring guns.
This is no more than ordinary civilised behaviour." judged in the light of these tests, it is clear that the point urged is wholly without merit.
The appeal fails and is dismissed.
Appeal dismissed.
| The appellant was charged under section 304 A of Indian Penal Code for causing the death of a woman.
The deceased was residing near the house of the accused.
The wall of the latrine of the house of the deceased had fallen down about a week prior to the day of occurrence and so the deceased along with others started using the latrine of the accused.
The accused protested against their coming there.
The oral warnings however, proved ineffective and so he fixed up a naked copper wire across the passage leading upto his latrine and that wire carried current from the electrical wiring of his home to which it was connected.
On the day of the occurrence, the deceased went to the latrine of the appellant and there she touched the aforesaid fixed wire as a result of which she died soon after.
The trial and the appellate court convicted and sentenced the appellant under section 304A of the Indian Penal Code.
Hence this appeal.
200 Held : (1) The plea of the right of private defence of property was not sustainable for the reason that the type of injury caused by the trap laid by the accused could not be brought within the purview of section 99 or 103 of the Indian Penal Code.
(2) A trespasser was not an outlaw, a caput lupinem.
The mere fact that the person entering a land was a trespasser did not entitle the owner or occupier to inflict on him personal injury by direct violence and the same principle would govern the infliction of injury by indirectly doing something on the land the effect of which he must know was likely to cause serious injury to the trespasser.
|
Appeal No. 62 of 1964.
Appeal by special leave from the judgment and decree dated July 28, 1959 of the Allahabad High Court in Civil Miscellaneous Writ No. 2071 of 1959.
A. V. Viswanatha Sastri, Rameshwar Nath, section N. Andley and P. L. Vohra, for the appellant.
Gopal Singh and R. N. Sachthey, for the respondents.
The Judgment of the Court was delivered by Subba Rao, J.
The facts leading up to this appeal may briefly be narrated.
Gujarat Cotton Mills Co. Ltd., hereinafter called the Company, is a limited company having its registered office at Ahmedabad.
In the year 1938 the Company appointed Messrs. Pira Mal Girdhar Lal & Co., hereinafter called the Agency Firm, as its Managing Agents.
On February 28, 1938, a formal agreement was entered into between the Company and the Agency Firm.
The said Agency Firm was formed under an instrument of partnership dated February 26, 1938, with 11 partners 3 of them are compendiously described as the "Bombay Group" and the remaining 8 of them as the "Kanpur Group".
With certain variations in the constitution of the Agency Firm, the said firm functioned as the Managing Agents of the Company till September 1946.
In September 1946 shareholding of the partners of the Agency Firm in the Company was as follows: Kanpur Group 32,500 shares.
Bombay Group 26,362 shares.
538 Because of certain differences between the partners, they decided among themselves to sell their shares and to surrender their Managing Agency.
On September 7, 1946, the said 11 partakers entered into an agreement with the firm of Messrs. Chhuttu Ram & Sons of Bihar, hereinafter called the Purchaser Firm.
Under that agreement it was provided that 65012 shares held by the 11 partners of the Agency Firm, directly or through their nominees, should be sold to the Purchaser Firm at Rs. 65 per share and that the Agency Firm should before November 15, 1946, resign its 'office of Managing Agency of the Company.
It was a condition of the agreement that it should have operation only after the Purchaser Firm or its nominees were appointed as the Managing Agents of the Company.
On October 30, 1946, the Company held its General Body Meeting and accepted the resignation of the Agency Firm and by another resolution appointed the Purchaser Firm as the Managing Agents in its stead.
In terms of the agreement, the Purchaser Firm paid for the entire shareholding of the partners of the Agency Firm at Rs. 65 per share.
The appellant is a Hindu undivided family.
Its karta was one Dwarkanath and the present karta is his son Ramji Prasad.
The said family was 'one of the II partners of the Agency Firm belonging to 'the Kanpur Group.
Out of the total shareholding the appellant held 11,230 shares.
It received the price for the said shares at the rate of Rs. 65 per share.
It was assessed to income tax for the year 1948 49 and the Income tax Officer by his order dated June 5, 1952 assessed the excess amount of Rs. 2,98,909 realized by the assessee under the head "income from business", i.e., the difference in the amount for which it purchased the shares and that for which it sold them.
On appeal, the Appellate Assistant Commissioner of Income tax confirmed the same.
On further appeal, the Income tax Appellate Tribunal, Delhi Bench, held that the said receipt bad to be taxed as "capital gains" under section 12B. of the Income tax Act, 1922, and directed the Income tax Officer to modify the assessment in accordance with its order.
The assessee made an application under section 35 of the Income tax Act to the Tribunal for further directions and the Tribunal, by its order dated March 26, 1954, amended its previous order dated August 3, 1953, by substituting the word "processed" in place of the word "assessed" in its previous order.
The assessee raised various contentions before the Income tax Officer, inter alia, that the said income was not liable to be taxed under section 12B of the Income tax Act under the head "capital gains" and that in any case in order to determine the amount of capital gains the market value of the shares only should be taken into consideration, as the price of Rs. 65 per share included also the consideration for the relinquishment of the managing agency rights.
The Income tax Officer rejected the said contentions of the assessee.
He redetermined the assessable income under the heading "capital gains" but did not issue a notice of demand as prescribed in section 29 of the Income tax Act.
After making an infructuous attempt to get suitable directions 539 from the Appellate Tribunal, on March 5, 1956, the assessee filed an application before the Income tax Officer to issue a notice of demand under section 29 of the Income tax Act so that it might prefer an appeal against the same to the appropriate authority.
But the Income tax Officer refused to issue any such notice.
The assessee preferred an appeal against that order to the Appellate Assistant Commissioner under section 30 of the Income tax Act and that was dismissed on March 8, 1957, on the ground that it was not maintainable.
Meanwhile on September 27, 1956, the appellant filed an application before the Commissioner of Income tax under section 33A(2) of the Income tax Act for revising the order of the Income tax Officer dated September 28, 1955.
On March 28, 1959, the Commissioner dismissed the revision petition on two grounds, namely, (1) that it was not clear whether the revision petition under section 33A of the Income tax Act was maintainable, and (ii) on merits.
It may be noticed that long before the revision petition was dismissed, the appeal filed by the assessee against the order of the Income tax Officer to the Appellate Assistant Commissioner was dismissed on March 8, 1957.
On November 18, 1957, the attention of the Commissioner was also drawn to the fact that the Bombay High Court in the case of a reference to that Court at the instance of the Bombay Group held that the market value of the shares should be taken into consideration to ascertain the excess realized on the sale of the shares of the assessee for the purpose of capital gains tax.
The Commissioner ignored that decision in dismissing the revision.
Thereafter, on July 28, 1959, the assessee filed Writ Application No. 2071 of 1959 in the High Court of Judicature at Allahabad, inter alia, for a writ of certiorari or any other direction or order of like nature to quash the order of the Income.tax Commissioner, Lucknow, dated March 28, 1959, and the Order of the Income tax Officer dated September 28, 1955, and for a writ of mandamus or any other order or direction of the like nature directing the Commissioner to pass a fresh order in accordance with the decision of the Bombay High Court and direct the Income tax Officer to pass a fresh order in accordance with law and to issue a notice of demand as required by section 29 of the Income tax Act.
The High Court dismissed the said application in limine mainly on the following three grounds: (1) the affidavit filed in support of the writ petition was highly unsatisfactory and on the basis of such an affidavit it was not possible to entertain the petition; (2) the facts given in the affidavit were incomplete and confused; and (3) even on merits, there was no force in the revision petition Hence the appeal.
Mr. A.V. Viswanatha Sastri, learned counsel for the appellant, contended that the affidavit filed in support of the petition was in accordance with law, and that, even if there were any defects, the Court should have given an opportunity to the appellant to rectify them; and that the High Court should have held 540 that the revision against the order of the Income tax Officer to the Commissioner was maintainable under section 33A of the Act, as the appeal against that order to the Appellate Assistant Commissioner was not maintainable and that it should have directed the Commissioner to entertain the revision and dispose of it in accordance with law directing the Income tax Officer to issue a notice of demand under section 29 of the Income tax Act.
He further contended that the High Court went wrong in holding that the facts in the Bombay decision were different from those in the present case, for the facts in both the cases were the same and in fact they arose out of the same transaction, namely, the sale of the shares by the Agency Firm to the Purchaser Firm.
Mr. Gopal Singh, learned counsel for the Revenue, while supporting the order of the High Court raised a preliminary objection, namely, that the order of the Commissioner under section 33A of the Income tax Act was administrative act and, therefore, no writ of certiorari would lie to the High Court to quash that order under article 226 of the Constitution.
We shall first take the preliminary objection, for if we maintain it, no other question will arise for consideration.
Article 226 of the Constitution reads: " . . every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose."
This article is couched in comprehensive phraseology and it exfacie confers a wide power on the High Courts to reach injustice 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 scope of those writs also is widened by the use of the expression "nature", 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 peculiar and complicated requirements of this county.
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 541 issue prerogative writs is to introduce 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 article itself.
To say this not to say that the High Courts can function arbitrarily under this article.
Some limitations are implicit in the article and others may be evolved to direct the article through defined channels.
This interpretation has been accepted by the Court in Basappa vs Nagappa(1) and P.J. Irani vs State of Madras(2).
But we are satisfied that this case falls directly within the confines of the certiorari jurisdiction as understood in England.
It is well settled that a writ of certiorari can be issued only to quash a judicial or a quasi judicial act and not an administrative act.
It is, therefore, necessary to notice the distinction between the said two categories of acts.
The relevant criteria have been laid down with clarity by Atkin, L.J., in King vs Electricity commissioners(3), elaborated by Lord Justice Scrutton in Rex vs London County Council(4) and authoritatively restated in Province of Bombay vs Kusaldas section Advani(5).
The said decisions laid down the following conditions to be complied with: (1) The body of persons must have legal authority; (2) the authority should be given to determine questions affecting the rights of subjects; and (3) they should have a duty to act judicially.
So far there is no dispute.
But in decided cases, particularly in India, there is some mixing up of two different concepts, viz., administrative tribunal and administrative act.
The question whether an act is a judicial act or an administrative one arises ordinarily in the context of the proceedings of an administrative tribunal or authority.
Therefore, the fact that an order was issued or an act emanated from an administrative tribunal would not make it anytheless a quasi judicial act if the aforesaid tests were satisfied.
The concept of a quasi judicial act has been conceived and developed by English Judges with a view to keep the administrative tribunals and authorities within bounds.
Parker, J., in R.V. Manchester Legal Aid Committee(1) brought out the distinction between judicial and administrative acts very vividly in the following passage: "The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to define exhaustively . .
When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the course of arriving at that decision.
Thus, if in order to arrive at the decision, the (1) ; (2) ; (3) (4) (5) ; (6) , 428.542 body concerned had to consider proposals and objections and consider evidence, then there is the duty to act judicially in the course of that inquiry . . . . .
Further, an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of and are not in accordance with the practice of a court of law . . . . .
If on the other hand, an administrative body in arriving at its decision at no stage has before it any form of his and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially".
The relevant principles have been succinctly stated in Halsbury 's Laws of England, 3rd Edn., Vol. 11, at pp.
55 and 56 thus: It is not necessary that it should be a court: an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of, and are not in accordance with the practice of, a court of law.
It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition.
A body may be under a duty, however, to act judicially (and subject to control by means of these orders) although there is no form of lis inter partes before it: it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous considerations". "Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision . .
If, on the other hand, an administrative body in arriving at its decision has before it at no stage any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially".
These are innumerable decisions of this Court where it issued a writ of certiorari to quash a quasi judicial act of an administrative tribunal or authority.
This Court set aside the order of the Andhra Pradesh State Government approving the order of nationalisation of road transport made by the Andhra Pradesh Road Transport Undertaking in Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation(1), the order of the Examination (1) [1959] Supp. 1 S.C.R. 319.543 Committee cancelling the examination results on the ground that it did not give opportunity to the examinees to be heard before the order was made in Board of High School and Intermediate Education, U.P., Allahabad vs Ghanshyam Das Gupta(1), and the order of the Revenue Board made in a revision petition against the order of the Deputy Commissioner impounding the document without hearing the aggrieved party in The Board of Revenue, U.P. vs Sardarni Vidyawati(2).
In all these cases the Government, the Examination Committee and the Board of Revenue were administrative bodies, but the acts impugned were quasi judicial ones, for they had a duty to act judicially in regard thereto.
The law on the subject may be briefly stated thus: The provisions of a statute may enjoin on an administrative authority to act administratively or judicially.
If the statute expressly imposes a duty on the administrative body to act judicially, it is a clear case of a judicial act.
But the duty to act judicially may not be expressly conferred but may be inferred from the provisions of the statute.
It may be gathered from the cumulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterion to be adopted, the phraseology used, the nature of the power conferred or the duty imposed on the authority and other indicia afforded by the statute.
In short, a duty to act judicially may arise in widely different circumstances and it is not possible or advisable to lay down a hard and fast rule or an inflexible rule of guidance.
With this background let us look at the relevant provisions of the Income tax Act.
Section 33A(2).
The Commissioner may, on application by an assessee for revision of an order under this Act passed by any authority subordinate to the Commissioner, made within one year from the date of the order (or within such further period as the Commissioner may think fit to allow on being satisfied that the assessee was prevented by sufficient cause from making the application within that period), call for the record of the proceeding in which such order was passed, and on receipt of the record may make such inquiry or cause such inquiry to be made, and, subject to the provisions of this Act, pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.
Provided that the Commissioner shall not revise any order under this sub section if (a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal but has not been made, the time within which such appeal may be made has not expired, [1962] Supp. 3 S.C.R. 36.(2) [1962] Supl.3 S.C.R. 50 ' 544 or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of appeal, or (b) where an appeal against the order has been made to the Appellate Assistant Commissioner, the appeal is pending before the Appellate Assistant Commissioner, or (c) the order has been made the subject of an appeal to the Appellate Tribunal.
Provided further that an order by the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the assessee.
Under this sub section an assessee may apply to the Commissioner for revision of an order under the Act by an authority subordinate to him.
Such application shall be filed within one year from the date of the order or within such further period as the Commissioner may think fit to allow.
On receipt of such an application the Commissioner may call for the record of the proceeding in which such order was made and make such enquiry or cause such enquiry to be made.
After such enquiry he can make an order not to the prejudice of the assessee but to his benefit.
Such revision is not maintainable if the time prescribed for an appeal against such an order to the appropriate authorities has not expired or if an appeal against such an order is pending before the appropriate authorities.
The scope of the revision is, therefore, similar to that prescribed under different statutes.
Prima facie the jurisdiction conferred under section 33A(2) of the Act is a judicial one.
The order that is brought before the Commissioner affects the right of the assessee.
It is implicit in revisional jurisdiction that the revising authority shall give an opportunity to the parties affected to put forward their case in the manner prescribed.
The nature of the jurisdiction and the rights decided carry with them necessarily the duty to act judicially in disposing of the revision.
The fact that the Commissioner cannot make an order to the prejudice of an assessee does not possibly change the character of the proceeding.
Though the Commissioner may not change the order of the inferior authority to the prejudice of the assessee, he may not give the full relief asked for by the assessee.
But it is said that the Commissioner exercising jurisdiction under section 33A of the Act is only functioning as an administrative authority and all his orders made thereunder partake that character.
Reliance is placed on the decision of the Judicial Committee in Commissioner of Income tax, Punjab, N.W.F. & Delhi Provinces, Lahore vs Tribune Trust, Lahore(1).
There, the Judicial Committee held that the assessments, which were duly made by the Income tax (1947) L.R. 74 I.A. 306. 317, 318. 545.
Officer in the proper exercise of his duty, were not a nullity, but were validly made and were effective until they were set aside; and that a reference to the High Court did not lie from an order under section 33 of the Act unless that order was prejudicial to the assessee in the sense that he was in a worse position than before the order was made.
But the Board incidentally made the following observations: "On the contrary, section 33 follows a number of sections which determine the rights of the assessee and is itself, as its language clearly indicates, intended to provide administrative machinery by which a higher executive officer may review the acts of his subordinates and take the necessary action on such review.
It appears that, as a matter of convenience, a practice has grown up under which the commissioner has been invited to act "of his own motion", under the section, and where this occurs a certain degree of formality has been adopted.
But the language of the section does not support the contention, which lies at the root of the third question and is vital to the respondent 's case, that it affords a claim to relief".
Continuing the same idea that Board observed: "The Commissioner may act under section 33 with or without invitation of the assessee: if he does so without invitation, it is clear that, if he does nothing to worsen the position of the assessee, the latter can acquire no right: the review may be a purely departmental matter of which the assessee knows nothing.
If, on the other hand, the commissioner acts at the invitation of the assessee and again does nothing to worsen his position, there is no justification for giving him a new right of appeal".
These observations were made in the context of a question whether a reference would lie to the High Court against an order of the Commissioner.
But the question whether the order of the Commissioner under section 33 of the Act was a judicial or a quasi judicial act subject to the prerogative writ of certiorari was neither raised nor decided in that case: that question was not germane to the enquiry before the Board, for the appeal did not arise out of any order made in a writ of certiorari.
Section 33, which was considered by the Privy Council was repealed by the Amending Act of 1939; but by Act XXIII of 1941 the revisional powers of the Commissioner were restored.
Section 33 A took the place of section 33 with certain modifications.
Sub section (1) of section 33A provided for the Commissioner acting suo motu; and sub section(2)thereof, on the application of the assessee.
Under this section the Commissioner can exercise the revisional jurisdiction subject to the conditions mentioned therein.
While section 33 only provided for the suo motu exercise of the jurisdiction, section 33A enables an assessee to apply to the Commissioner to revise the order of his subordinate officer.
Some of the High Courts, under the impression that the Privy Council held that the act of the Commissioner was an administrative one, ruled that a writ of certiorari.
would not lie to quash the order of the Commissioner under section 33A of the Act: see Sitalpore Colliery Concern Ltd. vs Union of India(1); Additional Income tax Officer, Cuddapah vs Cuddapah Star Transport Co. Ltd.(2); and Suganchand Saraogi vs Commissioner of Income tax, Calcutta(3).
They did not consider the scope of the revision before the Commissioner and whether the orders made thereunder satisfied the well settled tests of "judicial act" laid down by this Court.
In our view, for the reasons mentioned by us earlier, the said judgments were decided wrongly.
That apart, on the assumption that the order of the Commissioner under section 33 A of the Act was an administrative one, the respondent would not be in a better position.
What the appellant complains is that the Income tax Officer in terms of section 29 of the Act is under an obligation to issue a demand notice.
If the said contention was correct, he did not discharge the duty imposed on him by the statute.
If the Commissioner only made an administrative order in refusing to give any direction to the Income tax Officer, it would not exonerate the said officer from discharging his statutory duty.
In that event the assessee would certainly be entitled to approach the High Court under article 226 of the Constitution for the issue of a writ of mandamus or other appropriate direction to the Income tax Officer to discharge his statutory duty.
We, therefore, reject the preliminary objection of the respondents.
The High Court mainly dismissed the writ petition on the ground that the affidavit flied in support of the writ petition was highly unsatisfactory and that on the basis of such an affidavit it was not possible to entertain the petition.
In exercise of the powers conferred by article 225 of the Constitution and of other powers enabling it in that behalf the High Court of Allahabad framed the Rules of Court.
Chapter XXII thereof deals with the procedure to be followed in respect of a proceeding under article 226 of the Constitution other than a writ in the nature of habeas corpus.
The relevant rule is sub r.(2) of r. 1 of Ch.XXII, which reads: "The application shall set out concisely in numbered paragraphs the facts upon which the applicant relies and the grounds upon which the Court is asked to issue a direction, order or writ, and shall conclude with a prayer stating clearly, so far as circumstances permit, the exact nature of the relief sought.
The application shall be accompanied by an affidavit or affidavits in proof of the facts referred to in the application.
Such affidavit or affidavits shall be restricted to matters which are within the deponent 's own knowledge".
The application filed in the High Court certainly complied with the provisions of sub r.(2) of r. 1 of Ch.XXII of the Rules of Court of the Allahabad High Court.
It set out concisely in numbered paragraphs the facts upon which the applicant relied, the grounds on which the Court was asked to issue the direction and the exact nature of the relief sought.
But it is said that the affidavit filed in support of the application did not speak to matters which were within the deponent 's own knowledge.
Dhruva Das, the deponent of the affidavit, is a relative of the petitioner and he also looked after the case on his behalf as his pairokar and was fully conversant with the facts.
He solemnly affirmed and swore as follows: "I Dhruva Das, aforesaid deponent do hereby solemnly affirm and swear that the contents of paras 1, 2, 3 and 50 partly are true to my personal knowledge, that the contents of paras.4, 5, 6, 7, 8, 9, 10.11, 12. 13, 14, 15, 16, 20, 21, 25, 27, 29 partly, 31, 32, 34, 37, 38.41, 42, 44 are based on 46 and 50 partly and paras 17, 18, 19, 22, 23, 24, 26, 28, 29, partly 30, 33 ', 35, 36, 39, 40, 43, 48 partly are based on perusal of the record, those of paras 47, 48 partly 49 and 50 partly are based on legal advice, which I believe to be true, that no part of this affidavit is false and nothing material has been concealed in it".
In paragraphs which are based on a perusal of the record the deponent referred to the relevant orders of the Income tax authorities and also to the relevant agreements and the copies of the said orders and agreement were also annexed to the affidavit as schedules.
It is not clear from the schedules whether certified copies or the original of the orders received by the appellant were filed.
The said agreements and the orders afford sufficient basis to appreciate the case of the appellant and for disposing of the same.
"Deponent 's own knowledge" in r. 1(2) of Ch.XXII of the Rules is wide enough to comprehend the knowledge of the appellant derived from a perusal of the relevant documents; and the affidavit in express terms disclosed and specified the documents, the source of the appellant 's knowledge.
He swore in the affidavit that the documents annexed to the affidavit were true copies of public documents.
If they are certified copies of public documents, they prove themselves; if they are original of the orders sent to the appellant, the deponent, as his agent, speaks to their receipt.
It is, therefore, not correct to say that the facts stated in the affidavit are not based on the deponent 's knowledge.
The other facts alleged in the affidavit are only introductory in nature and if they are excluded the result will not be affected.
That apart, if the affidavit was defective in any manner the High Court, instead of dismissing the petition in limine, should have given the appellant a reasonable opportunity to file a better affidavit complying with the provisions of r. 1 of Ch.XXII of the Rules.
We cannot, therefore, agree with the High Court that the petition was liable to be dismissed in limine in view of the alleged defects in the affidavit.
548 Nor can we agree with the High Court that the facts given in the affidavit are incomplete and confused.
On the other hand, a careful perusal of the affidavit, along with the documents annexed thereto, discloses clearly the appellant 's case: it gives the necessary facts and the reliefs sought for.
We do not find any missing link in the narrative of facts or any confusion in the nature of the reliefs asked for.
We cannot also agree with the High Court that the decision of the Bombay High Court in Baijnath Chaturbhuj vs Commissioner of Income tax, Bombay City 11(1) was given on different facts and that it was impossible to contend that any part of the money paid by Messrs. Chaturam & Sons was really compensation for the managing agency rights.
The Bombay decision was given in the context of the dispute between the Bombay Group and the Income tax authorities and was based upon the consideration of the very documents which are the basis of the appellant 's claim.
We do not propose to express any opinion on the correctness or otherwise of that decision.
But, the fact that a Division Bench of one of the High Courts in India had taken the view in favour of the appellant indicates that the question raised is, in our view, an arguable one and it requires serious consideration.
We are satisfied that this is not a case where the High Court should have dismissed the writ petition in limine.
We find in the decree issued by the High Court that Sri Gopal Behari appeared on behalf of the opposite parties; presumably he appeared as the appellant must have issued notice in terms of r. 1(4) of Ch.XXII of the Rules.
Be that as it may, the High Court did not finally decide two important questions that really arose 'for consideration before it, namely: (i) whether a revision lay to the Commissioner under section 33 A(2) of the Act against the order of the Income tax Officer; and (ii) whether the Income tax Officer should have issued a demand under section 29 of the Act.
If a revision lay to the Commissioner, the Commissioner should have considered the second question before dismissing it.
Therefore, the question is whether a revision lay to the Commissioner under section 33 A(2) of the Act.
A revision does not lie to the Commissioner against an order where an appeal against that order lies to the Appellate Assistant Commissioner but has not been made and the time within which such an appeal may be made has not expired or where an appeal against the order has been made, it is pending before him.
It follows that if no appeal lies against the order an officer to the Appellate Assistant Commissioner, the Commissioner can revise that order under section 33 A of the Act.
In the present case, pursuant to the directions of the, Tribunal, Delhi Bench, the Income tax Officer determined the assessee 's capital gains under section 12 B of the Act; but the Income tax Officer did not make any order under section 23(3) of the Act, nor (1957) 31/.T.R. 643.
549 did he issue a regular notice of demand as prescribed under section 29 of the Act.
The result was, no appeal lay against the computation made by the Income tax Officer to the Appellate Assistant Commissioner.
Indeed, on March 8, 1957, the Appellate Assistant Commissioner rejected the appeal filed by the appellant as being not maintainable.
As no appeal lay to the Appellate Assistant Commissioner against the calculations made by the Income tax Officer, the Commissioner had certainly power to revise the said order.
On March 5, 1956, the appellant flied an application requesting the Income tax Officer to issue a notice of demand as required by section 29 of the Act.
But the said Officer declined to issue the notice of demand.
The question is whether he was bound to issue a notice of demand under section 29 of the Act.
Section 29 of the Act reads: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable".
Under this section, if a tax is due in consequence of an order from an assessee, the Income tax Officer is under a duty to serve on him a notice of demand.
Pursuant to the directions given by the Tribunal the Income tax Officer made fresh calculations under the head 'capital gains ' and ascertained the amount due from the assessee.
In the circumstances, pursuant to the said calculation, he should have passed an order and issued a notice of demand to the assessee.
In not doing so, it must be held that the Income tax Officer did not discharge his duty which he was bound to do under the Act; with the result he had become amenable to a writ of mandamus directing him to do what he should have done under the ,Act.
In the result, the order of the High Court is set aside and we issue a writ of certiorari quashing the order of the Commissioner and a writ of mandarnus directing the Income tax Officer to pass an order and issue a notice in accordance with law.
The appellant will have his costs throughout.
Appeal allowed.
| Pursuant to the directions of the Income tax Appellate Tribunal, the Income tax Officer, determined the assessee 's capital gains under section 12B of the Income tax Act, 1922.
He did not, however, make any order under section 23(3) of the Act, nor did he issue a notice of demand under section 29 of the Act.
The assessee filed an application before the Commissioner of Income tax, under section 33A(2) of the Act, for revising the computation made by the Income tax Officer drawing his attention to a decision of the Bombay High Court in Baijnath 's case, , as to how the capital gains should be ascertained.
That decision was based upon a consideration of the very documents which were the basis of the assessees ' claim.
The Commissioner dismissed the revision petition as not maintainable, as well as on merits, ignoring the Bombay decision.
Meanwhile, the assessee filed an application requesting the Income tax Officer to issue a notice of demand under section 29, to enable him to file an appeal, but the Officer declined to do so.
The assessee filed a writ application in the High Court for issuing appropriate writs to the Commissioner and the Income tax Officer, but the High Court dismissed it in limine.
In his appeal to this Court, the assessee contended that (i) the High Court erred in holding that the affidavit filed in support of the writ petition was not in accordance with law, and that even if there were any defects the High Court should have given him an opportunity to rectify them, and (ii) the High Court erred in distinguishing the Bombay decision and in holding that there was no force in the revision filed before the Commissioner, and that, the High Court should have directed the Commissioner to entertain the revision and dispose of it in accordance with law by giving suitable directions to the Income tax Officer.
The respondent raised a preliminary objection that as the order of the Commissioner was an administrative act, article 226 of the Constitution could not be invoked.
HELD:(i) As no appeal lay to the Appellate Assistant Commissioner against the calculations made by the Income tax Officer, the Commissioner had powers under section 33A(2) to revise the Income tax Officer 's order.
The jurisdiction conferred on the Commissioner by the section is a judicial one, The nature of the jurisdiction and the rights decided carry with them necessarily the duty to act judicially in disposing of the revision.
Further, the fact that a Division Bench of one of the High Courts in India had taken a view in favour of the assessee, indicated that the question raised was arguable and required serious consideration.
Therefore, a writ of certiorari quashing the order of the Commissioner dismissing the assessee 's revision petition, should be issued.
[544E G; 548D] 537 Sitalpore Colliery Concern Ltd. vs Union of India, , Additional Income tax Officer, Cuddapah vs Cuddapah Star Transport Co. Ltd. and Suganchand Saraogi vs Commissioner of Income tax, , overruled.
Even if the Commissioner only made an administrative order in refusing, to give any direction to the Income tax Officer, the assessee would still be entitled to approach the High Court under article 226, and a writ of mandamus directing the Income tax Officer to discharge his statutory duty of passing the order and issuing the notice of demand in accordance with law, should be issued.
[546C E] (ii)The affidavit filed on behalf of the assessee was complete and compiled with the rules made by the High Court.
The affidavit spoke only of matters which were within the deponent 's own knowledge, because, the phrase "deponent 's own knowledge" is wide enough to comprehend the knowledge derived from a perusal of relevant documents.
Even if the affidavit was defective in any manner, the High Court instead of dismissing the petition in limine should have given the assessee, a reasonable opportunity to file a better affidavit.
[547F G, H] (iii)The High Court was also in error in holding that the decision of the Bombay High Court was given on different facts, for the facts in both cases were the same and they arose out of the same transaction.
[548B C]
|
Criminal Appeal No. 722 of 1991.
From the Judgment and Order dated 21.12.1990 of the Kerala High Court in Criminal Appeal No. 425 of 1989.
B.R.L. lyanger, R. Mohan, V. Krishnamurthy and V. Bala chandran for the Appellants.
P.S. Poti, T.T. Kunhikannan, E.M.S. Anam, Ms. Indira Sawlmey, P. Parmeswaran, Ms. Sushma Suri, K. Ram Kumar and Y.P. Rao for the Respondents.
The Judgment of the Court was delivered by YOGESHWAR DAYAL, J.
Special leave granted.
This order will dispose of six matters namely, Crl.
Appeal Nos.
553/ 89, 283/91,284/91, Civil Appeal Nos.
3708 13/89, 1897/91 and Criminal Appeal arising out of S.L.P. (Crl.) No. 2647/91.
FACTS Crl.
A. No. 553/89 This appeal arises from the judgment of the learned Single Judge of the High Court of Kerala dated 6th June, 1988 whereby the learned Single Judge declined to quash the prosecution of the petitioner therein under Section 482 of the Code of Criminal Procedure.
The petitioner therein has been prosecuted for selling adulterated "Ashoka special supari" on the basis of a certificate issued by the Director of Central Food Laboratory showing that the article of Food purchased from the accused contained 2000 mgs/kg.
saccharin and that the sample does not conform to the Prevention of Food Adulteration Rules, 1955, (hereinafter referred to as the Rules).
The High Court took the view the report prima facie goes to show that accused has sold adulterated article of food and consequently declined to quash the prosecution under Section 482 of the Code.
A. No. 283/91 This appeal is directed against the order of the Kerala High Court dared 22nd January, 1991 accepting the appeal against the order of 394 acquittal passed by the Chief Judicial Magistrate, Palakkad, in S.T No. 36 of 1988.
The appeal was filed against the acquittal of accused Nos. 2 and 3 therein and out of whom N. Raja Mohammed, the Joint Managing Director of M/S N.V.K. Mohammed Sultan Rawther (P) Ltd., is the appellant before us.
The High Court confirmed the acquittal of second accused but sentenced the appellant before us under Section 16(1)(a)(i) of the Prevention of Food Adulteration Act to undergo simple imprisonment for six month and to pay a fine of Rs. 1,000 with a default sentence of simple imprisonment for two more months.
284/91.
This appeal is filed against the order dated 21st Decem ber, 1990 passed by the learned Single Judge of the Kerala High Court dismissing the revision petition whereby accused No. I therein was sentenced to pay Rs. 1,000 as fine and the two other accused were sentenced to simple imprisonment for six months each and Rs. 1,000 as fine and in default of payment of fine to undergo simple imprisonment for a period of one month more.
Their conviction were recorded under Section 7(i) and (v) read with Section (16) (1) (a) (ii) of the Prevention of Food Adulteration Act for having sold Roja Sungandha Suparit with admixture of saccharin.
The sample was taken on 22nd December, 1986.
Civil Appeal Nos.
3708 13/89 These appeals are filed by the Union of India against the judgment of the Division Bench of the High Court of Andhra Pradesh dated 16th June, 1986 whereby the Division Bench following the judgment of a learned Single Judge in Crl.
Petition No. 1569 of 1984 allowed the writ peti tions.
A batch of writ petitions were filed for a declara tion that the admixture of saccharin in Anjali Sugandhi Supari; Roja Scented Betelnut; Nizam Supari; A.R.R. Saugan tha Supari and Ajantha Sugandhi Supari is in accordance with Rule 44 of the Rules and restraining the respondents/ appel lant herein from interfering with the business of sale of Supari with such an admixture.
Civil Appeal No. 1897/91 This appeal is directed against the order of the Divi sion Bench of the Kerala High Court dated 22nd November, 1990 whereby the learned Division Bench was inclined to take the view that the learned Single Judge should have declined jurisdiction for the reason that the relief claimed 395 is of a general character for a declaration that the admix ture of saccharin in Roja Scented Betelnut is not a blanket ban under Rule 47 read with Appendix B of the Prevention of Food Adulteration Rules, 1955.
Appeal at, sing out of SLP (Crl.) No. 2647/91 This appeal is directed against the order of the High Court of Kerala dated 21st December, 1990 setting aside the order of acquittal passed by the trial court and remanding the matter to the trial court for fresh disposal according to law.
The trial court had inter alia taken the view that the sample of Supari in question was taken contrary to Rule 22 A of the Rules.
The High Court took the view that the sample was properly taken.
On a plea being raises that the article of Supari was not adulterated as saccharin could be added to Supari, the High Court did not agree with the submission and held that saccharin could not be added to Supari and consequently the High Court remanded the matter to the trial court for fresh disposal according to law.
The case inter alia involves interpretation of Rule 44 (g) of the Rules before its deletion with effect from 15th April, 1988 and the amendment of Rule 47 by Notification No. GSR 454 (E) dated 15.4.1988 (with effect from 15.4.1989) as covered by GSR 1157 (E) dated 9.12.1988.
Rules 44(g) and 47 as they originally stood and as they stood modified at the relevant time of taking of the sample, figured during the arguments and they are extracted hereunder with comments : "44.Sale of certain admixtures prohibited Notwithstanding the provisions of Rule 43, no person shall either himself or by any servant or agent sell (g) any article of food which contains any artificial sweetener, except Saccharin, or in the preparation of which any such artificial sweetener has been used".
" "47.
Addition of Saccharin to be mentioned on the label.
Saccharin may be added to any food if the container of such food is labelled with an adhesive declaratory label.
which shall be in the form given below : This . . (name of food) . . contains an admixture of Saccharin".
These Rules held the field from November 24, 1956 until August 24, 1968 when they were further amended.
The Preven tion of Food Adulteration (Third Amendment) Rules 1968, redrafted Rules 44 (g) and 47.
and it 396 is these Rules which were extant at the time of the alleged offence.
It is proper at this stage to reproduce these two Rules: "44.
Sale of certain admixtures prohibited Notwithstanding the provisions of Rule 43 no person shall either by himself or by any servant or agent sell (g) any article of food which contains any artificial sweetener except where such artifi cial sweetener is permitted in accordance with the standards laid down in Appendix 'B '.
"47.Addition of artificial sweetener to be mentioned on the label Saccharin or any other artificial sweetener shall not be added to any article of food, except where the addi tion of such artificial sweetener is permitted in accordance with the stand ards laid down in Appendix 'B ' and where any artificial sweetener is added to any food the container of such food shall be labelled with an adhesive declaratory label which shall be in the form given below: This . . (name of food) . . contains an admixture . . (name of the artificial sweetener)".
The Supreme Court in its decision Pyarali K. Tejani vs Mahadeo Ramchandra Dange and Others, ; took the view that at the relevant time the article like saccha rin could not be added to the Supan in view of the amended Rules 44(g) and 47 of the Rules.
It will be noticed that till date no standard has been prescribed in Appendix 'B ' to the Rules so far as the Supari is concerned.
Therefore under Rule 44(g) there was a total prohibition of use of saccha rin, which is an artificial sweetener, to any article of food including Supari and regarding saccharin it was specif ically provided in Rule 47 that it shall not be added to any article of food, except where the addition of such artifi cial sweetener is permitted in accordance with the standards laid down in Appendix 'B '.
Therefore, under Rule 47 again so far as saccharin is concerned and for which no standards have been prescribed in Appendix 'B ' there was total prohi bition of adding the same in any article of food.
This was the view taken in the aforesaid case of Pyarali K. Tejani.
For the period relevant for the Tejani 's case the Rules permitted saccharin to be added in case of carbonated water in item 5(B) A 1.01.01 only but no such permission was noticed by the Supreme Court in the case of Supari.
Thus the Supreme Court had settled the law, as far as the Rules between August 24, 1968 and 15th April, 1988 are concerned.
We may mention that w.e.f. 15.4.
1988 Rule 44(g) was omitted and Rule 47 was substituted by new Rules.
397 However, it appears that with effect from 26th May, 1971 for the first time a standard was prescribed for Saccharin Sodium as item No. A.07.10 in Appendix 'B ' to the Rules.
After the provision of standard for Saccharin Sodium in Appendix 'B ' to the Rules, the Bombay High Court in the case of State of Maharashtra vs Ranjitbhai Babubhai Suratwalla, distinguished the judgment of the Supreme Court in Tejani 's case (supra) and took the view that because standards; have been prescribed for saccharin, Rule 47 permitted its user in article of food.
This view was followed by Single Judge of the Andhra Preadesh High Court in the case reported as Thummalapudi Venkata Gopala Rao vs The State, (1986)Cr1 LJ 1699.
Asimilar view was taken by another Single Bench of the Madras High Court in the case M/s. Wahab and Co., a Proprietory concern represented by its proprietor M. A Wahab son of N. Mohamed Sheriff vs Food Inspector, Tiruchirappalli Municipal corparation Trichy; (1990)L.W.(CrI.)437 with out noticing the earlier cotract view of the same High Court reported as State by Public Prosecutor vs K. R. Balakrishnan, (1986) (I) FAC 384.
The Rajasthan High Court also took the same view in the case reported as Kailash vs The State of Rajasthan, (1985) (I) FAC 282.
The Gauhati High Court in the case reported as State of Assam vs Rant Karani and Others (1987) (3) All India Prevention of food Adulteration Journal 153 following some of the aforesaid decisions also look the view that addition of artificial sweetener like saccharin in Supari or Pan Ka Masala, if it conforms to the standard laid down in clause A.07.10 of the Appendix 'B ' of the Rules, did not violate Rule 44(g) read with Rule 47 of the Rules.
The Madhya Pradesh High Court in the case reported as Ujjain Municipal Corporation, Ujjain vs Chetan Das, (1985) (I) FAC 46. followed the view of the Bomaby High Court in the case reported as Ranjitbhai Babubhai Suratwalla (supra).
On the other banal the High court of Kerala, Allahabad and another earlier Single Bench of the Madras High Court took the view that prescription of standard of saccharin in Appendix 'B ' to the Rules could not alter the interpretation of Rule 44(g) nor help could be taken from interpretaion of Rule 47.
The Kerala High Court in the case reported as Food Inspector vs Usman, noticed the view of the Bombay High Court in Ranjitbhai Babubhai Suratwalla 's case (supra) and dissented from it and held: "Rule 47 of the Prevention of Food Adultera tion Rules provides that saccharin or any other artificial sweetener shall not be added to any article of food, except where the addi tion of 398 such artificial sweetener is permitted in accordance with the standards laid down in Appendix 'B ' and where any artificial sweeten er is added to any food, the container of such food shall be labelled with an adhesive de claratory label to that effect.
That means unless and to the extent in accordance with the standards prescribed in Appendix 'B ' saccharin or any other artificial sweetener are prohibited material in food articles.
For pan supari no standard is fixed in Appendix 'B '.
That means addition of artificial sweet ener is not permitted by the standards laid down in Appendix 'B ' and the prohibitions under Rule 47 operates as an absolute prohibi tion against addition of saccharin or other artificial sweetener so far as pan supari is concerned.
Whether addition of artificial sweetener is injurious to health or life is not a matter for consideration when its addi tion is prohibited".
Following the decision of the Supreme Court in Tejani 's case the Court set aside the acquittal of accused No. 1 and sentenced him.
A Division Bench of the Allahabad High Court in Krishna Chandra (in Jail,) vs State of Uttar Pradesh, (1990) (I) F.A.C. 35 differed with the earlier decision of the Single Bench in Ibrahim Hussain vs ,State of Uttar Pradesh and also differed with the view of the Bombay High Court in Ranjitb hai Babubhai Suratwallas case and declined to distinguish the Tejani 's case as held by this court and took the view that the prescription of the standard of saccharin is not at all relevant to the inquiry and saccharin could not be added to any article of food unless permitted by standard pre scribed in Appendix 'B ' to the Rules and purported to the decision of this Court in Tejani 's case.
Before us also Mr. B.R.L. lyengar, who appeared for the accused, made submission that on the construction of Rule 44(g) it permits sale of article of food which contains artificial sweetener with the standard as laid down in Appendix 'B ' to Rules.
We are unable to accept the submis sion.
We are also unable to accept the decisions of the High Courts supporting that view.
Rule 44 (g) indicates that sale of any article of food which contains artificial sweetener is banned.
The ban is lifted only if such artificial sweetener is permitted to be added to the article of food for which standards have been laid down in Appendix 'B ' to the Rules.
Admittedly no stand ard has been laid down for Pan Masala or Supari.
It is this article of food which was being sold.
No standard was pre scribed for this article of food.
Therefore, the exception permitted by clause (g) has no application 399 and no relevance.
The article which was being sold should contain a standard and the standard should permit artificial sweetener to be added.
Again Rule 47 in other form specifi cally bars saccharin or any other article of artificial sweetener to be added in any article of food, except where the addition of such artificial sweetener is permitted in accordance with the standards laid down in Appendix 'B '.
Therefore both Rules 44(g) and 47 constitute a total blanket ban on the addition of any artificial sweetener including saccharin to any article of food unless standards for that article of food is prescribed which authorises the use of such an artificial sweetener.
The argument that since the standards of saccharin have been provided for in the Appen dix 'B ' to the Rules and therefore, it could be added in view of the language of Rule 44(g) is fallacious.
What one has to see is the article of food in which the artificial sweetener is sought to be added.
If the standards for that article of food is provided in Appendix 'B ' to the Rules and such standards permit the addition of saccharin or any other artificial sweetener, then and then only saccharin or any other artificial sweetener could be added and not otherwise not.
It appears that the Bombay High Court and the other High Courts which have taken the opposite view seem to have fallen into errors while interpreting Rule 44(g1.
They have assumed as if once the standards of saccharin or the artifi cial sweetener have been prescribed it could be freely added to any article of food.
It is necessary to point out that the prescription of standard of saccharin or any artificial sweetener in Appendix 'B ' is really irrelevant.
What was emphasised in Tejani 's case is the standard of food and the standard should permit saccharin or any artificial sweetener to be added.
It is not the question of standard being pre scribed for saccharin which is relevant; what is relevant is the standard being prescribed in Appendix 'B ' of the article of food which is being sold and which standard permits user of saccharin.
This is the real intention of the legislature while enacting Rule 44(g) of the Rules.
For Supari and Pan Masala, it is undisputed that there is no standard pre scribed.
In this view of the matter, we agree with the decisions of the Kerala High court in Food Inspector vs Usman ; Allahabad High Court in Krishna Chandra, (in Jail) vs State of Uttar Pardesh, 1990 (I) F.A.C. 35 and Madras High Court in State by Public Prosecutor vs K.R. Balakrishnan, The decisions in: State of Maharashtra vs Ranjitbhai Suratwalla, the Bombay High Court; Thummalapudi Venkata Gopala Rao vs The State.
(1986) Crl.
L.J. 1699 of the Andhra Pradesh High Court; M/s. Wahab and Co., a Proprietory concern represented by its proprietor M.,A. Wahab son of N. Mohammed Sheriff vs Food Inspec 400 tor, Tiruchirapalli Municipal Corporation, Trichy, (1990) L.W. (Crl.) 437 of the Madras High Court; Kailash vs The State of Rajasthan, 1985 (I) F.A.C. 282 of the Rajasthan High Court; The State of Assam vs Ram Karani and Others, 1987 (3) All India Prevention of Food Adulteration Journal 153 of the Gauhati High Court and Ujjain Municipal Corpora tion, Ujjain vs Chetan Das, 1985 (I) F.A.C. 46 of the Madhya Pradesh High Court cannot be said to have been correctly decided and are hereby overruled.
The result is that civil Appeal Nos.
3708 13 of 1989 are accepted and the impugned judgment of the Andhra Pradesh High Court dated 16th June, 1986 is set aside Crl.
Appeal Nos.
553/89, 283/91,284/91, Civil Appeal No. 1897/91 and the appeal arising out of S.L.P. (Crl.) No. 2647/ 91 are dis missed.
T.N.A. Appeals dis posed of.
| The appellant (in Criminal Appeal No. 553/89) was prose cuted for selling adulterated supari with admixture of saccharin.
He filed a petition in the Kerala High Court under section 482 of the Criminal Procedure Code for quash ing the criminal proceedings which was dismissed by a single judge.
Against the decision of the single judge an appeal was filed in this Court.
The appellant (In Criminal Appeal No. 283/91) was also prosecuted for selling adulterated Supari but was acquitted by the Chief Judicial Magistrate, Palakkad.
On appeal the Kerala High Court set aside his acquittal and convicted him under section 16(1) (a) (i) of the Prevention of Food Adul teration Act and sentenced him to imprisonment for 6 months and a fine of Rs.1000.
Against the order the Kerala High Court an appeal was filed in this Court.
The appellant (In Criminal Appeal No. 284/91) was con victed ruder section 7(i) and (v) read with sections 16(i) (a) (ii) of the prevention of Food Adulteration Act for sale of adulterated supari with admixture of saccharin.
He filed a Revision Petition in the Kerala High Court and a Single Judge dismissed the same.
Against the order of the Single Judge an appeal was filed in this Court.
The facts in the connected civil appeal (Nos. 3708 13/89) are that a batch of writ petitions was filed in the Andhra Pradesh High 391 Court for a declaration that the admixture of saccharin in supari was in accordance with Rule 44 of the Prevention of Food Adulteration Rules, 1955 and for restraining the re spondents from interfering with the business of sale of supari.
A Division Bench of the High Court allowed the writ petitions.
Against the decision of the Division Bench Union of India has filed appeals in this Court.
Civil Appeal No. 1897/91 is directed against the order of the Division Bench of the Kerala High Court which held that the learned Single Judge should have declined jurisdic tion for the reason that the relief claimed was of a general character for a declaration that the admixture of saccharin in Roja Scented betelnut is not a blanket ban under Rule 47 read with Appendix 'B ' of the Prevention of Food Adultera tion Rules, 1955.
Criminal Appeal No. 722/91 is directed against the order of the High Court of Kerala setting aside the order of acquittal passed by the trial court and remanding the matter to the trial court for fresh disposal according to law.
The High Court did not agree with the submission that the arti cle of Supari was not adulterated as saccharin could be added to Supari.
Accordingly it held that saccharin could not be added to supari and consequently remanded the matter to the trial court for fresh disposal according to law.
In appeals to this court it was contended on behalf of the accused that on the construction of Rule 44(c) it per mits sale of Article of food which contains artificial sweetener with the standard as laid down in Appendix 'B ' to Prevention of Food Adulteration Rules, 1955.
Disposing the appeals, this Court, FIELD: 1.
Rule 44(g) of the Prevention of Food Adultera tion Rules, 1955 indicates that sale of any article of food which contains artificial sweetener is banned.
The ban is lifted only if such artificial sweetener is permitted to be added to the article of food for which standards have been laid down in Appendix 'B ' to the Rules.
Rule 47 in other form specifically bars saccharin or any other article of artificial sweetener to be added in any article of food, except where the addition of such artificial sweetener is permitted in accordance with the standards laid down in Appendix ' 'B '.
Thus both Rules 44(g) and 47 constitute a total blanket ban on the addition of any artificial sweeten er including saccharin to any article of food 392 unless standards for that article of food is prescribed which authorises the use of such an artificial sweetener.
[398 G, 399 A B] 2.
The prescription of standard of saccharin or any artificial sweetener in Appendix 'B ' is really irrelevant.
It is not the question of standard being prescribed for saccharin which is irrelevant what is relevant is the stand ard being prescribed in Appendix 'B ' of the article of food which is being sold and which standard permits user of saccharin.
This is the real intention of the legislature while enacting Rule 44(g) of the Rules.
[399 E F] 3.
What one has to see is the article of food in which the artificial sweetener is sought to be added.
The article which was being sold should contain a standard and the standard should permit artificial sweetener to be added.
If the standards for that article of food is provided in Appen dix 'B ' to the Rules and such standards permit the addition of saccharin or any other artificial sweetener, then and then only saccharin or any other artificial sweetener could be added and not otherwise.
[399 A C] 4.
Admittedly no standard has been laid down for Pan Masala or Supari i.e. the article of food which was being sold.
Therefore, the exception permitted by clause (g) of Rule 44 has no application and no relevance.
[398 H, 399 A] Pyarali K. Tejani vs Mahadeo Ramchandra Dange and Ors., ; , explained and applied.
State of Maharashtra vs Ranjitbhai Babubhai Suratwalla, ; Thummalapudi Venkata Gopala Rao vs The State.
, M/s Wahab and Co. a proprie tary concern represented by its ' proprietor N.A. Wahab son of N. Mohammad Sheriff vs Food lnspector.
Tiruchirappalli Municipal Corpn., Trichy.
[1990] L.W. (Crl.) 437; Kailash vs The ,State of Rajasthan, ; State of Assam vs Ram Karani anti Ors., (1987) 3 All India Prevention of Food Adulleration Journal 153; Ujjain Municipal Corpn.
, Ujjain vs Chetan Das, (1985) I F.A.C. 46, overruled.
State by public prosecutor vs
K.R. Balakrishnan, ; Food Inspector vs Usman. ; Krishna Chandra (In jail) vs State of Uttar pradesh, , approved.
|
iminal Appeal No. 314315 of 1976.
Appeals by special leave from the Judgment and order dated 4 1975 of the Bombay High Court in Criminal Revision Appln.
No. 1115/73.
M.C. Bhandare, (Mrs.) Sunanda Bhandare, M.S. Narasimhan, 7 3 .
K. Mathur and A.K. Sharma, for the Appellants.
M.N. Phadke and M.N. Shroff, for the Respondents.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Judicial fluctuations in sentencing and societal seriousness in punishing have combined to persuade Parliament to prescribe inflexible, judge proof, sentencing minima in the Food Adulteration law.
This depri vatory punitive strategy sometimes inflicts harsher than deserved compulsory imprisonment on lighter offenders, the situation being beyond judicial discretion even if prosecu tion and accused consent to an ameliorative course.
The two appeals, by special leave, partially illustrate this proposition.
Khurasani oil is an edible oil extracted by crushing oil seeds in mills.
Groundnut oil, also edible, is expressed likewise.
A firm by name almukand Hiralal Loya & Co., in a minor town in Maharashtra, ms an oil mill where Khurasani oil and groundnut oil are manufactured by the firm.
Sometimes they crush oil seeds for others on ire who pay milling charges.
The appellants in Criminal Appeal No. 314 are the manag ing partner and the manager of the mill and the appellant in Criminal appeal No. 315 is the operator of the expeller in the mill who actual sold the offending commodity.
On Febru ary 16, 1972 the Food inspector of Bhagur Municipality walked into the sales section of the Mill, asked for 375 grams of khurasani oil from accused No. 8, appellant in Criminal Appeal No. 315.
The quantity required was applied and, thereafter, the Food Inspector went through the statu tory exercises preparatory to an analysis by the Public Ana lyst.
After receiving the report of the Analyst to the effect that the sample of hurasani oil sent for analysis contained 30% of groundnut oil which amounted to a contra vention of rule 44(e) of the Prevention of Food Adultera tion Rules (for short, the rules), a complaint was lodged for selling adulterated food within the meaning of section 2(i) of he Prevention of Food Adulteration Act (hereinafter called the Act) read with sections 7(1) and 16 (1)(a) and r.44(e).
Evidence was led to make out a prima facie case.
The accused were questioned under section 342 Cr.
P.C., and the appellants confidently pleaded guilty to the charge where upon the trial Magistrate, perhaps agreeably to expecta tions, sentenced them each to a piffling fine of 3 Rs. 250.
Although the whole process in court is strongly suggestive of a tripartite consensual arrangement and re minds one of pie, bargaining procedures in the United States of America, the State Government appears to have taken a 7 3 trate 's adroit avoidance of the penal provisions which obligate him to inflict a minimum prison sentence, viz., section 2(i)(a) and section 16(1) with a view to apply the proviso to section 16(1).
This is, at best, a conjecture about the Magistrate and might as well be imputed to the prosecutor and the food inspector.
However, the State filed a revision to the High Court against the illegal and ultra lenient impost.
The revisional Judge converted the offence into one under section 2(i)(a) read with section 16(1 and enhanced the sentence to the minimum of six months an Rs. 1,000 by way of fine on the ground that the offence committee by the accused squarely fell within section 16(1)(a) and did not face within the proviso of that provision which vests a guarded discretion in the Court to soften the sentence to special cases.
The appel lants, shocked by this drastic reversal of fortune at the High Court 's hand: have sought restoration of the Magis trate 's conviction and sentence If this aggravated convic tion is correct, the enhanced punishment is inescapable.
The circumstances leading up to and constituting the offence hay 'been briefly set out already and the divergence between the trial court and the High Court turns on the legal inferance to be drawn from the factual matrix.
Has there been adulteration of food, in the sens imputed to that expression by section 2(i)(a)? Assuming it fails under section 2(i) (1) of the definition, does that factor exclude it from section 2(i) (a) Even if section 2(i)(a) does apply, is the benigrant proviso to section 16(1 attracted on the score that the crime in this case constitutes a violation of r. 44(e) prescribing minimum standards? These questions agricultural to the submission made by Shri Bhandare for the appellants.
his argument being that the scheme of s.2 is to erect separate corn apartments for the many types of adulteration so that if a food article is adulterated within the meaning of s.2(i)(1) more appropriately it falls outside the ambit of s.2(i)(a).
Otherwise, he argues, there is no point in itemising the various sub divisions even though he con cedes that marginally there may be overlapping among the sub clauses He further contends that even assuming that s.2(i)(a) is all corn prehensive, it must be read as the genus and thereafter sub clause (b) to (1) fall under two.
broad categories, viz., adulteration where injurious sub stances have been admixed and adulteration where innocent additions have been made or the substances sold merely violate a standard or degree of purity prescribed.
If there were force in this submission, the culpa, according to counsel, could reasonably 'fall under the non injurious type of adulteration covered by s.2(i)(1) The statute, says Shri Bhandare, sensibly dichotomises the senreno.
and invests a discretion in the court in the second category to reduce the sentence below the minimum stipulated, if special reasons exist for such clemency.
Of course, counsel concedes that if the adulteration is of the injurious brand, judicial sympathy is statutorily supplanted 73 4 this, he reasons, fits into and explains the scheme of s.16 which is a penal provision with dual limbs.
We wilt examine the validity of this interpretative dissection.
Indeed, if this somewhat strained argument fails,.
everything fails because, otherwise, the appellants have glibly convicted themselves, but of their own mouth, by an unusually obliging 'yes ' to every material question under s.342 Cr. P. Code.
Thus, on the merits, the sole question is about the proper offence made out on the facts admitted.
This, in turn, depends on the acceptability of the interpre tative dexterity displayed by counsel for the appellants.
It is trite that the social mission of Food Laws should inform the interpretative process so that the legal blow may fail .on every adulterator.
Any narrow and pedantic, liter al and lexical construction likely to leave loopholes for this dangerous criminal tribe to sneak out of the meshes of the law should be discouraged.
For the new criminal juris prudence must depart from the old canons, which make indul gent presumptions and favoured constructions benefiting accused persons and defeating criminal statutes Calculated to protect the public health and the nation 's wealth.
This humanist approach and cute construction persuades us to reject Shri Bhandare 's analysis of s.2(1).
Sub clause (a) of s.2(i) has a wide sweep and loyalty to the intendment of the statute forbids truncating its ambit.
There cannot be any doubt that if the article asked for is 100% khurasani oil and the article sold is 70% khurasani oil and 30% groundnut oil, the supply 'is not of the nature, substance or quality which it purports or is represented to be ' The suggestion that there is no format evidence of representa tion or prejudice as stated in the section does not merit consideration being a quibble over a trifle.
If we read s.2(i)(a) spaciously and if the facts alleged are accommodated by the definition of 'adulteration ' under that sub clause,.
section 16 ( 1 ) is attracted.
The first proviso to section 16 ( 1 ) will be attracted if and only if s.2(i)(1) applies.
In the present case the facts disclose that the offence is both under s.2(i)(a) and under section 7(v) for breach of r.44(e).
Section 2(i)(1) is repelled on the facts and it is obvious that this is not a case where either s.2(i)(1) or r.
A 17.12 urged by Shri Bhandare applies.
In this view it is not possible to invoke the amelioratory proviso to s.16(1) and the High Court is legally right in its conversion of the provision for conviction and enhance ment of the sentence.
We unhesitatingly hold that if s.2(i)(a) adequately fits in, adulteration under that provision must be found.
73 Once this position is made plain, the penalty that the appellants must suffer is fool proof.
Section 16 lays down the penalties and classifies them.
We are particularly concerned with s,16(1) of the Act which itself clubs togeth er many categories out of which we have to pick out only two for the purposes of this case, viz., (i) sale of any article of food which is adulterated; and (ii) sale of any article of 5 food other than one which is adulterated 'in contravention of any of the provisions of this Act or of any rule made thereunder '.
Ordinarily, both these clauses.
of offences are punishable with the minimum prescribed 'of not less ,than six months ' imprisonment, together with fine which shall not be less than Rs. 1,000/ '.
However, there is a kindly proviso which confers on the court a power to be exercised for any adequate and special reasons to be men tioned in the judgment whereby a sentence of imprisonment for a lesser term than six months or of fine smaller than Rs. 1,000/ or of both may be imposed, but this more moder ate punitive net is conditioned by the proviso itself.
We may read the proviso: "Provided that (i) if the offence is under sub clause (i) of clause (a) and is with respect to an article of food which is adulterated under sub clause (1) of clause (i) of sec. 2 or misbranded under sub clause (k) of clause (ix) of that section; or (ii) if the offence is under sub clause (ii) of clause (a).
the court may for any adequate and special reasons to be mentioned in the judgment, impose a sentence of imprisonment for a terms of less than six months or of fine of less than one thousand rupees or of both imprisonment for a term of less than six months and fine of less than one thousand rupees.
" Judicial compassion can play upon the situation only if the offence is under sub cl.
(i) of cl.
(a) of s.16(1) and the adulteration is one which fails under sub cl.
(1) of el.
(i) of s.2.
Secondly, the proviso also applies if the offence is under sub cl.
(ii) of el.
(a), that is to say, the offence is not one of adulteration but is made up of a contravention of any of the other provisions of the Act or 7 3 already found that the accused is guilty of an offence of adulteration of food under s.2(i)(a).
Therefore, proviso (ii) is out.
Proviso (i) will be attracted, according to Shri Bhandare, if s.2(i)(1) applies to the species of adul teration committed.
In our view, the only sensible under standing of proviso (i) is that judicial jurisdiction to soften the sentence arises if the offence of adulteration fails only under sub cl.
(1) of cl.
(i) of s.2 and we have held that it does not.
We cannot but deplore the clumsy draftsmanship displayed in a statute which affects the common man in his daily bread.
It is unfortunate that easy comprehensibility and simplicity for the laity.
are discard ed sometimes through oversophisticated scholarship in the art of drawing up legislative bills.
It cannot be over stressed that a new orientation for drafting methodology adopting directness of language and avoiding involved refer ence and obscurity is overdue.
Be that as it may, in the present case s.2(i) (a) applies and s.16(1)(a) has been breached.
Therefore the proviso cannot be applied in exten uation and the conviction of the High Court has to be up held.
6 The possibility of long argument in a case where the accused has pleaded guilty arises because the provision lends itself to adroit exercises.
The court has to look at the interpretative problem in the social setting of the statute, visualising the rough and tumble of the market place, the finesse with which clever victuallers fob off adulterated edibles and gullible buyers goofily fall victim.
Viewed this way, chasing recondite semantics or niceties of classification or chopping of logic has no scope for play.
The appeals must fail, without more.
But we have to take note of a few circumstances of significance brought to our notice by counsel for the appellant .with which the State 's counsel could not express serious disagreement, although he made no concessions.
, We now proceed to refer to these factors which do not deflect us from confirming the conviction.
The curtain has been drawn thereon.
To begin with, we are free to confess to a hunch that the appellants had hastened with their pleas of guilty hopefully, induced by an informal, tripartite understanding of light sentence in lieu of nolo contendere stance.
Many economic offenders resort to practices the American call 'plea bargaining ', 'plea negotiation ', 'trading out ' and 'compromise in criminal cases ' and the trial magistrate drowned by a docket burden nods assent to the sub rosa ante room settlement.
The business man culprit, confronted by a sure prospect of the agony and ignominy of tenancy of a 7 3 being a plea of guilt, coupled with a promise of 'no jail '.
These advance arrangements please everyone except the dis tant victim, the silent society.
The prosecutor is relieved of the long process of proof, legal technicalities and long arguments, punctuated by revisional excursions to.
higher courts, the court sighs relief that its ordeal, surrounded by a crowd of papers and persons, is avoided by one case less and the accused is happy that even if legalistic bat tles might have held out some astrological hope of abstract acquittal in the expensive hierarchy of the justice system he is free early in the day to pursue his old professions.
It is idle to speculate on the virtue of negotiated settle ments of criminal cases, as obtains in the United States but in our jurisdiction, especially in the area of dangerous economic crimes and food offences, this practice intrudes on society 's interests by opposing society 's decision expressed through pre determined legislative fixation of minimum sentences and by subtly subverting the mandate of the law.
The jurists across the Atlantic partly condemn the bad odour of purchased pleas of guilt and partly justify it philosoph ically as a sentence concession to a defendant who has, by his plea 'aided in ensuring the prompt and certain applica tion of correctional measures to him ', "In civil cases we find compromises actually encouraged as a more satisfactory method of set tling disputes between individuals than an actual trial.
However, if the dispute . finds itself in the field of criminal law, "Law Enforcement" repu diates the idea of compromise as immoral, or at best a necessary evil.
The "State" can never com promise.
It must 7 enforce the law.
" Therefore open methods of com promise are impossible." (Arnold, Law Enforcement An Attempt at Social Dissec tion, , 19 (1932).
We have no sanction, except surreptitious practice in some courts, for 'trading out ' of punitive severity although this aspect of the criminal system deserves Indian jurists ' consideration.
The sole relevance of this digression in this judgment is to highlight the fact that the appellants perhaps acted on an expectation which came to pass at the trial level but was reversed at the appellate level and this touch of 'immorality ' in the harsh morality of the punish ment is a factor counsel wants us to take note of.
But we can do nothing about it when the minimum is set by the 7 3 justice to the citizen and relieve over worked courts by more judicial agencies and streamlined procedures instead of leaving the uninformed public blindly to censure delayed disposals.
One real reason for long litigation is inaction or ineffective action of the legislature.
All knowledgeable law men may concede that the procedures in municipal and higher courts are ossified to the point, priced to the level, and slow to the degree where they cannot flexibly assist disputants in early resolution of their everyday disputes.
This, we hope, will change and the source of the evil eliminated.
The next draft on the court 's commiseration, made by counsel, is based on the milling operation realities sur rounding the commission of the crime.
It is asserted by the appellant 's advocate and not seriously controverted by his opponent that the small town milling practice is multi purpose, in the sense that whoever brings any edible oil seed for extraction of oil gets it done so that ground nut crushing may be followed by Khurasani seed or some other oil seed may chance to take turns by rotation.
Even the mill er 's own oil seeds may be sometimes khurasani; at other times, some other.
This process may result in the residue of one getting mixed up with the next.
May be, innocently some groundnut oil, in the present case, got into the khu rasani oil by the same expeller handling both.
Even so, the presence of 30% groundnut oil is, perhaps too high an admix ture to be explained away this easy way.
While we appreci ate the situation we must adhere to the provision.
Where the law lays down an absolute liability, alibis cancelling mens tea are out of bounds.
The last plea, urged ex mesericordium, ameliorative in appeal and unavailing against conviction, is that actually groundnut oil costs more and so profit motive stands nega tived, that the mixture of these edible oils, though techni cally forbidden, is in fact non injurious and a terrifying term of six months ' rigorous imprisonment is unjust.
The facts are probably right but ex necessitate legis the court has to inflict the heavy minimum sentence.
While in stray cases a jail term even in a trivial food offence may.
look harsh, Parliament, in its wider wisdom, and having regard .to social defence in a sensitive area standardised the sentence by insisting on a minimum, ignoring exceptional 2 1003SC1/76 8 cases where leniency is needed.
Individual hardships deserv ing of lighter sentence are sometimes exploited by counsel 's 7 3 offenders milder punishments.
It is worthy of note though that in the present case the mixing of the two oils is a motiveless act.
May be.
And the circumstances above men tioned add up to a plea for paring down the sentence and Shri Bhandare, for the appellants, sought to wheedle us into lending evedence to these circumstances and bring down.
the offence to a lesser one.
Logically and sociologically and, above all, legally, such a course is impermissible.
Never theless, there is one circumstance which has impressed us not to the extent of undoing the sentence imposed by the High Court but of drawing the attention of the top executive to what may justly be done by way of remission of sentence.
The appellants have sworn an affidavit in this Court stating that khurasam oil is the same as nigar seed oil.
This is backed by a certificate from the Maharashtra Chamber of Commerce and is evidently correct.
What is more important is that the appellants, when surprised by a modification of their sentence to a heavier one for what they thought was undeserving, moved in the matter of cases generally of adulteration of khurasani oil with groundnut oil.
They drew the attention of the authorities to punishment of innocents and it appears that the.
State Government was satisfied about this grievance and has since withdrawn a substantial number of cases against dealers of khurasani oil whose sales were contaminated with presence of groundnut oil.
The affi davit on behalf of the appellants states: "I further say that various cases filed by the respondents against the dealers of khurasani oil are now being withdrawn as invariably groundnut oil is observed in khurasani oil.
I crave leave to refer to and rely on the Journal of Maharashtra Chumher Patrika dated 21st September, 1975, when produced.
" Probably, had the present case survived till the government took action, it might have been withdrawn.
Moreover, there are circumstances suggesting of innocent admixture although it is beyond us to pronounce definitely on this aspect and it is not for us to enquire into the matter when section 16( 1 ) is clear and the sentence is legal.
Nevertheless, it may be appropriate for government to consider whether in the cir cumstances of this case and in the light of the observa tions made by us in this judgment it is not a matter for exercise of commutation powers.
Sentencing policy has a punitive and a correctional role and we are sure that what is the need of the appellants will be meted out to them if they deserve any activist administrative empathy at all.
accordingly dismiss the appeals.
| An analysis of a sample of khurasani oil from the appel lants ' mill collected by the Food Inspector showed 30% groundnut oil content amounting to contravention of r. 44(a) of the Rules which prohibits sale of a mixture of two or more edible oils as an edible oil.
The appellants were charged with an offence under section 2(i) of the Act read with sections 7 and 16(1)(a) and r. 44(a).
The appellants having pleaded guilty, each of them was sentenced to pay a small fine.
On revision, the High Court converted the offence into one under section 2(i) (a) read with section 16(1) and enhanced the sentence to a minimum of six month, imprisonment and fine of rupees one thousand on the ground that the offence committed by them fell within section 16(1)(a) and did not fall within the proviso to that section.
On appeal to this Court it was contended that even assuming section 2(i)(a) is all comprehensive it must be read as the genus and thereafter sub clauses (b) to (e) fall under two broad categories namely adulteration with injurious substances and adulteration with innocent additions or the substance sold merely violates a standard or degree of purity prescribed and in this case the offence would fall under the non injurious type covered by section 2(i)(1).
Dismissing the appeal, HELD: 1. (a) Sub clause (a) of section 2(1) has a wide sweep.
There causes be any doubt that if the article asked for is 100% khurasani oil and the article sold is 70% khurasani oil and 30% groundnut oil, the supply 'is not of the nature, substance and quality which it purports or is represented to be.
[4 E] (b) It is not possible to invoke the proviso to section 16(1) and the High Court is legally right in its conversion of the provision for conviction and enhancement of the sentence.
Though section 2(i)(a) is read speciously and if the facts al leged are accommodated by the definition of adulteration under that sub clause, section 16.(1) is attracted.
The first proviso to section 16(1) will be attracted if and only if section 2(i)(1) applies.
[4 F G] In the present case the facts disclose that the offence is both under section 2(i)(a) and under section 7(v) for breach of r. 44(e).
Section 2(i)(1) is repelled on the facts and this is not a case.
where either section 2(i)(1) or r. A17.12 applies.
2.(a) The proviso cannot apply in extenuation and the High Court was right in convicting the appellants.
Judicial compassion can play upon the situation only if the offence is under section 16(1)(a)(i) and the adulteration is one under section 2(i)(1).
The proviso applies if the offence is under cl.
(a)(ii), that is to say, the offence is not one of adultera tion but is made up of a contravention of the other provi sions of the Act or of any rule made thereunder.
Since in this case the offence falls under section 2(i)(a) proviso (ii) has no application.
[5 E F] (b) The judicial jurisdiction to soften the sentence arises if the offence of adulteration falls only under section 2(i)(1).
This case does not fall under this sub clause.
[5 G] [The Court drew attention to (a) the propriety of ac cepting by the prosecution and the Courts the accused 's plea of guilty of a lesser offence in dangerous economic crimes and food offences and (b) in view of the fact that a sub stantial number of cases of the kind were withdrawn by the Government because 2 variably groundnut oil is observed in Khurasani oil, the Government may consider whether in the circumstances of this case it is not a matter for exercise its commutation powers].
|
ivil Appeals Nos.
4224 27 of 1985.
From the Judgment and Order dated 29.4.1985 of the Kerala High Court in O.P. Nos. 905, 2732, 2781 and 3243 of 1985.
143 G. Viswanatha Iyer and Mrs. Baby Krishnan for the Appellant.
T.S. Krishnamoorthi, P. Subramonian Poti, T. Sridharan, A.S. Nambiar, P Parameshwarn, Mrs. Santa Vasudevan, E.M.S. Anam, T.L. Viswanatha Iyer, section Balakrishnan and Ramesh N. Keswani for the Respondents.
The Judgment of the Court was delivered by SEN, J.
These appeals by special leave are directed against the judgment and order of the Kerala High Court dated April 29, 1985 quashing the Cabinet decisions of January 30, 1985 and February 28, 1985 and issuing a writ in the nature of mandamus directing the respondents to fill up five vacancies in the posts of District Judges meant for direct recruitment from the bar, by the appointment of respondents Nos. 1 and 3 to 6 as recommended by the High Court under article 233(1) of the Constitution.
The issue involved is whether the issuance of a writ of mandamus by the High Court directing the Governor to act on the recom mendation of the High Court to fill up the five vacancies in the posts of DiStrict Judges reserved for direct recruitment from the practising members of the bar under article 233(1) of the Constitution was constitutionally impermissible.
By the judgment, a Division Bench of the High Court has held that although it was not oblivious that the 'advice ' of the Council of Ministers to reject the panel of fourteen names forwarded by the High Court could not.
be subject to judicial review and that article 163(3) of the Constitution precludes an inquiry as to the nature of the advice given by the Council of Ministers to the Governor, still it had the power to issue a writ in the nature of mandamus upon the basis that it was called upon to adjudge the legality and propriety of the decisions reached by the State Government through the instrumentality of the Council of Ministers.
It was of the view that the reasons given on the basis of which the Council of Ministers on February 28, 1985 purported to review their earlier decision dated January 30, 1985 and decided not to appoint respondents Nos. 1 and 3 to 6 as District Judges on the recommendation of the High Court due to the non representation of candidates belonging to the 'Latin Catholics and Anglo Indians ', 'Other Backward Class es ' and 'Scheduled Castes and Scheduled Tribes ', 8th, 10th and 12th in the cycle of rotation as provided in r. 14(c) of the Kerala State & Subordinate Services Rules, 1958, were no reasons at all and the action of the State Government in rejecting the panel sent by the High Court was arbitrary, illegal and improper.
144 The facts.
At the instance of the High Court, the State Government issued a notification on September 24, 1983 inviting applications from eligible members of the bar to fill up three vacancies in the cadre of District Judges by direct recruitment from the bar.
The notification stated that the number of candidates proposed to be selected were three, subject to variation according to the exigencies.
Later, the number of vacancies was increased to five.
There were a large number of candidates from the bar and the applications were forwarded by the State Government to the High Court with request to make its recommendations.
The Full Court at a meeting held on March 15, 1984 constituted of Committee of three senior most Judges to prepare a panel of names.
The Committee interviewed the candidates and drew up a list of fifteen candidates adjudged as eligible on an overall assessment of the merits.
One of the fifteen candi dates was Ms. Mary Teresa Dias, District Government Pleader and Public Prosecutor of Ernakulam belonging to the Latin Catholic community.
It however appears that the Committee by a majority of 2:1 felt that she was not suitable for ap pointment as a District Judge and accordingly deleted her name from the list of eligible candidates and drew up a panel of the remaining fourteen names.
The panel of fourteen names submitted by the Committee was approved of by the Full Court by a majority at a meeting held on June 12, 1984.
On June 14, 1984, the Actg.
Chief Justice sent up to the Chief Minister the panel of fourteen names as settled by the High Court for appointment as District Judges from the bar.
It was stated that the appointments had to be made according to the cycle of rotation governing reservation of posts as laid down in r. 14(c) of the Kerala State & Subordinate Services Rule, 1958, as required by r. 2(b) of the Kerala State Higher Judicial Service Rules, 1961.
Accordingly, the appointments had to start with the first vacancy going to a candidate belonging to the 'Latin Catholics and Anglo Indi ans ' community, 8th turn in the cycle of rotation.
As there was no candidate belonging to the 'Latin Catholics and Anglo Indians '. 'Other Backward Classes ' and 'Scheduled Castes and Scheduled Tribes ', 8th, th and 12th in the cycle of rotation, the first vacancy had to be filled by reason of r. 15(a) of the Rules by a suitable candidate belonging to the community or group of communities immediately next to the passed over community or group i.e. by respondent No. 1 Smt.
A. Lakshmikutty, a member of the 'Ezhava ' community, 6th in order of merit, falling in the group 'Ezhavas, Thiyyas and Billavas '.
14th in the cycle of rotation.
The second vacancy i.e. 9th in the cycle of rotation had to be filled by respondent No. 3, Krishnan Nair, 1st in order of merit, by open corn 145 petition.
The third vacancy had to go to 'Other Backward Classes ', th in the cycle of rotation.
As there was no 'Other Backward Classes ' candidates nor any candidate be longing to the 'Scheduled Castes and Scheduled Tribes ', 10 th and 12th in the cycle of rotation, it had to be filled by a Muslim candidate C. Khalid, respondent NO. 4 who was 5th in order of merit and 16th in the cycle of rotation.
The fourth vacancy had to be filled by a candidate on the basis of open competition i.e. by respondent No. 5 Achuthan Unni, 2nd in order of merit and 11th in the cycle of rotation.
The fifth vacancy was to be filled by respondent No. 6 Rajappan Asari, a Viswakarma, 4th in order of merit and 20th in the cycle of rotation.
Shortly thereafter on June 27, 1984 Ms. Mary Teresa Dias, the candidate belonging to the Latin Catholic commu nity moved the High Court by a petition under article 226 of the Constitution for grant of writs in the nature of manda mus directing the State Government to forbear from filling up any of the five vacancies in the post of District Judges without inclusion of her name in the panel and for directing the High Court to forward her name for appointment as a District Judge.
On January 31, 1985 a news item appeared in the Mathrub hoomy, and other Malyalam newspapers in the State to the effect that at a press conference held on that day the Chief Minister ' briefed the press of a Cabinet meeting of the earlier day i.e. on January 30, 1985.
It went on to say that the Government had decided to fill up four posts of District Judges from the panel of names recommended by the High Court and to keep one post vacant since there was a writ petition pending in the High Court.
It was said that the fifth vacan cy would also be filled after the decision of the High Court.
Further, the news item in Mathrubhoomy was to the effect that the Government had decided to appoint respond ents Nos.
3 to 6 Krishnan Nair, C. Khalid, E. Achuthan Unhi and G. Rajappan Asari as District Judges from the bar on the recommendation to the High Court.
There was some.
controver sy as to the meaning of some Malayalam words in the news item.
According to learned counsel for the appellant the words meant 'it was proposed to appoint ' while learned counsel for the respondents asserted that the meaning should be 'it was decided to appoint '.
The State Government had therefore decided not to appoint respondent No. 1 Smt.
A. Lakshmikutty belonging to the Ezhava community, 14th in the cycle of rotation, and one post was to be kept vacant pre sumably for a candidate belonging to the group 'Latin Catho lics and Anglo Indians ', 8th in the cycle of rotation.
146 On the next day i.e. on February 1, 1985, respondent No. 1 Smt.
A. Lakshmikutty moved the High Court by a petition under article 226 of the Constitution for grant of an appropri ate writ, direction or order to quash the decision of the Council of Ministers dated January 30, 1985 deciding not to appoint her as a District Judge as per the panel sent up by the High Court.
She by an application also prayed for grant of an ad interim prohibitory order to restrain the State Government from appointing respondents Nos.
3 to 6 as Dis trict Judges.
The stay application was heard by a Single Judge for two days, on February 13 and 20, 1985.
At the hearing on February 13, the learned Advocate General stated that the Governor had not issued any order of appointment in favour of respondent Nos. 3 to 6 and gave an undertaking on behalf of the State Government that no such appointments would be made for a period of seven days.
At the heating on February 20, the learned Advocate General submitted that the period of seven days as indicated by him had expired and there was no longer any further commitment on the part of the State Government not to make ' the appointments.
He further stated at the bar that the news item that one post was kept vacant on account of the Writ Petition filed by the Latin Catholic candidate Ms. Mary Teresa Dias was conect.
He also revealed that the relevant records were lying with the Governor and could be made available only after getting the same from him.
The learned Single Judge by his order dated February 21, 1985 held that prima facie the Cabinet decision of January 30, 1985 deciding to leave out respondent No.1 Smt.
A. Lakshmikutty, a candidate belonging to the Ezhava community falling in the group 'Ezhava, Thiyyas and Billavas ', 14th in the cycle of rotation, was invalid and unless she was found to be unfit for appointment as a District Judge, the first vacancy could not be offered to any person.
The relevant portion of the order reads: "Prima facie, the decision appears to be contrary to rules 14 to 17 of the Kerala State & Subordinate Service Rules.
First among the five vacancies, according to the records placed before me should go to a candidate belonging to Latin Catholic and Anglo Indian community, item 8 in the cycle of rotation.
In the absence of such a candidate, the vacancy should go to a candidate in item 10 in the cycle of rota tion.
The penal does not contain names of any candidates who come within 8th, th or the 12th items in the cycle of rotation.
Therefore, first vacancy should go to a candidate, failing in the 14th item in the cycle, namely, Ezhava.
" 147 Upon that view, the learned Single Judge issued a prohibito ry order restraining the State Government from making any appointment of respondents Nos.
3 to 6 or any other candi date as District Judges for a period of one month.
The State Government having been restrained from making the appointments for a period of one month i.e. till March 20, 1985, the matter of direct recruitment of District Judges from the bar again came up before a meeting of the Council of Ministers held on February 28, 1985.
The Govern ment reconsidered the whole question of direct recruitment of District Judges from the bar afresh and decided not to appoint anybody from the panel of names recommended by the High Court due to non representation of 'Latin Catholics and Anglo Indians ' 'Other Backward Classes ' and 'Scheduled Castes and Scheduled Tribes ', 8th, 10th, 12th ' turns in the cycle of rotation.
Accordingly, the Chief Minister addressed a letter on March 4, 1985 to the Acting Chief Justice, the material portion of which reads as follows: "My dear Chief Justice, Sub: Direct recruitment of District Judges from the Bar.
Please refer to your letter No. R3/84(SS) dated 14.6.
1984 forwarding a panel of 14 candidates considered suitable by the High Court for appointment as District Judges direct from the Bar.
You are aware that some O.Ps have been filed in the High Court in connection with the selection and appointment of the District Judges.
In that context, Government have reviewed the entire issue of appointment to the five vacancies of Dis trict Judges from the bar.
The avowed policy of the Govern ment is to give adequate representation to candidates be longing to Scheduled Castes, Scheduled Tribes, Latin Catho lics/Anglo Indians and Other Backward Communities as far as possible.
Unfortunately we cannot implement this policy if appointment is made from the panel now prepared as it con tains no candidates from these groups.
As the vacancies that will occur for direct recruitment in the cadre of District Judges will be only few, the passing over of the communities cannot be made good in the near 148 future.
Consequently, the usual procedure of passing over communities unrepresented in the merit list will cause neglect of very backward communities for a long time.
There have been many writs filed questioning the selections.
Having due consideration to the above facts, Government have decided to cancel all steps taken so far on the basis of applications received in response to notifica tion dated 24th September, 1983, and to invite fresh appli cations and to do recruitment of District Judges from the Bar on the basis of such fresh applications.
" The State Government in the return filed before the High Court questioned the authority and jurisdiction of the High Court to issue a writ of mandamus requiring the Governor to act contrary to the decision.
of the Council of Ministers taken on February 28, 1985 and to appoint respondents Nos. 1 and 3 to 6 to be District Judges under article 233(1) of the Constitution from amongst the members of the bar as per its recommendations.
It was pleaded inter alia that the power of appointment of District Judges under article 233(1) is an executive function and the Governor is bound to act on the advice of the Council of Ministers under article 163(1).
It was also pleaded that it was not open to the High Court to scrutinise the reasons which impelled the Council of Minis ters to review its earlier decision taken on January 30, 1985 and decide in the subsequent meeting held on February 28, 1985 not to appoint anyone as a District Judge under article 233(1) from the panel of names submitted by the High Court.
It was averred that there were good and weighty reasons why the State Government were constrained to review their earlier decision.
The State Government was faced with a serious problem in that there would be non representation of 'Latin Catholics and Anglo Indians ', 'Other Backward Class es ' and 'Scheduled Castes and Scheduled Tribes ' if the appointments were to be made according to the panel submit ted by the High Court.
It was asserted that the Government viewed with concern the proceedings before the High Court and felt that there should be no room for such challenge.
The Government therefore decided to reject the panel of names forwarded by the High Court by cancelling the afore said notification and all the steps taken pursuant thereto.
It was further decided to issue a fresh notification invit ing applications from the members of the bar for appointment as 149 District Judges for being placed before the High Court to prepare a fresh panel of names.
In essence, the contention is that the State Government has the final voice in the appointment of District Judges under article 233(1) and it was therefore for the Council of Ministers to take the decision not to appoint anyone from the panel of names submitted by the High Court which was a decision taken in the larger public interest.
The material portion of the return in the form of a counter affidavit by the Commissioner and Secre tary to the State Government, Home Department reads as follows: "The Government reviewed their recommendation on 28.2.1985 and decided not to appoint anybody as recommended earlier, and further decided to invite fresh applications for being placed before the High Court to prepare a fresh panel for recruitment to the post of District Judges.
The non repre sentation of Scheduled Castes, Latin Catholics, Anglo Indians and Other Backward Communities in the panel of names submitted by the High Court weighed with the Government in taking the above decision.
Further it is not healthy to give room for such challenges as those made before this Hon 'ble Court on the panel by interested parties.
Hence the decision was taken reviewing the earlier recommendation.
Fresh applications will be invited and the High Court will be requested to recommend fresh panel for recruitment to the post of District Judges." In order to appreciate the.contentions advanced, it is necessary to mention that r. 2(b) of the Kerala S,ate Higher Judicial Service Rules, 1961 framed under the proviso to article 309 of the Constitution provides that one third of the permanent places of District Judges shall be filled or reserved to be filled by direct recruitment from the bar.
Note beneath r. 2(b) enjoins that in the case of appointment by direct recruitment, the appointment shall be made in accordance with the principles of reservation of posts, embodied in rr.
14 to 17 of part II of the Kerala State & Subordinate Services Rules, 1958.
For the sake of completeness, we would also refer to the scheme of communal reservation by a system of rotation or sub rotation engrafted in rr.
14 to 17 of the Kerala State & Subordinate Services Rules, 1958.
These are special provi sions made by the State under article 14 read with article 16(4) of the Constitution for the reservation of appointments or posts in favour of.the backward classes which, in the opin ion of the State, are not adequately represented in the services 150 under the State.
These rules are meant to ensure fair repre sentation to the Higher judicial service of the State, to the members of the Scheduled Castes and Scheduled Tribes and to the Other Backward Classes.
R. 14 insofar as material, reads: "14.
Reservation of appointments: Where the special rules lay down that the principle of reservation of appointments shall apply to any service, class or category or where in the case of any service, class or category for which no special rules have been issued, the Government have by notification in the Gazette declared that the principle of reservation of appointments shall apply to such service, class or category, appointments by direct recruitment to such service, class or category shall be made on the follow ing basis: (a) The unit of appointment for the purpose of this rule shall be 20, of which two shall be reserved for Scheduled Castes and Scheduled Tribes and 8 shall be reserved for the Other Backward Classes and the remaining 10 shall be filled on the basis of merit.
(b) The claims of members of Scheduled Castes and Scheduled Tribes and Other Backward Classes shall also be considered for the appointments which shall be filled on the basis of merit and where a candidate belonging to a Scheduled Caste, Scheduled Tribe or Other Backward Class is selected on, the basis of merits, the number of posts reserved for Scheduled Castes, Scheduled Tribes or for Other Backward Classes as the case may be, shall not in any way be affected.
(c) Appointments under this rule shall be made in the order or rotation specified below in every cycle of 20 vacancies.
Open competition.
Ezhavas, Thiyyas and Billavas.
Open competition.
Scheduled Castes.
Open competition.
151 6.
Muslims.
Open competition.
Latin Catholics and Anglo Indians.
Open competition.
Other Backward Classes.
Open competition.
Scheduled Castes.
Open competition.
Ezhavas, Thiyyas and Billaras.
Open competition.
Muslims.
Open competition.
EZhavas, Thiyyas and Billavas.
Open competition.
20. Viswakarmas.
" Under r. 14(a) there is 50% reservation of posts for the backward classes under article 16(4) i.e. for the Scheduled Castes and Scheduled Tribes and Other Backward Classes.
Whichever be the method adopted for selecting candidates as per the rules of rotation under r. 14(c) or sub rotation under r. 17(2), the mandate of r. 14(b) is clear and specif ic.
The members of Scheduled Castes and Scheduled Tribes and Other Backward Classes have the right to be considered for appointments which shall be filled on the basis of merit.
Where a candidate belonging to such Backward Classes is selected on the basis of merits, such selection would not prejudice their claim to the legitimate quota on the basis of reservation.
It is not often that there is no eligible candidate available from a community or group of communities.
To meet such a situation, r. 15(a) provides that if a suitable candidate is not available for selection from any particular community or group of communities specified in the annexure, the said community or group shall be passed over and the post filled by a suitable candidate from the community or group of communities immediately next to the passed over community or group in the order of rotation.
R. 15(b) en joins that if a suitable candidate is 152 not available for selection from the group of communities classified as 'Scheduled Castes ', in the turn allotted for such a group in the annexure, the said group shall be passed over and the post shall be filled by a suitable candidate from the group of communities classified as 'Scheduled Tribes ' and vice versa.
If no suitable candidate for selec tion in any of the two groups viz.
Scheduled Castes and Scheduled Tribes is available, the vacancy has to be filled by open competition.
R. 15(c) provides for restoration of the benefit of the turn forfeited at the earliest opportuni ty.
Proviso thereto however enjoins that the restoration of the benefit of the turn forfeited by the carry forward rule, shall not exceed 50% of the vacancies to be filled in a particular year.
R. 16 provides for sub rotation among major groups of other backward classes.
R. 17(1) lays down the manner in which appointments have to be made from candidates belonging to other backward classes.
Other backward classes are enumerated in List III to Part I of the Rules and there are 73 communities or groups divided into 8 categories specified in r. 17(1).
Categories 1 to 7 are Ezhavas and Thiyyas, Muslims, Latin Catholics and Anglo Indians, Nadars, Scheduled Castes converts to Christianity, Viswakarmas and Dhooravas.
All other backward classes put together consti tute the 8th category.
R. 17(2) provides for sub rotation among the other backward classes.
We need not go into de tails of the 40 turns in which the positions reserved for other backward classes have to be distributed.
It is common ground that the five vacancies to be filled in this case had to start with the 8th turn in the cycle of rotation, in the following order: (1) Latin Catholics and Anglo Indians (2) Open competition (3) Other backward class es i.e. other than those mentioned in items 1 to 7 of r. 17 '(1)(4) Open competition, and (5) Scheduled Castes and Scheduled Tribes, appropriate to 8th, 10th and 12th tums in the cycle of rotation.
That is because in the previous recruitment made in the year 1978, appointments had been made upto the 7th turn in the cycle of rotation.
In allowing the writ petitions the learned Judges held that although they could not subject the deliberations of the Council of Ministers to judicial review and article 163(3) of the Constitution precludes an inquiry as to the nature of the advice given by the Council of Ministers to the Gover nor, still there was need for affirmative action by the issue of a writ in the nature of mandamus or in the words of the High Court, there has been 'flagrant and wrongful refus al ' on the part of the State Government to exercise juris diction.
It held relying on the celebrated decision in Padfield vs Minister of Agriculture, Fisheries and 153 Food; , and the several decisions of this Court and the House of Lords that although the Governor i.e. the State Government was not bound to accept the recommenda tions of the High Court nor was he bound to give reasons for not accepting the names recommended by the High Court, nevertheless the Council of Ministers could not unilaterally reject the panel submitted by the High Court without obtain ing the views of the High Court.
Consultation with the High Court was not an empty formality.
It held that there was no full and effective consultation with the High Court before the State Government decided not to appoint anybody as a District Judge from the panel forwarded by the High Court under article 233(1).
The reasons given by the Chief Minister for rejection of the panel of names recommended by the High Court viz. non representation of Latin Catholics and Anglo Indians, Scheduled Castes and Scheduled Tribes and Other Backward Classes were 'no reasons at all ' and in any event the reasons were bad in law.
It held that a process of recruitment cannot be abandoned nor a rank list cancelled merely because the Government felt that a suitable candidate was not available.
The State Government as the appointment authority was as such bound by r. 15(a) which incorporated the rule of passing over like any other rules.
Abandonment of a scheme of recruitment and the cancellation of the panel submitted by the High Court is therefore foreign to and not contemplated by the scheme if a suitable candidate is not available from a particular community or group of communi ties.
R. 15(a) merely contemplates that such community or group of communities should be passed over and the vacancy filled by a suitable candidate from the group or a community immediately next following.
The High Court also adverted to the scheme of restoration which contemplated the restoration of the turn forfeited.
It then went on to say that the State Government had no power to keep one vacancy open presumably to fill up that post by a suitable candidate from the group of LatinCatholics and Anglo Indians.
The governmental action was wholly mala fide, arbitrary and irrational.
If it had no power to keep one post vacant for a particular community, the Government could not decide ' to appoint respondents Nos. 3 6 as District Judges as recommended by the High Court.
The Government refused to appoint respondent No. 1 on the pre text that it had decided to keep one post vacant i.e. 8th turn in the cycle of rotation.
If that be so, it could not have decided to appoint respondents nos.
4 and 6, Muslim and Viswakarma, 16th and 20th turns in the cycle of rotation.
The first decision of the Council of Ministers taken on January 30, 1985 was therefore influenced by extraneous considerations which it ought not to have taken into account and therefore it was liable to be struck down.
The subse quent decision ' 154 of the Council of Ministers taken on February 28, 1985 was also guided by considerations which were wholly extraneous and irrelevant.
The High Court observed that by deciding not to appoint anybody as a District Judge from the panel of names recommended by the High Court under article 233 (1) of the Constitution, there was an overt attempt on the part of the Government to appoint persons from outside the panel which was constitutionally impermissible.
A few more facts.
On April 29, 1985 i.e. the day on which the writ petitions of the present respondents were allowed by the common judgment under appeal, the High Court by a separate judgment dismissed the writ petition filed by Ms. Mary Teresa Dias, the LatinCatholic candidate, on the ground inter alia that she was 'ineligible for selection ' as a District Judge in view of the criterion laid down in r. 3(2)(c) of the Kerala State Higher Judicial Service Rules, 1961.
On the same day i.e. on April 29, 1985 the learned Judges also rejected the appeal of Smt.
N. Subhadra Aroma and the writ petition of K. Sadanandan.
N. Subhadra Amma claimed that by reason of her marriage to a scheduled caste, she should have been regarded as such and considered to fill up the post reserved for scheduled caste candidates.
In his writ petition K. Sadanandan, a scheduled caste candi date, questioned the method of selection adopted by the High Court by interview.
Both Smt.
N. Subhadra Amma and K. Sada nandan preferred appeals to this Court by special leave.
In N. Subhadra Arama vs State of Kerala & Ors., (C. A. No. 4 163/85 decided on September 10, 1985) this Court allowed the appeal of N. Subhadra Amma, set aside the judgment of the High Court and directed the High Court to determine whether she belonged to a scheduled caste or not, and in case she happened to be a scheduled caste, her claim for appointment to the post reserved for scheduled caste candidates be considered.
Similarly, in K. Sadanandan vs State of Kerala & Ors., (C.A. No. 5693/85 decided on December 17, 1985) this Court allowed the appeal of K. Sadanandan set aside the judgment of the High Court and directed that his claim for selection against the reserved post for scheduled caste candidates be considered afresh.
The directions issued by this Court in N. Subhadra Amma 's and K. Sadanandan 's cases directing the High Court to consider their names for ap pointment to the post reserved for members of the scheduled castes must necessarily disturb the panel drawn up by the High Court.
In view of the directions issued by this Court which have to be obeyed by the High Court, the entire ques tion has to be considered afresh in the light of the subse quent developments.
155 Various contentions have been advanced by learned coun sel for the parties but on the view that we take it is not necessary to deal with them all.
We are grateful to the learned counsel for placing with great perspicuity, much learning and resource their respective points of view.
They have mainly referred to the four decisions in Chandra Mohan vs State of U.P. & Ors., ,.
A. Panduranga Rao vs State of Andhra Pradesh & Ors., ; , Mani Subrat Jain vs State of Haryana & Ors., and M.M. Gupta & Ors.
vs State of Jammu & Kashmir & Ors.
, ; After the conclusion of the heating, the State Govern ment on our request placed a copy of the letter of the Acting Chief Justice dated June 14, 1984 addressed to the Chief Minister, which was not on record.
In the letter he stated that he was enclosing a panel of 14 names considered suitable by the High Court for appointment of District Judges direct from the bar.
In para 7 thereof, he explained the basis on which the panel of names was prepared, namely: "In the panel of names enclosed, there is no candidate from.
the 'Latin Catholics and Anglo Indians ' group and so the first vacancy will have to be allotted, under rule 15(a) of the Kerala State and Subordinate Services Rules, 1958, to 'Other Backward Classes ' in the 10th cycle of rotation taking into account the Explanation to the annexure.
The panel includes two candidates belonging to 'Other Backward Classes ' namely, Shri Rajappan Asari who is a Viswakarma and Smt.
K.J. Teresa who is a Scheduled Caste convert.
But these two communities are not included in item 8 in rule 17(1) of the Rules.
There is also no Scheduled Caste candidates.
Under rule 15, therefore, we have to go down in the cycle of rotation and allot the vacancy to a candidate from the group 'Ezhavas, Thiyyas and Billavas '.
The second vacancy has to be filled up on the basis of 'Open Competition '.
The third vacancy should go to 'Other Backward Classes ' as defined in the Explanation.
As there is no O.B.C. candidate and no Scheduled Caste candidate appropriate to the 12th rotation in the annexure, and the Ezhava candidate appropriate to the 14th rotation is already approved for, this third reserved vacancy has to be filled up from among 'Muslims ' ( 16th rotation).
" In these appeals, three main questions arise for deter mination, namely: (i) Whether the High Court 'was justified in holding that the 156 Council of Ministers could not have at the subsequent meet ing held on February 28, 1985 'reviewed ' the situation and decided not to make the appointments contrary to the earlier decision taken at the Cabinet meeting held on January 30, 1985 to make such appointments on the recommendation of the High Court.
(ii) Whether the High Court could have issue a writ or direction in the nature of mandamus under article 226 directing the State Government, meaning the Governor, to appoint respondents Nos. 1 and 3 6 as District Judges from the bar under article 233(1) of the Constitution in accordance with the recommendation of the High Court, and contrary to the decision of the Council of Ministers taken on February 28, 1985 not to appoint anybody from the panel forwarded by the High Court.
(iii) If the High Court were of the view that there was no full and effective consultation by the State Government with the High Court as enjoined by article 233(1) of the Constitution and therefore the Government could not have unilaterally rejected the panel of names recommended by the High Court, whether the proper course for the High Court was to have issued a writ or direction in the nature of mandamus requiring the State Government to convey its views to the High Court as reflected in.
the Chief Minister 's letter dated March 4, 1985 and, if necessary.
make a fresh effort to find suitable candidates from the communities or groups of communities passed over.
The heart of the matter is that 'consultation ' between the State Government and the High Court .in the matter of appointment of District Judges under article 233(1) of the Constitution must be real.
full and effective.
To make the consultation effective.
there has to be an inter change of views between the High Court and the State Government.
so that any departure from the advice of 'the High Court would be explained to the High Court by the State Government.
If the State Government were simply to give lip service to the principle of consultation and depart from the advice of the High Court in making judicial appointments without referring back to the High Court.
the difficulties which prevent the Government from accepting its advice.
the consultation would not be effective and any appointment of a person as a Dis trict Judge by direct recruitment from the bar or by promo tion from the judicial services under article 233(1) would be invalid.
Unless.
the State Government were to convey to the High Court the difficulties which prevent the Government from accepting its advice by referring back the matter the consultation would not be effective.
Indubitably.
the power of appointment of persons to be District Judges conferred on the Governor.
meaning the State Government.
157 under article 233(1) in consultation with the High Court is an executive function.
It has been settled by a long line of decisions of this Court starting from Chandra Mobart vs State of U.P. & Ors., to M.M. Gupta & Ors.
vs State of Jammu & Kashmir & Ors., (supra) that the power of the State Government is not absolute and unfettered but is hedged in with conditions.
The exercise of the power of the Governor under article 233(1) in the matter of appointment of District Judges is conditioned by co nsultation with the exercise of the power that the power can only be exercised in consultation with the High Court.
Appointment of persons to be, and the posting and promo tion of, District Judges in any State, shall be made by the Governor of the State under article 233(1) in consultation with the High Court exercising jurisdiction in relation to such State.
Sub article
(2) thereof provides that a person not already in the service of the Union or of the State shall only be eligible to be appointed as a District Judge if he has been for not less than seven years an Advocate or a Pleader and is recommended by the High Court for appoint ment.
It is therefore obvious that eligibility of appoint ment of persons to be District Judges by direct recruitment from amongst the members of the bar depends entirely on the recommendation of the High Court.
The State Government has no power to appoint any person as a District Judge except from the panel of names forwarded by the High Court.
As stated, the decisions starting from Chandra Mohan vs State of U.P. & Ors., (supra) has established the principle as a rule of law, that consultation between the Governor and the High Court in the matter of appointment of District Judges under article 233(1) must not be empty formality but real, full and effective.
In Chandra Mohan vs State of U.P. & Ors., ,(supra) Subba Rao CJ.
speaking for a unanimous court observed: "The exercise of the power of appointment by the Governor is conditioned by his consulta tion with the High Court.
that is to say, he can only appoint a person to the post of District Judge in consultation with the High Court.
The object of consultation is apparent.
The High Court is expected to know better than the Governor in regard to the suitability or otherwise of a person.
belonging either to the "Judicial service" or to the Bar, to be appointed as a District Judge.
Therefore.
a duty is enjoined on the Governor to make the appointment in consultation with a body which is the appropriate authority to give advice to him.
158 These provisions indicate that the duty to consult is so integrated with the exercise of the power that the power can be exercised only in consultation with the person or persons designated therein.
" To the same effect are the decisions in Chandramouleshwar Prasad vs Patna High Court & Ors., ; , High Court of Punjab & Haryana etc.
vs Sate of Haryana, , A. Panduranga Rao vs State of Andhra Pradesh & Ors.
and M.M. Gupta & Ors.
vs State of Jammu & Kashmir & Ors., (supra).
In A. Panduranga Rao vs State of Andhra Pradesh & Ors., (supra) it was observed: "Government was not bound to accept all the recommendations but could tell the High Court its reasons for not accepting the High Court 's recommendations in regard to certain persons.
If the High Court agreed with the reasons in case of a particular person the recommendation in his case stood withdrawn and there was no question of appointing him.
Even if the High Court did not agree the final authority was the Government in the matter of appointment and for good reasons it could reject the High Court 's recommendations.
In either event it could ask the High Court to make more recom mendations in place of those who have been rejected." In M.M. Gupta & Ors.
vs State of Jammu & Kashmir & Ors., (supra) Amarendra Nath Sen, J. speaking for himseft and Bhagwati & Pathak, JJ.
while dealing with the appointment of persons to be District Judges by the Governor under article 233(1), viewed with concern the recent trend of interference in the matter of judicial appointments by the Executive both at the Centre and the State levels and expressed the view that healthy conventions and proper norms should be evolved in the matter of these appointments for safe guarding the independence of the judiciary in conformity with the re quirements of the Constitution.
We fully endorse the princi ple deduced by him from the .
various authorities of this Court in these words: "Normally, as a matter of rule, the recommen dations made by the High Court for the ap pointment of a District Judge should be ac cepted by the State Government and the Gover 159 nor should act on the same.
If in any particu lar case, the State Government for good and weighty reasons finds it difficult to accept the recommendations of the High Court, the State Government should communicate its views to the High Court and the State Government must have complete and effective consultation with the High Court in the matter.
There can be no doubt that if the High Court is con vinced that there are good and weighty reasons for the objections on the part of the State Government, the High Court will undoubtedly reconsider the matter and the recommendations made by the High Court." (Emphasis supplied) The Constitution of India provides in articles 124(2), 217(1) and 233(1) dealing with appointment of Judges from the Supreme Court downwards and article 222(1) dealing with transfer of a Judge from one High Court to another for a very delicate process of consultation between the executive and the judiciary.
The word 'consultation ' in article 233(1) must bear the same meaning as in these other provisions.
The plain meaning of the word 'consult ' as given in Shorter Oxford English Dictionary, Vol. 1 at p. 409 is: 'to take counsel together, deliberate, confer, and the word 'consul tation ' means: 'the action of consulting or taking counsel together; deliberation, conference.
The word 'consultation ' therefore implies a conference of two or more persons or an impact of two or more minds in respect of a topic in order to enable them to evolve a correct, or at least, a satisfac tory solution.
In the words of Subba Rao, CJ.
R. Pushpam vs State of Madras, AIR 1953 Mad.
392 cited by Chandrachud, J. in Shethi 's case: "In order that the two minds may be able to confer and produce a mutual impact, it is essential that each must have for its consid eration full and identical facts, which can at once constitute both the source and foundation of the final decision.
" The concept of consultation in article 222(1) has been deline ated by Chandrachud, J. in Union of India vs Sankalchand Himatlal Sheth & Anr.
, ; , in his own illumi nating language: "It casts an absolute obligation on the Presi dent to consult the Chief Justice of India before transferring a Judge from one High Court to another.
The word 'may ' in Article 160 222(1) qualifies the last clause which refers to the transfer of a Judge and not the inter vening clause which refers to consultation with the Chief Justice of India.
The President may or may not transfer a Judge from one High Court to another.
He is not compelled to do so.
But if he proposes to transfer a Judge.
he must consult the Chief Justice of India before transferring the Judge.
That is in the nature of a condition precedent to the actual trans fer of the Judge.
In other words, the transfer of a High Court Judge to another High Court cannot become effective unless the Chief Justice of India is consulted by the President in behalf of the proposed transfer.
Indeed, it is euphemistic to talk in terms of effective ness, because the transfer of a High Court Judge to another High Court is unconstitution al unless, before transferring the Judge, the President consults the Chief Justice of India.
*** *** *** *** *** (T)here can be no purposeful consideration of a matter, in the absence of facts and circum stances on the basis of which alone the nature of the problem involved can be appreciated and the right decision taken.
It must, therefore, follow that while consulting the Chief Jus tice, the President must make the relevant data available to him on the basis of which he can offer to the President the benefit of his considered opinion.
If the facts necessary to arrive at a proper conclusion are not made available to the Chief Justice, he must ask for them because, in casting on the President the obligation to consult the Chief Justice, the Constitution at the same time must be taken to have imposed a duty on the Chief Justice to express his opinion on nothing less than a full consideration of the matter on which he is entitled to be consulted.
The fulfilment by the President, of his constitu tional obligation to place full facts before the Chief Justice and the performance by the latter, of the duty to elicit facts which are necessary to arrive at a proper conclusion are parts of the same process and are complemen tary to each other.
The faithful observance of these may well earn a handsome dividend useful to the administration of justice.
Consultation within the meaning of Article 222(1), there fore, means full and effective, not formal or unproductive consultation.
Thus, deliberation is the quintessence of consultation." (Emphasis supplied) The argument of Sri G. Viswanatha Iyer, learned counsel appearing for the State Government is that the High Court had no authority or jurisdiction to issue a writ of mandamus ordaining the State Government, meaning the Governor, to appoint respondents Nos. 1 and 3 6 as District Judges under article 233(1) in accordance with the recommendation of the High Court, and contrary to the decision of the Council of Ministers taken on February 28, 1985.
He argues that the High Court exceeded its jurisdiction in subjecting the process of decision making by the Council of Ministers to judicial review and questions the propriety of the observa tions made by the High Court that the reasons furnished in the letter of the Chief Minister dated March 4, 1985 were no reasons at all and that the governmental action was totally arbitrary, irrational and improper.
He next argues that the appointment of District Judges by the Governor in consulta tion with the High Court under article 233(1) is purely an executive function and that the Governor is not bound to accept the advice of the High Court.
In support of the contention, reliance is placed on the decision of this Court in Mani Subrat Jain vs State of Haryana & Ors., (supra).
In any event, no writ of mandamus lies in the case of non selection to a post.
According to the learned counsel, it was open to the Government not to make any appointments at all from the panel of names forwarded by the High Court if the Government was of the opinion that the making of such appointments would result in non representation of certain backward communities or groups.
It is said that while ad judging the suitability of candidates was no doubt a func tion of the High Court but.
at the same time, the Government had the duty to ensure that the appointment of District Judges from the bar under article 233(1) in accordance with the panel prepared by the High Court, was in conformity with r. 2(b) of the Kerala State Higher Judicial Service Rules i.e. in consonance with the scheme of communal reservation.
In substance, the contention is that the scheme of communal reservation as laid down in rr.
14 to 17 of the Rules does not compel the State Government to pass over candidates belonging to a community or group of communities by taking recourse to the principle of passing over in r. 15(a).
Finally, the learned counsel submits that if it were to be held that there was no full and effective consultation with the High Court and therefore the State Government could not have unilaterally rejected the panel, the proper course for the High Court was to have issued a writ in the nature of mandamus requiting the State Govern 162 ment to communicate its views to the High Court with a view to elicit its opinion and, if necessary, make a fresh effort to find suitable candidates from the communities or groups passed over before taking a final decision in the matter.
There is, in our opinion, sufficient force in these submis sions.
Arguments of Sri T.S.Krishnamoorthy Iyer, learned coun sel appearing for respondents nos.
3 6 were two fold.
His main submission is that according to the decision of this Court in Shamsher Singh & Anr.
vs State of Punjab, 14 the Governor must act on the advice of the Council of Ministers.
According to him, there was no occasion for the Council of Ministers to have reviewed the situation and decided not to appoint anybody from the panel contrary to the decision taken on January 30, 1985, which was constitu tionally impermissible.
As the sequence of events would show the immediate provocation for the subsequent decision of the Cabinet taken on February 28, 1985 was the issue of an ad interim prohibitory order by the High Court on February 21, 1985 .restraining the State Government from making any appointments for a period of one month.
In fact, there was no legal impediment to the appointment of respondents nos.
3 6 as District Judges after the Council of Ministers had taken a decision at its meeting held on January 30, 1985 to appoint them as District Judges on the recommendation of the High Court.
From the news item of the press conference held by the Chief Minister on January 31, 1985 as 'reported in the Mathrubhoomy and other Malyalam newspapers, it was amply clear that the Government had decided to fill up four posts and keep one vacancy open presumably for the Latin Catholic candidate since she had filed a writ petition in the High Court.
It is submitted that all the formalities were com plete and the only thing that remained was the issue of a formal notification in the name of the Governor making the appointments, as required by article 166(1).
Alternatively, the learned counsel contends that if the Government felt that there were unsurmountable difficulties in making the ap pointments according to the panel drawn up by the High Court due to non representation of Latin Catholics and AngloIndi ans, Other Backward Classes and Scheduled Castes and Sched uled Tribes as expressed by the Chief Minister in his letter dated March 4, 1985, and as reiterated in the return filed in the High Court by the Secretary to the Government, Home Department, the State Government should have referred back the matter to the High Court requiring the High Court to reconsider the question of selection of candidates.
In essence, the contention is that the subsequent decision of the 163 Council of Ministers taken on February 28, 1985 was liable to be quashed for want of consultation with the High Court as required by article 233(1), and the learned counsel suggest ed that we should remit back the matter to the State Govern ment with necessary directions.
As to the power of the High Court to grant a writ in the nature of mandamus, he contends that respondents nos. 3 6 having been recommended by the High Court had a legitimate expectation to be appointed as District Judges from the bar under article 233(1) and therefore had the fight to approach the High Court for grant of neces sary relief.
Argument of Sri Subramanion Poti, learned counsel ap pearing for respondent No. 1 was that the reasons furnished by the Chief Minister in his letter dated March 4, 1985 were no reasons at all and that the reason viz non representation of Latin Catholics and Anglo Indians, Other Backward Classes and Scheduled Castes and Scheduled Tribes, could not be a ground for rejection of the panel forwarded by the High Court or furnish a basis to issue a fresh notification inviting applications.
He submits that r. 15(a) contemplates that if a suitable candidate was not available.
the vacancy should be filled by a candidate belonging to the community or group immediately next to the passed over community or group.
The learned counsel contends that it was not suggest ed that the panel of names drawn up by the High Court was not in conformity with the rules of communal reservation laid down in rr.
14 to 17 6f the Rules.
If no candidates were available from the communities Latin Catholics and Anglo Indians.
Other Backward Classes and Scheduled Castes and Scheduled Tribes, 8th,10th and 12 turns in the cycle of rotation.
the vacancy had to be filled up by respondent No. 1 Smt.
A. Lakshmikutty, an Ezhava community candidate, 14th in the cycle of rotation.
According to him , there were no 'good and weighty reasons ' for the Council of MiniSters in withholding from the Governor the recommendation made by the High Court which was plainly for a bad reason.
While the Council of Ministers had the duty to advise the Governor in the affairs of the State, it could not withhold information from the Governor.
Alternatively, he adopted the argument of Sri T.S. Krishnamoorthy Iyer and contended that if it be held that there was no full .and effective consultation between the High Court and the State Government.
the matter be remitted back to the State Government for reconsideration of the whole question.
We find it difficult to sustain the judgment of the High Court or the reasons upon which it is based.
The High Court if we may say so without meaning any disrespect, fell into an error in characterising the 164 reasons given on the basis of which the Council of Ministers reached a decision on February 28, 1985 to review their earlier decision taken on January 30, 1985 and decided not to appoint anybody as a District Judge from the panel of names forwarded by the High Court which were 'arbitrary, illegal and improper '.
Apparently, the High Court was not right in its view that the rejection of the panel for the reason disclosed by the Council of Ministers in his letter dated March 4, 1985 viz. due to non representation of candi dates belonging to Latin Catholics & Anglo Indians, Other Backward Classes and Scheduled Castes and Scheduled Tribes, 8th, 10th and 12th turns in the cycle of rotation, was 'no reason at all '.
We are satisfied that the High Court could not have upon this basis issued a writ of mandamus directing the State Government i.e. the Governor to appoint respond ents Nos. 1 and 3 6 as District Judges under article 233(1) of the Constitution.
The High Court has virtually tendered on advice to the Governor to act on the recommendation of the High Court i.e. contrary to the advice of the Council of Ministers and thereby entered into the process of decision making which was constitutionally impermissible.
The Governor has to act on the advice of the Council of Ministers under article 163(1) in the matter of appointment of District Judges under article 233(1) and not on the advice of the High Court: Shamsher Singh & Anr.
vs State of Punjab, (supra).
Appointment of persons to be, and posting and promotion of, District Judges by the Governor under article 233(1) is purely an executive function.
The High Court therefore had no authority or jurisdiction to issue any writ of mandamus of the kind complained of.
If was certainly not open to the High Court to embark upon an inquiry as to the reasons which impelled the Council of Ministers at the meeting held on February 28, 1985 to review the decision taken on January 30, 1985 and decide not to appoint anyone as a District Judge under article 233(1) from the panel of names drawn up by the High Court.
It was also not justified in observing that the reasons as disclosed by the Chief Minister in his letter dated March 4, 1985, on the basis of which the Council of Ministers on February 28, 1985 decided not to appoint respondents Nos. 1 and 3 6 as District Judges on the recommendation of the High Court viz. due to non representation of certain important communities or groups of communities, were no reasons at all and in any event, the reasons given were bad in law.
There is no basis, in our opinion, for the finding reached by the High Court.
Learned counsel for the State Government rightly questioned the authority and jurisdiction of the High Court to have issued a writ of mandamus commanding the State Government to make certain appointment of persons to be District Judges when the 165 Council of Ministers had taken a decision to the contrary.
According to him, this was not a proper exercise of powers by the High Court under article 226 of the Constitution and in any view of the matter, the issuance of a writ of mandamus in the circumstances was wholly impermissible.
In our opin ion, the contention must prevail.
We must refer to the case of Mani Subrat Jain vs State of Haryana & Ors., (supra) which was relied upon by learned counsel for the State Government.
It is well settled that a writ of mandamus is not a writ of course or a writ of right, but is, as a rule, discretionary.
There must be a judicially enforceable right for the enforcement of which a mandamus will lie.
The legal right to enforce the performance of a duty must be in the applicant himself.
In general, there fore, the Court will only enforce the performance of statu tory duties by public bodies on application of a person who can show that he has himself a legal right to insist on such performance.
Applying the principles stated in Halsbury 's Laws of England, 4th edn., vol. 1, paragarph 122, this Court observed that a person whose name had been recommended for appointment as a District Judge by the High Court under article 233(1) had no legal right to the post, nor was the Governor bound to act on the advice of the High Court and therefore he could not ask for a mandamus.
It was observed: "It is elementary though it is to be restated that no one can ask for a mandamus without a legal right.
The initial appointment of District Judges under Article 233 is within the exclusive jurisdiction of the Government after consulta tion with the High Court.
The Governor is not bound to act on the advice of the High Court.
The High Court recommends the names of persons for appointment.
If the names are recommended by the High Court it is not obligatory on the Governor to accept the recommendation.
(T)he consultation of the Governor with the High Court does not mean that the Governor must accept whatever advice of recommendation is given by the High Court.
Article 233 re quires that the Governor should obtain from the High Court its views on the merits and demerits of 166 persons selected 'for promotion and direct recruitment.
" The existence of a right is the foundation of the jurisdic tion of a Court to issue a writ of mandamus.
The present trend of judicial opinion appears to be that in the case of non selection to a post, no writ of mandamus lies.
We howev er do not wish to rest the decision on the technical ground.
In our considered opinion, the decision of these appeals must ultimately turn on the question whether there was real, full and effective consultation by the Governor with the High Court within the meaning of article 233(1) before the State Government reached a decision to reject the panel forwarded by the High Court.
As well settled, the duty of the Governor to consult the High Court in the matter of appointment of District Judges is so integrated with the exercise of his power that the power can only be exercised in the manner provided by article 233(1) or not at all.
Normal ly, as a matter of rule, the recommendations of the High Court for the appointment of a District Judge should be accepted by the State Government and the Governor should act on the same.
If, in any particular case, the State Govern ment for 'good and weighty reasons ' finds it difficult to accept the recommendations of the High Court, the State Government should communicate its views to the High Court and must have complete and effective consultation with the High Court in the matter.
It must therefore follow that before rejecting the panel forwarded by the High Court, the State Government should have conveyed its views to the High Court to elicit its opinion, It should have taken the High Court into confidence and placed before it the difficulties that faced the Government in acting upon the recommenda tions, namely, that it would result in non representation of important communities like Latin Catholics and Anglo Indi ans, Other Backward Classes and Scheduled Castes and Sched uled Tribes, as expressed by the Chief Minister in his letter dated March 4, 1985.
The fulfilment by the Governor of his constitutional obligation to place full facts before the High Court was a precondition before the State Govern ment could arrive at a decision not, to appoint respondents nos.
1 and .3 6 as District Judges.
On its part, there was a constitutional obligation cast on the High Court under article 233(1) to express its opinion on a consideration of the facts and circumstances on the basis of which alone the nature of the problem could be appreciated and the .right decision taken.
It must accordingly be held that the State Government was wrong in taking a unilateral decision to cancel all steps taken in pursuance of the notification dated September 24, 1983 and to issue a fresh notification inviting applica 167 tions, without taking the High Court into confidence.
In the premises, the proper course for the High Court to adopt was to have issued a writ in the nature of mandamus requiring the State Government to place before the High Court the facts i.e. the difficulties as expressed in the letter of the Chief Minister dated March 4, 1985 to elicit its opin ion.
If the matter rested at that, there would be no diffi culty, but the High Court has gone a step further.
The issuance of a writ of mandamus by the High Court directing the State Government i.e. the Governor to act on the recom mendation of the High Court to fill up the five vacancies in the posts of District Judges meant for direct recruitment from the members of the bar under article 233(1) was constitu tionally impermissible.
Although the High Court was not oblivious that the 'advice ' of the Council of Ministers to reject the panel of fourteen names submitted by the High Court could not be subject to judicial review and that article 163(1) of the Constitution precludes an inquiry as to the nature of the advice given by the Council of Ministers to the Governor, still it has issued a writ in the nature of mandamus upon the basis that it is called upon to adjudge the legality and propriety of the two decisions taken by the State Government through the instrumentality of the Council of Ministers.
Relying upon the decision of this Court in the State of Rajasthan & Ors.
vs Union of India, ; , it observed that so long as the question remains whether the Council of Ministers acted within the limits of their power or exceeded it, it can be decided by the Court.
Apart from saying that the reasons given on the basis of which the Council of Ministers on February 28, 1985 reviewed their earlier decision of January 30, 1985 and decided not to appoint respondents nos.
1 and 3 6 as District Judges on the recommendation of the High Court viz. due to non representa tion of candidates belonging to Latin Catholics and Anglo Indians, Other Backward Classes and Scheduled Castes and Scheduled Tribes, were no reasons at all, and that the action of 'the State Government in rejecting the panel sent by the High Court was totally arbitrary, illegal and improp er, it further observed that 'there was an overt attempt on the part of the State Government to appoint persons from outside the panel ' which was constitutionally impermissible, and relied on the proposition laid down in Padfied 's case that 'if the Minister gave no reasons, the Court might infer that he had no good reasons to give '.
It accordingly held that the action of the State Government had no rational nexus to the object sought to be achieved i.e. implementa tion of the scheme of communal reservation laid down in rr.
14 to 17 of the Kerala State & Subordinate Services Rules made applicable by Note beneath r. 2(b) of the Kerala State Higher Judicial Service Rules.
168 In coming to that conclusion, the High Court relied upon the following observations of Bhagwati, J. in the State of Rajasthan & Ors.
vs Union of India, (supra) to the effect: "It will, therefore, be seen that merely because a question has a political colour, the Court cannot fold its hands in despair and declare "Judicial hands off".
So long as a question arises whether an authority under the Constitution has acted within the limits of its power or exceeded it, it can certainly be decided by the Court.
Indeed it would be its constitutional obligation to do so . . .
Every organ of government, be it the executive or the legislature or the judiciary, derives its authority from the Constitution and it has to act within the limits of its authority.
" FolloWing this line of reasoning, the High Court ob serves that 'every activity of the Government must be in formed with reason and every action taken by the State Government must be in public interest and the action would be invalid if it is unreasonable or lacking the quality of public interest.
With respect, the High Court was in error in working this principle, which on the contrary, lands support to the contention of the State Government that the High Court exceeded its jurisdiction in issuing the writ of Mandamus complained of the reason for this is obvious.
Our Constitution does not envisage a rigid separation of powers.
For example, the power to promulgate on Ordinance which, undisputedly, is a legislative power, is conferred on the executive under article 123.
Even though this is so, the re spective powers of the three wings of the State are well defined with the object that each wing must function within the field earmarked for it.
The object of such demarcation is to exclude the possibility of encroachment on the field earmarked for one wing by the other or others.
As long as each wing of the State functions within the field carved out and shows due deference for the other two branches, there would arise no difficulty in the working of the Constitu tion.
But the trouble arises when one wing of the State tries to encroach on the field reserved for the other.
It is in the above context that special responsibility devolves upon the Judges to avoid an over activist approach and to ensure that they do not trespass within the spheres ear marked for the other two branches of the State.
In our opinion, the High Court could not intervene at a stage where the Council of Ministers had reviewed the situation and decided to reject the panel sent by the High Court and not to appoint any of the five advocates to be District Judges except by issuing a writ in the nature of mandamus requiting the State Government to refer back the 169 matter to the High Court for reconsideration in the event the High Court came to the conclusion that there was no full and effective consultation, .
We find it difficult to fully subscribe to the view expressed by the High Court that the action of the State Government was not informed with reason or that it was not in public interest.
It cannot be said that there was any impropriety involved in the Chief Minister writing to the Actg.
Chief Justice placing the views of the Government.
The High Court failed to appreciate that the Chief Minister expressed his unhappiness that due to adherence to the principle of passing over the Government was not able to implement its policy of giving adequate representation to candidates belonging to Latin Catholics and Anglo Indians, Other Backward Classes and Scheduled Castes and Scheduled Tribes.
Further, as the vacancies that would occur for direct recruitment in the cadre of District Judges would only be few, the usual procedure of passing over communities could not be made good in the near future, and that the adoption of that course would cause neglect of very backward communities for a long time.
May be, the Government thought, albeit wrongly, that the principle of passing over embodied in rule 15(a) of the Rules being an integral part of the process of appointment, the ultimate decision on the ques tion whether recourse should be had to that principle was one for the Government to take.
We are quite clear in our mind that the Government was misled on that aspect.
Normally, the principle of passing over laid down in r. 15(a) of the Rules in as integral part of the process of appointment and therefore the Government being the appoint ment authority would have the right to take a decision in the matter.
But the Government failed to appreciate that the High Court plays a decisive role in the matter of appoint ment of District Judges under article 233(1).
Adjudging suit ability of a candidate for appointment as a District Judge under article 233(1) is a function of the High Court which must necessarily imply that if the High Court finds that the candidate belonging to a particular community or group is not suitable for appointment, it has to find a candidate from the community or group next following in the cycle of rotation It must logically follow, as a necessary conse quence that it is for the High Court to decide whether or not a. particular community or group should be passed over under r. 15(a) of the Rules for want of a suitable candidate and the vacancy be filled up from the community or group immediately next to the passed over community or group in the order of rotation or sub rotation provided in r. 14(c).
All that the State 170 Government could do was to convey to the High Court the difficulties faced by the Government in implementing the recommendations.
It must accordingly be held that the State Government wrongly assumed to itself the power to decide the question whether the principle of passing over laid down in r. 15(a) of the Rules should be resorted to or not.
There was quite some discussion at the bar as to whether the Council of Ministers could have reviewed their earlier decision and decided not to appoint anybody from the panel of names forwarded by the High Court and to issue a fresh notification inviting applications.
The answer to the ques tion is self evident.
Merely because the Chief Minister briefed, the press on January 31, 1985 as regards the decision taken at the meeting of the Council of Ministers held on the previous day and the news of the press confer ence was published in the Mathrubhoom and other Malyalam newspapers to the effect that the Government had decided to fill up four posts of District Judges, it could not be said that there was an order of the State Government in the manner required by article 166(1).
What the news item conveyed was that the Council of Ministers had taken a decision to advise the Governor to appoint respondents nos.
3 6 as District Judges.
The Governor has to act with the aid and advice of the Council of Ministers as required by article 163(1).
Whatever the Council of Ministers may say in regard to a particular matter, does not become the action of the State Government till the advice of the Council of Ministers is accepted or deemed to be accepted by the Head of the State.
Before an advice of the Council of Ministers amounts to an order of the State Government, there are two require ments to be ful filled.
namely: (1) The order of the State Government had to be expressed in the name of the Governor as required by article 166(1).
and (2) It has to be communicat ed to the persons concerned.
See: Staff of Punjab vs Sodhi Sukhdev Singh, ; and Bachhittar Singh vs State of Punjab.
It must therefore follow that unless and until the decision taken by the Council of Ministers on January 30, 1985 was translated into action by the issue of a notification expressed in the name of the Governor as required by article 166(1), it could not be said to be an order of the State Government.
Until then.
the earlier decision of the Council of Ministers was only a tentative one and it was therefore fully competent for the High Court to reconsider the matter and come to a fresh decision.
It is said reflect that there should have been this unfortunate discord between the High Court and the State Government over the 171 direct recruitment of District Judges from the bar under article 233(1).
This was mainly because there was failure to appreciate on the part of both the respective functions of each.
We hope and trust that the State Government and the High Court in the consultative process would come to a solution of the problem acceptable to both as early as possible.
At our request, the Registrar of the High Court has furnished us with requisite information on the strength of cadre of District Judges.
From the Note prepared by him, the picture that emerges is this.
Under the proviso to r. 2(b) of the Kerala State Higher Judicial Service Rules, one third of the permanent posts of District Judges including Selec tion Grade District Judges has to be filled up or reserved to be filled up by direct recruitment.
The number of perma nent places of District Judges is 29.
There is only one District Judge at present who is a direct recruit.
The number of posts has increased with the creation of three posts of Motor Accidents Claims Tribunals at Palghat, Man jeri and Tellichen which started functioning from June 1, 198 1, and became permanent by June 1, 1986.
Thus the number of permanent posts of District Judges has gone up to 32.
Therefore, there arises the need for filling up ten posts of District Judges by direct recruitment.
Even after the fill ing up of five vacancies with which we are concerned, there would still remain scope for selecting four more District Judges from the bar.
With the elevation of Sri K.T. Thomas and Sri K. Sreedharan who were both directly recruited from the bar, there would be need for filling up the posts of District Judges vacated by them.
Due to the constitutional impasse created, the matter is at a standstill.
In the result, the appeals succeed and are allowed to the extent indicated herein.
The judgment and order of the High Court directing the issuance of a writ of mandamus commanding the State Government to appoint respondents Nos. 1 and 3 6 as District Judges under article 233(1) of the Con stitution are set aside.
We instead direct that a writ in the nature of mandamus shall be issued to the State Govern ment requiring it to communicate its views to the High Court to elicit its opinion within six weeks from today and, if necessary, make a fresh effort to find suitable candidates from the communities or groups of communities passed over before taking a final decision in the matter.
In conse quence, the State Government 's decision not to make appoint ments from the panel forwarded by the High Court and to re notify the vacancies must stand quashed.
The High Court shall also comply 172 with the directions issued by this Court in two cases of Smt.
N. Subhadra Arnrna and K. Sadanandan.
We make it clear that the choice of candidates lies entirely with the High Court.
There shall be no order as to costs.
S.R. Appeals al lowed.
| Rule 2(b) of the Kerala State Higher Judicial Service Rules, 1961 requires that the cycle of rotation governing reservation of posts as laid down in Rule 14(c) of the Kerala State and Subordinate Service Rules, 1958 be followed in the selection and appointment of District Judges by direct recruitment.
Under Rule 14(c) appointments shall be made in the order of rotation specified therein in every cycle of 20 vacancies.
It is not often that there is no eligible candidate available from a community or group of communities.
To meet such a situation, r. 15(a) provides that if a suitable candidate is not available for selection from any particular community or group of communities speci fied in the annexure, the said community or group shall be passed over and the post filled by a suitable candidate from the community .or group of communities immediately next to the passed over communitY or group in the order of rotation.
Rule 15(b) enjoins that if a suitable candidate is not available for selection from the group of communities clas sified as "Scheduled Castes", in the turn allotted for such a group in the annexure, the said group shall be passed over and the post Shall be fired by a suitable candidate from the group of communities classified as "Scheduled Tribes" and vice versa.
If no suitable candidate for selection in any of the two groups namely, Scheduled Castes and Scheduled Tribes is available, the vacancy has to be filled by open competi tion.
Rule 15(c) provides for restoration of the benefit of the turn forfeited at the earliest opportunity.
Proviso thereto however enjoins that the restoration of the benefit of the turn forfeited by the carry forward rule, 137 shall not exceed 50% of the vacancies to be filled in a particular year.
Rule 16 provides for sub rotation among major groups of other backward classes.
Rule 17(1) lays down the manner in which appointments have to be made from candi dates belonging to other backward classes.
Other backward classes are enumerated in List III to Part I of the Rules and there are 73 communities or groups divided into 8 cate gories specified in Rule 17(1).
Categories 1 to 7 are Ezha vas and Thiyyas, Muslims, Latin Catholics and Angin Indians, Nadars, Scheduled Castes converts to Christianity, Viswakar mas and Dhooravas.
All other backward classes put together constitute the 8th category.
Rule 17(2) provides for sub rotation among the other backward classes.
In the last recruitment made in the year 1978 appointments had been made upto 7th turn in the cycle of rotation.
The Committee of three senior most Judges constituted by the Full Court interviewed the candidates and drew up a list of fifteen candidates adjudged on an overall assessment of the merits.
One of the fifteen ' candidates Ms. Mary Teresa Dias belonging to the Latin Catholic community, however, was considered unsuitable for appointment by the Committee by a majority of 2:1.
On an approval of the revised panel of fourteen candidates by the Full Court by a majority at a meeting held on 12.6.1984, the said list was sent to the Chief Minister.
As there was no candidate belonging to the 'Latin Catholics and Anglo Indians ', 'Other Backward Classes and 'Scheduled Castes and Scheduled Tribes ', 8th, th and 12th in the cycle of rotation, the first vacancy had be filled by reason of rule 15(a) of the Rules by a suitable candidate belonging to the community or group of communities immediately next to the passed over community or group i.e. by respondent No. 1 Smt.
A. Lakshmikutty, a member of the 'Ezhava ' community, 6th in order of merit, failing in the group 'Ezhavas ', Thiyyas and Billavas ', 14th in the cycle of rotation.
The second vacancy i.e. 9th in the cycle rotation had to be filled by respondent No. 3, Krishnan Nair, 1st in order of merit, by open competition.
The third vacancy had to go to 'other Backward Classes ', 10th in the cycle of rotation.
As there was no 'other Backward Classes ' candidate belonging to the 'Scheduled Castes and Scheduled Tribes ', 10th and 12th in the cycle of rotation, it had to be filled by a Muslim candidate C. Khalid, respondent No. 4 who was 5th in order of merit and 16th in the cycle of rotation.
The fourth vacancy had to be filled by a candidate on the basis of open competition i.e. by respondent No. 5 Achuthan Unni, 2nd in order of merit and 11th in the cycle of rotation.
The fifth vacancy was to be filled by respondent No. 6 Rajappan Asari, a Viswakarma, 4th in order of merit and 2Oth in the cycle of rotation.
138 Shortly thereafter, on June 27, 1984, Ms. Mary Teresa Dias filed a petition under Article 226 of the Constitution for grant of a writ of mandamus claiming her right to the first vacancy being a candidate belonging to the Latin Catholic and Anglo Indian community with a direction to the State Government not to fill up any of the five vacancies in the post of District Judges without inclusion of her name in the panel and a further direction to the High Court to forward her name for appointment as a District Judge.
The said writ petition was however dismissed later on.
Subsequently pursuant to a news item appearing on 31.1.1985 in several malayalm newspapers to the effect that the cabinet as its meeting held on 30.
I. 1985 had decided to appoint only four out of the said five candidates leaving A. Lakshmikutty sixth in order of merit belonging to the Ezhava community as one post was to be kept vacant for a candidate belonging to the group of Latin Catholic Anglo Indian community, Respondent No. 1 Smt.
Lakshmikutty moved the High Court by a petition under Article 226 of the Con stitution for grant of an appropriate writ, direction or order to quash the decision of the Council of Ministers dated January 30, 1985 deciding not to appoint her as per the panel sent up by the High Court.
Her application for grant of an ad interim prohibitory order to restrain the State Government from appointing only Respondents 3 to 6 as District Judges as per the Cabinet decision was ordered by a learned Single Judge on a prima facie case being made out.
The State Government having been restrained from making the appointments for a period of one month.
i.e. till March 20, 1985, the matter of direct recruitment of District Judges from the bar again came up before a meeting of the Council of Ministers held on February 28, 1985.
The Govern ment reconsidered the whole question of direct recruitment of District Judges from the bar afresh and decided not to appoint anybody from the panel of names recommended by the High Court due to non representation of 'Latin Catholics and AngloIndians ' 'Other Backward Classes ' and 'Scheduled Castes and Scheduled Tribes ', 8th, 10th, and 12th turns in the cycle of rotation, However, the Kerala High Court al lowed the writ petition filed by Respondent A. Lakshmikutty by its judgment and order dated 29.4.1985, quashed the Cabinet decisions of 30.1.1985 and 28.2.1985 and issued a writ in the nature of mandamus directing the respondents State to fill up five vacancies in the posts of District Judges meant for direct recruitment from the bar, by the appointment of Respondents t and 3 to 6 as recommended by the High Court under Article 233 (1) of the Constitution.
Hence the State appeals, by special leave.
139 Allowing the appeals and modifying the order, the Court, HELD: 1.1 The power of appointment of persons to be District Judges conferred on the Governor, meaning the State Government, under article 233(1) in consultation with the High Court is executive function.
The power of the State Govern ment is not absolute and unfettered but is hedged in with conditions.
The exercise of the power of the Governor under article 233(1) in the matter of appointment of District Judges is conditioned by consultation with the exercise of the power that the power can only be exercised in consultation with the High Court.
Therefore, the eligibility of appoint ment of persons to be District Judges by direct recruitment from amongst the members of the bar depends entirely on the recommendation of the High Court.
The State Government has no power to appoint any person as a District Judge except from the panel of names forwarded by the High Court.
But, the consultation between the Governor and the High Court in the matter of appointment of District Judges under Article 233 (1) must not be an empty formality but real, full and effective.
[156H I57E] Chandra Mohan vs State of U.P. & Ors., ; A Panduranga Rao vs State of Andhra Pradesh & Ors., ; Mani Subrat Jain vs State of Haryana & Ors., ; M.M. Gupta & Ors.
vs State of Jammu & Kashmir & Ors.
, ; ; Chandra mouleshwar Prasad vs Patna High Court & Ors., ; ; High Court of Punjab & Haryana etc.
vs State of Haryana, ; and Union of India vs Sankalchand, Himatlal Sheth & Anr., ; , referred to.
As well settled the duty of the Governor to consult the High Court in the matter of appointment of District Judges is so integrated with the exercise of his power that the power can only be exercised in the manner provided by article 233(1) or not at all.
Normally, as a matter of Rule, the recommendations of the High 'Court for the appointment of a District Judge should be accepted by the State Govern ment and the Governor should act on the same.
If, in any particular Case, the State Government for 'good and weighty reasons ' finds it difficult to accept the recommendations of the High Court, the State Government should communicate its views to the High Court and must have complete and effective consultation with the High Court in the matter.
In the instant case, therefore, before rejecting one panel forward ed by the High Court, the State Government should have conveyed its views to the High Court to elicit its opinion.
[I66C E] The fulfilment by the Governor of his constitutional obliga tion to 140 place full facts before the High Court was a pre condition before the State Government could arrive at a decision not to appoint respondents Nos. 1 and 3 6 as District Judges.
On its part, there was a constitutional obligation cast on the High Court under article 233(1) to express its opinion on a consideration of the facts and circumstances on the basis of which alone the nature of the problem could be appreciated and the right decision taken.
Therefore, the State Govern ment was wrong in taking a unilateral decision to cancel all steps taken in pursuance of the notification dated September 24, 1983 and to issue a fresh notification inviting applica tions, without taking the High Court 'into confidence.
And the proper course for the High Court to adopt was to have issued a writ in the nature of mandamus requiring the State Government to place before the High Court the facts i.e. the difficulties as expressed in the letter of the Chief Minis ter dated March 4, 1985 to elicit its opinion.
[166G 167A] 1.3 The respective powers of the three wings of the State are well defined with the object that each wing must func tion within the field earmarked for it.
The objects of such demarcation is to exclude the possibility of encroachment on the field earmarked for the wing by the other or theirs.
As long as each wing of the State functions within the field carved out and shows due deference for the other two branch es, there would arise no difficulty in the working of the Constitution.
But, when one wing of the State tries to encroach on the field reserved for the other, special re sponsibility devolves upon the Judges to avoid an overactiv ist approach and to ensure that they do not trespass within the spheres earmarked for the other two branches of the State.
Therefore, the High Court could not intervene at a stage where the Council of Ministers had reviewed the situa tion and decided to reject the panel sent by the High Court and not to appoint any of the five advocates to be District Judges except by issuing a writ in the nature of mandamus requiring the State Government to refer back the matter to the High Court for reconsideration.
[168F 169A].
2.1 It is well settled that a writ of mandamus is not a writ of course or a writ of right, but is, as a rule, dis cretionary.
There must be a judicially enforceable right for the enforcement of which a mandamus will lie.
The legal right to enforce the performance of a duty must be in the applicant himself.
In general, therefore, the Court will only enforce the performance of statutory duties by public bodies on application of a person who can show that he has himself a legal right to insist on such performance.
[165C] 2.2 The issuance of a writ of mandamus by the High Court direct 141 lag the State Government i.e. the Governor to act on the recommendation of the High Court to fill up the five vacan cies in the posts of District Judges meant for direct re cruitment from the members of the bar under article 233(1) was constitutionally impermissible.
Although the High Court was not oblivious that the 'advice ' of the Council of Ministers to reject the panel of fourteen names submitted by the High Court could not be subject to judicial review and that article 163(1) of the Constitution, precludes an inquiry as to the nature of the advice given by the Council of Ministers to the Governor, still it has issued a writ in the nature of mandamus upon the basis that it is called upon to adjudge the legality and propriety of the two decisions taken by the State Government through the instrumentality of the Council of Ministers.
By doing so, the High Court has virtually tendered an advice to the Governor to act on the recommenda tion of the High Court i.e. contrary to the advice of the Council of Ministers and thereby entered into the process of decision making which as constitutionally impermissible.
The Governor has to act on the advice of the Council of Minis ters under article 163(1) in the matter of appointment of District Judges under article 233(i) and not on the advice of the High Court.
Appointment of persons to be, and posting and promotion of, District Judges by the Governor under article 233(1) is purely an executive function The High Court there fore had no authority or jurisdiction to issue any writ of mandamus of the kind complained of.
It was certainly not open to the High Court to embark Upon an inquiry as to the reasons which impelled the Council of Ministers at the meeting held on February, 28, 1985 to review the decision taken on January 30, 1985 and decide not to appoint anyone as a District Judge under article 233(1) from the panel of names drawn up by the High Court.
It was also not justified in observing that the reasons as disclosed by the Chief Minister in his letter dated March 4, 1985 on the basis of which the Council of Ministers on February 28, 1985, decided not to appoint respondents Nos. 1 and 3 6 as District Judges on the recommendation of the High Court namely due to non representation of certain important communities or groups of communities, were no reasons at all and in any event, the reasons given were bad in law.
There is no basis for the ridding reached by the High Court.
[167B D, 164E G] 3.
Normally, the principle of passing over laid down in Rule 15(a) of the Kerala State and Subordinate Service Rules, 1958 is an integral part of the process of appoint ment and therefore the Government being the appointment authority would have the right to take a decision in the matter.
But the Government failed to appreciate that the High Court plays a decisive rule in the matter of appoint ment of District Judges under article 233(1).
Adjudging suit ability of a candidate for appointment 142 as a District Judge under article 233(1) is a function of the High Court which must necessarily imply that if the High Court finds that the candidate belonging to a particular community or group is not suitable for appointment, it has to find a candidate from the community or group next follow ing in the cycle of rotation.
It must logically follow, as a necessary consequence that it is for the High Court to decide whether or not a particular community or group should be passed over under r. 15(a) of the Rules for want of a suitable candidate and the vacancy be filled up from the community or group immediately next to the passed over community or group in the order of rotation or sub rotation provided in rule 14(c).
All that the State Government could do was to convey to the High Court the difficulties faced by the Government in implementing the recommendations.
It must accordingly be held that the State Government wrongly as sumed to itself the power to decide the question whether the principle of passing over laid down in r. 15(a) of the Rules should be resorted to or not.
[169F 170B] 4.
Whatever the Council of Ministers may say in regard to a particular matter, does not become the action of the State Government till the advice of the Council of Ministers is accepted or deemed to be accepted by the Head of the State.
Before an advice of the Council of Ministers amounts to an order of the State Government, there are two require ments to be fulfilled, namely; (1) The order of the State Government had to be expressed in the name of the Governor as required by article 166(1) and (2) It has to be communicated to the persons concerned.
It must therefore follow ' that unless and until the decision taken by the Council of Minis ters on JanUary 30, 1985 was translated into action by the issue of a notification expressed in the name of the Gover nor as required by article 166(1), it could not be said to be an order of the State Government.
Until then, the earlier decision of the Council of Ministers was only a tentative one and it was therefore fully competent for the High Court to reconsider the matter and come to a fresh decision.
[170E G] State of Punjab vs Sodhi Sukhdev Singh, ; ; and Bachhittar Singh vs State of Punjab, , referred to.
|
N: Criminal Appeal No. 406 of 1976.
Appeal by Special Leave from the Judgment and Order dated 1 9 1975 of the Madras High Court in Criminal Appeal No. 823/74.
493 A. N. Mulla, A. T. M. Sampath and P. N. Ramalingam for the Appellant.
A. V. Rangam for the Respondent.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is by Special Leave by accused 1 and 2 in S.C. 26 of 1974 on the file of Sessions Judge, South Arcot Division, against their conviction and sentence imposed by the High Court of Judicature at Madras in Criminal Appeal No. 823 of 1974 dated 1st September, 1975.
The two Appellants and Muthuthamizaharasan were accused Noc.
1 3 in the Sessions Court.
The first appellant was found guilty under section 302 I.P.C. and sentenced to imprisonment for life.
The second appellant and the third accused were found guilty of an offence under section 302 read with section 149 I.P.C. and sentenced to imprisonment for life.
On appeal by the two appellants and the third accused, the third accused was acquitted by the High Court and the appellants Nos. 1 and 2 are before us.
The deceased Rasayal is the sister of appellants and the third accused.
The first accused Dhanabal is the eldest and the second appellant and the third accused are his younger brothers.
The second appellant married Laxmi, the daughter of Rasayal.
Rasayal owned about 5 acres of land in Keelakkarai village.
She executed a general power of attorney Exh.
P. 15 on 31st August, 1970 in favour of the second appellant.
Rasayal, after she lost her husband, started leading an immoral life which was disliked by her brothers.
As a result, Rasayal began to cultivate her own land inspite of the power of attorney executed in favour of the second appellant.
There was misunderstanding between the parties and Rasayal had complained to the Police stating that her brothers had threatened to do away with her.
On the date of the occurrence at about 1.30 p.m. on 5th December, 1973, when Rasayal and her farm servant Parmasivam, P.W. 4 were working in her field removing weeds, the two appellants and the third accused converged to the place where Rasayal was working.
The first appellant was armed with Veecharuval, the second appellant was armed with a spade and the third was unarmed.
On seeing them, Rasayal ran towards the channel running adjacent to her fields.
The third accused instigated the first appellant to cut her saying that she was leading an immoral life and that she should not be left.
Thereupon, the first appellant cut Rasayal on the right side of her neck with the Veecharuval and she fell down in the channel, raising an alarm.
494 The second appellant stated that she should not be left at that and that her head should be severed from her body, she being an immoral woman.
Thereupon, the first appellant caught hold of her hair by the left hand and cut her neck with the Veecharuval, severing the head from the trunk.
The occurrence was witnessed by Ramalingam P.W. 1 and Ramakrishnan, P. W. 2 who were returning at that time after spraying insecticides in the fields of P.W. 1 Chelladurai, P.W. 3 who was coming to the field of Rasayal with food for P. W. 4 also saw the occurrence.
Nagappan P.W. 5 who was going towards the scene of occurrence to meet Ramakrishnan P.W. 2 for getting arrears of wages also saw the occurrence.
Soon after the occurrence, the first appellant left taking away the Veecharuval with him and second appellant leaving the spade near the feet of the deceased Rasayal.
P. W. 4 gave a report Ext.
P. 7 to the Sub Inspector of Police, Kamaratchi at 3 p.m. on the same day.
The Sub Inspector recorded the narration of P. W. 4, read it over to him and obtained his signatures.
After registering a case under section 302 I.P.C. he took up the investigation and proceeded to the scene of the occurrence and held the inquest.
The Doctor who conducted the post mortem was of the view that the deceased appeared to have died of severance of the head from the trunk.
During investigation, the Police had section 164 Cr.
P. C. Statements recorded from P.Ws. 1 to 5 before the Sub Magistrate, Chidambaram on 24 12 1973.
During the committal proceedings, P.W. 4 turned hostile but P.Ws. 1, 2, 3 and 5 gave evidence supporting the prosecution.
After committal, P.W. 1, 2, 3 and 5 resiled from the evidence they gave in the Committal Court.
They were treated as hostile by the Prosecution and their evidence before the Committing Court was admitted in evidence under section 288 of the Code of Criminal Procedure.
The High Court relying on the evidence of P.Ws. 1, 2, 3 and 5 which was marked under section 288 of the Criminal Procedure Code, found that it was satisfactorily established that the first appellant cut the deceased on the right side of the neck, that the second accused instigated the first accused to cut her saying that she was an immoral woman and the first appellant caught hold of her hair by the left hand and cut her neck with the Veechruval, severing the head from the trunk and left the place alongwith other accused.
The High Court acquitted the third accused on the ground that in the F.I.R. it was not mentioned that the third accused instigated the first accused to cut the neck of the deceased.
He was given the benefit of doubt and was acquitted.
Mr. Mulla, learned counsel for the appellants, submitted that the conviction of the two appellants based entirely on the retracted evi 495 dence of P.W. 1, 2, 3 and 5 marked in the Sessions Court under section 288 cannot be sustained.
Secondly, the Learned Counsel submitted that the High Court was in error in taking into account the statements recorded from the witnesses under section 164 of the Code of Criminal Procedure in coming to the conclusion that the evidence given in the Committal Court could be relied upon.
Lastly, the Learned Counsel submitted that in any event the case of the second appellant is similar to that of the third accused and that the second appellant ought to have been acquitted.
We have been taken through the relevant evidence of the witnesses, their statements under section 164 of the Code of Criminal Procedure and the evidence given by them in the Committal Court which was transposed to the record of the Sessions Court under section 288 of the Code of Criminal Procedure.
Before considering the questions of law raised by the Learned Counsel, we find that the plea of the learned counsel on behalf of the second appellant has to be accepted.
The case for the prosecution is that the two appellants and the third accused went to the scene of occurrence the first appellant armed with Veecharuval, the second appellant with a spade and the third accused unarmed converged on Rasayal and the first accused gave a cut which resulted in severance of her head.
We feel that when the three brothers went to the scene determined to do away with Rasayal, any instigation was most unlikely.
The first accused who actually caused injury is the eldest brother.
It is difficult for us to accept that before he actually caused the injury, he needed the instigation of the second appellant.
In the deposition of Ramalingam P. W. 1, which was marked under section 288, Code of Criminal Procedure, Ext.
P. 2, he stated that first accused came with Aruval, A 2 with a spade and alongwith A 3 went towards Rasayal Ammal.
A 1 with the Veecharuval cut Rasayal Ammal on her right neck.
The other persons were standing there.
Thus the instigation attributed by the prosecution to the second appellant is not found in the evidence of Ramalingam.
Taking into account the facts and the probabilities of the case, we feel it is most unlikely that the second appellant instigated the first accused as a result of which the first accused caused the fatal injury.
The second appellant is entitled to the benefit of doubt.
His appeal is allowed and his conviction and sentence are set aside.
He is directed to be set at liberty.
We will now take up the first contention of the learned counsel that the conviction based on statements marked under s 288 of 496 the Code of Criminal Procedure is not sustainable for consideration.
section 288 of the Code of Criminal Procedure runs as follows: "The evidence of a witness duly recorded in the presence of the accused under Chapter XVIII may, in the discretion of the Presiding Judge, if such witness is produced and examined be treated as evidence in the case for all purposes subject to the provisions of the ".
The plea of the Learned Counsel is that the evidence marked under section 288 is inadmissible as it was only read in full to the witnesses and had not been put to them passage by passage as required by section 145 of the Evidence Act.
The procedure that was adopted in the Sessions Court was that when the witnesses stated giving a version hostile to the prosecution, he was asked whether he was examined in the Committal Court.
The evidence marked as given by him in the Committal Court was read over to the witnesses by the Public Prosecutor.
The witness admitted that he had given evidence as found in the Exh.
and that he had signed it.
The evidence given in the Committal Court was transposed to the record of the Sessions Court under section 288 of the Code of Criminal Procedure.
The procedure adopted was challenged on the ground that section 288 contemplates that the evidence given during Committal proceedings can be treated as evidence in the case subject to the provisions of the , and, therefore, each and every passage on which the prosecution relies on should have been put to the witnesses before the passages can be marked and treated as substantive evidence.
section 145 of the Evidence Act, runs as follows: "A witness may be cross examined as to previous statements made by him in writing or reduced into writing, and relevant to matters in question, without such writing being shown to him, or being proved; but if it is intended to contradict him by the writing, his attention must, before the writing can be proved be called to those parts of it which are to be used for the purposes of contradicting him.
" Reliance was placed on the decision of this Court in Tara Singh vs State of Punjab, wherein it was held that the evidence in the Committal Court cannot be used in the Sessions Court unless the witness is confronted with his previous evidence as required under 497 section 145 of the Evidence Act.
The Court observed that if the prosecution wishes to use the previous testimony as substantive evidence then it must confront the witness with those parts of it which were to be used for the purpose of contradicting him and then only the matter can be brought in as substantive evidence under section 288.
On the facts of the case the Court found that all that happened was that the witnesses were asked something about their previous statements and they replied that they were made under coercion.
It does not appear that the entire previous statements of the witnesses were put to them and they were asked whether they, in fact, made the statements.
In Bhagwan Singh vs State of Punjab,, this Court distinguished the case of Tara Singh vs State of Punjab (supra) and observed that resort to section 145 of the Evidence Act is necessary only if a witness denies that he made the former statement.
When the witness admits the former statement, all that is necessary is to look to the former statement on which no further proof is necessary because of the admission that it was made.
Hidayatullah, C.J. in State of Rajasthan vs Kartar Singh, while dealing with the procedure to be adopted in treating the statement in the committal court as substantive evidence observed that the witnesses should be confronted with their statements in the Committal Court which are to be read over to them in extenso.
The Chief Justice pointed out that the witnesses in the case admitted that their statements were truly recorded in the Committal Court but denied that they were true statement because they were made to depose that way by the Police.
It would have been useless to point out the discrepancies between the two statements because the explanation would have been the same and in the circumstances, the requirements of section 145 of the were fully complied with.
It is thus clear from the authorities referred to above that the requirements of section 288 would be fully complied with if statements of the witnesses are read in extenso to them and they admit that they have made those statements in the committal Court.
The required procedure has been followed in this case and the attack made by the learned counsel has to fail.
The second legal contention raised by the Learned Counsel was that the High Court was in error in taking into account the statements recorded from the witnesses under section 164 of the Code of 498 Criminal Procedure in coming to the conclusion that the evidence given by them in the Committal Court could be relied upon.
The High Court stated "we are satisfied having regard to 164 statements of P.W. 1 to 3 and 5 that the statements given by those witnesses before the Committing Court are true and could be relied on" and proceeded to observe "that as there are more statements admitted in evidence under section 288 of the Code of Criminal Procedure than one, the evidence of one witness before the Committing Court is corroborated by that given by others".
Mr. Mulla, Learned Counsel, submitted that a statement recorded under section 164 of the Code of Criminal Procedure indicates that the Police thought that the witnesses could not be relied on as he was likely to change and, therefore, resorted to securing a statement under section 164 of the Code of Criminal Procedure.
The statement thus recorded, cannot be used to corroborate a statement made by witness in the Committal Court.
In support of this contention the learned counsel relied on certain observations of this Court in Ram Chandra and Ors.
vs State of U.P.
In that case, in a statement recorded from the witness under section 164 of the Code of Criminal Procedure, the Magistrate appended a certificate in the following terms: "Certified that the statement has been made voluntarily.
The deponent was warned that he is making the statement before the 1st Class Magistrate and can be used against him.
Recorded in my presence.
There is no Police here.
The witness did not go out until all the witnesses had given the statement.
" The Court observed that the endorsement made is not proper but declined to infer from the endorsement that any threat was given to those witnesses or that it necessarily makes the evidence given by the witness in Court suspect or less believable.
The view of the Patna High Court in Emperor vs Manu Chik, where the observations made by the Calcutta High Court in Queen Empress vs Jadub Das, that statements of the witnesses obtained under this Section always raises a suspicion that it has not been voluntarily made was referred to, was relied on by the Learned Counsel.
This Court did not agree with the view expressed in the Patna case but agreed with the view of Subba Rao, J. (as he then was) in Gopisetti Chinna 499 Venkata Subbiah, where he preferred the view expressed by Nagpur High Court in Parmanand vs Emperor, It was observed that the mere fact that the witnesses statement was previously recorded under section 164 will not be sufficient to discard it.
It was observed that the court ought to receive it with caution and if there are other circumstances on record which lend support to the truth of the evidence of such witnesses, it can be acted upon.
During the investigation the Police Officer, sometimes feels it expedient to have the statement of a witness recorded under section 164, Code of Criminal Procedure.
This happens when the witnesses to a crime are closely connected with the accused or where the accused are very influential which may, result in the witnesses being gained over.
The 164 statement that is recorded has the endorsement of the Magistrate that the statement had been made by the witness.
The mere fact that the Police had reasons to suspect that the witness might be gained over and that it was expedient to have their statements recorded by the Magistrate, would not make the statements of the witnesses thus recorded, tainted.
If the witness sticks to the statement given by him to the Magistrate under section 164, Code of Criminal Procedure, no problem arises.
If the witness resiles from the statement given by him under section 164 in the Committal Court, the witness can be cross examined on his earlier statement.
But if he sticks to the statement given by him under section 164 before committal enquiry and resiles from it in the Sessions Court, the procedure prescribed under section 288, Code of Criminal Procedure, will have to be observed.
It is for the Court to consider taking into account all the circumstances including the fact that the witness had resiled in coming to the conclusion as to whether the witness should be believed or not.
The fact that the Police had section 164 statement recorded by the Magistrate, would not by itself make his evidence tainted.
section 157 of the Evidence Act makes it clear that the statement recorded under section 164 of the Code of Criminal Procedure can be relied on for corroborating the statements made by the witnesses in the Committal Court.
This Court has expressed its view that though the statements made under section 164 of the Code of Criminal Procedure, is not evidence, it is corroborative of what has been stated earlier in the Committal Court vide The High Court was right in relying on the statement of the witnesses under section 164 as corroborating their subsequent evidence before the Committal Court.
Equally unsustainable is the plea of the Learned 500 Counsel that a statement recorded under section 288 of the Code of Criminal Procedure of one witness cannot corroborate the statement of another witness under section 288.
The statements are treated as substantive evidence in law and we do not see any flaw in treating the statement of one witness as corroborative of the other.
The result in the question of law raised by the Learned Counsel fail.
The appeal of the first appellant is rejected and his conviction and sentence confirmed.
The appeal of the second appellant is allowed and his conviction and sentence set aside.
He is directed to be set at liberty forthwith.
V.D.K. 1st Appellant 's Appeal dismissed.
2nd Appellant 's Appeal allowed.
| The appellants and the third accused were brothers of the deceased Rasayal.
They were charged for the offence of committing the offence of murder and were found guilty and sentenced under section 302 read with section 149 I.P.C. to imprisonment for life by the Sessions Court.
In appeal the High Court, acquitted the third accused but confirmed the conviction and sentence of the appellants.
In appeal by special leave, three contentions were raised namely (i) the conviction of the two appellants based entirely on the retracted evidence of PWs.
1,2, 3 and 5 marked in the Sessions Court was wrong (ii) the evidence marked under section 288 was inadmissible as it was only read in full to the witnesses and had not been put to them passage by passage as required in section 145 of the Evidence Act and (iii) the case of the second appellant was similar to that of the third accused and ought to have been acquitted giving him the benefit of doubt.
Accepting the appeal of the 2nd appellant and dismissing the appeal of the first, the Court ^ HELD: 1.
Talking into account the facts and the probabilities of the case it is clear that it was the first appellant who caused the fatal injury and needed no instigation from the second appellant.
There was no evidence as to any overt act, except the presence of the second appellant along with the third accused.
It was most unlikely that the second appellant instigated the first accused as a result of which the first accused caused the fatal injury.
The second appellant is entitled to the benefit of doubt.
[495E G] 2.
The requirements of section 288 of the Criminal Procedure Code would be fully complied with if statements of the witnesses are read in extenso to them 492 and they admit that they have made those statements in the Committal Court.
The required procedure has been followed in this Case.
[497F G] Tara Singh vs State of Punjab, ; , Bhagwan Singh vs State of Punjab, ; State of Rajasthan vs Kartar Singh, ; referred to.
During the investigation the police officer, sometimes feels it expedient to have the statement of a witness recorded under section 164 Code of Criminal Procedure.
This happens when the witnesses to the crime are closely connected with the accused or where the accused are very influential which may result in the witnesses being gained over.
The 164 statement that is recorded has the endorsement of the Magistrate that the statement had been made by the witness.
[499 A C] 4.
The mere fact that the police had reasons to suspect that the witness might be gained over and that it was expedient to have their statements recorded by the Magistrate, would not make the statements of the witnesses thus recorded tainted.
If the witness sticks to the statement given by him to the Magistrate under section 164 Code of Criminal Procedure, no problem arises.
If the witness resiles from the statement given by him under section 164 in the committal court, the witness can be cross examined on his earlier statement.
But if he sticks to the statement given by him under section 164 before committal enquiry and resiles from it in the Sessions Court, the procedure prescribed under section 288, Code of Criminal Procedure will have to be observed.
It is for the Court to consider taking into account all the circumstances including the fact that the witness had resiled, in coming to the conclusion as to whether the witness should be believed or not.
The fact that the Police had section 164 statement recorded by the Magistrate would not by itself make his evidence tainted.
[499 C F] Ram Chandra & Ors.
vs State of U.P. ; explained and relied on.
Section 157 of the Evidence Act makes it clear that the statement recorded under section 164 of the Code of Criminal Procedure can be relied on for corroborating the statements made by the witnesses in the committal court.
Though the statements made under section 164 of the Code of Criminal Procedure, is not evidenced, it is corroborative of what has been stated earlier in the committal court.
[499 F G] State of Rajasthan vs Kartar Singh, ; followed.
A statement recorded under section 288 of the Code of Criminal Procedure of one witness can corroborate the statement of another witness under section 288.
The statements are treated as substantive evidence in law and there is no flaw in treating the statement of one witness as corroborative of the other.
[500 A B]
|
l Appeals Nos.
1091 to 1093 of 1971.
Appeals by special leave from the award dated April 15, 1971 of the Industrial Tribunal, Maharashtra, Bombay in References (IT) Nos. 20 of 1969, 70 of 1970 and 105 of 1969.
V.M. Tarkunde, R. A. Jahagirdar and I.N. Shroff, for the appellant (in all the appeals).
K.T. Sule.
Janardan Sharma and Indira Jaisingh, for respondent No. 1 (in all the appeals).
Urmila Kapoor and Kamlesh Bansal, for respondent No. 2 (in all the appeals).
The Judgment of the Court was delivered by Vaidialingam, J.
These three appeals, by special leave, arise out of the Award, dated April 15, 1971 of the Industrial Tribunal, Maharashtra, Bombay in Reference (I.T. Nos. 20 and 105 of 1969 and 70 of 1970).
The main questions that arise for consideration in these appeals relate to the award of Dearness Allowance, Classification of Grades and Fixation of Wages and a direction given by the Industrial Tribunal regarding the Incentive Bonus Scheme, as modified by the Company.
There is also a minor point regarding a particular clause in the Gratuity Scheme as framed by the Tribunal in Reference (I.T. No. 20 of 1969).
Though there are certain other matters dealt with in the Award in Reference (I.T. No. 20 of 1969) they are not the subject of controversy in these appeals.
We will now state the circumstances under Which the Refer ences came to be made to the Tribunal.
570 The appellant was started as a proprietary concern in the year 1944 and was later transformed to a public limited Company and registered as such under the Indian Companies Act, 1962.
From its inception, the Company has been dealing in the business of manufacturing and selling pharmaceutical products.
It had its factory in Jogeshwari in Greater Bombay.
At the time of the Reference, the Company was employing about 714 workmen of whom 558 were operatives and 156 were members of the clerical and subordinate staff.
All these employees were covered by the demands comprised in all the References.
The wage scales of the workmen had been determined originally in Reference (I.T.No. 23 of 1959).
The wage scales of the operatives were as follows "Unskilled A Rs. 1 .52 0 .09.2 .23 0 .12 2 .93
Unskilled B 1.25 0.96 1.85 0.09. 2.30 Semi skilled A 2 .00 0 .12 2 .72 0 .18 3 .80
Semi skilled B 1 .76 0 .11 2 .64 0 .15 3 .39
Skilled 2 59 0 .13 2 .85 0 22 3 .95 0 .30 4 .25".
The wage scales of the clerical and subordinate staff were as follows .200 260 "Junior Chemist Rs. 120 10 12 Manufacturing Assistant140 10 220 15 310 Store keepers Store Assistants 180 10 260 15 350 Stenographers Junior Clerk 60 8 90 10 146 E.B. 15 215.
Intermediate Clerks75 8 115 12 175 E.B. 15 250.
Senior Clerks 115 10 255 15 315 E.B. 20 395.
" In addition to the basic wages, referred to above, the employees were getting dearness allowance, which in the case of operatives was equal to 80% of the revised textile scale of dearness allowance and in the case of clerical and subordinate staff 100% of the revised textile scale of dearness allowance.
The nomenclature of the grades of the operatives was changed by a consent award in Reference (I.T. No. 170 of 1961).
The grades and wages as per this award were as follows "Unskilled Rs. 1 25 0 06 1 85 0 09 2 30 Semi skilled A, 1 52 0 02 2 33 0 12 2 93 Semi skilled B ' 1 76 0 11 2 64 0 15 3 39 Skilled 2 00 0 12 2 72 0 18 3 39 Highly Skilled 2 59 0 13 2 85 .O 22 . 3 95. .
O 30 4 25.
" The dearness allowance of the operatives and clerical and subordinate staff underwent a change by the award in Reference (I.T. No. 402.
of 1963).
Under that award the dearness allowance 571 of the operatives was increased to 90% of the revised textile scale of dearness allowance from January 1, 1964 and to 95% of the revised textile scale of dearness allowance from July 1, 1964.
The dearness allowance of the clerical and subordinate staff was supplemented at different slabs with effect from January 1, 1964 as follows : "Basic salary upto Rs. 100 Basic salary of Rs. 101 to 200 Basic salary of Rs. 201 to 300 Basic salary of over Rs. 300 .
Operatives ' dearness allowance plus Rs. 7 .50 Operative , ' dearness allowanceplus Rs. 15.
Operatives dearness allowance plus Rs. 22 50.
Operatives ' dearness allowance plus Rs. 25.
" Though the award prescribed to the clerical and subordinate staff the same rate of dearness allowance of the operatives plus a fixed amount, as referred to above, the Company continued to give them dearness allowance equal to 100% of the revised textile scale of dearness allowance.
This was also supplemented with the fixed amount depending upon the slab of the salary.
There was a settlement on June 24, 1966 between the Company and its employees, in and by which the wages of the opera tives and the clerical and subordinate staff underwent a final revision.
The wages of the operatives were fixed as follows "Unskilled Rs. 1 .25 0 .10 2 .75
Semi skilled B 1 60 0 .12 2 32 0 .15 3 .67
Semiskilled A 1 .80 0 .15 2 85 0 .20 4 . 45 Skilled 2 .,10 0 20.3 .10 0 .25 5 .10
Highly skilled 2 .75 0 20 3 75 0 .25 5 00 0 .30 6 .50.
" Similarly, the wages of the clerical and subordinate staff were as follows : "Junior Clerk Rs. 75 6 105 10 155 15 260 E. B. 17 311.
Intermediate Clerk 90 8 130 12 190 15 295 E. B. 18 349.
Senior Clerk 125 10 195. 15 270 20 390 E. B 25 440.
Steno and Storekeeper180 10 260 15 380 E. B. 20 4 460.
" The above basic scales in respect of all the categories were again supplemented by dearness allowance as provided for in the award passed in Reference (I.T. No. 402 of 1963).
The Company had also an Incentive Bonus Scheme, by virtue of which a large number of operatives were getting, on an average an additional sum of Rs. 28/ per month.
The Company further revised 572 from about November 1, 1969 the wage scales of Drivers and Watchmen as follows : "Drivers Rs. 70 6 100 9 145 12 205 E. B. 15 250.
Watchmen 45 4 65 6 95 E. B. 8. 135".
The above was the pattern of the wage structure and dearness allowance for the operatives and the clerical and subordinate staff.
The Unions concerned made a demand for introducing the following scheme of dearness allowance in respect of all the workmen with immediate effect : Wage slab .
When the working classVariation in the cost of living in dearness allow dex figure is inance for every 10 the group of 401 points rise or 410.
upto 100 100 per cent 5 per cent From Rs. 101 to 200 50 per cent2 1/2 per cent From Rs. 201 and above 25 per centII percent Minimum dearness allowance Rs. 100.
Minimum variation Rs. 5.
" They also demanded that the above scheme of dearness allow ance was to have retrospective effect from August 1, 1967.
In the same demand the Unions required that the workmen should be granted one month 's wages for every year of service as gratuity in case of resignation, dismissal, discharge, death or termination of service for any reason.
By this demand the Unions required modification of the then existing pattern of payment of dearness allowance at 95% of revised textile scale of dearness allowance to operatives and 100% of revised textile scale of dearness allowance plus Rs. 7.50 to Rs. 25/ paid to the clerical and other staff.
The Company did not agree to the demand and in consequence by order dated January 14, 1969 the Government of Maharashtra referred for adjudication to the Industrial Tribunal the demands.
This Reference was registered as Reference (I.T. No. 20 of 1969).
The Unions again made a demand for revision of scales of pay as well as the classification of employees, their grades and their fitment in the revised scales of pay.
As against the then existing six categories of workmen and their wage scales of the operatives the Unions demanded new classification and gradation into eight grades with new wage scales.
Similarly, as against the then existing five grades of the clerical and subordinate staff, the Unions demanded the creation of six categories with enhanced wage scales.
These demands again were not accepted by the Company which led to the State Government making a reference Oil January 9, 1970, which reference was registered as Reference (I.T. No. 70 of 1970).
573 The Company some time in the year 1959 had introduced an Incentive Bonus Scheme.
This was introduced, according to the appellant, because of the fact that the workmen were not giving a substantial production.
The basis of the scheme, introduced by the appellant, was that if the workmen gave only 30% of the 100% production expected of them, their performance would be considered zero.
On the other hand, if they gave production above 30% and upto 100%, they would be eligible for payment of Incentive Bonus which would be from 31 to 100 points.
In other words, for the 70 points above the first 30 points, the workmen would get Rs. 501 as Incentive Bonus which would work out approximately to about Rs. 71.43 per point.
The appellant desired that the then existing floor limit of 30% ought to be raised to 75% without varying the quantum of Rs. 501 that was originally payable on achievement of 100% production.
What was intended was that the 25 points between 75 and 100 points Were to be made eligible for payment of Incentive Bonus of Rs. 2/ for each point.
The 'Company served a notice of change on the workmen under section 9A of the .
As the workmen protested against this change, this led the Government to make a Reference to the Industrial Tribnual for adjudication.
This was numbered as Reference, (I.T. No. 105 of 1969).
The appellant resisted the claims made for revision of dearness allowance and wage scales as well as the modification sought for in the gratuity scheme.
The appellant also wanted the Tribunal to uphold the notice of change given by it under section 9A of the in respect of the Incentive Bonus Scheme.
In particular the appellant contended that it was not a comparable concern with the units referred to by the Unions and that any modification in the scale of dearness allowance and wages would be beyond its financial capacity.
The appellant also relied oil the coming into force of the Drugs (Price Control) Order, 1970 with effect from May 16, 1970.
According to the appellant the wages and dearness allowance paid by it to the workmen were far higher than what were paid by other units in the region.
The Company also referred to the various awards wherein it had been held that it could not be compared with an International Company having branches in Bombay or with foreign concern though incorporated in India.
The wage scales had been fixed by Settlement dated June, 24, 1966 and that nothing has happened since the date of Settlement to justify a revision of wage scales 'and dearness allowance.
The appellant further urged before the Tribunal that the double linking of dearness allowance, as required by the Unions had never been adopted for the Pharmaceutical units in the Bombay region.
According to the appellant, the revision 574 effected regarding the Incentive Bonus Scheme was justified and the amount of 2/ offered per point was much more than the prevailing rate of Rs. 71.43p.
per point.
It also opposed the revision of the then existing gratuity scheme as demanded by the Unions.
According to the appellant the gratuity scheme which was in force had been introduced by a consent award in 1963.
The appellant filed copies of balance sheets and profit and loss accounts from 1962 63 to 1969 70 and various other charts in support of its plea that it will not be able to bear the additional financial burden that would result if the wage scales and dearness allowance are revised as per the demands made by the Unions.
It will be seen from the facts mentioned above that thr main controversy between the parties related to the revision of wage structure and dearness allowance.
As the demands of the workmen related to regrouping, in different grades, the operatives and the clerical and subordinate staff and as this involved a very radical change in the existing pattern of grades, the Tribunal felt that the opinion of an expert should be obtained on the advisibility of the reclassification.
In this regard both the Unions and the against filed a joint application on December 22, 1970 requesting the Tribunal to appoint Sri N. L. Gadkari, retired Chief Inspector of Factories, Maharashtra State as an assessor.
They also prayed that the points mentioned in the application be referred for the opinion of the assessor.
The Assessor submitted his report on February 22, 1971, in which he recommended the continuance of the then existing grades.
The Unions, while demurring to the report of the Assessor, requested the Tribunal, by their application dated March 25, 1971 to fix for the then existing five grades the following wage scales "Unskilled. .
Rs. 85 8 125 10 225 Semi skilled B. 100 10 150 12 210 15 285.
Semi skilled A 120 12 180 15 255 18 345.
Skilled 140 15 215 18 305 20 405.
Highly skilled 225 25 350 30 500 35 675.
" The appellant, when the Reference came up for hearing, raised an objection to the selection of wage scale by the Unions for the existing grades of the operatives on the ground that such a selection was not permissible, being contrary to the provisions of s.10(4) of the .
The Unions, ultimately, made it clear to the Tribunal that their demand for revision of wage scales of the existing five grades of operatives is to be as follows : "Unskilled Rs. 60 5 85 7 155.
Semi skilled B 70 6 100 8 180.
Semi skilled A 85 8 125 10 225.
Skilled 100 10 150 12 210 15 285.
Highly skilled 120 12 180 15 255 18 345.
" 575 It is on the basis of this claim that the question of revision has been dealt with by the Tribunal.
Regarding the financial incapacity pleaded by the appellant, the Tribunal after an analysis of the balance sheets and profit and loss accounts, held that the average net profit of the Company during the years 1965 66 to 1969 70 works out to about Rs. 1384691/ .
It is also of the, view that the apprehensions of the appellant/regarding the possible impact of the Drugs (Price Control) Order, 1970 are not justified.
It is the view of the Tribunal that in spite of the price freeze effected in 1963, the appellant has been doing very good business from 1962 63 to 1969 70.
Ultimately, the Tribunal found that the financial condition of the appellant is quite sound.
Regarding the comparable concerns in the region, the Unions referred to as many as twenty units.
One of the units relied on as comparable with the appellant was M/s. Burroughs Wellcome & Co. (India) Private Ltd., Bombay.
The appellant opposed its being compared with the concerns relied on by the Unions on the ground that those units were either foreign concerns doing business in India or Indian units working, in collaboration with foreign concerns.
The appellant in turn relied on several other concerns as being comparable with it.
The appellant very strongly relied on certain previous awards in support of its contention that it has been held in those awards that the appellant cannot be compared with foreign concerns or with the concerns working in collaboration with foreign concerns.
The Tribunal, after a consideration of the materials placed ' before it, in this regard, ultimately, held that M/s. Burroughs Wellcome & Co. (India) Private Ltd., was a unit which could be considered as a comparable concern with the appellant.
The Tribunal having regard to the grades and scales of pay obtaining in M/s. Burroughs Welcome & Co. (India) Private Ltd., held that the wage scales for the five grades for the operatives of the appellant should be as follows : "Unskilled .
Rs. 42 3 71 4 112 Semi skilled B 47 3 50 82 4 122 Semi skilled A 50 4 90 5 50 134 Skilled 55 5 50 110 6 50 155 50 High skilled 72 7 142 8 182 9 5C 220.
" The Tribunal fixed the following grades and scales of pay for the clerical and subordinate staff "Junior Clerks and Laboratory Assistants Rs. 85 7 50 145 10 195 12 259 17 323 Intermediate Cierks 120 10 200 12 260 15 335 18 353 Senior Clerks 185 15 305 20 365 25 465" 576 The Tribunal did not accept the large demand made by the Unions for a general adjustment in increments of the employees.
Nevertheless, in view of the revision of the scales of wages, it gave certain directions so that the employees may be fitted in the appropriate revised wage scales.
The parties very hotly contested the question of dearness allowance as well as the pattern to be adopted.
As there were different systems of dearness allowance for the operatives and the clerical and subordinate staff, the Unions desired that a common scheme of dearness allowance on a slab system should be adopted.
The Tribunal having regard to the decisions of this Court in Greaves Cotton and Co. and others vs Their Workmen(1) and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen(2) held that there was no justification for having two systems of dearness allowance one for the operatives and the other for the members of the clerical and subordinate staff.
Accordingly, the Tribunal held that all the employees should get the same dearness allowance irrespective of the fact whether they were operatives ,or members of the clerical and subordinate staff.
As the dearness allowance has to be fixed on industry cum region basis, the Tribunal examined the system of dearness allowance followed in the region by the industries belonging to the pharmaceutical units.
The Unions had submitted statements Exs.
DU 1 and MU. 1 containing a list of pharmaceutical units, in support of their contention that such units were adopting a slab system of dearness allowance.
The Company, on the other hand, referred to certain awards of the Industrial Tribunals in support of its stand that slab system of dearness allowance is not considered as an appropriate mode of providing neutralization.
The Unions also relied on certain awards wherein the slab system of dearness allowance had been introduced by the Industrial Tribunals.
Though the Tribunal had held that most of the units referred to in Exs.
DU 1 and MU 1, cannot be, considered for the purpose of being treated as units comparable with the appellant, nevertheless it held that the practice adopted by those units regarding the grant of dearness allowance can be taken into account as providing a guide regarding the system of dearness allowance adopted in the region.
On this basis the Tribunal accepted the statements in Exs.
DU 1 and MU 1 and held that the slab system of dearness allowance was prevalent in a large number of units belonging to pharmaceutical industry.
In this view, the Tribunal further held that slab system of dearness allowance can be adopted, if the financial burden consequent on the adoption of the said system, can be safely borne by the Company.
(1) (2) 577 The Tribunal then proceeded to consider the system obtaining in Burrough Welcome Company regarding the payment of dear ness allowance.
The system in the said Company, which was common for operatives as well as the clerical and subordinate staff, was as follows Basic Salary Dearness allowance per Variationfor month at the Bom points.
bay working class cost of living index 491 500.
Rs. 1 100.
150 percent 5 Per cent Rs. 101 200 1 50 Per cent on the 1st 21 Per cent Rs. 100.
71 Per cent on the balance.
Rs. 201 300 150 per cent on the 1st 11/4 per cent.
Rs. 100.
721 Per cent on the 2nd Rs. 100, and 36 1/4 per cent on the balance.
Minimum Dearness allowance Rs. 4 Rs. 101.
In the said Company the above scale of dearness allowance was however limited only to employees drawing a basic salary upto Rs. 360/ per month.
The appellant accepted before the Tribunal that the scheme of dearness allowance obtaining, in Burroughs wellcome Company would cast a lesser financial burden than the scale of dearness allowance as demanded by the Unions.
In fact, the Company had filed two charts Exs.
C 12 and C 13, showing the burden which it will have to bear if the scheme of dearness allowance as demanded by the Unions was introduced.
, The Company had worked out the demands in different ways and that is why it filed two statements.
According to the appellant the additional financial burden will be about Rs. 878125.00 as per exhibit C 12 and Rs. 1252693.00 as per exhibit C 13.
The Tribunal is of the view that under exhibit C 13, the Company had taken into account a sum of Rs. 186293.00 payable to some members of the staff drawing a salary of over Rs. 200/per month and amongst whom were also included 52 chemists.
According to the Tribunal the 52 chemists are not covered by the Reference and therefore the burden will have to be calculated only in respect of the workmen covered by the Reference and to, whom dearness allowance is being fixed.
On calculation the Tribunal found that about a lakh of rupees payable to 52 chemists and included in exhibit C 13 by the appellant will have to be deducted from Rs. 1252693.00 Accordingly, it held that as per the calculation of the appellant under exhibit C 13, leaving out the 52 chemists, the total burden will only be Rs. 1152693 .00.
Taking 578 into account the tax relief that the Company will get, the Tribunal ultimately held that the additional financial burden that the appellant will have to bear will only be Rs. 555000.00.
As it had already held that the average annual gross profits of the Company are over Rs. 40,00,000.00, the Tribunal held that the Company can easily bear this additional burden.
The Tribunal is further of the view that though the financial impact of the Drugs (Price Control) Order, on the business activities of the Company has had to be seen, the impact will not be such as to make the appel lant 's financial position difficult.
For all these reasons, the Tribunal fixed for the operatives and the clerical and subordinate staff of the appellant dearness allowance on a system prevalent in Burroughs Wellcome Company.
The system of dearness allowance fixed by the Tribunal is as follows : Basic salary Dearness allowance per Variation month at the Bom bay working class cost of living index 521 530.
Rs. 1 100 150 per cent Rs. 101 200 150 per cent on the 1st Rs. 100.
72 1/2 per cent on the balance.
Rs. 201 300 150 Per cent on the 1st 100 Rs.72 1/2 Percenton the 2.
Rs. 100.
36 1/4 per cent.
on the balance.
Minimum dearness allow ance Rs. 101 _ percent _ 1/2 per cent Rs. 4.
The Tribunal has further directed that dearness allowance in accordance with the above scheme will be payable only to em ployees drawing a basic salary upto Rs. 300/ per month.
It will be seen that the Tribunal while adopting the scale of dearness allowance obtaining in Burroughs Wellcome Company, has made a departure in fixing the scale of dearness allowance on the basis of the Bombay Working Class Cost of Living Index 521 to, 530.
The dearness allowance scheme obtaining in Burroughs Wellcome Company was on the Bombay Working Class Cost of Living Index 491 to 500.
The dis rent cost of living index was adopted by the Tribunal in view of the fact that the appellant was Paying incentive wages to its operatives and with a view to lessen the financial burden on the Company.
Another feature of the scheme adopted by the Tribunal is that it puts a ceiling on the employees drawing basic wages upto 579 Rs. 300/ per month alone being eligible for dearness allowance, whereas under the practice originally obtaining in the Company there was no such limit.
The Tribunal held that the revised wage scales and dearness allowance would be effective from October 1, 1969 and directed the Company to pay the arrears within three months from the date of the Award becoming enforceable.
At this stage it may be mentioned that the appellant is not challenging this direction regarding the date from which the wage scales and dearness allowance are to take effect, though it very vehemently attacks the fixation of the scale of revised wage scales and dearness allowance by the Tribunal.
Regarding gratuity, the Company had already a scheme which had been introduced under the Settlement Award in Reference (IT) No. 141 of 1962.
It is not necessary to set out the scheme that was prevalent in the Company because the only.
objection of the appellant to the revised scheme evolved by the Tribunal is in respect of raising the ceiling from 15 months to 17 1/2 months.
The demand in this regard by the Unions was that the ceiling should be raised from 15 months basic wages to 20 months basic wages.
However, the Tribunal did not accept the claim of the Unions in toto.
On the other hand, it adopted the practice obtaining in the Burroughs Wellcome Company and accordingly fixed the ceiling at 17 1/2 months basic wages.
Regarding the notice of change issued to the workmen by the appellant under s.9A of the proposing to alter the existing floor limit of 30% to 75% in the Incentive Bonus Scheme, the Tribunal on the joint application of the parties dated April 10 , 1970 appointed on April 28, 1970 Sri B. Tulpule, as Assessor to examine the question of revising the existing scheme of Incentive Bonus.
The Assessor submitted his report on August 27, 1970 making the following recommendations : "(1) The base performance index for all sections /in the Company 's factory should be revised and raised to 60 per cent.
(2) Consequent upon the revision of the base index as above, an amount of Rs. 100 per day should be added to the basic wages of the workers, this addition being independent of any other revision of the wage structure that the Tribunal may decide upon.
(3) The revised rates of incentive should continue beyond 100 pet cent performance." Though the Unions generally accepted the recommendations, the appellant was opposed, particularly to the second and third 580 recommendations.
The Tribunal, after a consideration of the objection, is, of the view that recommendations Nos. 2 and 3 were beyond the scope of the terms of reference made to him.
Therefore, those two recommendations were negatived.
Regarding the first recommendation, it is stated by the Tribunal that the Unions accepted the same and that the Company also was not opposed to that suggestion made by the Assessor regarding the raising of the base performance index to 60%.
In dealing with this aspect the Assessor in his report had stated as follows "If the base index of any incentive scheme is raised from X to Y, the workers will stop getting the incentive earnings which they used to get for the performance range from X to Y. This is also the main anxiety expressed by both the Unions in the present case.
At the outset I asked the management whether the implication of their proposed change was such a reduction in the workers ' total pay packet, at any given level of performance.
The management categorically assured me that that is not their intention.
Their purpose in proposing the change is stated by them to induce workers to raise their performance above the prevailing level.
" The Tribunal in its Award had stated that the matters men tioned in the above paragraph including the assurance stated to have been given by the appellant were not denied.
Therefore, the Tribunal, in view of the common measure of agreement between both the parties regarding the first recommendation is of the view that if the pay packet of the workman is to be protected at the wage raise base index performance of 60%, some scheme may have to be worked out.
But as the necessary materials for the purpose of evolving a scheme were not available, the Tribunal has thrown out a suggestion that the said question should be dealt with by the appellant in consultation with the Unions and frame a scheme by common consent, if possible.
Accordingly, the Tribunal left the matter to the parties to deal with the matter with the observation that if it is found that no scheme could be framed by consent, the Unions will be free to raise any dispute that may be available to them in that regard.
We have.
exhaustively referred to the questions referred to the Tribunal as well as the decision of the, Tribunal on those points.
In these appeals, as mentioned earlier, the controversy relate to (1) Scale of Dearness Allowance; (2) Fixation of Wage Scales, Classification and Grades; (3) Raising of the ceiling to 17 '2 months basic wages in. the gratuity scheme.
; and (4) the direction given by the Tribunal.
regarding the Incentive Bonus Scheme.
581 As the main points in great controversy between the parties before us relate to the pattern of dearness allowance and the classification and grades of employees and the fixation of the revised wage scales, we will take up for consideration those matters.
The very _first objection of Mr. Tarkunde, learned counsel for the appellant is regarding the manner of ascertaining grosser of its when revising the wage scales and awarding dearness allowance.
We have already pointed out that the Tribunal has proceeded on the basis that the average annual gross profits of the Company are over Rs. 40,00,000.00.
The appellant had submitted balance sheets and profit and loss accounts for the year 1962 63 to 1969 70.
It is enough to refer to the particulars that could be gathered for the five preceding years, namely, 1965 00 to 1969 70.
For those years the figures are as follows Particulars 1965 66 1966 67 1967 68 1968 69 1969 70 Paid up capital 4500000 4 50 000 0 4500000 54 00 00 0 Reserves and Surplus 2152186 2925376442151547856975714988 Sales 21997640 23866647 303593803299445637152031 Depreciation 5449195 55035784 8241111775916719 Development rebate 972426 8266105840110858144511 Provision for taxation 1915000 1590300185050016985001639000 Net Block 4601566 4905509 545821257459977375386 Net Profit 954591 1443489 159709416045011323779 From the above statement it will be seen that the average net profits work out to Rs. 1384691.00 The net profits have been arrived at, by the Company after deducting taxation, depreciation and development rebate.
It is on the basis of the net profits, so arrived at that the appellant appears to have urged before the Tribunal that the wage scales and dearness allowance are to (1),fixed.
The Tribunal rejected this contentions.
On the, other hand, the Tribunal has held that when considering a revision of wage structure what is to be taken into account is not the net profit. ; but gross profits without any deductions having been made for taxa tion, depreciation and development rebate.
It is on that basis.
that the Tribunal held that the average gross profits ' of the Company exceed Rs. 40,00,000.00.
The gross profits without deducting taxation, depreciation and development rebate for the years 1965 66 to 1969 70 will be.
proximately as follows Year Gross profits Rs. "1965 66.
35,11,752 1966 6736 ' 57,000 1961 6843, 37,698 1968 6945, 25,134 1969 7040, 24,009" 9 L1031 Sup.
Cf/72 582 From the above it will be seen that the figure of Rs. 40,00,000.00 arrived at by the Tribunal as average annual grossprofits appears to be prima facie correct.
Mr. Tarkunde, learned counsel for the appellant found con siderable difficulty in challenging the view of the Tribunal that gross profits are to be arrived at without decucting taxation and development rebate.
He rather strenuously urged that there is absolutely no warrant for arriving at gross profits without deducting depreciation.
On the other hand, Mr. K. T. Sule, learned counsel for the respondent No. 1, whose, contentions have been adopted by Mrs. Urmila Kapoor, learned counsel for the second respondent, pointed out that the approach made by the, Tribunal is correct and is also supported by the decisions of this Court.
Mr. Tarkunde referred us to sections 205 and 211 of the , as well as , Schedule VI therein.
We do not think it necessary to% refer to those provisions as, in ouropinion, they have no relevance or bearing when considering a revision of wages and award of dearness allowance under industrial adjudication.
Those provisions are intended for ' a totally different purpose.
We will presently show, by reference to the decisions of this Court that the Tribunal was justified in computing gross profits without deducting taxation, depreciation and development rebate.
In view of the decisions, to which we will immediately refer to, Mr. Tarkunde was prepared to accept the position that, at any rate, taxation and development rebate cannot be deducted, but he still maintained that depreciation has to be deducted.
In Gramophone Company Ltd. vs Its Workmen(1), this Court, in dealing with a gratuity scheme, had to consider the principles applicable for ascertaining the financial capacity of an employer.
In that decision the employer contended that before the real profit for each year can be4 arrived at, the provisions made for taxation and for development reserves should be deducted.
On this basis, it was further contended that if these deductions are made, there will not be any profit left which will enable the Company concerned to frame a gratuity scheme.
This claim for deducting taxation and development rebate reserves was negatived by this Court as follows : "When an industrial tribunal is considering the question of wage structure and gratuity which in our opinion stands more or less on the same footing as wage struc (1)[1964] 583 ture, it has to look at the profits made without considering provision for taxation in the shape of income tax and for reserves.
The provision for income tax and for reserves must in our opinion take second place as compared to provision for wage structure and gratuity, which stands on the same footing as provident fund which is also a retrial benefit.
" It was further observed that if an industry is in a stable condition and the burden of provident fund and gratuity does not result in loss to the employer, that burden will have to be borne by the employer, like the burden of wage structure in the interest of social justice.
It was finally held that the contention on behalf of the Company therein that provision for taxation and provision for reserves should take precedence over provision for gratuity cannot be accented.
From the above decision it is clear that Fixation of wage structure stands more or less on the same footing as framing of a gratuity scheme and the principles applicable for ascertaining the profits are the same : (2) Provision for taxation and provision for reserves cannot take precedence over for gratuity and fixation of wages; and (3) The provision for income tax and for reserves must take second place as compared to provision for wage structure and gratuity.
The above decision categorically rules out any deduction of taxation.
It also excludes from deduction all provision for reserves which will take in depreciation reserve also.
But, Mr. Tarkunde contended that the above decision is an authority for the proposition that the only two items that could be deducted are provision for taxation and provision for development rebate reserve.
If so, the counsel urges that the deduction of depreciation reserve as claimed by the appellant is justified and, that the Tribunal erred in declining that item to be deducted.
We are not inclined to accept this contention of Mr. Tarkunde.
The above decision is, in our opinion, an authority for the proposition that the provision for taxation and provision for reserves, which expression will take in depreciation reserve also, cannot be deducted for the purpose of computing the profits.
At 'any rate the, said decision had no occasion to consider whether depreciation reserve can be deducted or not.
We have already pointed out that the only claim made by the appellant therein was for deducting provision for taxation and for development rebate reserve and that claim was rejected.
Therefore, looked at from any point of view, the above decision is certainly not in favour of the contention of Mr. 584 Tarkunde that depreciation reserve has to be deducted before arriving at profits.
In The Indian Link Chain Manufacturers Ltd. vs Their Work men(1), this Court had occasion to consider the principles applicable to ascertain the financial capacity of a company in fixing wage scales and dearness allowance and framing of a gratuity scheme.
The Principle applicable was stated as follows "It is pertinent to notice that gratuity and wages in industrial adjudication are placed on the same footing and have priority over Income tax and other reserves, as such in considering the financial soundness of an undertaking for the purposes of introduction of a gratuity scheme the profits )that must be taken info account are those computed prior to the deduction of depreciation and other reserves.
" The decision in Gramophone Company vs Its Workmen 2 was quoted with approval in this decision.
The Company in that case had calculated profits after deducting depreciation.
This method was deprecated by this Court as follows : "All these profits it may be mentioned are computed after deducting depreciation and this should betoken into account in considering the desirability of formulating a gratuity scheme for the Appellant.
" In the end the provision made for depreciation and which had been deducted by the Company for calculation of profits was added back.
From the above decision it is clear that profits are to be computed prior to the 'deduction of depreciation and other reserves.
The said decision directly holds that provision for depreciation and other reserves cannot be deducted in computing profits be ascertained for framing a gratuity scheme.
This decision again reiterates the legal position that gratuity and wages in industrial adjudication and placed on the same footing and have priority over Income tax and other reserves.
In fact, as pointed out by us earlier, provision made for depreciation and which had been deducted by the Company for arriving at profits was added back.
by this Court.
Mr. Tarkunde urged that this Court in The Indian Link Chain Manufacturers Ltd. vs Their Workmen(1) has misunderstood and misinterpreted the earlier decision in Gramophone Company Ltd. vs Its Workmen (2 ) .
According to the counsel the error committed by this Court was on proceeding on the basis that the decision in (1) ; (2) [1964]2 L.L.J. 131.
585 Gramophone Company Ltd. vs Its Workmen(1) has laid down that depreciation reserve should not be deducted in computing the profits available for framing a gratuity scheme or when fixing a wage scale, We have no hesitation in rejecting this contention of Mr. Tarkunde.
We have already expressed our views regarding the scope of the decision in Gramophone Company Ltd. vs Its Workmen(1) and no error has been committed by this Court in The Indian Link Chain Manufactures Ltd. vs Their Workmen(2).
On the other hand, the latter decision is directly in point to the effect that provision for depreciation cannot be deducted.
We may also refer to the observation of this Court in Ahme dabad Millowners ' Association Etc.
vs The Textile Labour Association(3) that. . it is the figure of gross profit which is more important, because it is not disputed that wages payable to the employees are a first charge,, and.
all other liabilities take their place after the wages.
" Mr. Tarkunde referred us to, the statements contained in certain leading text books on principles of Accounting, Book Keeping and Accounts and Accountancy regarding the nature of depreciation reserve.
In "Principles of Auditing by F. R. M. De Paula, 8th Edition," it is stated that the main object of providing for depreciation of wasting assets is to keep the original capital intact.
In "Balance Sheets, how to read and understand them, by Philip Tovey,3rd Edition" the distinction between a "Reserve" and "Depreciation" has been stated.
The author says that depreciation should be written of before arriving at the year 's profit and that reserve is built up, by setting aside portions of the profits itself.
The author proceeds to state that depreciation represents the estimated wear and tear which will ultimately reduce the property and plant to scrap value.
In "Book Keeping and Accounts" 'by Cropper, Morr 's and Fison, 19th Edition, when dealing with the Trial Balance, Trading and Profit and Loss Accounts, it is mentioned that depreciation is the term employed by the Accountants to indicate the gradual deterioration both in the value and the usefulness of those assets which, by reason of their nature and uses, steadily decline in value.
Again in "Accountancy" by William Pickles, 3rd Edition the author has defined "Depreciation" as the permanent and continuing diminution in the.
quality, quantity or value of an asset.
it Is further stated that the provision for depreciation does not depend upon what the business can afford, as the debit therefore is an (1) [1964] 2 L.L.J.131, (2) ; (3) ; 586 essential one, constituting not an appropriation of, but a charge against, profits for the period in question.
Based upon the above statements contained in the text books, referred to above, Mr. Tarkunde urged that the principle in Accountancy is that depreciation must be deducted before ascertaining the profits.
In our opinion, the above statements may have considerable bearing in the preparation of profit and loss accounts having due regard to the provisions of the and Mercantile usage; but they have no bearing on the question of fixation of wage structure and dearness allowance in an industrial adjudication.
From what is stated above, it follows that the Tribunal was justified in arriving at gross profits without deducting the provision for Depreciation.
As already mentioned by us, Mr. Tarkunde has accepted that the Tribunal was justified in not deducting the Provision made for taxation and development rebate.
The result is that the average gross profits of the appellant being about Rs. 40,00,000,00, as held by the Tribunal, is correct.
In the fixation of wages and dearness allowance the legal position is well established that it has to be done on an industry cumregion basis having due regard to the financial capacity of the unit under consideration vide Express Newspapers (Private) Ltd., and Another vs The Union of India and others(1), Greaves Cotton and Co. and others vs Their Workmen (2) , and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen(3).
It has been further stated in Greaves Cotton add Co. and others vs Their Workmen (2 ) as follows : "The principle therefore which emerges from these two decisions is that in applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind.
But where the number of industries of the same kind in a particular region is small it is the region part of the industry cum region formula which assumes importance. . (1) (2) ; (3) ; 587 It has been further emphasized in Ahmedabad Millowners ' Association etc.
vs The Textile Labour Association(1) that industrial adjudication should always take into account, when revising the wage structure and granting dearness allowance, the problem of the additional burden to be imposed on the employer and ascertain whether the employer can reasonably be called upon to bear such burden.
The principles to be borne in mind have been stated in the said decision as follows : " It is a long range, plan; and so, in dealing with this problem, the financial position of the employer must be carefully examined.
What has been the progress of the industry in question; what are the prospects of the industry in future; has the industry been making profits; and if yes, what is the extent of profits; what is the nature of demand which the industry expects to secure; what would be the extent of the burden and its gradual increase which the employer may have to face ? These and similar other considerations have to be carefully weighed before a proper wage structure can be reasonably constructed by industrial adjudication. .
As pointed out in Greaves Cotton and Co. and others vs Their Workmen (2) , one of the principles to be adopted in fixing wages and dearness allowance is that the Tribunal should take into account the, wage scale and dearness allowance prevailing in ' comparable concerns carrying on the same industry in the region.
, The factors which have to be taken into account for ascertaining comparable concerns have also been laid down by this Court.
In Workmen of Balmer Lawrie and Co. vs Balmer Lawrie and those principles have been stated as follows "Besides, it is necessary to emphasise that in dealing with the comparable character of industrial undertakings, industrial adjudication does not usually rely on oral evidence alone.
This question is considered in the light of material fact and circumstances which are generally proved by documentary evidence.
What is the total capital invested by the concern, what is the extent of its business, what is the order of the profits made by the concern, what are the, dividends paid, how many employees are employed by the concern, what is its standing in the industry to which it belongs, these and other matters have to be examined by industrial adjudication in determining the question as to whether one concern is com parable with another in the matter of fixing wages.
Now, (1) ; (2) ; (3) ; 588 it is obvious that these questions cannot be decided merely on the interested testimony either of the workmen, or of the employer and his witnesses '" In Workmen of New Egerton Woollen Mills vs New Egerton Woollen Mills and others(1) , the above principles have again been reiterated.
From the decisions, referred to above, it follows that two principal factors which must weigh while fixing or revising wage scales and grades are: (1) How the wages prevailing in the establishment in question compare with those given to the workmen of similar grade and scale by similar establishments in the same industry or in their absence in similar establishments in other industries in the region; and (2) What wage scales the establishment in question can pay without any undue strain on its financial resources.
The same principles substantially apply when fixing or revising the dearness allowance.
The question is whether the Tribunal has adopted the above principles when revising the wage scales and dearness allowance in the case of the appellant.
The Unions had relied on as many as twenty one concerns located in the region of Greater Bombay and belonging to the same pharmaceutical units of industry as, units comparable with the appellant.
The appellant opposed its being compared with those concern,, on the ground that the units relied on by the Unions were companies haying foreign collaborations or connections, and as such possessing several advantages.
The appellant in turn relied on several concerns in the region as comparable units.
Before we refer to the concerns relied on by the Unions and the appellant as comparable concerns, it is necessary to deal with an objection raised by Mr. Tarkunde that no foreign unit doing business in India or no unit in India doing business in collaboration with a foreign concern, can ever be considered for purposes of comparison.
According to the appellant such concerns have distinct advantages of international research facilities, reputation in business which enables such concerns to market their products more easily and thus enable them to pay higher wages to their employees.
In view of the special technical facilities, that may be available to them, their output will be far higher though the number of employees will be much less, and as such they will be able to pay to their lesser number of employees higher wages.
In this connection Mr. Tarkunde relied on certain awards of the Industrial Tribunal (1)[1969] 589 wherein it is held that the comp 'es having foreign collaboration though in the same region and in the same industry, cannot be considered for the purposes of comparison with purely local On the other hand Mr. Sule, has opposed the above position and urged that the question as to who is the employers is absolutely immaterial so long as the tests for the purposes of comparability as laid down 'by this Court, are satisfied and the capacity to bear the financial burden is established.
We will deal with aspects in the first instance.
It must be stated at the outset that the Unions placed reliance on certain information contained in the prospectus of the Company and certain statements contained in the book "Indian, Pharmaceutical Industry" published in 1963 and 1969, to show that the appellant concern is also one which has foreign collaboration and as such it is to be ranked as a concern with foreign attachment.
has recorded a finding in favour of the appellant that it is not a unit having foreign collaboration.
Therefore, this finding is III favour of the appellant.
The question that now arises for consideration is whether in law there is any objection or prohibition in an industrial tribunal, when dealing with comparable units in a region from taking into account concerns having foreign collaboration.
It is no doubt true that some of the concerns relied on by the Unions are concerns working in collaboration with foreign firms.
In Chemical Industries and Pharmaceutical Laboratories Limited (Cipla) Bombay vs Their Workmen(1), it was held by the Industrial Tribunal that the Cipla cannot be compared to Glaxo Laboratories, Raptakos Brett and other pharmaceutical concerns which are either subsidiaries of foreign concerns or are closely linked with them.
It was further held that if any comparis on could be made,in can only be with concerns like Kemp & Company.
Sandu Pharmaceutical, Fair Deal Corporation, Edison Continental Laboratories, Bengal 'Chemicals and such other indigenous concerns.
Again in Alembic Chemical Works Ltd. Baroda vs Its Workmen (2) , the Tribunal held that Alembic cannot be compared to concerns like the Glaxo Laboratories and others who have associations in different degrees and forms with certain foreign concern, of international repute.
On this reasoning the Tribunal relied more on the scales wages prevailing in concerns like the Jhandu Pharmaceutical, Cipla.
Kemp & Co., and such similar concerns although it held that (2) [1958] I.C.R. Bombay, 1305.
(1) [1957] I.C.R Bombay, 1206.
590 Alembic is a much bigger concern, than the said units.
It must be stated that in both these awards concerns with foreign collaboration have been eliminated from consideration on the ground that they cannot be regarded as comparable concerns and to that extent they support Mr. Tarkunde 's contention.
In Reference (IT) No. 223 of 1959, which related to the appellant Company, the workmen placed reliance on Indian units of foreign concerns for being treated as comparable units.
,The appellant, however, pointed out that those units which have international fame and repute in world market were in a position to sell their products more easily and profitably and hence they cannot be treated as comparable units.
The Tribunal, no doubt, accepted the contention of the appellant that the Unions had selected some of the bigger concerns for comparison and held that it would be more appropriate if the appellant is placed somewhere in between the bigger and smaller concerns.
In this view the Tribunal took to the financial capacity of the appellant.
Again in Reference, (IT) No. 402 of 1963, relating to the appellant, wherein the dearness allowance was revised, the appellant had contended that it should not be compared with the units like Ciba, Dumex, Glaxo, Sandoz and the like.
The Tribunal held that the appellant cannot be compared with international pharmaceutical units having branches in Bombay or with foreign concerns like Glaxo, Ciba, Sandoz etc., which though incorporated in India are subsidiaries of foreign companies having all the advantages of connection with respect of home companies in Europe and America.
The Tribunal referred to the award in Reference (IT) No. 223 of 1,959 and held 'that a fair cross section of the industry has to be taken into account for fixing a scale of dearness allowance, which will be within the financial capacity of the appellant.
But, how ever, the Tribunal held that the appellant is a firm of good reputeand standing and that it has very fair prospects.
Though in Reference (IT) No. 223 of 1959, the Tribunal did not specifically eliminate from consideration units having foreign collaboration as such, nevertheless, in Reference (IT) No. 402 of 1963, the Tri bunal has held that the appellant cannot be compared with international pharmaceutical companies having branches in Bombay or with concerns, though, incorporated in India, are subsidiaries of foreign, companies.
From what is stated above, it is no doubt true that in the three awards, one of which specifically relates to the appellant, concerns having foreign collaboration have been eliminated for purposes of comparison.
But no legal principle on the basis of which such a decision has been arrived at has been stated in any of these awards.
591 In our opinion, so long and to the extent that concerns having foreign collaboration are doing business in India and in a particular concerned region, we do not see any reason why they should not be taken into account for purposes of being treated as comparable units, provided the tests for such purposes as laid down by this,, Court are satisfied.
No doubt some of those concerns may be having an advantage in various matters.
But merely because that they possess such advantage in the field of business is not a circum stance for eliminating such concerns for purposes of comparability.
The object of industrial adjudication is, as far as possible, to secure uniformity of service conditions amongst the industrial units in the same region.
If a concern having foreign collaboration properly satisfies the tests of comparability, it would be improper to regard ' such unit as uncomparable merely on the ground that it is a con cern with foreign collaboration or interest and that 'the unit with which it is sought to be compared is entirely of Indian origin and resources.
The object of Industrial.
Law is to improve the service conditions of industrial labour so as to provide for them the ordinary amenities of life with a view to bring about industrial peace which would in 'turn accelerate productivity of the country resulting in its prosperity.
The prosperity of the country, in its turn will help to improve the condition of labour.
The principles regarding fixation of wage scales and dearness allowance have been laid down in several decisions, by this Court and they apply equally to all industries irrespective of the character of the employer.
The worker is interested in his pay packet and given reasonable wages, he can be expected to be a satisfied worker.
There is no justification from the stand point of view of the employees for fixing different wage scales merely because of the fact that some workmen are in the employ of purely local concerns while some others are in the employ of units though in the same region, working in collaboration with, foreign concerns.
As the paramount consideration is the interest of the worker, the character of the employer is irrelevant, provided ' the latter 's financial capacity to bear the burden is established.
In the ultimate analysis the, character of the employer or the destination of profits has no relevance in the fixation of wages and dearness allowance.
We are fortified in the above view by The decision of the Constitution Bench of this Court in Hindustan Antibiotics Ltd. vs The, Workmen and others(1).
In that case on behalf of the appellant it was urged that as it was a government company in the public sector, the principles governing the fixation of wages applicable to companies in the private sector do not have any relevance.
On (1)[1967]1.S.C.R.652. 592 the other hand, on behalf of the workmen it was contended that in fixing the wage structure including dearness allowance the question, who is the employer, is irrelevant and that only the needs of the employee are of paramount importance.
The contention on behalf of the workmen was accepted by this Court and it was held that the same principles that have been laid down by the industrial adjudication and the courts regarding the fixation of wage scales and dearness allowance in respect of companies in the private sector apply with equal force to companies in the public sector also.
It was further held that in the application of the industry cum region principle to be adopted to distinction can be made between one unit and another in the same industry in the fixation of wage scale,; provided the test of financial capacity is satisfied.
It was further held that by and large the acceptance of the principle of industry cum region will be more conducive to industrial relations and that the same principles evolved by the industrial adjudication in regard to private sector undertakings will govern those in the public sector undertakings having a distinct corporate existence.
Though the decision cited above had to deal with a claim for ,differentiation being made on behalf of a company in the public sector and which claim was rejected, in our opinion, the basic principle underlying the said decision will apply even with respect 'to the question whether the units, having collaboration with foreign concerns can be taken into account for purposes of comparison, In our opinion, the above decision warrants the conclusion that such units having foreign collaboration or foreign companies doing 'business in India can be taken into account for purposes of being considered whether they are comparable units.
Of course, the test laid down by this Court for treating one unit as a comparable one, will have to be satisfied, and once that test is fulfilled, there can be no distinction made between such units and purely local units.
Therefore, in our view, the Tribunal, in the case 'before us, was perfectly justified in taking into account for purposes of comparison units having collaboration with foreign concerns and foreign units doing business in India in the same region and being in the same industry.
It follows, therefore, that the principles laid down to the contrary in the awards relied on by Mr. Tarkunde, are erroneous.
Coming to the units relied on by the parties as comparable units.
as mentioned earlier, the Unions relied on as many as 21 concerns as comparable with the appellant.
No doubt some of the units relied on by them were units having collaboration with foreign concerns.
The appellant also, in turn filed statement exhibit C 26.
referring to six companies which could be treated as comparable concerns. 593 The Tribunat rejected most of the units relied on by the Unions on the ground that the information furnished regarding such units.
were not adequate and complete regarding various factors necessary to constitute a comparable unit.
We have also gone through the statements filed by the Unions.
In exhibit DU 2, one of the Unions furnished information regarding the business performance of about nine concerns till the year 1964 65.
Similarly, in exhibit DU 3, another Union had given the average performance of nearly ton units for the years 1962 63 to 1964 65.
As it would be more desirable to consider the financial capacity of the appellant in the light of the trading results disclosed in the balance sheets and profit and loss accounts from the years 1965 66 to 1969 70, it must he considered that the information furnished in Exs.
DU 2 and DU 3 cannot he considered to be upto date and helpful.
The Unions also did not make any further attempt to supplement the informa tion contained in these two exhibits by furnishing information regarding the years subsequent to 1964 65.
No doubt, the Unions have furnished particulars regarding one unit, Burroughs Welcome India) Private Ltd., which will be dealt with later.
Therefore, the rejection by the Tribunal of most of the units relied on by the Unions, was justified.
The appellant Company relied on six units mentioned in exhibit C 26.
Those units are Cipla, Chemo Phama, Zandu, Opil, Sigma and Bengal Chemicals.
But the Company did not furnish information regarding the business performance of these concerns for a period of years in the immediate past.
But it will be noted that the four units referred to in exhibit C 26.
namely, Zandu, Cipla, Opil and Sigma, had been considered by the Industrial Tribunal in its previous award Reference (IT) No. 402 of 1963, when the scale of dearness allowance obtaining in the appellant Company was revised.
On that occasion the Tribunal had held that it was only Cipla which came nearest to the appellant Company and even there the dearness allowance obtaining in Cipla cannot be taken for comparison.
That means that these four units were left out of account and were not treated as units comparable with die appellant.
No fresh materials were placed by the appellant regarding these four units after the decision of the Tribunal in Reference (IT) No. 402 of 1963.
Therefore, the Tribunal in the present case, was justified in rejecting the claim of the appellant that those four units are comparable concerns.
The elimination of the four units.
thus left for consideration only two concerns, namely, Chemo Phama and Bengal Chemicals.
Even here the Unions had furnished statements Exs.
DU 8 and DU 9, regarding these two units in Ex ' DU 8, the business performance of Chemo Phama froth 1965 to 1969 was given and in exhibit DU 9, the business performance of Bengal Chemicals from 1965 to 1970 was given.
The 594 'Unions had also furnished exhibit DU 44 regarding the business performance of the appellant.
A comparison of the statements contained in Exs.
DU 8 and DU 9 with the material relating to the appellant in exhibit DU 44, regarding the paid up capital, reserves and surplus sales, net block, net profits and gross profits, it is quite clear that the business performance of Chemo Phama and Bengal Chemicals do not come anywhere nor that of the appellant.
The appellant in all respects stands on a much higher footing.
The average gross profits of the appellant work out to Rs. 40,11,176.
while the average gross profits of Chemo Phama works out to Rs. 5,31,511 and that of the Bengal Chemicals to Rs. 11,39,553.
Therefore, it is clear that these two units also cannot be treated as concerns comparable with the appellant and hence the wage structure prevailing in those concerns cannot provide any useful guidance.
We have already mentioned that the Tribunal has ultimately held that M/s Burroughs Wellcome (India) Private Limited is a concern comparable with that of the appellant.
It is no doubt a foreign company in the sense that its entire capital is held by foreign company as shown in the statement exhibit C 11, filed by the appellant.
But we have already rejected the contention that such a concern cannot be ruled out of consideration for purpose of comparability.
A very severe attack has been levelled by Mr. Tarkunde in the Tribunal 's treating M/s Burroughs Wellcome Company as a comparable unit.
According to the learned counsel if the various factors relevant for the purpose of comparison are considered, it will be clear that the appellant cannot stand any comparison with this unit.
Mr. Tarkunde further pointed out that instead of taking ,only one unit for purposes of comparison, the Tribunal should have taken fair cross section of the industry in order to find out where exactly the appellant can be fitted in.
It is no doubt true that a fair cross section of the industry should be taken into account.
But in this case when all the other units have been held to be not ,comparable with the appellant, this criticism levelled against the approach made by the Tribunal cannot be accepted.
Regarding Burroughs Wellcome Company, the Unions had sub mitted a statement exhibit DU 2A under a seal of confidential as it was a private limited company.
A comparison of the information ,contained in the said statement exhibit DU 2A regarding the paid up ,capital ', reserves and surplus sales, depreciation, development rebate, provision for taxation, net profits, gross profits, net block and dividend declared for the years 1967 to 1970 with the corresponding items in exhibit DU 4A with respect to the appellant shows that both the units are substantially on a par.
Normally, the 595 statements in exhibit DU 2A could have been extracted in this judgment but for the fact that Burroughs Wellcome Company being a private limited company and the statements having been furnished in a sealed cover, they could not be made public.
The paid up capital.
is identical in both the concerns.
The average sales of Burroughs Wellcome Company and those of the appellant are substantially the same.
The difference between the, net profits of the two is significantly small.
The gross profits of the two units are also close to each other.
No doubt there are some small differences between the two in these items, but they are of no significance.
The various factors which have to be taken into account for he purpose of a unit being treated as a comparable one as laid down by this Court have already been referred to.
If so, all those factors taken into account clearly show that Burroughs Wellcome Company is a unit comparable with the appellant.
No doubt the appellant has relied on the ratio of employees to sales, as well as to debt equity ration and the percentage of profit to sales in respect of the appellant and the Burroughs Wellcome Company.
exhibit C 22 contains the ratio of employees to sales in 1968 69.
Though there are certain other units referred to therein, we will only advert to the particulars regarding the appellant and the Burroughs Wellcome Company, which are as follows Ration of Employee to Sales No. of Per Name of the Company Year SalesEmployees employee sale Rs. Rs. Unichem 68 6932994456 752 43875 Burroughs.
69 25000000 425 58823 A reference to exhibit C 22 will show that the sales of the appellant is higher than that of Burroughs Welcome Co. No doubt the ratio per employee is slightly less in the case of the appellant.
It is also seen that the appellant employs nearly 752 workmen whereas Burroughs Wellcome Co. employs only 425 workmen.
In exhibit C 18, particulars regarding Debt Equity Ratio have been given.
That statement contains particulars regarding the various firms including the appellant.
In 1969 the capital of the appellant was Rs. 101.86 lakhs.
It had borrowed Rs. 95.89 lakhs and the percentage on borrowed funds to capital works out to 94.1 %.
It is no doubt true that there is no borrowed capital in Burroughs Wellcome Co. In exhibit C 18 particulars regarding nine Units have been given and it is seen that except two units, all the other seven units, including the appellant, have borrowed.
In fact it is interesting to note that Glaxo, which has a capital of Rs. 1196.81 lakhs had also borrowed Rs. 26 80 lakhs.
Similarly, 596 Chemo Phama which had a capital of only Rs. 32.05 lakhs had borrowed Rs. 37.08 lakhs and the percentage works out to Rs. 115.7%.
We are referring to these aspects because it was stressed by Mr. Tarkunde that the Debt Equity Ratio in the appellant is very high and that it has to pay a large amount by way of interest on borrowed funds which is not the case with Burroughs Wellcome Company.
But the statements contained in exhibit C 18 themselves clearly show that borrowing for the purpose of business seems to be a usual pattern followed by the companies in the region.
exhibit C 15 is a statement relating to percentage of profit to sales for the years 1965 66 to 1969 70.
No doubt the figures given therein show that the percentage of profits has been fluctuating.
but, in our opinion, the particulars contained in the above exhibits.
relied on by the appellant, do not affect the findings of the Tribunal that Burroughs Wellcome Company is a unit comparable with the appellant.
Another criticism that has been levelled by Mr. Tarkunde is that the Tribunal has not taken into account the prospects of the future business of the appellant.
In this connection the appellant relied on the coming into force with effect from January 1, 1971 of ' the Drugs (Price Control) Order, 1970.
According to Mr. Tarkunde whatever may have been the financial.
position of the appellant in the past, its future business is bound to suffer in view of this price control order.
He referred us to the decision in Williamsons (India) Private, Ltd. vs Its Workinen(1) of this Court wherein it has been held, amongst the various factors which have to be taken into account for the purpose of fixation of wage scales and dearness allowance, the prospect of future business is a very relevant circumstance.
This factor, according to the appellant, has not been taken into account by the Tribunal.
We have earlier referred to the decisions of this Court regarding the principles governing the fixation of wages and dearness allowance.
It is no doubt a long, range plan and the Prospects of future business amongst other factors have also to be taken into account.
The case of the appellant is that in 1963, there has been a price freeze and that has affected its business and therefore the Drugs (Price, Control) Order, 1970 will affect its future business.
We have, already, extracted in the earlier part of the judement the trading results, of the appellant from 1965 66 to 1969 70.
If the price freeze which came into force in 1963 had any affect, then it must have been reflected in the trading results of the appellant.
The (1) 597 trading results of the appellant during the years 1962 63 to 1964 65 are as follows : Particulars1962 63 1963 64 1964 65 Paid up capital 4491000 44992504499500 Reserves and Surplus 476569 1010753 1505353 Sales 10241405 1566588317388705 Net Block 3907400 4371113 4345467 Provision for Taxation 934000 1065000 1515000 Depreciation297243379256390878 Development rebate 33686 100617 22329 Net Profits 442881 703567 877271 A glance of the above statement clearly shows that though the paid up capital remains the same, there has been a steady rise in the reserve and surplus sales and net profits.
Similarly, the net block has also an increase.
There has been no set back in the sales.
On the other hand there has beena steady rise in the sales.
No doubt for the year 1969 70 the profits did go down; but the drop is comparably small and the appellant has not been able to, satisfy.
us that it is due to the price freeze.
Then the question is regarding the impact of the Drugs (Price Control) Order, 1970, which has come into effect from January 1,1971.
In this connection it is necessary to refer to the speech made bythe Chairman of the Board of Directors of the appellant Companyat the Annual General Meeting held on January 9, 1971.
At thisstage it may be mentioned that the Accounting year of the appellant Company is from October 1, to September 30, of the succeeding year.
On January 9, 1971, the Chairman was giving a review of the working of the Company for the year ending September 30, 1970.
He had clearly stated that the impact of the Drugs (Price Control) Order, 1970, which had come into force only recently will be felt by the Company only after the year 1970 71.
The appeal was heard by us from January 3, 1972 and concluded only on January 10, 1972.
As the Company, in the previous years had been having its Annual, General Meetings in early January, of each year, we suggested to the counsel for the appellant that as the approximate trading results for the year commencing from October 1, 1970 to September 30, 1971 would have been available by then, they may be furnished so that it may be possible to find out the impact of the Drugs (Price Control) Order on the trading results of the appellant.
But it was represented that the figures are not available.
It is not necessary for us to cornment except to state that going by the fact that on former occasions the figure had been ready by the first week of January to enable the Annual General Meeting of the Company to be held, it would not have been difficult for the appellant to have furnished at least 1031 Sup.
CI/72 598 the approximate figures, if really the trading results had shown a decline.
The appellant has missed an opportunity 'that was provided to it to establish that the Drugs (Price Control) Order has adversely affected its business.
Under those circumstances, it is not possible for us to disagree with the view of the Tribunal that the impact of the Drugs (Price Control) Order will 'not be such as to affect materially the business prospects of the appellant Company.
We may state that if the Drugs (Price Control) Order, mate rially affects the prosperity of the appellant 's trade, it would be open to it to raise a dispute for the reduction in the wage structure and in case they are able to show that in view of the Drugs (Price Control) Order, their financial position has been weakened to such an extent that they cannot bear the burden of wage structure fixed by the present award, the matter may have to be examined on its merits.
The question of fixation of wage scales need not detain us very long.
We have already extracted the wage scales prevailing in the appellant company as well as the categories of workmen when the reference was made.
We have also referred to the fixation of wage scales by the, Tribunal on a comparison with the wage scale obtaining in Burroughs Wellcome Company.
The wage structure.
as well as the grades that were prevalent in Burroughs Wellcome Co. in pursuance of the settlement dated June 13, 1966 regarding the ,operatives and clerical and subordinate staff have been incorporated ,by the Tribunal in its Award.
We do not think it necessary to reproduce the same.
A comparison of the wage scales in Burrough Wellcome Company and the wage scales fixed by the Tribunal in the Award for the Company will show that the Tribunal has only made some slight variation in view of the fact that it accepted the report of the assessor for the continuance of the existing grades in the Company.
As some of those grades were, not existing in BurToughs Wellcome Company, the Tribunal bad to make some slight changes.
Wherever it was possible the wage structure in Burroughs Wellcome Co. has been retained but the maximum has been raised a little and some slight changes have also been made in the incremental stage.
Once Burrough Wellcome Company is treated as a comparable unit, we are satisfied that the wage scales awarded by the Tribunal cannot be 'considered to be unjustified.
The Tribunal 's finding regarding the financial capacity of the appellant has already been referred to and we accept the same.
it was, however, pointed out by Mr. Tarkunde that in consi dering the comparability of a unit; strength of the labour force has also to be given due importance.
Mr. Tarkunde pointed out that 599 while the appellant employs 752 workmen, there are only 436 in Burroughs Wellcome Co. as is seen from the Statement exhibit C 22.
No doubt to this extent, the two units differ, but when one bears in mind the business performance of both the units,there is not much of a substantial difference.
It may be that because of the fact that Burroughs Wellcome Co. adopts more modem methods of production, it was employing a smaller complement of workers.
Having due regard to all the other tests that have been satisfied, this difference in the strength of labour force alone, in our opinion, cannot be given undue importance.
It is pertinent to note that this Court in Workmen of New Egerton, Woollen Mills vs New Egerton Woollen Mills and others(1) did not disagree with the view of the Industrial Tribunal which had treated the respondent therein and another unit as a comparable unit, notwithstanding the that the respondent was employing at the material time about 3000 workmen whereas the unit which was treated as a comparable unit was having the labour force of only about 1000 men, in view of the fact that all other requirements for comparability Were satisfied.
In fact, in the case before us, the Tribunal has adverted to this difference of labour force of the appellant and Burroughs Wellcome Company, but nevertheless it held that, that by itself is not sufficient to eliminate Burroughs Wellcome Company as a comparable unit.
We agree with this approach made by the Tribunal.
An objection was taken on the basis of section 10(4) of the that the Tribunal has permitted the Unions to revise their demand regarding classification and grades of workmen and that the Tribunal has further committed an error in upholding the grades of Stenographers, Assistants and Store keepers and merging them with that of the Senior Clerks.
We are not inclined to accept this contention advanced on behalf of the appellant.
We have already referred to the fact that as the question of classification and fixing grades were matters cf a technical nature, at the joint request of both the parties, the Tribunal appointed Sri Gadkari, as an assessor.
It was really in view of the stand taken by both the parties before the assessor and the Tribunal, after the report was submitted by the assessor that the Tribunal has accepted the report that the existing grades should continue.
But as the workmen had to be fitted in 'the appropriate grades, the Tribunal was justified in fitting in the categories the workmen and their grades as well as their scales of wages.
The above contention based upon section 10(4) of the , at the most can relate, if at all.
only to the operatives.
The report of Sri Gadkari has already been referred to.
He had suggested the ' retention of the existing categories.
The workmen have necessarily to, be classified for the purpose of being put in particular categories (1)[1969] 2 L.L.J.782.
600 and the wages also have to be suitably fixed depending upon the category in which they are so fitted.
Having due regard to the, nature of the reference, classification though jobwise and the fixing of wages of pay and fitting the workmen in suitable categories were all matters incidental and as such the Tribunal has acted within its jurisdiction in classifying the workmen and fixing the scales of pay after fitting them in particular categories.
In the view above expressed, we do not think it necessary to refer to the decisions referred either by Mr. Tarkunde, learned counsel for the appellant or by Mrs. Urmila Kapoor, on behalf of the respondent No. 2 as to when exactly the matter can be considered to be incidental to the question referred for adjudication.
Before we take up the question of dearness allowance, one other point that requires to be adverted to is the objection taken on behalf of the appellant regarding the raising in the gratuity scheme the ceiling limit from 15 months to 17 21 months ' basic wages.
The Tribunal has adopted the pattern obtaining in Burroughs Wellcome Company.
We do not see any question of principle involved in this matter and therefore we find no merit in the objection raised by the Company.
The pattern of dearness allowance that was in force in the appellant Company at the time of the reference has been indicated already.
We have also referred to the scale of dearness allowance fixed by the Tribunal.
There were different systems of dearness allowance for the operatives and the clerical and subordinate staff.
That such a different system of dearness allowance for the employees working under the same employer is not warranted, is clear from the decisions of this Court in Greaves Cotton & Co. and others vs Their Workmen(1) and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen(2).
Therefore, the Tribunal was justified in devising a uniform scale of dearness allowance applicable to all the employees of the appellant.
The Unions required a common scheme of dearness allowance of slab system to be introduced for all employees.
The appellant resisted the claim on the ground that there was already a scheme of dearness allowance existing in the Company and that there is, no justification for revising the same.
But, nevertheless, the Tribunal has adopted, by and large, the scheme of dearness allowance which was in vogue in 'Burroughs Wellcome Co. Normally, once Burroughs Wellcome Co. is treated as a unit comparable with the appellant, the Tribunal must be considered prima facie to be justified in introducing the pattern obtaining in that unit.
However, it is pointed out on behalf of the appellant that the slab system of dearness allowance does not obtain in any of the pharmaceutical industries in the region.
(1) ; (2) ; 601 The contention that because there was a system of dearness allowance in existence in the Company and therefore there was no justification for revising the same, cannot be accepted.
A similar contention raised in Remington Rand of India vs Its Workmen(1) was rejected by this Court.
In that.
case there was a system of dearness allowance providing for payment of not only a rate of percentage on the basic salary but also a variation in the percentage on the rise or fall of the cost of living index.
The workmen demanded revision of the scale of dearness allowance on the ground that the cost of living index had increased.
The claim was resisted by the Company on the ground that the scheme of dearness allowance then existing in the Company itself provided for an increase in the cost of living index and therefore no revision is required.
This contention was not accepted by this Court.
It was held that a claim made by the Workmen, if otherwise justified, cannot be rejected on the sole ground that a provision is already made in an existing scheme of dearness allowance for adjustment depending upon an increase in the cost of living index.
This Court further held that if it is established that the cost of living shows a tendency to rise very high, the workmen would be entitled to claim and there may be a change in the rate of dearness allowance originally fixed, so, as to provide for more neutralisation.
It was further held that a claim made by the workmen win have to be properly considered and adjudicated upon by the Tribunal.
In fact, in that case, it is seen that there was only a 50 point rise in the cost of living index and nevertheless the revision of the scale of dearness allowance by the Tribunal was upheld.
We may also refer to the decision of this Court in Workmen of Balmer Lawrie and Co. vs Balmer Lawrie and Co.(2) wherein it has been held as follows : "If the paying capacity of the employer increases or the cost of living shows an upward trend, or there are other anomalies, mistakes or errors ', in the award fixing wage structure, or there has been a rise in the wage structure in comparable industries in the region, industrial employees would be justified in making a claim for the reexamination of the wage structure and if such claim is referred for adjudication, the Adjudicator would not normally be justified in rejecting it solely on the ground that enough time has not passed after the making of the award, or that material change in relevant circumstances had not been proved.
It is of course, not possible to lay down any hard and fast rule in the matter.
The question as to revision must be examined, on the merits in each (1) (2) ; 602 individual case that is brought before an adjudicator for his adjudication.
" On the date when the settlement was entered into between the appellant and its workmen on April 20, 1966, the cost of living , index was 630.
From exhibit C 1 it is seen that in August 1969, the cost of living index had gone up to 7 90 and from exhibit DU IO dated December 8, 1970, it is seen that when the second settlement was entered into between Burroughs Welcome, Co. and its workmen, the cost of living index had gone upto 800.1.
It is also seen that at the time of the Award it had gone up further to about 850 points.
Therefore, from the date of the settlement in 1966 the cost of living index had very rapidly gone up by 220 points.
At the time when the demand for revision of wage scales and dearness allowance wag made by the Unions and when the reference order was made by the Government, the cost of living index had gone up very high.
That clearly shows that the workmen had made out a case for revision of wage scales and dearness allowance.
We have earlier referred to the scheme of dearness allowance fixed by the Tribunal in the Award.
The scheme provides for payment of a particular percentage on the basic salary and it also provides for variation on 10 points.
But the dearness allowance has been fixed on the Bombay Working Class Cost of Living Index of 521 530.
Though more or less the same pattern of dearness allowance was obtaining in Burroughs Welcome Co. , the dearness allowance in the latter was fixed at the Bombay Working Class Cost of Living Index of 491 500.
The scale of dearness allowance, as demanded by the Unions, was on the basis of the cost of living index 401 410.
It was accepted by the appellant that the scheme obtaining in Burroughs Welcome Company is more advantageous from the financial point of view than the scheme of dearness allowance demanded by the Unions.
In fact, the Tribunal itself has made a further concession in favour of the appellant by adopting the cost of living index of 521 530 instead of 491 500 as was obtaining in Burroughs Welcome Co. The Tribunal had made this change in the cost of living index in view of the fact that in the appellant Company, there was an Incentive Wages Scheme in and by which operatives 'were getting on an average, about Rs. 28/ per month.
Therefore the financial burden cast on the appellant by the dearness allowance scheme fixed by the Tribunal is such that the appellant can bear the burden.
in order to show that in the Bombay region the pharmaceutical units were adopting the slab system of dearness allowance, the Unions had filed a chart exhibit DU 1.
It is evident from exhibit DU 1, that out of 19 pharmaceutical units, referred to therein, at least 1 1 of them adopt the slab system of dearness allowance which.
has been 603 introduced in the case of the appellant in the Award.
No doubt, it is pointed out by Mr. Tarkunde 'that in the statement filed bay the appellant, exhibit C 25, it will be.
seen that none of the Indian owned units have adopted the slab system.
But whether those units have adopted or not, we have already indicated, that no distinction can be made between a purely local unit and a foreign unit doing business in India or an Indian unit doing business in collaboration with foreign concern.
When once such units can be taken into, account as comparable units, the pattern of dearness allowance, obtaining therein can very well be considered to ascertain the system adopted by the industry as that will show the trend in the region.
As pointed out above, at least 11 units, referred to in exhibit DU 1 have adopted the.
system now introduced in the case of ' the appellant by the Tribunal.
Under those circumstances when such system is prevailing in the industry in the same region, it cannot be held that the Tribunal has committed any error, in introducing a similar pattern in the case of the appellant.
The slab system has been approved by this Court as will be seen by the decisions in Greaves Cotton and Co. and others vs Their Workmen(2) and Bengal Chemical and Pharmaceutical Works Ltd. vs Its Workmen (2) .
Even in Bombay that such a pattern of dearness allowance, as the one introduced in the case of the appellant, is existing is seen by the decisions of this Court in Greaves Cotton and Co. and others vs Their Workmen(2) and Kamani Metals & Alloys Ltd. vs Their Workmen (3).
No doubt the industries therein were not pharmaceutical units.
But that such a system exists in Bombay region is clear from the above decisions.
Mr. Tarkunde referred us to the Award of the Industrial Tri bunal in Reference (IT) No. 411 of 1966 in Voltas Limited, Bombay vs The Workmen Employed under them dated September 30, 1969 wherein the adoption of slab, system has not been approved.
On the other hand, Mrs. Urmila Kapoor, learned counsel for respondent No. 2 has drawn our attention to a number of awards of the Industrial Tribunal rendered during the years 1965 to 1968 wherein the slab system of dearness allowance has been adopted in Bombay region.
It is only necessary to refer to the award in the case of May and Baker Limited, Bombay vs Its Workmen, because that is a pharmaceutical unit.
The award was given in or about June 1967 and it is seen that the dearness allowance on the pattern now given by the Tribunal in respect of the appellant has been adopted.
We have already referred to the fact that in exhibit DU71, it is seen that as many as 11 pharmaceutical unit s in Bombay region have adopted the pattern of granting dearness allowance on the slab (1) ; (3) ; (2) 3.
604 system now incorporated in the present award.
Though most of the units referred to therein could not be treated as units comparable with the appellant because of lack of full information regarding material factors, yet those concerns can be taken into account inasmuch as the system Obtaining in those concerns will show that the slab system is not something new to the pharmaceutical units.
We have already referred to the award in May and Baker Limited, Bombay vs Its Workmen.
These facts clearly show that the scheme of dearness allowance provided in the award before us in respect of the appellant is not anything new.
On the other hand, the Tribunal has only adopted the system prevailing in the region in respect of pharmaceutical units.
So far as the financial burden is concerned we have already referred to the findings recorded by the Tribunal.
Even on the basis that the Tribunal was not justified in proceeding on the assumption that 52 chemists are not covered by the reference, in our opinion, the additional burden that will be cast on the appellant can be easily borne by if.
Therefore, we see no error in the scheme of dearness allowance introduced, in the case of the appellant, by the Tribunal.
The only other point that requires to be considered is in respect of the direction given by the Tribunal regarding the Incentive Bonus scheme in respect of which the appellant had given notice of change under section 9A of the industrial Disputes Act, 1947.
We have already referred to the nature of the scheme that originally existed and the modification sought to be made by the, appellant.
We have also pointed out that the Tribunal has not accepted most of the recommendations made by Sri Tulpule, who was appointed as an a ssessor on the joint application of both the parties.
The Tribunal has stated that it is desirable that a scheme is worked out, if possible, by consent of parties for the purpose of protecting the interest of the workmen at the increased base performance index.
According to Mr. Tarkunde the Tribunal itself should have gone into the matter and evolved a scheme.
No doubt, it would have been desirable if the Tribunal had actually evolved a scheme.
But the Tribunal has stated that the necessary material for that purpose has not been made available and as such it has not been possible to devise a scheme calculated to afford protection to the incentive earning of a workman at the raised base performance index.
In fact, we also suggested to, the counsel that the parties may consider the matter and submit a scheme for that purpose.
But it was represented to us on February 9, 1972 by Mrs. Urmila Kapoor, learned counsel for respondent No. 2, that it has not been possible for the parties to arrive at an agreement in respect of that matter, at present.
Therefore, there is nothing further that could 605 be done by this Court in this regard; and the result is that the observations made by the Tribunal in this regard will have full effect.
In the result, all the conventions of the appellant are rejected and the Award of the Industrial Tribunal in respect of the matters ,in controversy in the appeals are confirmed.
All the appeals are dismissed.
In Civil Appeal No. 1091 of 1971, the appellant will pay the costs of respondents Nos. 1 and 2.
In the other appeals, parties will near their own costs.
The appellant will have three months ' time from today for payment of the amounts due under the award.
| The appellant carried on the business of manufacturing and selling pharmaceutical products in Greater Bombay.
In disputes arising bet the appellant and the respondents the Industrial Tribunal had to deal with questions relating to dearness allowance, classification of grades and fixation of wages and the incentive bonus scheme as modified 'by the company.
In appeal against the award of the Tribunal, HELD : (i) The decisions of this Court in Gramophone Company Ltd. vs its Workmen and The Indian Link Chain Manufacturers Ltd. vs Their Workmen show that the Tribunal was justified in computing gross profits without deducting taxation, depreciation and development rebate.
The latter decision is directly in point to the effect that provision for depre ciation cannot be deducted.
[582E., 585B C] Gramophone Company Ltd. vs Its Workmen, and The Indian Link Chain Manufacturers Ltd. vs Their Workmen, , applied.
Ahmedabad Millowners ' Association Etc.
vs The Textile Labour Association, ; , referred to.
(ii)So long and to the extent that concerns having foreign collaboration are doing business in India and in a particular concerned region there is no reason why they should not be taken into account for purposes of being teated as comparable units, provided that the tests for such purposes as laid down by this Court are satisfied.
The object of industrial adjudication is to secure as far as possible uniformity of service conditions among industrial units in the same region,.
if a concern having foreign collaboration properly satisfies the tests of comparability it would be improper to regard such unit as uncomparable merely on the ground that it is a concern with foreign collaboration or interest and that the unit with which it is sought to be compared is entirely of Indian origin and resources.
[591A C] Chemical Industries and Pharmaceutical Laboratories Limited (Cipla) Bombay vs Their Workmen, [1957] I.C.R. Bombay 1206 and Alembic Chemical Works Ltd. Baroda vs Its, Workmen ; , Hindustan Antibiotics Ltd. vs The Workmen and Ors., ; , relied on.
(iii)On the materials before it the Tribunal was justified in treating M/S. Burroughk Wellcome & Co. as a unit comparable with the appellant.
568 The fact that Burroughs Wellcome employed a lesser labour force did not deserve much importance because the business performance of the two companies was equal.
Once Burroughs Wellcome Co. was treated as a comparable unit the wage scales awarded by the Tribunal could not be considered to be unjustified.
[598G 599A D] Workmen of New Egerton Woollen Mills vs New Egerton Woollen Mills and Ors., , applied.
(iv)On the facts of the case it was not possible to disagree with the view of the Tribunal that the impact of the Drugs (Price Control ) Order will not be such as to affect materially the business prospects of the appellant company.
If the Order materially affects the prosperity of the appellant 's trade it would be open to it to raise a dispute for the reduction in the wage structure and in case they are able to show that in view of the Drugs (Price Control) Order their financial position has weakened to such an extent that they cannot bear the burden of the wage structure fixed by the present award, the matter may have to be examined on its merits.
[598B C] Williamsons (India) Private, Ltd. vs Its Workmen, , referred to.
(v)The Tribunal had acted within its jurisdiction in classifying the workmen and fixing the scales of pay after fitting them in particular categories.
The objection based on section 10(4) of the must be rejected.
[599E 600B] (vi)When the Tribunal raised in the gratuity scheme the ceiling limit from 15 months to 17 1/2 months according to the pattern obtaining in Buroughs Wellcome Company there was no question of principle involved justifying an objection by the appellant company.
[60OC D] (vii)There were different systems of dearness allowance for the operators and the clerical and subordinate staff in the appellant company.
That such a different system of dearness allowance for employees working under the same employer is not warranted is clear from the decisions of this Court in the cases of Greaves Cotton & Co. and Bengal Chemical & Pharmaceutical Works Ltd. Therefore the Tribunal was justified in devising a uniform scale of dearness allowance applicable to all the employees of the appellant.
[600E F] Greaves Cotton and Co. and Ors.
vs Their Workmen, ; and Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen; , , relied on.
(viii)From the date of the settlement in 1966 the cost of living index had very rapidly gone up by 220 points.
At the time when the demand for revision of wages scales and dearness allowance was made by the Unions and when the reference order was made by the Government, the cost of living index had gone up very high.
That clearly showed that the workmen bad made out a case for revision of wage scales and dearness allowance.
The contention of the appellant that because a system of dearness allowance already existed there should be no revision of the same, could not be accepted.
[6O2C; 601A] Co. ; and Remington and of India vs Its Workmen, , followed.
569 (ix)When the slab, system of dearness allowance was prevailing in the industry in the region the Tribunal committed no error in introducing a similar pattern in the case of the appellant.
[603C D] Kamani Metals & Alloys Ltd. vs Their Workmen, ; , referred to.
(x)In regard to the incentive Bonus Scheme the Tribunal had stated that the necessary material for that purpose had not been made available and as such it had not been possible to devise a scheme calculated to afford protection to the incentive earning of a workman at the raised base performance index.
This Court could do nothing further,in this 'regard and the result would be that observations made by the Tribunal will have full, effect.
[604G H]
|
Civil Appeal No. 1597 of 1972.
Appeal from the Judgment and Order dated 25th January, 1972of the Allahabad High Court in Civil Misc.
Writ No. 3788/70.
S.T. Desai, Shri Narain, J. B. Dadachanji, Ravinder Narain, S Swarup and Talat Ansari for the Appellant.
G. N. Dikshit, M. V. Goswami and O. P. Rana for RR 1 3 and 5.
Girish Chandra for Respondent No. 4.
651 A. B. Dewan, Ravinder Narain, section Swarup and A. N. Haksar for the Intervener (M/s. Modi Rubber Ltd.).
The Judgment of the Court was delivered by BHAGWATI, J.
, This appeal by certificate raises a question of considerable importance in the field of public law.
How far and to what extent is the State bound by the doctrine of promissory estoppel ? It is a doctrine of comparatively recent origin but it is potentially so fruitful and pregnant with such vast possibilities for growth that traditional lawyers are alarmed lest it might upset existing doctrines which are looked upon almost reverentially and which have held the field for a long number of years.
The law in regard to promissory estoppel is not yet well settled though it has been the subject of considerable debate in England as well as the United States of America and it has also received consideration in some recent decisions in India and we, therefore, propose to discuss it in some detail with a view to defining its contours and demarcating its parameters.
We will first state briefly the facts giving rise to this appeal.
This is necessary because it is only where certain fact situations exist that promissory estoppel can be invoked and applied.
The appellant is a limited company which is primarily engaged in the business of manufacture and sale of sugar and it has also a cold storage plant and a steel foundry.
On 10th October, 1968 a news item appeared in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under section 4A of the U.P. Sales Tax Act to all new industrial units in the State with a view to enabling them "to come on firm footing in developing stage".
This news item was based upon a statement made by Shri M. P. Chatterjee the then Secretary in the Industries Department of the Government.
The appellant, on the basis of this announcement, addressed a letter dated 11th October, 1968 to the Director of Industries stating that in view of the sales tax holiday announced by the Government, the appellant intended to set up a Hydro genation Plant for manufacture of Vanaspati and sought for confirmation that this industrial unit, which it proposed to set up would be entitled to sales tax holiday for a period of three years from the date it commenced production.
The Director of Industries replied by his letter dated 14th October, 1968 confirming that "there will be no sales tax for three years on the finished product of your proposed Vanaspati factory from the date it gets power connection for commencing production." The appellant thereupon started taking steps to contact various financiers for financing the project and also initiated negotiations with manufacturers for purchase of machinery for setting 652 up the Vanaspati factory.
On 12th December, 1968 the appellant 's representative met the 4th respondent who was at that time the Chief Secretary to the Government as also Advisor to the Governor and intimated to him that the appellant was setting up the Vanaspati factory solely on the basis of the assurance given on behalf of the Government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of commercial production at the factory and the 4th respondent reiterated the assurance that the appellant would be entitled to sales tax holiday in case the Vanaspati factory was put up by it.
The appellant by its letter dated 13th December, 1968 placed on record what had transpired at the meeting on the previous day and requested the 4th respondent "to please confirm that we shall be allowed sales tax holiday for a period of three years on the sale of Vanaspati from the date we start production." On the same day the appellant entered into an agreement with M/s. De Smith (India) Pvt. Ltd., Bombay for supply of plant and machinery for the Vanaspati factory, providing clearly that the appellant would have the option to terminate the agreement, if within 10 weeks exemption from sales tax was not granted by the State Government.
The 4th respondent replied on 22nd December, 1968 confirming that "the State Government will be willing to consider your request for grant of exemption from U.P. Sales Tax for a period of three years from the date of production" and asked the appellant to obtain the requisite application form and submit a formal application to the Secretary to the Government in the Industries Department and in the meanwhile to "go ahead with the arrangements for setting up the factory".
The appellant had in the meantime submitted an application dated 21st December, 1968 for a formal order granting exemption from sales tax under section 4A of the Act.
It appears that the letter of the 4th respondent dated 22nd December, 1968 was not regarded as sufficient by the financial institutions which were approached by the appellant for financing the project since it merely stated that the State Government would be willing to consider the request for grant of exemption and did not convey any decision of the State Government that the exemption would be granted.
The appellant, therefore, addressed a letter dated 22nd January, 1969 to the 4th respondent pointing out that the financial institutions were of the view that the letter of the 4th respondent dated 22nd December, 1968 "did not purport to commit the Government for the concession mentioned" and it was, therefore, necessary to obtain a formal order of exemption in terms of the application submitted by it.
The 4th respondent, however, stated categorically in his letter in reply dated 23rd January, 1969 that the proposed Vanaspati Factory of the appellant "will be 653 entitled to exemption from U.P. Sales Tax for a period of three years from the date of going into production and that this will apply to all Vanaspati sold during that period in Uttar Pradesh itself" and expressed his surprise that "a letter from the Chief Secretary to the State Government stating this fact in clear and unambiguous words should not carry conviction with the financial institutions.
" In view of this unequivocal assurance given by the 4th respondent, who not only occupied the post of Chief Secretary to the Government but was also Advisor to the Governor functioning under the President 's rule, the appellant went ahead with the setting up of the Vanaspati Factory.
The appellant by its letter dated 25th April, 1969 advised the 4th respondent that the U.P. Finance Corporation, being convinced by the clear and categorical assurance given by the 4th respondent that the Vanaspati Factory of the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of production, had sanctioned financial assistance to the appellant and the appellant was going ahead with the project in full speed to enable it to start production at the earliest.
The appellant made considerable progress in the setting up of the Vanaspati Factory but it seems that by the middle of May 1969 the State Government started having second thoughts on the question of exemption and a letter dated 16 May, 1969 was addressed by the 5th respondent who was Deputy Secretary to the Government in the Industries Department, intimating that a meeting has been called by the Chief Minister on 23rd May, 1969 "to discuss the question of giving concession in Sales Tax on Vanaspati products" and requesting the appellant to attend the meeting.
The appellant immediately by its letter dated 19th May, 1969 pointed out to the 5th respondent that so far as the appellant was concerned, the State Government had already granted exemption from Sales Tax by the letter of the Chief Secretary dated 23rd January, 1969 but still, the appellant would be glad to send its representative to attend the meeting as desired by the 5th respondent.
The proposed meeting was, however, postponed and the appellant was intimated by the 5th respondent by its letter dated 23rd May, 1969 that the meeting would now be held on 3rd June, 1969.
The appellant 's representative attended the meeting on that day and reiterated that so far as the appellant was concerned, it had already been granted exemption from Sales Tax and the State Government stood committed to it.
The appellant thereafter proceeded with the work of setting up the Vanaspati plant on the basis that in accordance with the assurance given by the 4th respondent on behalf of the State Government, the appellant would be exempt from payment of Sales Tax for a period of three years from the date of commencement of production.
654 The State Government however went back upon this assurance and a letter dated 20th January, 1970 was addressed by the 5th respondent intimating that the Government had taken a policy decision that new Vanaspati Units in the State which go into commercial production by 30th September, 1970 would be given partial concession in Sales Tax at the following rates for a period of three years: First year of production 31/2% Second year of production 3% Third year of production 21/2% The appellant by its letter dated 25th June, 1970 pointed out to the Secretary to the Government that the appellant proposed to start commercial production of Vanaspati with effect from 1st July, 1970, and stated that, as notified in the letter dated 20th January, 1970, the appellant would be availing of the exemption granted by the State Government and would be charging sales tax at the rate of 31/2% instead of 7% on the sales of Vanaspati manufactured by it for a period of one year commencing from 1st July, 1970.
The factory of the appellant thereafter went into production from 2nd July, 1970 and the appellant informed the Secretary to the Government about the same by its letter dated 3rd July, 1970.
The State Government however once again changed its decision and on 12th August, 1970 a news item appeared in the Northern India Patricia stating that the Government had decided to rescind the earlier decision i.e. the decision set out in the letter dated 20th January, 1970, to allow concession in the rates of Sales Tax to new Vanaspati Units.
The appellant thereupon filed a writ petition in the High Court of Allahabad asking for a writ directing the State Government to exempt the sales of Vanaspati manufactured by the appellant from sales tax for a period of three years commencing from 2nd July, 1970 by issuing a notification under section 4A and not to collect or charge sales tax from the appellant for the said period of three years.
It appears that in the writ petition as originally filed, there was no plea of promissory estoppel taken against the State Government and the writ petition was, therefore, amended by obtaining leave of the High Court with a view to introducing the plea of promissory estoppel.
The appellant urged in the amended writ petition that the 4th respondent acting on behalf of the State Government had given an unequivocal assurance to the appellant that the appellant would be entitled to exemption from payment of sales tax for a period of three years from the date of commencement of the production and this assurance was given by the 4th respondent intending or knowing that it would be acted on by the appellant and in fact 655 the appellant, acting in reliance on it, established the Vanaspati factory by investing a large amount and the State Government was, therefore, bound to honour the assurance and exempt the Vanaspati manufactured and sold by the appellant from payment of sales tax for a period of three years from 2nd July, 1970.
This plea based on the doctrine of promissory estoppel was, however rejected by the Division Bench of the High Court principally on the ground that the appellant had waived the exemption, if any, by accepting the concessional rates set out in the letter of the Deputy Secretary dated 20th January, 1970.
The appellant thereupon preferred the present appeal after obtaining a certificate of fitness from the High Court.
The principal argument advanced on behalf of the appellant in support of the appeal was that the 4th respondent had given a categorical assurance on behalf of the State Government that the appellant would be exempt from payment of sales tax for a period of three years from the date of commencement of production and such assurance was given intending or knowing that it would be acted on by the appellant and in fact the appellant, acting in reliance on it, altered its position and the State Government was, therefore, bound, on the principle of promissory estoppel, to honour the assurance and exempt the appellant from sales tax for a period of three years from 2nd July, 1970, being the date on which the factory of the appellant commenced production.
The appellant assailed the view taken by the High Court that this claim of the appellant for exemption based on the doctrine of promissory estoppel was barred by waiver, because the appellant had by its letter dated 25th June, 1970 accepted that it would avail of the exemption granted under the letter of the 5th respondent dated 20th January, 1970 and charged sales tax at the concessional rate of 31/2% instead of 7% during the first year of its production.
The appellant urged that waiver was a question of fact which was required to be pleaded and since no plea of waiver was raised in the affidavit filed on behalf of the State Government in opposition to the writ petition, it was not competent to the State Government to rely on the plea of waiver for the first time at the hearing of the writ petition.
Even if the plea of waiver were allowed to be raised, notwithstanding that it did not find place in the pleadings, no waiver was made out, said the appellant, since there was nothing to show that were the circumstances in which the appellant had addressed the letter dated 25th June, 1970 stating that it would avail of the exemption granted under the letter dated 20th January, 1970 and it was not possible to say that the appellant, with full knowledge of its right to claim total exemption from payment of sales tax, waived that right and agreed to accept the concessional rates set out in the letter dated 20th January, 1970.
The 656 State Government on the other hand strongly pressed the plea of waiver and submitted that the appellant had clearly waived its right to complete exemption from payment of Sales Tax by addressing the letter dated 25th June, 1970.
The State Government also contended that, in any event, even if there was no waiver, the appellant was not entitled to enforce the assurance given by the 4th respondent, since such assurance was not binding on the State Government and more over, in the absence of notification under section 4A, the State Government could not be prevented from enforcing the liability to sales tax imposed on the appellant under the provisions of the Act.
It was urged on behalf of the State Government that there could be no promissory estoppel against the State Government so as to inhibit it from formulating and implementing its policies in public interest.
These were broadly the rival contentions urged on behalf of the parties and we shall now proceed to consider them.
We shall first deal with the question of waiver since that can be disposed of in a few words.
The High Court held that even if there was an assurance given by the 4th respondent on behalf of the State Government and such assurance was binding on the State Government on the principle of promissory estoppel, the appellant had waived its right under it by accepting the concessional rates of sales tax set out in the letter of the 5th respondent dated 20th January, 1970.
We do not think this view taken by the High Court can be sustained.
In the first place, it is elementary that waiver is a question of fact and it must be properly pleaded and proved.
No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation for it is laid in the pleadings.
Here it was common ground that the plea of waiver was not taken by the State Government in the affidavit filed on its behalf in reply to the writ petition, nor was it indicated even vaguely in such affidavit.
It was raised for the first time at the hearing of the writ petition.
That was clearly impermissible without an amendment of the affidavit in reply or a supplementary affidavit raising such plea.
If waiver were properly pleaded in the affidavit in reply, the appellant would have had an opportunity of placing on record facts showing why and in what circumstances the appellant came to address the letter dated 25th June, 1970 and establishing that on these facts there was no waiver by the appellant of its right to exemption under the assurance given by the 4th respondent.
But in the absence of such pleading in the affidavit in reply, this opportunity was denied to the appellant.
It was, therefore, not right for the High Court to have allowed the plea of waiver to be raised against the appellant and that plea should have been rejected in limine.
657 Secondly, it is difficult to see how, on the facts, the plea of waiver could be said to have been made out by the State Government.
Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be "an intentional act with knowledge".
Per Lord Chelmsford, L.C. in Earl of Darnley vs London, Chatham and Dover Rly.
Co. There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it.
It is pointed out in Halsbury 's Laws of England (4 d) Volume 16 in paragraph 1472 at page 994 that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights" and Isaacs, J, delivering the judgment of the High Court of Australia in Craine vs Colonial Mutual Fire Insurance Co. Ltd. has also emphasised that waiver "must be with knowledge, an essential supported by many authorities".
Now in the present case there is nothing to show that at the date when the appellant addressed the letter dated 25th June, 1970, it had full knowledge of its right to exemption under the assurance given by the 4th respondent and that it intentionally abandoned such right.
It is difficult to speculate what was the reason why the appellant addressed the letter dated 25th June, 1970 stating that it would avail of the concessional rates of sales tax granted under the letter dated 20th January, 1970.
It is possible that the appellant might have thought that since no notification exempting the appellant from sales tax had been issued by the State Government under section 4A, the appellant was legally not entitled to exemption and that is why the appellant might have chosen to accept whatever concession was being granted by the State Government.
The claim of the appellant to exemption could be sustained only on the doctrine of promissory estoppel and this doctrine could not be said to be so well defined in its scope and ambit and so free from uncertainty in its application that we should be compelled to hold that the appellant must have had knowledge of its right to exemption on the basis of promissory estoppel at the time when it addressed the letter dated 25th June, 1970.
In fact, in the petition as originally filed, the right to claim total exemption from sales tax was not based on the plea of promissory estoppel which was introduced only by way of amendment.
Moreover, it must be remembered that there is no presumption that every person knows the law.
It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law.
Over a hundred and thirty years ago, Maule, J., pointed out in Martindala vs Faulkner(3): "There is no presumption in this country 658 that every person knows the law: it would be contrary to common sense and reason if it were so".
Scrutton, also once said: "It is impossible to know all the statutory law, and not very possible to know all the common law." But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans vs Bartlem(1)"_____the fact is that there is not and never has been a presumption that every one knows the law.
There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application.
" It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June, 1970.
We accordingly reject the plea of waiver raised on behalf of the State Government.
That takes us to the question whether the assurance given by the 4th respondent on behalf of the State Government that the appellant would be exempt from sales tax for a period of three years from the date of commencement of production could be enforced against the State Government by invoking the doctrine of promissory estoppel.
Though the origin of the doctrine of promissory estoppel may be found in Hughes vs Metropolitan Railway Co.(2) and Birmingham & District Land Co. vs London & North Western Rail Co.(3) authorities of old standing decided about a century ago by the House of Lords, it was only recently in 1947 that it was rediscovered by Mr. Justice Denning, as he then was, in his celebrated judgment in Central London Property Trust Ltd. vs High Trees House Ltd.(4) This doctrine has been variously called 'promissory estoppel ', 'equitable estoppel ', 'quasi estoppel ' and 'new estoppel '.
It is a principle evolved by equity to avoid injustice and though commonly named 'promissory estoppel, it is, as we shall presently point out, neither in the realm of contract nor in the realm of estoppel.
It is interesting to trace the evolution of this doctrine in England and to refer to some of the English decisions in order to appreciate the true scope and ambit of the doctrine particularly because it has been the subject of considerable recent development and is steadily expanding.
The basis of this doctrine is the inter position of equity.
Equity has always, true to form, stepped into mitigate the rigours of strict law.
The early cases did not speak of this doctrine as estoppel.
They spoke of it as 'raising an equity '.
Lord Cairns stated 659 the doctrine in its earliest form it has undergone considerable development since then in the following words in Hughes vs Metropolitan Railway Company (supra): "It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results. afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.
" This principle of equity laid down by Lord Cairns made sporadic appearances in stray cases now and then but it was only in 1947 that it was disinterred and restated as a recognised doctrine by Mr. Justice Denning, as he then was, in the High Trees ' case (supra).
The facts in that case were as follows: The plaintiffs leased to the defendents, a subsidiary of the plaintiffs, in 1937 a block of flats for 99 years at a rent of & 2500/ a year.
Early in 1940 and because of the war, the defendants were unable to find sub tenants for the flats and unable in consequence to pay the rent.
The plaintiffs agreed at the request of the defendants to reduce the rent to &.
1250/ from the beginning of the term.
By the beginning of 1945 the conditions had improved and tenants had been found for all the flats and the plaintiffs, therefore, claimed the full rent of the premises from the middle of that year.
The claim was allowed because the court took the view that the period for which the full rent was claimed fell out side the representation, but Mr. Justice Denning, as he then was, considered Obiter whether the plaintiffs could have recovered the covenanted rent for the whole period of the lease and observed that in equity the plaintiffs could not have been allowed to act inconsistently with their promise on which the defendants had acted.
It was pressed upon the Court that according to the well settled law as laid down in Jorden y. Money(1), no estoppel could be raised against plaintiffs since the doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence and not to promises de futuro which, if binding at all, must be binding only as contracts and here there was no representa 660 tion of an existing state of facts by the plaintiffs but it was merely a promise or representation of intention to act in a particular manner in the future.
Mr. Justice Denning, however, pointed out: "The law has not been standing still since Jorden vs Money.
There has been a series of decisions over the last fifty years which, although they are said to be cases of estoppel are not really such.
They are cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on.
In such cases the courts have said that the promise must be honoured.
" The principle formulated by Mr. Justice Denning was, to quote his own words, "that a promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply".
Now Hughes vs Metropolitan Railway Co. (supra) and Birmingham and District Land Co. vs London & North Western Rail Co. (supra), the two decisions from which Mr. Justice Denning drew inspiration for evolving this new equitable principle, were clearly cases where the principle was applied as between parties who were already bound contractually one to the other.
In Hughes vs Metropolitan Railway Co. (supra) the plaintiff and the defendant were already bound in contract and the general principle stated by Lord Cairns, L.C. was: "If parties who have entered into definite and distinct terms involving certain legal results afterwards enter upon a course of negotiations".
Ten years later Bowen, L. J. also used the same terminology in Birmingham and District Land Co. vs London and North Western Rail Co. (supra) that: "If persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe ".
These two decisions might, therefore, seem to suggest that the doctrine of promissory estoppel is limited in its operation to cases where the parties are already contractually bound and one of the parties induces the other to believe that the strict rights under the contract would not be enforced.
But we do not think any such limitation can justifiably be introduced to curtail the width and amplitude of this doctrine.
We fail 661 to see why it should be necessary to the applicability of this doctrine that there should be some contractual relationship between the parties.
In fact Donaldson, J. pointed out in Durham Fancy Goods Ltd. vs Michael Jackson (Fancy Goods) Ltd. (1) : "Lord Cairns in his enunciation of the principle assumed a pre existing contractual relationship between the parties, but this does not seem to me to be essential, provided that there is a pre existing legal relationship which could in certain circumstances give rise to liabilities and penalties." But even this limitation suggested by Donaldson, J. that there should be a pre existing legal relationship which could in certain circumstances give rise to liabilities and penalties is not warranted and it is significant that the statement of the doctrine by Mr. Justice Denning in the High Trees ' case does not contain any such limitation.
The learned Judge has consistently refused to introduce any such limitation in the doctrine and while sitting in the Court of Appeal, he said in so many terms, in Evenden vs Guildford City Association Football Club Ltd.(2) "Counsel for the appellant referred us, however, to the second edition of Spencer Bower 's book on Estoppel by Representation[(1966) pp.
340 342] by Sir Alexander Turner, a judge of the New Zealand Court of Appeal.
He suggests the promissory estoppel is limited to cases where parties are already bound contractually one to the other.
I do not think it is so limited : see Durham Fancy Goods Ltd. vs Michael Jackson (Fancy Goods) Ltd. It applies whenever a representation is made, whether of fact or law, present or future, which is intended to be binding, intended to induce a person to act on it and he does act on it.
" This observation of Lord Denning clearly suggest that the parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel takes its origin.
The doctrine would seem to apply even where there is no pre existing legal relationship between the parties, but the promise is intended to create legal relations or affect a legal relationship which will arise in future.
Vide Halsbury 's Laws of England, 4th ed.
16 p. 1018, Note 2 para 1514.
Of course it must be pointed out in fairness to Lord Denning that he made it clear 662 in the High Trees ' case that the doctrine of promissory estoppel cannot found a cause of action in itself, since it can never do away with the necessity of consideration in the formation of a contract, but he totally repudiated in Evenden 's case the necessity of a pre existing relationship between the parties and pointed out in Crabb vs Arun District Council(1) that equity will in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights even where they arise, not under any contract, but on his own title deeds or under statue.
The true principle of promissory estoppel, therefore seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any preexisting relationship between the parties or not.
It may be pointed out that in England the law has been well settled for a long time, though there is some indication of a contrary trend to be found in recent juristic thinking in that country, that promissory estoppel cannot itself be the basis of an action.
It cannot found a cause of action : it can only be a shield and not a sword.
This narrow approach to a doctrine which is otherwise full of great potentialities is largely the result of an assumption, encouraged by it rather misleading nomenclature, that the doctrine is a branch of the law of estoppel.
Since estoppel has always been traditionally a principle invoked by way of defence, the doctrine of promissory estoppel has also come to be identified as a measure of defence.
The ghost of traditional estoppel continues to haunt this new doctrine and that is why we find that while boldly formulating and applying this new equity in the High Trees ' case, Lord Denning added a qualification that though in the circumstances set out, the promise would undoubtedly be held by the courts to be binding on the party making it, notwithstanding that under the old common law it might be difficult to find any consideration for it. "the courts have not gone so far as to give a cause of action in damages for the breach of such a promise, but they have refused to allow the party making it to act inconsistently with it".
Lord Denning also pointed out in Combe vs 663 Combe(2) that "Much as I am inclined to favour the principles stated in the High Trees ' case, it is important that it should not be stretched too far, lest it should be endangered.
That principle does not create new causes of action where none existed before.
It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties. " So also said Buckley, J., in the more recent case of Beesly vs Hallwood Estates Ltd.(1) "The doctrine may afford a defence against the enforcement or otherwise of enforceable rights : it cannot create a cause of action.
" It is, however, necessary to make it clear that though this doctrine has been called in various judgments and text books as promissory estoppel and it has been variously described as `equitable estoppel ', `quasi estoppel ' and `new estoppel ', it is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice where a promise is made by a person knowing that it would be acted on by the person to whom it is made and in fact it is so acted on and it is inequitable to allow the party making the promise to go back upon it.
Lord Denning himself observed in the High Trees ' case, expressly making a distinction between ordinary estoppel and promissory estoppel that cases like the one before him were" not cases of estoppel in the strict sense.
They are really promises, promises intended to be binding, intended to be acted upon and in fact acted upon".
Jenkins, C.J. also pointed out in Municipal Corporation of Bombay vs Secretary of State (2) that the "doctrine is often treated as one of estoppel but I doubt whether this is correct, though it may be a convenient name to apply".
The doctrine of promissory estoppel need not, therefore, be inhibited by the same limitation as estoppel in the strict sense of the term.
It is an equitable principle evolved by the courts for doing justice and there is no reason why it should be given only a limited application by way of defence.
It may be noted that even Lord Denning recognised in Crabb vs Arun Distric Council (supra) that "there are estoppels and estoppels.
Some do give rise to a cause of action.
Some don 't" and added that "in the species of estoppel called `proprietary estoppel ', it does give rise to a cause of action" The learned Law Lord, after quoting what he had said in Moorgate Mercantile Co. Ltd. vs Twitchings,(3) namely that the effect of estoppel on the true owner may be that : 664 "his own title to the property, be it land or goods, has been held to be limited or extinguished, and new rights and interests have been created therein.
And this operates by reason of his conduct what he has led the other to believe even though he never intended it.
" Proceeded to observe that "the new rights and interests, so created by estoppel, in or over land, will be protected by the courts and in this way give rise to a cause of action".
The Court of Appeal in this case allowed Crabb a declaration of "a right of access at point over the verge on to Mill Park Road and a right of way along that road to Hook Lane" on the basis of an equity arising out of the conduct of the Arun District Council.
Of course, Spencer Bower and Turner, in their Treatise on `The Law Relating to Estoppel by Representation ' have explained this decision on the basis that it is an instance of the application of the doctrine of estoppel by encouragement or acquiescence or what has now come to be known as proprietary estoppel which, according to the learned authors, forms an exception to the rule that estoppel cannot found a cause of action.
But if we look at the judgments of Lord Denning and Scarman, L.J., it is apparent that they did not base their decision on any distinctive feature of proprietary estoppel but proceeded on the assumption that there was no distinction between promissory and proprietary estoppel so far as the problem before them was concerned.
Both the learned Law Lord and the learned Lord Justice applied the principle of promissory estoppel in giving relief to Crabb.
Lord Denning, referring to what Lord Cairns had said in Hughes vs Metropolitan Railway Co.,(1) a decision from which inspiration was drawn by him for evolving the doctrine of promissory estoppel in the High Tree 's case, observed that " it is the first principle on which all courts of equity proceed. that it will prevent person from insisting on his strict legal rights whether arising under a contract, or on his title deeds, or by statute when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties".
The decision in the High Trees ' case was also referred to the learned Law Lord and so also other cases supporting the doctrine of promissory estoppel.
Scarman, L.J. also observed that in pursuing the inquiry as to whether there was an equity in favour of Crabb, he did not find helpful "the distinction between promissory and proprietary estoppel".
He added that this "distinction may indeed be valuable to those who have to teach or expound the law, but I do not think that, in solving the particular problem raised by a particular case, putting the law into categories is of the slightest assistance".
It does appear to us that this was a case deci 665 ded on the principle of promissory estoppel.
The representative of the Arun District Council clearly gave assurance to Crabb that they would give him access to the new road at point B to serve the southern portion of his land and the Arun District Council in fact constructed a gate at point B, and in the belief induced by this representation that he would have right of access to the new road at point B, Crabb agreed to sell the northern portion of his land without reserving for himself as owner of the southern portion any right of way over the northern portion for the purpose of access to the new road.
This was the reason why the Court raised an equity in favour of Crabb and held that the equity would be satisfied by giving Crabb "the right of access at point B free of charge without paying anything for it".
Arun District Council was held bound by its promise to provide Crabb access to the new road at point B and this promise was enforced against Arun District Council at the instance of Crabb.
The case was one which fell within the category of promissory estoppel and it may be regarded as supporting the view that promissory estoppel can be the basis of a cause of action.
It is possible that the case also came within the rule of proprietary estoppel enunciated by Lord Kingsdown in Ramsden vs Dyson(1) : "The rule of law applicable to the case appears to me to be this : If a man, under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the land lord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation." and Spencer Bower and Turner may be right in observing that that was perhaps the reason why it was held that the promise made by Arun District Council gave rise to a cause of action in favour of Crabb.
But, on what principle, one may ask, is the distinction to be sustained between promissory estoppel and proprietary estoppel in the matter of enforcement by action.
If proprietary estoppel can furnish a cause of action, why should promissory estoppel not ? There is no qualitative difference between the two.
Both are the off springs of equity and if equity is flexible enough to permit proprietary estoppel to be used as a cause of action, there is no reason in logic or principle why promissory estoppel should also not be available as a cause of action, if necessary to satisfy the equity.
666 But perhaps the main reason why the English Courts have been reluctant to allow promissory estoppel to found a cause of action seems to be the apprehension that the doctrine of consideration would other wise be completely displaced.
There can be no doubt that the decision of Lord Denning in the High Trees ' case represented a bold attempt to escape from the limitation imposed by the House of Lords in Jorden vs Money (supra) and it rediscovered an equity which was long embedded beneath the crust of the old decisions in Hughes vs Metropolitan Railway Co. (supra) and Birmingham and District Land Co. vs London and North Western Rail Co. (supra), and brought about a remarkable development in the law with a view to ensuring its approximation with justice, an ideal for which the law has been constantly striving.
But it is interesting to note the Lord Denning was not prepared to go further, as he thought that having regard to the doctrine of consideration which was so deeply entrenched in the jurisprudence of the country, it might be unwise to extend promissory estoppel so as to found a cause of action and that is why he uttered a word of caution in Combe vs Combe (supra) that the principle of promissory estoppel "should not be stretched too far, lest it should be endangered".
The learned Law Lord proceeded to add "seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with the necessity of consideration when that is an essential part of the cause of action.
The doctrine of consideration is too firmly fixed to be overthrown by a side wind.
" Spencer Bower and Turner also point out at page 384 of their Treatise (3rd ed) that it is difficult to see how in a case of promissory estoppel a promise can be used to found a cause of action without according to it operative contractual force and it is for this reason that "a contention that a promissory estoppel may be used to found a cause of action must be regarded as an attack on the doctrine of consideration." The learned authors have also observed at page 387 that "to give a plaintiff a cause of action on a promissory estoppel must be little less than to allow an action in contract where consideration is not shown" and that cannot be done because consideration "still remains a cardinal necessity of the formation of a contract.
" It can hardly be disputed that over the last three or four centuries the doctrine of consideration has come to occupy such a predominant position in the law of contract that under the English law it is impossible to think of a contract without consideration and, therefore, it is understandable that the English courts should have hesitated to push the doctrine of promissory estoppel to its logical conclusion and stopped short at allowing it to be used merely as a weapon of defence, though, as we shall point out, there are, quite a few cases where this doctrine has been used 667 not as founding a cause of action in itself but as a part of a cause of a action.
The modern attitude towards the doctrine of consideration is, however, changing fast and there is considerable body of juristic thought which believes that this doctrine is "something of an anchronism".
Prof. Holdsworth pointed out long ago in his History of English Law that "the requirements of consideration in its present shape prevent the enforcement of many contracts, which ought to be enforced, if the law really wishes to give effect to the lawful intentions of the parties to them; and it would prevent the enforcement of many others, if the judges had not used their ingenuity to invest considerations.
But the invention of considerations, by reasoning which is both devious and technical, adds to the difficulties of the doctrine".
Lord Wright remarked in an article published in that the doctrine of consideration in its present form serves no practical purpose and ought to be abolished.
Sir Federick Pollock also said in his well known work of `Ganius of Common Law ', p. 91 that the application of the doctrine of consideration" to various unusual but not unknown cases has been made subtle and obscured by excessive dialectic refinement".
Equally strong is the condemnation of this doctrine in judicial pronouncements.
Lord Duned observed in the well known case of Dunlop Pneumatic Tyre Co. vs Selfridge and Co. Ltd.(1) "I confess that this case is to my mind apt to nip any budding affection which one might have had for the doctrine of consideration.
For the effect of that doctrine in the present case is to make it possible for a person to snap his fingers at a bargain deliberately made, a bargain not in itself unfair, and which the person seeking to enforce it has a legitimate interest to enforce.
" The doctrine of consideration has also received severe criticism at the hands of Dean Roscoe Pound in the United States.
The reason is that promise as a social and economic institution becomes of the first importance in a commercial and industrial society and it is an expression of the moral sentiment of a civilised society that a man 's word should be `as good as his bond ' and his fellow men should be able to rely on the one equally with the other.
That is why the Law Revision Committee in England in its Sixth Report made as far back as 1937 accepted Prof. Holdsworth 's view and advocated that a contract should exist if it was intended to create or affect legal relations and either consideration was present or the contract was reduced to writing.
This recommendation, however, did not fructify into law with the result that the present position remains what it was.
But having regard to the general opprobrium to which the doctrine of consideration has been subjected 668 by eminent jurists, we need not be unduly anxious to project this doctrine against assault or erosion nor allow it to dwarf or stultify the full development of the equity of promissory estoppel or inhibit or curtail its operational efficacy as a justice device for preventing injustice.
It may be pointed out that the Law Commission of India in its 13th Report adopted the same approach and recommended that, by way of exception to section 25 of the Indian Contract Act, 1925, a promise, express or implied, which the promisor knows or reasonably should know, will be relied upon by the promisee, should be enforceable, if the promisee has altered his position to his detriment in reliance on the promise.
We do not see any valid reason why promissory estoppel should not be allowed to found a cause of action where, in order to satisfy the equity, it is necessary to do so.
We may point out that even in England where the judges apprehending that if a cause of action is allowed to be founded on promissory estoppel it would considerably erode, if not completely overthrow, the doctrine of consideration, have been fearful to allow promissory estoppel to be used as a weapon of offence, it is interesting to find that promissory estoppel has not been confined to a purely defensive role.
Lord Denning himself said in Combe vs Combe (supra) that promissory estoppel "may be a part of a cause of action", though "not a cause of action itself".
In fact there have been several cases where promissory estoppel has been successfully invoked by a party to support his cause of action, without actually founding his cause of action exclusively upon it.
Two such cases are : Robertson vs Minister of Pensions(1) and Evenden vs Guildford City Association Football Club Ltd.(2) The English courts have thus gone a step forward from the original position when promissory estoppel was regarded merely as a passive equity and allowed it to be used as a weapon of offence to a limited extent as a part of the cause of action, but still the doctrine of consideration continues to inhibit the judicial mind and that has thwarted the full development of this new equitable principle and the realisation of its vast potential as a juristic technique for doing justice.
It is true that to allow promissory estoppel to found a cause of action would seriously dilute the principle which requires consideration to support a contractual obligation, but that is no reason why this new principle, which is a child of equity brought into the world with a view to promoting honesty and good faith and bringing law closer to justice should be held in fetters and not allowed to operate in all the activist magnitude, so that it may fulfil the purpose for which it was conceived and born.
It must be remembered that law is not a mausoleum.
It is not an antique to be taken 669 down, dusted, admired and put back on the shelf.
It is rather like an old vigorous tree, having its roots in history, yet continuously taking new grafts and putting out new sprouts and occasionally dropping dead wood.
It is essentially a social process, the end product of which is justice and hence it must keep on growing and developing with changing social concepts and values.
Otherwise, there will be estrangement between law and justice and law will cease to have legitimacy.
It is true as pointed out by Mr. Justice Holmes, that continuity with the past is a historical necessity but it must also be remembered at the same time, as pointed out by Mr. Justice Cardozo that "conformity is not to be turned into a "fetish".
We would do well to recall the famous words uttered by Mr. Justice Cardozo while closing his first lecture on "Paradoxes of Legal Science"; "The disparity between precedent and ethos may so lengthen with the years that only covin and chicenery would be disappointed if the separation were to end.
There are many intermediate stages, mores, if inadequate to obliterate the past, may fix direction for the future.
The evil precedent may live, but so sterilized and truncated as to have small capacity for harm.
It will be prudently ignored when invoked as an apposite analogy in novel situations, though the novel element be small.
There will be brought forward other analogies, less precise, it may be, but more apposite to the needs of morals.
The weights are constantly shifted to restore the equilibrium between precedent and justice.
" Was it not Lord Denning who exhorted judges not to be timorous sours but to be bold spirits, ready to allow a new cause of action if justice so required.
(Candler vs Crane Christmas & Co.(1) We may profitably consider at this stage what the American law on the subject is because in the United States the law has always shown a greater capacity for adjustment and growth than elsewhere.
The doctrine of promissory estoppel has displayed remarkable vigour and vitality in the hands of American Judges and it is still rapidly developing and expanding in the United States.
It may be pointed out that this development does not derive its origin in any way from the decision of Lord Denning in the High Trees ' case but ante dates this decision by a number of years; perhaps it is possible that it may have helped to inspire that decision.
It was long before the decision in the High Trees 'case that the American Law Institute 's Restatement of the Law of Contract 's came out with the following proposition in Article 90 : 670 "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.
" This proposition was explained and elucidated by several illustrations given in the article and one of such illustrations was as follows : "A promises B to pay him an annuity during B 's life.
B thereupon resigns a profitable employment, as A expected that he might.
B receives the annuity for some years, in the meantime becoming disqualified from again obtaining good employment.
A 's promise is binding.
" It is true that the Restatement has not the same weight, as a source of law, as actual decisions of courts of high standing, yet the principle set out in Article 90 has in fact formed the basis of a number of decisions in various states and it is now becoming increasingly clear that a promise may in the United States derive contractual enforceability if it has been made by the promisor intending that it would be acted on and the promisee has altered his position in reliance on it, notwithstanding that there is no consideration in the sense in which that word is used in English and Commonwealth jurisprudence.
Of course the basic requirement for invoking this principle must be present namely, that the fact situation should be such that "injustice can be avoided only by enforcement of the promise".
There are numerous examples of the application of this principle to be found in recent American decisions.
There is, for instance, the long line of cases in which a promise to give a charitable subscription has been consistently held to be enforceable at the suit of the charity.
Though attempts have been made to justify these decisions by reasoning that the charity by commencing or continuing its charitable work after receiving promise has given good consideration for it, we do not think that, on closer scrutiny, the enforceability of the promise in these cases can be supported by spelling out the presence of some form of consideration and the true principle on which they are really based is the principle of promissory estoppel.
This is also the view expressed in the following statement at page 657 of vol.
19 of American Jurisprudence : "A number of courts have upheld the validity of charitable subscriptions on the theory of promissory estoppel holding that while a mere promise to contribute is unenforceable for want of consideration, if money has been expended or liabilities have been incurred in reliance on the promise so 671 that non fulfillment will cause injury to the payee, the donor is estopped to assert the lack of consideration, and the promise will be enforced." Chief Justice Cardozo, presiding over the Court of Appeals of the State of New York, explained the ratio of these decisions in the same terms in Alleghany College vs National Chauteuque County Bank(1): "The half truths of one generation tend at times to perpetuate themselves in the law as the whole truths of another, when constant repetition brings it about that qualifications, taken once for granted, are disregarded or forgotten.
The doctrine of consideration has not escaped the common lot.
As far back as 1881, Judge Holmes in his lectures on the Common Law (p. 292) separated the detriment which is merely a consequence of the promise from the detriment, which is in truth the motive or inducement, and yet added that the courts 'have gone far in obliterating this distinction '.
The tendency toward effacement has not lessened with the years.
On the contrary there has grown up of recent days a doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled a 'promissory estoppel '.
Williston, Contract, Ss. 139, 116.
Whether the exception has made its way in this State to such an extent as to permit us to say that the general law of consideration has been modified accordingly, we do not now attempt to say.
Cases such as and be signposts on the road.
Certain at least it is that we have adopted the doctrine of promissory estoppel as the equivalent of consideration in connection with our law of charitable subscriptions.
So long as those decisions stand, the question is not merely whether the enforcement of a charitable subscription can be squared with the doctrine of consideration in all its ancient rigor.
The question may also be whether it can be squared with the doctrine of consideration as qualified by the doctrine of promissory estoppel".
We have said that the cases in this State have recognized this exception, if exception it is thought to be.
Thus, in the subscription was made without request, express or implied that the church do anything on the faith of it.
Later, the church did incur expense to the knowledge of the promisor, and in the reasonable belief that the promise would be kept.
We held the promise binding, though 672 consideration there was none except upon the theory of a promissory estoppel.
In a situation substantially the same became the basis for a like ruling.
So in 103 N.Y. 600 and the moulds of consideration as fixed by the old doctrine were subject to a like expansion.
Very likely, conceptions of public policy have shaped, more or less subconsciously, the rulings thus made.
Judges have been affected by the thought that 'defences of that character ' are 'breaches of faith towards the public, and especially towards those engaged in the same enterprise, and an unwarrantable disappointment of the reasonable expectations of those interested '.
W. F. Allen J. in 12 N.Y. 18 and of and cases there cited.
The result speaks for itself irrespective of the motive.
Decisions which have stood so long, and which are supported by so many considerations of public policy and reason, will not be over ruled to save the symmetry of a concept which itself came into our law, not so much from any reasoned conviction of its justice, as from historical accidents of practice and procedure.
(8 Holdsworth, History of English Law, 7 et.
The concept survives as one of the distinctive features of our legal system.
We have no thought to suggest that it is obsolete or on the way to be abandoned.
As in the case of other concepts, however, the pressure of exceptions has led to irregularities of form.
" It is also interesting to note that the doctrine of promissory estoppel has been widely used in the United States in diverse other situations as founding a cause of action.
The most notable instances are to be found in what may be called the "sub contractor bid cases" in which a contractor about to tender for a contract, invites a sub contractor to submit a bid for a sub contract and after receiving his bid the contractor submits a tender.
In such cases, the sub contractor has been held unable to retract his bid and be liable in damages if he does so.
It is not possible to say that any detriment which the contractor may be able to show in these cases would amount to consideration in its strict sense and these decisions have plainly been reached on an application of the doctrine of promissory estoppel.
One of such cases was Drennan vs Star Paving Company(1) where Traynor, J. explicitly adopted as good law the text of Article 90 of the Restatement of the law of Contracts quoted above and stated in so many words that "the absence of consideration is not fatal to the enforcement of such a promise".
There are also numerous cases where the doctrine of promissory estoppel has been applied against the Government where 673 the interest of justice, morality and common fairness clearly dictated such a course.
We shall refer to these cases when we discuss the applicability of the doctrine of equitable estoppel against the Government.
Suffice it to state for the present that the doctrine of promissory estoppel has been taken much further in the United States than in English and Commonwealth jurisdictions and in some States at least, it has been used to reduce, if not to destroy, the prestige of consideration as an essential of valid contract.
Vide Spencer Bower and Turner 's Estoppel by Representation (2d) page 358.
We now go on to consider whether and if so to what extent is the doctrine of promissory estoppel applicable against the Government.
So far as the law in English is concerned, the position cannot be said to be very clear.
Rowlett J., in an early decision in Rederiaktiebolaget Amphitrite vs The King(1) held that an undertaking given by the British Government to certain neutral ship owners during the First World War that if the shipowners sent a particular ship to the United Kingdom with a specified cargo, she shall not be detained, was not enforceable against the British Government in a court of law and observed that his main reason for taking this view was that: " it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises.
It cannot by contract hamper its freedom of action in matters which concern the welfare of the State.
" This observation has however not been regarded by jurists as laying down the correct law on the subject since it is "very wide and it is difficult to determine its proper scope".
Anson 's English Law of Contract, 22d.
The doctrine of executive necessity propounded by Rowlatt, J., was in fact disapproved by Denning, J., as he then was, in Roberston vs Minister of Pensions (supra) where the learned Judge said: The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded.
Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
That doctrine was propounded by Rowlatt, J., in Rederiak tiebolaget Amphitrite vs The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention.
Rowlatt, J., seems to have been influenced by 674 the cases on the right of the Crown to dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reily vs The King (1954) A.C. 176, 176).
In my opinion the defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract.
" It is true that the decision of Denning J., in this case was overruled by the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. (1) but that was on the ground that the doctrine of promissory estoppel cannot be invoked to "bar the Crown from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it".
The decision of the House of Lords did not express any disapproval of the applicability of the doctrine of promissory estoppel against the Crown nor did it overrule the view taken by Denning J., that the Crown cannot escape its obligation under the doctrine of promissory estoppel by "praying in aid the doctrine of executive necessity.
" The statement of the law by Denning, J., may, therefore, still be regarded as holding the field and it may be taken to be a judicially favoured view that the Crown is not immune from liability under the doctrine of promissory estoppel.
The courts in America for a long time took the view that the doctrine of promissory estoppel does not apply to the Government but more recently the courts have started retreating from that position to a sounder one, namely, that the doctrine of promissory estoppel may apply to the Government when justice so requires.
The second edition of American Jurisprudence brought out in 1966 in paragraph 123 points out that "equitable estoppel will be invoked against the State when justified by the facts", though it does warn that this doctrine "should not be lightly invoked against the State.
" Later in the same paragraph it is stated that "as a general rule, the doctrine of estoppel will not be applied against the State in its governmental, public or sovereign capacity", but a qualification is introduced that promissory estoppel may be applied against the State even in its governmental, public or sovereign capacity if "its application is necessary to prevent fraud or manifest injustice".
Since 1966 there is an increasing trend towards applying the doctrine of promissory estoppel against the State and the old law that promissory estoppel does not apply against the government is definitely declining.
There have been numerous cases in the State courts where it has been held that promissory estoppel may be applied even against the Govern 675 ment in its governmental capacity where the accommodation of the needs of justice to the needs of effective government so requires.
The protagonists of the view that promissory estoppel cannot apply against the Government or a public authority seek to draw inspiration from the majority decision of the United States Supreme Court in Federal Crop Insurance Corporation vs Merrill.(1) But we do not think that decision can be read as laying down the proposition that the doctrine of promissory estoppel can never be invoked against the Government.
There the County Committee acting as the agent of the Federal Crop Insurance Corporation which was a wholly Government owned corporation constituted under the Federal Crop Insurance Act, advised the respondents that their entire 460 acres of spring wheat crop which included spring wheat reseeded.
On winter wheat acreage was insurable and acting upon it, the respondents made an application for insurance which was forwarded by the County Committee to the Denver office of the Corporation with a recommendation for acceptance.
The application did not mention that any part of the insured crop was reseeded and it was accepted by the Denver office of the Corporation.
There were at this time wheat crop insurance regulations framed by the Corporation and published in the Federal Register which prohibited insurance of spring wheat reseeded on winter wheat acreage but neither the respondents nor the County Committees which was acting as the agent of the Corporation was aware of them.
A few months later, most of the respondent 's crop was destroyed by drought and on a claim being made by the respondents under the policy of insurance, the Corporation refused to pay the loss on the ground that the wheat crop insurance regulations expressly prohibited insurance of reseeded wheat.
The refusal was upheld by the Supreme Court by a majority of five to four.
The majority observed: "It is too late in the day to urge that the Government is just another private litigant, for purposes of charging it with liability, whenever it takes over a business theretofore conducted by private enterprises or engages in competitions with private ventures.
Whatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that be who purports to act for the Government stays within the bounds of his authority And this is so even though as here, the agent himself may have been unaware of the limitations upon his autho 676 rity. "Man must turn square corners when they deal with the Government", does not reflect a callous outlook.
It merely expresses the duty of all courts to observe the conditions defined by Congress for charging the public treasury.
" It will be seen that the Corporation was held entitled to repudiate its liability because the wheat crop insurance regulations prohibited insurance of reseeded wheat and the assurance given by the County Committee as the agent of the Corporation that the reseeded wheat was insurable being contrary to the wheat crop insurance regulations, could not be held binding on the Corporation.
It was not within the authority of the County Committee to give such assurance contrary to the wheat crop insurance regulations and hence no promissory estoppel against the Corporation could be founded upon it.
This decision did not say that even if an assurance given by an agent is within the scope of his authority and is not prohibited by law, it could still not create promissory estoppel against the Government.
But, it may be pointed out, even this limited holding has come in for considerable criticism at the hands of jurists in the United States.
See Davis on Administrative Law (3rd d.) pages 344 345.
Referring to the observation of the majority that "Men must turn square corners when they deal with the Government", Maguire and Zimet have poetically responded by saying: "It is hard to see why the Government should not be held to a like standard of rectangular rectitude when dealing with its citizens." (Maguire and Zimet, Hobson 's Choice and Similar Practices in Federal Taxation, 48 Harv.
L. Rev. 1287 at 1299).
There has so far not been any decision of the Supreme Court of the United States taking the view that the doctrine of promissory estoppel cannot be invoked against the Government.
The trend in the State courts, of late, has been strongly in favour of the application of the doctrine of promissory estoppel against the Government and public bodies "where interests of justice, morality and common fairness clearly dictate that course.
" It is being increasingly felt that "that the Government ought to set a high standard in its dealings and relationships with citizens and the word of a duly authorised Government agent, acting within the scope of his authority ought to be as good as a Government bond".
Of course, as pointed out by the United States Court of Appeals, Third Circuit in Valsonavich vs United States, (1) the Government would not be estopped "by the acts of its officers and agents who without authority enter into 677 agreements to do what the law does not sanction or permit" and "those dealing with an agent of the Government must be held to have notice of limitations of his authority" as held in Merrill 's case.
This is precisely what the House of Lords also held in England in Howell vs Falmouth Boat Construction Co. Ltd. (supra) where Lord Simonds stated the law to be: "The illegality of an act is the same whether or not the actor has been misled by an assumption of authority on the part of a Government officer however high or low in the hierachy.
The question is whether the character of an act done in face of a statutory prohibition is affected by the fact that it has been induced by a misleading assumption of authority.
In my opinion the answer is clearly No." But if the acts or omissions of the officers of the Government are within the scope of their authority and are not otherwise impermissible under the law, they "will work estoppel against the Government.
" When we turn to the Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made.
The requirement of consideration has not been allowed to stand in the way of enforcement of such promise.
The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived.
It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel was formulated by Denning, J., in England, A Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel and recognised a cause of action founded upon it in the Ganges Manufacturing Co. vs Surajmuli and other(1).
The doctrine of promissory estoppel was also applied against the Government in a case subsequently decided by the Bombay High Court in Municipal Corporation of Bombay vs The Secretary of State.(2) The facts of this last mentioned case in Municipal Corporation of Bombay vs The Secretary of State (supra) are a little interesting and it would be profitable to refer to them.
The Government of Bombay, with a view to constructing an arterial road, requested the Municipal Commissioner to remove certain fish and vegetable 678 markets which obstructed the construction of the proposed road.
The Municipal Commissioner replied that the markets were vested in the Corporation of Justices but that he was willing to vacate certain municipal stables which occupied a portion of the proposed site if the Government would rent other land mentioned in his letter, to the Municipality at a nominal rent, the Municipality undertaking to bear the expenses of levelling the same and permit the Municipality to erect on such land "stables of wood and iron with nobble foundation to be removed at six months ' notice on other suitable ground being provided by Government".
The Government accepted the suggestion of the Municipal Commissioner and sanctioned the application of the Municipal Commissioner for a site for stabling on the terms set out above and the Municipal Commissioner thereafter entered into possession of the land and constructed stables, workshops and chawls on the same at considerable expense.
Twenty four years later the Government served a notice on the Municipal Commissioner determining the tenancy and requesting the Municipal Commissioner to deliver possession of the land within six months and in the mean time to pay rent at the rate of Rs.12,000/ per month.
The Municipal Corporation declined to hand over possession of the land or to pay the higher rent and the Secretary of State for India thereupon filed a suit against the Municipal Corporation for a declaration that the tenancy of the Municipality stood determined and for an order directing the municipality to pay rent at the rate of Rs. 12,000/ per month.
The suit was resisted by the Municipal Corporation on the ground then the events which had transpired had created an equity in favour of the Municipality which afforded an answer to the claim of the Government to eject the Municipality.
This defence was upheld by a Division Bench of the High Court and Jenkins C.J., speaking on behalf of the Division Bench, pointed out that, in view of the following facts, namely: " the Municipality gave up the old stables, levelled the ground, and erected the moveable staibles in 1866 in the belief that they had against the Government an absolute right not to be turned out until not only the expiration of six months notice, but also other suitable ground was furnished: that this belief is referable to an expectation created by the Government that their enjoyment of the land would be in accordance with this belief: and that the Government knew that the Municipality were acting in this belief so created:" 679 an equity was created in favour of the Municipality which entitled it "to appeal to the Court for its aid in assisting them to resist the Secretary of State 's claim that they shall be ejected from the ground".
The learned Chief Justice pointed out that the doctrine which he was applying took its origin "from the jurisdiction assumed by Courts of Equity to intervene in the case of or to prevent fraud" and after referring to Ramsden vs Dyson(1) observed that the Crown also came within the range of this equity.
This decision of the Bombay High Court is a clear authority for the proposition that it is open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution.
That is how this decision has in fact been interpreted by this court in Union of India vs Indo Afghan Agencies:(2) We don 't find any decision of importance thereafter on the subject of promissory estoppel until we come to the decision of this Court in Collector of Bombay vs Municipal Corporation of the City of Bombay & Ors.(3).
The facts giving rise to this case were that in 1865 the Government of Bombay called upon the predecessor in title of the Municipal Corporation of Bombay to remove old markets from a certain site and vacate it and on the application of the Municipal Commissioner, the Government passed a resolution approving and authorizing the grant of another site to the Municipality.
The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be like other public buildings, for the benefit of the whole community".
The Municipal Corporation gave up the site on which the old markets were situated and spent a sum of Rs. 17 lakhs in erecting and maintaining markets on the new site.
In 1940 the Collector of Bombay assessed the new site to land revenue and the Municipal Corporation there upon filed a suit for a declaration that the order of assessment was ultra vires and it was entitled to hold the land for ever without payment of any assessment.
The High Court of Bombay held that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the Municipal Corporation and there was thus a limitation on the right of the Government to assess under section 8 of the Bom 680 bay City Land Revenue Act.
On appeal by the Collector to this Court, the majority Judges held that the Government was not, under the circumstances of the case, entitled to assess land revenue on the land in question because the Municipal Corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly, uninterruptedly and of right for over seventy years and thereby acquired the limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent.
Chandrasekhra Aiyar, J., agreed with the conclusion reached by the majority but rested his decision on the doctrine of promissory estoppel.
He pointed out that the Government could not be allowed to go back on the representation made by it and stressed the point in the form of an interrogation by asking: "if we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must prevent being committed?" He observed that even if the resolution of the Government amounted merely to "the holding out of a promise that no rent will be charged in the future, the Government must be deemed in the circumstances of this case to have bound themselves to fulfil it.
Whether it is the equity recognised in Ramsden 's case (supra) or it is some other form of equity, is not of much importance.
Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power.
" This was of course the solitary view of Chandrasekhara Aiyer, J., but it was approved by this Court in no uncertain terms in Indo Afghan Agencies case (supra).
Then we come to the celebrated decision of this Court in the Indo Afghan Agencies case (supra).
It was in this case that the doctrine of promissory estoppel found its most eloquent exposition.
We may briefly state the facts in order to appreciate the ratio of the decision.
Indo Afghan Agencies Ltd. who were the respondents before the Court, acting in reliance on the Export Promotion Scheme issued by the Central Government, exported woollen goods to Afghanistan and on the basis of their exports claimed to be entitled to obtain from the Textile Commissioner import entitlement certificate for the full F.O.B. value of the goods exported as provided in the scheme.
The Scheme was not a statutory Scheme having the force of law but it provided that an export of woollen goods would be entitled to import raw material of the total amount equal to 100% of the F.O.B. value of his exports.
The respondents contended that, relying on the promise contained in the Scheme, they had exported woollen goods to Afghanistan and were,.
therefore, entitled to enforce the promise against the Government and to obtain import entitlement 681 certificate for the full F.O.B. value of the goods exported on the principle of promissory estoppel.
This contention was sought to be answered on behalf of the Government by pleading the doctrine of executive necessity and the argument of the Government based on this doctrine was that it is not competent for the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the question arises and no promise or undertaking can be held to be binding on the Government so as to hamper its freedom of executive action.
Certain observations of Rowlatt, J., in Rederiektiabolaget Amphitrite vs The King (supra) were sought to be pressed into service on behalf of the Government in support of this argument.
We have already referred to these observations earlier and we need not reproduce them over again.
These observation undoubtedly supported the contention of the Government but it was pointed out by this Court that these observations were disapproved by Denning J., in Robertson vs Minister of Pensions (supra) where the learned Judge said that "the Crown cannot escape by praying in aid the doctrine of executive necessity, that is the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
The defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract" and this statement of Denning, J., was to be preferred as laying down the correct law of the subject.
Shah, J., speaking on behalf of the Court, observed at p. 376: "We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment.
Under our constitutional set up no person may be deprived of his right or liberty except in due course of and by authority of law; of a member of the Executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law common or statute the Courts will be competent to and indeed would be bound to, protect the rights of the aggrieved citizen.
" The defence of executive necessity was thus clearly negatived by this Court and it was pointed out that it did not release the Government from its obligation to honour the promise made by it, if the citizen, acting in reliance on the promise, had altered his position.
The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be deteated by invoking the defence of executive necessity.
682 It was also contended on behalf of the Government that if the Government were held bound by every representation made by it regarding its intention, when the exporters have acted in the manner they were invited to act, the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 was executed.
But this contention was negatived and it was pointed out by this Court that the respondents "are not seeking to enforce any contractual right: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, and we are of the view that even if the Scheme is executive in character, the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out".
It was thus laid down that a party who has, acting in reliance on a promise made by the Government, altered his position, is entitled to enforce the promise against the Government, even though the promise is not in the form of a formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel against the Government.
This Court finally, after referring to the decision in the Ganges Manufacturing Co. vs Surujmull (supra).
The Municipal Corporation of the City of Bombay vs The Secretary of State for India (supra) and Collector of Bombay vs Municipal Corporation of the City of Bombay & Ors.
(supra), summed up the position as follows: "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the Judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen." The law may, therefore, now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promises and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promises, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract 683 as required by Article 299 of the Constitution.
It is elementary that in a Republic governed by the rule of law, no one, howsoever high or low, is above the law.
Every one is subject to the law as fully and completely as any other and the Government is no exception.
It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter.
It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel.
Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of "honesty and good faith"? Why should the Government not be held to a high "standard of rectangular rectitude while dealing with its citizens"? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo Afghan Agencies case and the supremacy of the rule of law was established.
It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action.
If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it.
But if the Government makes such a promise and the promises acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual.
The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavor of the Courts and the legislatures must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible.
The doctrine of promissory estoppel is a significant judicial contribution in that direction.
But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires.
If it can be shown by the Government that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the 684 Government.
The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it.
When the Government is able to show that in view of the facts as have transpired, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and after this position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies.
It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it.
The Government cannot, as Shah, J., pointed out in the Indo Afghan Agencies case, claim to be exempt from the liability to carry out the promise "on some indefinite and undisclosed ground of necessity or expediency", nor can the Government claim to be the sole judge of its liability and repudiate it "on an ex parte appraisement of the circumstances".
If the Government wants to resist the liability, it will have to disclose to the Court what are the facts and circumstances on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether these facts and circumstances are such as to render it inequitable to enforce the liability against the Government.
Mere claim of change of policy would not be sufficient to exonerate the Government from the liability: the Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands.
It is only if the Court is satisfied, on proper and adequate material placed by the Government, the over riding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government.
The Court would not act on the mere ipse dixit of the Government, for it is the Court which has to decide and not the Government whether the Government should be held exempt from liability.
This is the essence of the rule of law.
The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden.
But even where there is no such over riding public interest, it may still be competent to 685 the Government to resile from the promise "on giving reasonable notice which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position" provided of course it is possible for the promisee to restore status quo ante.
If however, the promisee cannot resume his position, the promise would become final and irrevocable.
Vide Emmanuel Ayodeji Ajayi vs Briscoe.(1) The doctrine of promissory estoppel was also held applicable against a public authority like a Municipal Council in Century Spinning & Manufacturing Co. Ltd. & Anr.
vs The Ulhasuagar Municipal Council & Anr.(2) The question which arose in this case was whether the Ulhas Nagar Municipal Council could be compelled to carry out a promise made by its predecessor municipality that the factories in the industrial area within its jurisdiction would be exempt from payment of octroi for seven years from the date of the levy.
The appellant company, in the belief induced by the assurance and undertaking given by the predecessor municipality that its factory would be exempt from octroi for a period of seven years, expanded its activities, but when the municipal council came into being and took over the administration of the former municipality, it sight to levy octroi duty on appellant company.
The appellant company thereupon filed a writ petition under Article 226 of the Constitution in the High Court of Bombay to restrain the municipal council from enforcing the levy of octroi duty in breach of the promise made by the predecessor municipality.
The High Court dismissed the petition in limine but, on appeal, this Court took the view that this was a case which required consideration and should have been admitted by the High Court.
Shah, J., speaking on behalf of the Court, pointed out "Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice.
The obligation arising against an individual out of his representation amounting to a promise may be enforced ex contracted by a person who acts upon the promise: when the law requires that a contract enforceable at law against a public body shall be in certain from or be executed in the manner prescribed by statute, the obligation may be if the contract be not in that form be enforced against it in appropriate cases in equity." The learned Judge then referred to the decision in the Indo Afghan Agencies case and observed that in that case it was laid down by this 686 Court that "the Government is not exempt from the equity arising out of the acts done by citizens to their prejudice relying upon the representations as to its future conduct made by the Government".
It was also pointed out by the learned Judge that in the Indo Afghan Agencies case this Court approved of the observations made by Denning, J. in Robertson vs Minister of Pensions (supra) rejecting the doctrine of executive necessity and held them to be applicable in India.
The learned Judge concluded by saying in words pregnant in the hope and meaning for democracy: "If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted.
A public body is, in our judgment, not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice." This Court refused to make a distinction between a private individual and a public body so far as the doctrine of promissory estoppel is concerned.
We then come to another important decision of this Court in Turner Morrison & Co. Ltd. vs Hungerford Investment Trust Ltd. (1) where the doctrine of promissory estoppel was once again affirmed by this Court.
Hegde, J, speaking on behalf of the Court, pointed out: "Estoppel" is a rule of equity.
"That rule has gained new dimensions in recent years.
A new class of estoppel i.e. promissory estoppel has come to be recognised by the courts in this Country as well as in England.
The full implication of 'promissory estoppel ' is yet to be spelled out." The learned Judge, after referring to the decisions in High Trees case, Robertson vs Minister of Pensions (supra) and the Indo Afghan Agencies case, pointed out that "the rule laid down in these decisions undoubtedly advanced the cause of justice and hence we have no hesitation in accepting it.
We must also refer to the decision of this Court in M. Ramanatha Pillai vs The State of Kerala & Anr.(1) because that was a decision strongly relied upon on behalf of the State for negativing the applicability of the doctrine of estoppel against the Government.
This was a case where the appellant was appointed to a temporary post and on the post being abolished, the service of the appellant was terminated.
The appellant challenged the validity of termination of service, inter alia, on 687 the ground that the Government was precluded from abolishing the post and terminating the service on the principle of promissory estoppel.
This ground based on the doctrine of promissory estoppel was negatived and it was pointed out by the Court that the appellant knew that the post was temporary, suggesting clearly that the appellant could not possibly be led into the belief that the post would not be abolished.
If the post was temporary to the knowledge of the appellant, it is obvious that the appellant knew that the post would be liable to be abolished at any time and if that be so, there could be no factual basis for invoking the doctrine of promissory estoppel for the purpose of precluding the Government from abolishing the post.
This view taken by the Court was sufficient to dispose of the contention based on promissory estoppel and it was not necessary to say anything more about it, but the Court proceeded to cite a passage from American Jurisprudence, Vol. 28 (2d) at 783, paragraph 123 and observed that the High Court rightly held "that the courts exclude the operation of the doctrine of estoppel, when it is found that the authority against whom estoppel is pleaded has owed a duty to the public against whom the estoppel cannot fairly operate.
" It was this observation which was heavily relied upon on behalf of the State but we fail to see how it can assist the contention of the State.
In the first place, this observation was clearly obiter, since, as pointed out by us, there was on the facts of the present case no scope for the applicability of the doctrine of promissory estoppel.
Secondly, this observation was based upon a quotation from the passage in paragraph 123 at page 783 of Volume 28 of American Jurisprudence (2 d), but unfortunately this quotation was incomplete and it overlooked, perhaps inadvertently, the following two important sentences at the commencement of the paragraph which clearly show that even in the United States the doctrine of promissory estoppel is applied against the State "when justified by the facts": "There is considerable dispute as to the application of estoppel with respect to the State.
While it is said that equitable estoppel will be invoked against the State when justified by the facts, clearly the doctrine of estoppel should not be lightly invoked against the State" (emphasis supplied).
Even the truncated passage quoted by the Court recognised in the last sentence that though, as a general rule, the doctrine of promissory estoppel would not be applied against the State in its governmental, public or sovereign capacity, the Court would unhesitatingly allow the doctrine to be invoked in cases where it is necessary in order "to prevent fraud or manifest injustice".
This passage leaves no doubt that the 688 doctrine of promissory estoppel may be applied against the State even in its governmental, public or sovereign capacity where it is necessary to prevent fraud or manifest injustice.
It is difficult to imagine that the Court citing this passage with approval could have possibly intended to lay down that in no case can the doctrine of promissory estoppel be invoked against the Government.
Lastly, a proper reading of the observation of the Court clearly shows that what the Court intended to say was that where the Government owes a duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so.
This proposition is unexceptionable, because where the Government owes a duty to the public to act in a particular manner, and here obviously duty means a course of conduct enjoined by law, the doctrine of promissory estoppel cannot be invoked for preventing the Government from acting in discharge of its duty under the law.
The doctrine of promissory estoppel cannot be applied in teeth of an obligation or liability imposed by law.
We may then refer to the decision of this Court in Assistant Custodian vs Brij Kishore Agarwala & Ors.(1) It is not necessary to reproduce the facts of this case, because the only purpose for which this decision was relied upon on behalf of the State was to show that the view taken by the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. (Supra) was preferred by this Court to that taken by Lord Denning in Robertson vs Minister of Pension (supra).
It is true that in this case the Court expressed the opinion "that the view taken by the House of Lords is the correct one and not the one taken by Lord Denning" but we fail to see how that can possibly help the argument of the State.
The House of Lords did not in Howell 's case negative the applicability of the doctrine of promissory estoppel against the Government.
What it laid down was merely this, namely, that no representation or promise made by an officer can preclude the Government from enforcing a statutory prohibition.
The doctrine of promissory estoppel cannot be availed to permit or condone a breach of the law.
The ratio of the decision was succinctly put by Lord Normand when he said" neither a minister nor any subordinate officer of the Crown can by any conduct or representation bar the Crown from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it".
It may also be noted that promissory estoppel cannot be invoked to compel the Government or even a private party to do an act prohibited by law.
There can also be no promissory estoppel against the exercise of legislative power.
The Legislature can never be precluded 689 from exercising its legislative function by resort to the doctrine of promissory estoppel.
Vide State of Kerala vs Gwalior Rayon Silk Manufacturing Co. Ltd.(1) The next decision to which we must refer is that in Excise Commissioner, U.P. Allahabad vs Ram Kumar.(2) This was also a decision on which strong reliance was placed on behalf of the State.
It is true that, in this case, the Court observed that "it is now well settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers," but for reasons which we shall presently state, we do not think this observation can persuade us to take a different view of the law than that enunciated in the Indo Afghan Agencies ' case.
In the first place, it is clear that in this case there was factually no foundation for invoking the doctrine of promissory estoppel.
When the State auctioned the licence for retail sale of country liquor and the respondents being the highest bidders were granted such licence, there was in force a Notification dated 6th April, 1959, issued under section 4 of the U.P. Sales Tax Act, 1948, exempting sale of country liquor from payment of sales tax.
No announcement was made at the time of the auction whether the exemption from sales tax under this Notification dated 6th April, 1959 was or was not likely to be withdrawn.
However, on the day following the commencement of the licence granted to the respondents, the Government of U.P. issued a Notification dated 2nd April, 1969 superseding the earlier Notification dated 6th April, 1959 and imposing sales tax on the turnover in respect of country spirit with immediate effect.
This notification dated 2nd April, 1969 was challenged by the respondents by filing a writ petition and amongst the several grounds of challenge taken in the writ petition, one was that "since the State Government did not announce at the time of the aforesaid auction that the Notification dated 6th April, 1959 was likely to be withdrawn and the sales of country liquor were likely to be subjected to the levy of sales tax during the excise year and in reply to the query made by them at the time of the auction they were told by the authorities that there was no sales tax on the sale of country liquor, the appellants herein were estopped from making the demand in respect of sales tax and recovering the same from them".
It was in the context of this ground of challenge that the Court came to make the observation relied upon on behalf of the State.
Now, it is clear that, even taking the case of the respondents at its highest, there was no representation or promise made by the Government that they would continue the exemp 690 tion from sales tax granted under the Notification dated 6th April, 1959 and would not withdraw it, and the Notification dated 2nd April, 1969 could not, therefore, be assailed as being in breach of any such representation or promise.
There was accordingly, no factual basis for making good the plea of promissory estoppel and the observation made by the court in regard to the applicability of the doctrine of promissory estoppel against the Government was clear obiter.
That perhaps was the reason why the Court did not consider it necessary to refer to the earlier decisions in Century Spinning & manufacturing Co. 's case and Turner Morrison 's case and particularly the decision in the Indo Afghan Agencies case where the court in so many terms applied the doctrine of promissory estoppel against the Government in the exercise of its executive power.
It is not possible to believe that the Court was oblivious of these earlier decisions, particularly when one of these decisions in the Indo Afghan Agencies case was an epoch making decision which marked a definite advance in the field of administrative law.
Moreover, it may be noted that though, standing by itself, the observation made by the Court that "there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers" may appear to be wide and unqualified, it is not so, if read in its proper context.
This observation was made on the basis of certain decisions which the Court proceeded to discuss in the succeeding paragraphs of the judgment.
The Court first relied on the statement of the law contained in paragraph 123 at page 783, Volume 28 of the American Jurisprudence (2d), but it omitted to mention the two important sentences at the commencement of the paragraph and the words "unless its application is necessary to prevent fraud or manifest injustice" at the end, which clearly show that even according to the American Jurisprudence, the doctrine of promissory estoppel is not wholly inapplicable against the Government in its governmental, public or sovereign capacity, but it can be invoked against the Government "when justified by the facts" as for example where it is necessary to prevent fraud or injustice.
In fact, as already pointed out above, there are numerous cases in the United States where the doctrine of promissory estoppel has been applied against the Government in the exercise of its governmental, public or executive powers.
The Court then relied upon the decision in the Gwalior Rayon Silk Manufacturing Co. 's case, but that decision was confined to a case where legislation was sought to be precluded by relying on the doctrine of promissory estoppel and it was held, and in our opinion rightly, that there can be no promissory estoppel against the legislature in the exercise of its legislative function.
That decision does not negative the applicability of the 691 doctrine of promissory estoppel against the Government in the exercise of its governmental, public or executive powers.
The decision in Howell 's case was, thereafter, relied upon by the Court, but that decision merely says that the Government cannot be debarred by promissory estoppel from enforcing a statutory prohibition.
It does not countenance an absolute proposition that promissory estoppel can never be invoked against the government.
The Court also cited a passage from the judgment of the High Court of Jammu & Kashmir in Malhotra & Sons & Ors.
vs Union of India & Ors.
,(1) but this passage itself makes it clear that the courts will bind the Government by its promise where it is necessary to do so in order to prevent manifest injustice or fraud.
The last decision on which the Court relied was Federal Crop Insurance Corporation vs Morrill (supra) but this decision also does not support the view contended for on behalf of the State.
We have already referred to this decision earlier and pointed out that the Federal Crop Insurance Corporation in this case was held not liable on the policy of insurance, because the regulations made by the Corporation prohibited insurance of reseeded wheat.
The principle of this decision was that promissory estoppel cannot be invoked to compel the Government or a public authority to carry out a representation or promise which is contrary to law.
It will thus be seen from the decisions relied upon in the judgment that the Court could not possibly have intended to lay down an absolute proposition that there can be no promissory estoppel against the Government in the exercise of its governmental, public or executive powers.
That would have been in complete contradiction of the decisions of this Court in the Indo Afghan Agencies Case, Century Spinning and Manufacturing Co. 's case and Turner Morrison 's case and we find it difficult to believe that the Court could have ever intended to lay down any such proposition without expressly referring to these earlier decisions and over ruling them.
We are, therefore, of the opinion that the observation made by the Court in Ram Kumar 's case does not militate against the view we are taking on the basis of the decisions in the Indo Afghan Agencies ' case, Century Spinning & Manufacturing Co. 's case and Turner Morrison 's case in regard to the applicability of the doctrine of promissory estoppel against the Government.
We may then refer to the decision of this Court in Bihar Eastern Gangetic Fishermen Co operative Society Ltd. vs Sipahi Singh & Ors.(2) It was held in this case in paragraph 12 of the judgment that the respondent could not invoke the doctrine of promissory estoppel because he was unable to show that, relying on the representation of the Govern 692 ment, he had altered his position by investing moneys and the allegations made by him in that behalf were "much too vague and general" and there was accordingly no factual foundation for establishing the plea of promissory estoppel.
On this view, it was unnecessary to consider whether the doctrine of promissory estoppel was applicable against the Government, but the Court proceeded to reiterate, without any further discussion, the observation in Ram Kumar 's case that "there cannot be any estoppel against the Government in the exercise of its sovereign, legislative and executive functions".
This was clearly in the nature of obiter and it cannot prevail as against the statement of law laid down in the Indo Afghan Agencies case.
Moreover, it is clear from paragraph 14 of the judgment that this Court did not intend to lay down any proposition of law different from that enunciated in the Indo Afghan Agencies case because it approved of the decision in the Indo Afghan Agencies case and distinguished it on the ground that in that case there was not enforcement of contractual right but the claim was founded upon equity arising from the Scheme, while in the case before the Court, a contractual right was sought to be enforced.
There is, therefore, nothing in this decision which should compel us to take a view different from the one we are otherwise inclined to accept.
We may point out that in the latest decision on the subject in Radha Krishna Agarwal vs State of Bihar & Ors.(1) this Court approved of the decisions in the Indo Afghan Agencies case and Century Spinning and Manufacturing Co 's case and pointed out that these were cases where it could be held that public bodies or the State are as much bound as private individuals are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities".
It would, therefore, be seen that there is no authoritative decision of the Supreme Court which has departed from the law laid down in the celebrated decisions in the Indo Afghan Agencies case and the Century Spinning & Manufacturing Co 's case.
The law laid down in these decisions as elaborated and expounded by us continues to hold the field.
We may now turn to examine the facts in the light of the law discussed by us.
It is clear from the letter of the 4th respondent dated 23rd January, 1969 that a categorical representation was made by the 4th respondent on behalf of the Government that the proposed vanaspati factory of the appellant would be entitled to exemption from sales tax 693 in respect of sales of vanaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production.
This representation was made by way of clarification in view of the suggestion in the appellant 's letter dated 22nd January, 1969 that the financial institutions were not prepared to regard the earlier letter of the 4th respondent dated 22nd December, 1968 as a definite commitment on the part of the Government to grant exemption from sales tax.
Now the letter dated 23rd January, 1969 clearly shows that the 4th respondent made this representation in his capacity as the Chief Secretary of the Government, and it was, therefore, a representation on behalf of the government.
It was faintly contended before us on behalf of the State that this representation was not binding on the Government, but we cannot countenance this argument, because, in the first place, the averment in the writ petition that the 4th respondent made this representation on behalf of the government was not denied by the State in the affidavit in reply filed on its behalf, and secondly, it is difficult to accept the contention that the 4th respondent, who was at the material time the Chief Secretary to the government and also advisor to the Governor who was discharging the functions of the Government.
We must, therefore, proceed on the basis that this representation made by the 4th respondent was a representation within the scope of his authority and was binding on the Government.
Now, there can be no doubt that this representation was made by the Government knowing or intending that it would be acted on by the appellant, because the appellant had made it clear that it was only on account of the exemption from sales tax promised by the Government that the appellant had decided to set up the factory for manufacture of vanaspati at Kanpur.
The appellant, in fact, relying on this representation of the Government, borrowed moneys from various financial institutions, purchased plant and machinery from M/s. De Smith (India) Pvt. Ltd., Bombay and set up a vanaspati factory at Kanpur.
The facts necessary for invoking the doctrine of promissory estoppel were, therefore, clearly present and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect out the representation and exempt the appellant from sales tax in respect of sales of vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production.
The State, however, contended that the doctrine of promissory estoppel had no application in the present case because the appellant did not suffer any detriment by acting on the representation made by the Government : the vanaspati factory set up by the appellant was quite a profitable concern and there was no prejudice caused to the 694 appellant.
This contention of the State is clearly unsustainable and must be rejected.
We do not think it is necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promisee acting in reliance of the promise, should suffer any detriment.
What is necessary is only that the promisees should have altered his position in reliance on the promise.
This position was implied accepted by Denning, J., in the High Trees ' case when the learned Judge pointed out that the promise must be one "which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made and which was in fact acted an" (emphasis supplied).
If a promise is "acted on", "such action, in law as in physics, must necessarily result in an alteration of position.
" This was again reiterated by Lord Denning in W.J. Alan & Co. Ltd. x. El.
Nasr Export and Import Co.(1) where the learned Law Lord made it clear that alteration of position "only means that he (the promise) must have been led to act differently from what he would otherwise have done.
And if you study the cases in which the doctrine has been applied, you will see that all that is required is that the one should have acted on the belief induced by the other party." Viscount Simonds also observed in Tool Metal Manufacturing Co. Ltd vs Tungsten Electric Co. Ltd. (2) that "the gist of the equity lies in the fact that one party has by his conduct led the other to alter his position".
The judgment of Lord Tucker in the same case would be found to depend likewise on a fundamental finding of alteration of position, and the same may be said of that of Lord Coheb.
Then again in Emmanuel Avodeji vs Briscoe (supra) Lord Hodson said: "This equity,is however, subject to the qualification (1) that the other party has altered his position".
The same requirement was also emphasised by Lord Diplock in Kaminins Ballrooms Ltd. vs Zenith Investments (Torquay) Ltd. (3) What is necessary, therefore, is no more than that there should be alteration of position on the part of the promisee.
The alteration of position need not involve any detriment to the promises.
If detriment were a necessary element, there would be no need for the doctrine of promissory estoppel because in that event, in quite a few cases, the detriment would form the consideration and the promise could be binding as a contract.
There is in fact not a single case in England where detriment is insisted upon as a necessary ingredient 695 of promissory estoppel.
In fact, in W. J. Alan & Co. Ltd. vs El Nasar Export and Import Co. (supra), Lord Denning expressly rejected detriment as an essential ingredient of promissory estoppel, saying: "A seller may accept a less sum for his goods than the contracted price, thus inducing (his buyer) to believe that he will not enforce payment of the balance; see Central London Property Trust Ltd. vs High Trees House Ltd. and D. & C. Builders Ltd. vs Rees In none of these cases does the party who acts on the belief suffer any detriment.
It is not a detriment, but a benefit to him to have an extension of time or to pay less, or as the case may be.
Nevertheless, he has conducted his affairs on the basis that he has had that benefit and it would not be equitable now to deprive him of it.
" We do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promise to show that he suffered detriment as a result of acting in reliance on the promise.
But we may make it clear that if by detriment we mean injustice to the promisee which could result if the promisor were to recede from his promise then detriment would certainly come in as a necessary ingredient.
The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise.
The classic exposition of detriment in this sense is to be found in the following passage from the judgment of Dixon, J in the Australian case of Grundt vs The Great Boulder Pty.
Gold Mines Ltd. (1): " It is often said simply that the party asserting the estoppel must have been induced to act to his detriment.
Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine.
That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting.
This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.
So long as the assumption is adhered to, the party who altered his situation upon the 696 faith of it cannot complain.
His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment.
His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong, and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act or source of prejudice.
" If this is the kind of detriment contemplated, it would necessarily be present in every case of promissory estoppel because it is on account of such detriment which the promisee would suffer if the promisor were to act differently from his promise, that the Court would consider it inequitable to allow the promisor to go back upon his promise.
It would, therefore, be correct to say that in order to invoke the doctrine of promissory estoppel it is enough to show that the promisee has acting in reliance of the promise, altered his position and it is not necessary for him to further show that he has acted to his detriment.
Here, the appellant clearly altered its position by borrowing moneys from various financial institutions, purchasing plant and machinery from M/s. De Smet (India) Pvt. Ltd., Bombay and setting up a vanaspati plant, in the belief induced by the representation of the Government that sales tax exemption would be granted for a period of three years from the date of commencement of the production.
The Government was, therefore bound on the principle of promissory estoppel to make good the representation made by it.
Of course, it may be pointed out that if the U.P. Sales Tax Act, 1948 did not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government because the Government cannot be compelled to act contrary to the statute, but since section 4 of the U.P.Sales Tax Act, 1948 confers power on the Government to grant exemption from sales tax, the Government can legitimately be held bound by its promise to exempt the appellant from payment of sales tax.
It is true that taxation is a sovereign or governmental function, but, for reasons which we have already discussed, no distinction can be made between the exercise of a sovereign or governmental function and a trading or business activity of the Government so far as the doctrine of promissory estoppel is concerned.
Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the 697 essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it.
We are, therefore, of the view that in the present case the Government was bound to exempt the appellant from payment of sales tax in respect of sales of vanaspati effected by it in the State of Uttar Pradesh for a period of three years from the date of commencement of the production and was not entitled to recover such sales tax from the appellant.
Now, for the assessment year 1970 71, that is, 2nd July, 1970 to 31st March, 1971, the appellant collected from its customers sales tax amounting to Rs. 6,81,178.95 calculated at the rate of 3 1/2% on the sale price.
But when the assessment was made by the Sales Tax Authorities, sales tax was levied on the appellant at the rate of 7% and the appellant was required to pay up a further sum of Rs. 6,80,969.42.
The appellant had prayed for an interim order in the present appeal staying further proceedings, but this Court, by an order dated 3rd April, 1974, granted interim stay only on the appellant paying up the amount of sales tax due for the assessment year 1970 71 before 31st July, 1974 and so far as the assessment years 1971 72, 1972 73 and 1973 74 were concerned, the Court directed that the assessments for those years may proceed, but only the final order shall not be passed.
The result was that the appellant had to pay up the further sum of Rs. 6,80,949.42 for the assessment year 1970 71.
The appellant collected from the customers for the assessment year 1971 72 an aggregate sum of Rs. 9,91,206.17 by way of sales tax at the rate of 3 1/2% for the period 1st April, 1971 to 1st July, 1971, 4% for the period 2nd July, 1971 to 24th January, 1972 and 7% for the period 25th January, 1972 to 31st March, 1972 and deposited this amount in the Treasury.
Similarly, for the assessment year 1972 73, the appellant collected from its customers an aggregate sum of Rs. 19,36,597.23 as and by way of sales tax at the rate of 7% of the sale price and this amount was deposited by the appellant in the Treasury, and so also for the first quarter of the assessment year 1973 74 upto the end of which the exemption from sales tax was to continue, the appellant collected and paid an aggregate sum of Rs. 4,84,884.05 at the rate of 7% of the sale price.
It appears that surcharge amounting to Rs. 2,83,008.09 for the period of the exemption was also paid by the appellant into the Treasury.
The assessments for the assessment years 1971 72, 1972 73 and 1973 74 were, however, not completed in view of the stay order granted by this Court.
Now, obviously since the Government is bound to exempt the appellant from payment of sales tax for a period of three years from 2nd July, 1970, being the date of commencement of the production, the appellant would not be liable to 698 pay any sales tax to the State in respect of sales of vanaspati effected during that period and hence the State would have to refund to the appellant the amount of sales tax paid for the period 2nd July, 1970 to 31st March, 1971, subject to any claim which the State may have to retain any part of such amount under any provision of law.
If the State has any such claim, it must be intimated to the appellant within one month from today and it must be adjudicated upon within a further period of one month after giving proper opportunity to be heard to the appellant.
If no such claim is made, or, if made, not adjudicated upon within the time specified, the State will refund the amount of sales tax to the appellant with interest thereon at the rate of 6% per annum from the date when such refund becomes due and if such claim is made and adjudicated upon within the specified time and it is found that a part of this amount is liable to be retained by the State under some provision of law, the State will refund the balance to the appellant with interest at the like rate.
So far as the assessment years 1971 72, 1972 73 and 1973 74 are concerned, the Sales Tax Authorities will proceed to complete the Assessments for those assessment years in the light of the law laid down in this judgment and the amounts of sales tax deposited by the appellant will be refunded to the appellant to the extent to which they are not found due and payable as a result of the assessments, subject to any claim which the State may have to retain those amounts under any provision of law.
We accordingly allow the appeal, set aside the judgment of the High Court and issue a writ, order or direction to the above effect against the respondents.
The State will pay the costs of the appellant throughout.
S.R. Appeal allowed.
| The appellant is a limited company which is primarily engaged in the business of manufacture and sale of sugar and it has a cold storage plant and a steel foundry.
With reference to a news item dated 10th October 1968 in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under section 4A of the U.P. Sales Tax Act to all new industrial units in the State with a view to enabling them "to come on firm footing in developing stage", the appellant addressed a letter dated 11th October 1968 to the Director of Industries stating that in view of the sales tax holiday announced by the Government the appellant intended to set up a Hydrogenation plant for manufacture of Vanaspati and sought for confirmation that this industrial unit which it proposed to set up, would be entitled to sales tax holiday ' for a period of three years from the date it commenced production.
The Director of Industries by his letter dated 14th October 1968, confirmed that "there will be no sales tax for three years on the finished product of your proposed Vanaspati factory from the date it gets power connection for commencing production".
Thereafter when the appellant 's representative met the 4th respondent, who was at that time the Chief Secretary to the Government as also Advisor to the Governor and apprised the latter that the appellant was setting up the Vanaspati factory solely on the basis of the assurance given on behalf of the Government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of commercial production at the factory, the 4th respondent reiterated the assurance made.
Again the appellant, by its letter dated 13th December 1968, requested the 4th respondent "to please confirm that we shall be allowed sales tax holiday for a period of three years on the sale of Vanaspati from the date we start production".
The 4th respondent replied on 22nd December 1968 that "the State Government will be willing to consider your request for grant of exemption from U.P. Sales Tax for a period of three years from the date of 642 production" and asked the appellant to obtain the requisite application form and submit a formal application to the Secretary to the Government in the Industries department, and in the meanwhile "to go ahead with the arrangements for setting up the factory".
The appellant in the meantime had submitted an application dated 21st December 1968 for a formal order granting exemption from sales tax under section 4A of the U.P. Sales Tax Act.
The appellant was also subsequently informed by the letter dated 23rd January 1969 of the 4th respondent categorically that the proposed Vanaspati factory of the appellant "will be entitled to exemption from U.P. Sales Tax for a period of three years from the date of going into production and that this will apply to all Vanaspati sold during that period in Uttar Pradesh itself".
The appellant, on the basis of these unequivocal assurances, went ahead with the setting of the Vanaspati factory and made much progress.
By the middle of May 1969, the State Government started having second thoughts on the question of exemption and the appellant was requested to attend a meeting "to discuss the question of giving concession in Sales Tax on Vanaspati products".
The appellant immediately by its letter dated 19th May 1969 pointed out to the 5th respondent that so far as the appellant was concerned, the State Government had already granted exemption from sales tax by the letter of the Chief Secretary dated 23rd January, 1969, but still, the appellant would be glad to send its representative to attend the meeting.
The appellant 's representative did attend the meeting held on 3rd June 69 and reiterated that so far as the appellant was concerned, it had already been granted exemption from sales tax and the State Government stood committed to it The State Government, however, went back upon the assurance and a letter dated 20th January 1970 was addressed by the 5th respondent intimating that the Government had taken a policy decision that new Vanaspati units in the State which go into commercial production by 30th September 1970, would be given only partial concession in Sales Tax at different rates on each year of production.
The appellant, by its letter dated 25th June 1970, pointed out to the Secretary to the Government that the appellant proposed to start commercial production of Vanaspati with effect from 1st July 1970 and stated that, as notified in the letter of 20th January 1970, the appellant would be availing of the exemption granted by the State Government and would be charging Sales Tax at the rate of 3 1/2% instead of 7% on the sales of Vanaspati manufactured by it for the period of one year commencing from 1st July 1970.
The factory of the appellant thereafter went into production from 2nd July 1970 and the appellant informed the Secretary to the Government about the same by its letter dated 3rd July 1970.
The State Government, however, once again changed its decision and on 12th August 1970, a news item appeared in the 'Northern Indian Patrika ' stating that the Government had decided to rescind the earlier decision i.e. the decision set out in the letter dated 20th January 1970, to allow concession in the rates of Sales Tax to new Vanaspati Units.
The appellant thereupon filed a writ petition in the High Court of Allahabad asking for a writ directing the State Government to exempt the sales of Vanaspati manufactured by the appellant from Sales Tax for a period of three years commencing from 2nd January 1970 by issuing a notification under section 4A of the U.P. Sales Tax Act from the appellant for the said period of three years.
The plea based on the 643 doctrine of promissory estoppel was, however rejected by the Division Bench of the High Court principally on the ground that the appellant had waived the exemption, if any, by accepting the concessional rates set out in the letter of the respondent dated 20th January 1970.
Allowing the appeal by certificate, the Court, ^ HELD: 1.
The view taken by the High Court, namely, that even if there was an assurance given by the 4th respondent on behalf of the State Government and such assurance was binding on the State Government on the principle of promissory estoppel, the appellant had waived its right under it by a accepting the concessional rates of sales tax set out in the letter of the 5th respondent dated 20th January, 1970 is not correct.
[656 D E] 2.
Waiver is a question of fact and it must be properly pleaded and proved.
No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation for it is laid in the pleadings.
[656 E F] In the instant case: (a) the plea of waiver was not taken by the State Government in the affidavit filed on its behalf in reply to the writ petition, nor was it indicated even vaguely in such affidavit.
It was raised for the first time at the hearing of the writ petition.
That was clearly impermissible without an amendment of the affidavit in reply or a supplementary affidavit raising such plea.
[656 F] (b) It was not right for the High Court to have allowed the plea of waiver to be raised against the appellant and that plea should have been rejected in limine.
If waiver were properly pleaded in the affidavit in reply, the appellant would have had an opportunity of placing on record facts showing why and in what circumstances the appellant came to address the letter dated 25th June 1970 and establishing that on those facts there was no waiver by the appellant of its right to exemption under the assurance given by the 4th respondent.
But in the absence of such pleading in the affidavit in reply, this opportunity was denied to the appellant [656F H] 3.
Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be "an intentional act with knowledge".
There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it.
[657A, B] In the instant case, on the facts, the plea of waiver could not be said to have been made out by the State Government: There was nothing to state that at the date when the appellant addressed the letter dated 25th June 1970, it had full knowledge of its right to exemption under the assurance given by the 4th respondent and that it intentionally abandoned such right.
It is not possible to presume in the absence of any material placed before the Court, that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June 1970.
It is difficult to speculate what was the reason why the appellant addressed the letter 25th June 1970 stating that it would avail of the concessional rates of sales tax granted under the letter dated 20th January 1970.
[657 D E] 644 Earl of Darnley vs London, Chathan and Dover Rly.
Co. (Proprietors etc.), @ 57 Craine vs Colonial Mutual Fire Insurance Co. Ltd. ; ; Martindala vs Faulkner ; quoted with approval.
The doctrine called 'promissory estoppel ', 'equitable estoppel ', 'quasi estoppel ', and 'new estoppel ' is a principle evolved by equity to avoid injustice where a promise is made by a person knowing that it would be acted on and it is person to whom it is made and in fact it is so acted on and it is inequitable to allow the party making the promise to go back upon it.
Though commonly named promissory estoppel it is neither in the realm of contract nor in the realm of estoppel.
The basis of the doctrine is the inter position of equity, which has always true to its form stepped in to mitigate the rigours of strict law.
[658 E G] 5.
The true principle of promissory estoppel is that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relationship effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is infact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any pre existing relationship between the parties or not.
Equity will in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights even where they arise, not under any contract, but on his own title deeds or under statute.
[662 B D] To the applicability of the doctrine of promissory estoppel it is not necessary that there should be some contractual relationship between the parties.
Nor can any such limitation, namely, that the doctrine of promissory estoppel is limited in its operation to cases where the parties are already contractually bound and one of the parties induces the other to believe that the strict rights under the contract would not be enforced be justifiably introduced to curtail the width and amplitude of the doctrine.
The parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel take its origin.
The doctrine would apply even where there is no pre existing legal relationship between the parties, but the promise is intended to create legal relations or affect a legal relationship whish will arise in future.
[660 G H, 661 A, F G].
Jorden V. Money, , Hughes vs Metropolitan Railway Co., , Birmingam & District Land Co. vs London and North Western Rail Co., ]1888] ; discussed and questioned.
Central London Property Trust Ltd. vs High Trees House Ltd., [1947] K.B. p. 130:: ; explained.
Evenden vs Guildford City Association Football Club Ltd., @ 272 :: @ 255; Crabb vs Arun District Council.
@ 875:: @ 858 CA; quoted with approval.
645 6.
The doctrine of promissory estoppel cannot be inhibited by the same limitation estoppel in the strict sense of the term.
It is an equitable principle evolved by the Courts for doing justice and there is no reason why it should be given only a limited application by way of defence and it should only be a shield and not a sword to found a cause of action.
It can be the basis of a cause of action.
[662 D E, 663 E F].
There is no qualitative difference between 'proprietary estoppel ' and 'promissory estoppel '.
Both are the off springs of equity and if equity is flexible enough to permit proprietary estoppel to be used as a cause of action, there is no reason in logic or principle why promissory estoppel should also not be available as cause of action, if necessary to satisfy the equity.
[665 G H] Central London Property Trust Ltd. vs High Trees House Ltd .
[1947]1 K.B.P. 130: ; Combe vs Combe ; ; Beesly vs Hallwood Estate Ltd. ; Municipal Corporation of Bombay.v Secty.
of State I.L.R. @ 607; Mooregate Mercantile Co. Ltd. vs Twichings,s ; referred to.
Crabb vs Arun District Council @ 875 explained.
Ramsden vs Dysen,[1866] L.R H.L. 129; Dunlop Pneuntafic Tyre Co. vs Saifridge & Co. Ltd. ; discussed.
Law is not a mausoleum.
It is not an antique to be taken down, dusted admired and put back on the shelf.
It is rather like an old but vigorous tree having its roots in history, yet continuously taking new grafts and putting out new sprouts and occasionally dropping dead wood.
It is essentially a social process, the end product of which is justice and hence it must keep on growing and developing with changing social concepts and values.
Otherwise, there will be estrangement between law and justice and law will cease to have legitimacy Though 'continuity with the past is a historical necessity ', 'conformity is not to be turned into a fetish '.
[668 H, 669 A B].
Therefore, despite the fact that allowing promissory estoppel to found a cause of action would seriously dilute the principle which requires consideration to support a contractual obligation, this new principle, which is a child of equity brought into the world with a view to promoting honesty and good faith and bringing, law closer to justice should not be held in fetters but allowed to operate in all its activist magnitude.
so that it may fulfil the purpose for which was conceived and born.
[668 F G].
Robertson v Minister of Pensions.
Evenden Guldford city Association Football Club Ltd. [1975] 3 All.
E.R. p. 269.
Candler vs Crane Christmas & Co. @ 178; quoted with approval.
A promise may, in the United States, derive contractual enforceability if it has been made by the promisor knowing or intending that it would be acted on and the promisee has altered his position in reliance on it, notwithstanding that there is no consideration in the sense in which that word is used in English 646 and Commonwealth jurisprudence.
However, the basic requirement for invoking this principle must be present namely that the fact situation should be such that injustice can be avoided only by enforcement of the promise.
The doctrine of promissory estoppel has been used in the United States to reduce, if not to destroy, the prestige of consideration as an essential of valid contract and also used in diverse other situations as founding a cause of action: [670 D E, 673 B].
Alleghany College vs National Chauteaque Country Bank 57 Am L. R. 980; Drennan vs Stat Paving Company [1958] 31 California 2nd 409; referred.
Under the English law, the judicially formed view is that the crown is not immune from liability under the doctrine of promissory estoppel and the view taken by Denning J., in that the crown cannot escape its obligation under the doctrine of promissory estoppel by "praying in aid the doctrine of executive necessity" still holds the field.
[674 D].
Robretson vs Minister of Pensions [1949] 1 K. B. 227; quoted with approval: Rederiaktiebolaget Amphitrities.
vs The King ; referred to.
Howell vs Falmouth Boat Construction Co. Ltd. ; explained 10.
Even in the United States, the trend in the State Courts, of late, has been strongly in favour of the application of the doctrine of promissory estoppel against the Government and public bodies "where interests of justice, morality and common fairness clearly dictate that course".
It is being increasingly felt that "the Government ought to set a high standard in its dealings and relationships with citizens and the word of a duly authorised Government agent, acting within the scope of his authority, ought to be as good as a Government bond".
The Government would not be estopped "by the acts of its officers and agents who without authority enter into agreements to do what the law does not sanction or permit" and "these dealing with an agent of the Government must be held to have notice of limitations of his authority".
But if the acts of omissions of officers of the Government are within the scope of their authority and are not otherwise impermissible under the law, they "will work estoppel against Government".
[676 F H, 677 A D] Federal Crop Insurance Corporarion vs Maroill ; 92 L. ed.
discussed and explained.
Valsonavich vs United States p. 96; quoted With approval.
Where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution.
[682 G H, 683 A].
647 It is elementary that in a Republic governed by the rule of law, no one, a however high or low is above the law.
Every one is subject to the law as fully and completely as any other and the Government is no exception.
It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned; the former is equally bound as the latter.
On no principle can a Government committed to the rule of law, claim immunity from the doctrine of promissory estoppel.
The Government cannot be heard to say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of 'honesty and good faith '.
In fact the Government should be held to a high "standard of rectangular rectitude while dealing with its citizens".
[683 A C].
Gangaes Manufacturing co vs Surajmull and Ors., I.L.R. ; Municipal Corporation of Bombay vs The Secretary of State, I,L.R. 29 Bomb.
588; approved.
Collector of Bombay vs Municipal Corporoaton of rlle City of Bombay and Ors.
; ; Union of India vs Indo Afghan Agencies, ; ; followed.
Ransden vs Dyson,[1866] L.R. 1HL 170; referred to.
Robertson vs Minister of Pensions, [1949] 1 K. B. 227; quoted with approval as the correct law.
The doctrine of executive necessity, regarded as sufficient Justification for the Government to repudiate even its contractual obligations was emphatically negatived in the Indo Afghan Agencies case and the supremacy of the laws was established, [683 C D].
Therefore, it is not open to Government to claim immunity from the applicability of the rule of promissory estopped and thereby repudiate a promise made by it on the ground that such promise may fetter its future executive action.
If the Government wants to preserve its freedom of executive action from being hampered or restricted, the Government should not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it.
But, if the Government makes such a promise and the promisee acts in reliance upon it and alters his position the Government would be compelled to make good such promise like any other private individual.
[683 D F].
The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society.
It should be the constant endeavor of the Courts and the legislatures to close the gap between law and morality and bring about as near an approximation between the two as possible.
The doctrine of promissory estopped is a significant judicial contribution in that direction.[683 F G].
Since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires.
If it could be shown the by Government that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the Government.
648 The doctrine of promissory estoppel would be displaced in such a case because on the facts, equity would not require that the Government should be held bound by the promise made by it.
[683 G H, 684 A] When the Government is able to show that in view of the facts, as they have transpired public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance, the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies.
It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it.
The Government cannot claim to be exempt from the liability to carry out the promise 'on some indefinite and undisclosed ground of necessity or expediency ', nor can the Government claim to be the sole judge of its liability and repudiate it 'on an exparte appraisement of the circumstances.
[684 A D] In order to resist its liability, the Government should disclose to the Court the various events necessitating its claim to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government.
[684 D E].
Mere claim of change of policy would not be sufficient to exonerate the Government from the liability: the Government would have to show precisely the changed policy with the reason and justification therefor, to enable the Court to judge for "itself which way the public interest lies and what equity of the case demands.
It is only if the Court is satisfied, on proper and adequate material placed by the Government, that over riding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it that the Court would refuse to enforce the promise against the Government.
[684 E F] The essence of the rule of law is that the Court would not act on the mere ipse dixit of the Government, for it is the Court which has to decide and not the Government, whether the Government should be held exempt from liability.[684 F G] The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden.
But even where there is no such over riding public interest, it may still be competent to the Government to resile from the promise 'on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position ' provided of course it is possible for the promisee to restore status quo ante.
If, however, the promisee cannot resume his position, the promise would become final and irrevocable.
[684 G H, 685 A].
Emmanuel Ayodeji Ajayi vs R. T. Briscoe, [1964] 3 All.
E.R. 556; referred to 649 14.
So far as the doctrine of promissory estoppel is concerned, no distinction can be made between a private individual and a public body.
This doctrine is also applicable against a public body like a municipal council.
However, this doctrine cannot be applied in teeth of an obligation or liability imposed by law.
It cannot be invoked to compel the Government or even a private party to do an act prohibited by law.
There can also be no promissory estoppel against the exercise of legislative power.
The Legislature can never be precluded from exercising its legislative function by resort to the doctrine of pro missory estoppel.
[688C, G H 689 A].
Century Spinng and Manufacturing Co. Ltd. & Anr.
vs The Ulhasnagr Municipal Council and Anr.
[1970] 3 SCR 854; Turner Mossison and Co. Ltd. vs Hunngerfard Investmetn Trust Ltd.[1972] 3 S.C.R. 711; discussed & followed.
M. Ramanatha Pillai vs The Stare of Kerala & Anr.
5 @ 526; Assistant Cusrodian vs Brij Kishore Agarwala & Ors. ; , explained and held inapplicable.
Sate of Kerala vs Gwalior Rayon Silk Manufacturing Co. Ltd. ; @ 688; reiterated.
Malhortra and Sons & Ors.
vs Union of India and Ors.
A.I.R. 1976 J & K p. 41 approved.
Excise Commissioner U.P. Allahabad vs Ram Kumar ; Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. vs Sipali Sangil and Ors.
[1978] 1 S R 375; ; ; Radha Krishan Agarwal vs State of Bihar and Ors. ; ;: ; ; explained.
In order to attract the applicability of the doctrine of promissory estoppel, it is not necessary that the promisee, acting in reliance on the promise, should suffer any deteriment.
What is necessary is no more than that there should be alteration of his position in reliance on the promise.
If detriment were a necessary element, there would be no need for the doctrine of promissory estoppel because, in that event in quite a few cases, the detriment would form the consideration and the promise would be binding, as a contract.
If by deteriment is meant injustice to the promisee which would result if the promisor were to resile from his promisee, then detriment would certainly come in as a necessary ingredient.
The detriment in such a case is not some prejudice sneered by the promisee acting on the promise, put the prejudice which would be caused to the promisee, if the promisor were allowed to back on the promise.
It is not necessary for the promisee to show that he has acted to his detriment.
All that he has to show is that he has acted to reliance on the promise and altered his position.
[694 A B, F G, 695 E, 694 D].
Central London Property Trust Ltd. V. High Trees House, [1947] K.B. p. 130:: [1956] 1 All.
E.R. 256, W. J. Alan & Co. Ltd. vs El Nasar Export and Import Co. [1972] 2 All.
E.R. p. 127, @ p. 140, Tool Metal Manufacturing Co. Ltd. vs Tunosten Electric Co. Ltd. [1955] All.
E. R. 657; [1975] 1 W. L. R. 761 Emmaulel Ayodeji 650 Ajya V. R. T. Briscoe Karnmins Ballrooms Ltd. vs Zenith Investments (Torquay) Ltd. , Grurldt vs the Boulder Pty.
Gold Mines Ltd. ; ; quoted with approval.
In the instant case.
The facts necessary for involving the doctrine of promissory estoppel were clearly resent and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect of sales of Vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production.
[693 F G] (a) The letter dated 23rd January 1969 was a representation on behalf of the Government, the representation having been made by the 4th respondent in his capacity as the Chief Secretary of the Government categorically to the effect that the appellant would be entitled to exemption from sales tax in respect of the sale of vanaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production.
This representation was made by way of clarification in view of the suggestion in the appellant letter dated 2 nd January 1969 that the financial institutions were not prep ed to regard the earlier letter of the 4th respondent dated 22nd December 1968 as a definite commitment on the part of the Government to grant exemption from sales tax.
[692 H, 693 A B] (b) The representation made by the 4th respondent was a representation within the scope of his authority and was binding on the Government in as much as the 4th respondent, who was at the material time the Chief Secretary to the Government and also Adviser to the Governor discharging the functions of the Government during the President 's Rule had authority to bind the Governor.
Moreover the averment to this effect in the Writ Petition was not denied by the State in the affidavit in reply filed on its behalf [693 C D].
(c) This representation was made by the Government knowing or intending that it would be acted on by the appellant because the appellant made it clear that it was only on account of the exemption from sales tax promised by the Government that the appellant had decided to set up the factory for manufacture of Vanaspati.
In fact the appellant relying on this representation of the Government, borrowed moneys from various financial institutions, purchased plant and machinery from M/s. De Smith (India) Pvt. Ltd., Bombay and set up a Vanaspati factory at Kanpur.
[693 E F]
|
Civil Appeal No. 487 of 1977.
Appeal by Special leave from the Judgment and order dated the 5th January, 1977 of the orissa High Court in O.J.C. No. 810 of 1976.
V S Desai, Parveen Kumar and Ashok Mathur for the Appellant.
C.V. Murty, K. PrabhaKar Rao and C.M. Murty for the Respondents.
R.K. Mehta for Respondent No. 3.
B.D. Sharma for Respondent No. 2.
The Judgment of the Court was delivered by MISRA J.
: The present appeal by special leave is directed against the judgment of the High Court of Orissa dated 5th January ]977 dismissing a petition under 'articles 226 and 227 of the Constitution ' for quashing imposition of octroi under section 131(1)(kk) of the Orissa Municipal Act, 1950 (hereinafter referred to as the 'Act ') and for . '.
a declaration.
that the notifications dated 31st July 1973 and 12th August, 1975 issued by the State Government in exercise of powers .
vested under s.4 of the Act are illegal and unenforceable and for a further declaration that the octroi Bye laws of the Jharsuguda Municipal Council are also void and inoperative.
Jharsuguda Municipality, respondent No. 1, is a municipality incorporated under the Act.
In March 1962 the State Government 'accorded sanction for the imposition of octroi in terms of s.]3](]) of the Act. ' A set of octroi bye laws were framed by the Municipal Council in terms of s.388 of the Act and the same were also approved by the State Government in exercise of powers under s.390 of the Act on 19th March, 1968.
octroi was levied for the first time after 31st March 1962 when the State Government accorded sanction under s.131 (i)(kk) of the Act.
The appellant is a company duly incorporated under the Indian having its mills located at village Ektali under the Jharsuguda police station in District Sambalpur, Orissa.
The said area of the village was included within the Ektali Panchayat.
The company mainly carries on spinning of cotton which in the manu . 404 facturing ' process is transformed from loose fibres into finished yarn.
The area under the Ektali village in which the appellants ' factory was located was constituted, along with other villages as a Gram by a declaration made under s.3 of the, Orissa ' Grama Panchayat Act, 1964.
On or about 25th March, 1970 Jharsuguda Municipality passed a resolution for the inclusion of Ektali and other villages in the Jharsuguda Municipality and thus extending the area of the said Municipality.
Against the proposed extension the appellant made a representation to the State Government inter alia on the ground that he said, village Ektali could not under the relevant rules be included in the Municipality under s.4(1)(c) of the Orissa Municipal Act, 1950 in view of the proviso to s.4(1) which contemplates that a declaration shall not be made under this sub section unless the State Government are satisfied that two thirds of the adult male population of the town to which it refers are chiefly employed in pursuits other than agriculture and that such a town contains not less than 10,000 inhabitants and an average number of not less than 1000 inhabitants to a square mile of the area of such a town.
The appellant alleged that the male population of the said village Ektali was 2640 as per 1971 census report, out of which only 1586 were chiefly employed in pursuits other than agriculture and thus two thirds of such male population were not employed in non agricultural pursuits.
The State Government, however, by a notification dated 31st July 1973 declared their intention under s.4(1)(c) of the Municipal Act, 1950 to include within the Jharsuguda Municipality the local area of a number of villages including the village Ektali.
By the said notification published in Orissa Gazette Extraordinary dated 22nd August, 1973 the Government invited objections within six weeks from the date of publication.
The appellant did file objection to the said notification.
Objection was also filed by Grama Panchayat of Ektali to the effect that the Ektali Grama was duly constituted , by the State Government in Community Development and Panchayat Raj Department in exercise of powers under s.3(1) of the Orissa Grama Panchayat Act and in the absence or any notification under s.3(1) and s.149 of the Grama Panchayat Act, village Ektali still continues to be a Grama.
The objections were examined by the District Magistrate, Sambalpur and the Revenue Division Commissioner Northern Division, .
Sambalpur and the same were rejected.
On 12th August, 1975, notification under s.4(33(b) declaring the inclusion of the said villagsa 405 including the village Ektali, into Jharsuguda Municipality was issued.
Soon thereafter on Ist September, 1975 the said Jharsuguda Municipality sent a letter to the appellant directing it to pay octroi as per provisions of s.5 of the Orissa Municipal Act.
The said octroi was payable at the rate of 1 per cent ad valorem on cotton as soon as it entered the municipal check post for the purpose of its being spun into yarn.
The levy or octroi duty was challenged by filing a petition under articles 226 and 227 of the Constitution on various grounds viz.
,(a) the inclusion of village Ektali in the area of Jharsuguda Municipality was illegal and ultra vires the provisions of the Orissa Municipal Act, and (b) the levy of octroi duty at the rate of I percent ad valorem was arbitrary, coercive and violative of article 301 of the Constitution and, therefore, the appellant prayed for quashing the notifications referred to above.
The writ petition was, however, dismissed by a Division Bench of the Orissa High Court by its order dated 5th January.
1977 The appellant filed an application under article 133(1) of the Constitution for the grant of a certificate for leave to appeal to 'this Court, which was dismissed by the High Court by its order dated 19th January, 1977.
The appellant has now filed the present appeal after obtaining special leave from this Court.
The learned counsel for the appellant raised the following contentions: .
In the absence of a notification cancelling the declaration constituting Ektali village as part of Grama, it was not legally permissible for the State Government acting ' under the Orissa Municipal Act 1 950 to include within the area of the municipality the area of the said Grama. 2.
The mandatory requirements of proviso to sub s.(l) of s.4 of the Orissa Municipal Act, 1950 have not beer satisfied.
The objection filed by the appellant under sub s.(2) of s.4 has not been considered by the State Government.
(a) The liability to octroi arises when any of the three alternatives mentioned in s.]31(1)(kk) of the Municipal Act is satisfied viz., when the goods are brought 406 within the municipal limits for (i) consumption, (ii) use or (iii) sale.
(b) The tax already imposed within the limits of the Municipality of Jharsuguda could not be automatically made applicable to the extended limits of the municipality without obtaining the sanction of the State Government under s.131(1) (kh) of the Act.
(c) The rate levied is per se unreasonable and arbitrary.
We take up these grounds seriatim.
Admittedly village Ektali where the factory of the appellant is located was a part of the duly constituted Ektali Grama Panchayat prior to 1973, within the meaning of s.3 of the Orissa Grama Panchayat Act.
Sub section (1) of s.3 authorises the State Government to constitute any village or group of contiguous villages as a Grama by a declaration notified in the Gazette and assign to such Grama a name which shall be of one of the villages comprised within the Grama.
Subsection (2) of 5.3 provided that whenever the State Government deems it fit so to do, they may cancel any notification in respect of a Grama under sub s (1) on may alter the area comprised in a Grama by reducing or adding to the number of villages comprised within such Grama by a declaration 'notified in the Gazette constituting such altered area or areas as a Grama or Gramas, as the case may be.
The precise contention raised on behalf of the appellant is that there was a declaration by notification for the.
constitution of the Grama within the meaning of sub s.(l), but there has been no notification as required by sub s,(2) of s.3 for taking village Ektali out of Grama Panchayat and, therefore, village Ektali continues to be a Grama and the inclusion of village Ektali in Jharsuguda Municipality by notifications dated 31st July, 1973 and 12th August, 1975 will have no effect.
This contention has considerable force: When a duly constituted Grama is to go out of existence an order of the Magistrate cancelling the notification in terms of sub s.(2) of s.3 of the Grama Panchayat Act is necessary.
But there are circumstances which take away the force of the argument.
The Grama Panchayat never ' challenged the notification of inclusion of the village Ektali in Jhar 407 suguda Municipality.
From un controverted averment made in para 6 of the counter affidavit of the State filed before the High Court it appears that the Grama Panchayat was consulted before the impugned notification.
Therefore, we do not feel persuaded to accept the contention at the instance of the appellant.
This leads us to the second ground.
In order to.
appreciate the second ground it is appropriate at this stage to refer to the provisions of s.1 in so far as it is relevant for the purposes of the case: "4.(1) The State Government may, by notification declare their intention (a) to constitute any town, together with, or exclusive of, any railway station, village, land or building in the vicinity of any such town, a municipality under this Act: or (b) . . . . . . . (c) to include within a municipality any local area contiguous to the same and defined in the notification; or (d) . . . (e) . . .
(f) . . . (g) . . . (h) . . .
Provided that a declaration shall not be made under this sub section unless the State Government are satisfied that two thirds of the adult male population of the town to which it refers, are chiefly employed in pursuits other than agricultural, and that such town contains not less than ten thousand inhabitants and an average number of not less than one thousand inhabitants to the square mile of the area of such town, 408 (2) Any inhabitant of the town or local area, or any, rate payer of the municipality, in respect of, which any .
such notification has been published under sub section (l) may, if he objects to anything contained in the notification, submit his objection in writing to the State Government.
through the Magistrate of the district within six weeks from the date of the publication of the notification and the ' State .
Government shall take his objections into consideration.
(3) . ." The emphasis of the appellant is that two third of the adult male population of the Grama should be chiefly employed in pursuits other than agricultural.
The appellant has referred to 1971 census figures.
On the basis of these census figures it is argued that out of the total male population of 2640 of Grama Ektali only 1586 adults were engaged in non agricultural pursuits hut the requirement of law was that two third of the male population should have been employed in the non agricultural pursuits which comes to 1760.
The argument proceeds on the assumption that the proviso to s.4(1) applies.
But a bare persual of the proviso clearly indicates that the requirement is that two thirds of the adult male population of the town to which it refers should be engaged in non agricultural ' pursuits.
The provision, to our mind, applies not to all the classes of sub s.(l) of s.4 but it applies only to cl.(a) of sub s.(l) of s.4, because it is cl.(a) of s.4(1) which talks of town.
Therefore, the proviso, in .
Our opinion, has no application to the present case and that cannot be taken to be a ground for challenging the notification for inclusion of village Ektali in the Jharsuguda Municipality.
This takes us to the third ground.
The appellant had filed an objection under sub s.(2) of s.4.
The said objection was examined by the District Magistrate, Sambalpur and the Revenue Divisional Commissioner (Northern Division), Sambalpur: They overruled the objection treating it to be of general nature.
Thereafter, the Community Development and the Panchati Raj (Grama Panchayat) Department were consulted to agree with this proposal, to which they agreed, and it was thereafter.
that the Urban Development Department issued a final notification dated 12th August, 1975 to include the above village into the municipal limits of Jharsuguda Municipality.
The contention of the appellant that the objection had not been considered by the State Government 409 cannot be accepted in as much as the objection is required to be made through the Magistrate of the district.
Naturally, the District Magistrate while forwarding the objection to the State Government made his comment.
The Revenue Divisional Commissioner intervenes in the channel of communication between the District Magistrate and the State Government and he, therefore, had an occasion to.
process the matter.
The State Government while dealing with the matter consulted the.
Panchayati Raj Department and ultimately notified in terms of notification dated 12th August, 1975.
In the circumstances it cannot be accepted that the objection filed by the appellant had not been considered by the State Government.
It was next contended that the liability for octroi arises when ally of the three alternatives mentioned in s.131(1)(kk) of the Municipal Act are satisfied, namely, when the goods are brought within the municipal limits fol (i) consumption, (ii) use, or (iii) sale.
Section 131(1) of the Municipal Act empowers the Municipal Council to impose various kids of taxes within the limits of the Municipality with the sanction of the State Government.
One of the taxes contemplated by s.313 (l) is octroi, as provided in cl.
According to the appellant the goods are brought into the municipal area not for the purpose of sale or for consumption but for the purpose of manufacture of yarn.
The appellant took support from Burmah Shell Oil Storage & Distribution Co. India Ltd. vs The Belgam Borough Municipality in which this Court had an occasion to consider the word 'Consumption '.
This Court took the view that the word 'consumption ' in is primary sense means the act of con summing and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article, but in some legal contexts, the word 'Consumption has a wider meaning and that it is .
not necessary that by the act of consumption the commodity must be ' destroyed or used up.
On the strength of this authority it is con tended that the goods were brought into the municipal limits neither .
For consumption, nor for sale.
Assuming the contention to be correct there is no escape from the conclusion that the goods are brought into the municipal limits at.
least for the purpose of use.
In this view of the legal position the imposition of octroi by the Municipality cannot be challenged on this ground.
The next ground of attack is based on s.372 of the Orissa Municipal Act.
Section 392 pertinently reads: H 410 "392.
The State Government before making any rules under sub section (2) of section 81 and section 387, and a municipal council, before making any regulation or by laws under section 388, shall publish, in such manner as the State Government deem sufficient for giving information to persons interested, the proposed rules or regulations or by laws together with a notice specifying a date on or after which the same will be taken into consideration; and shall before making such rules or regulations or by laws, receive and consider any objection or suggestion which may be made by any person with respect to the same before the date so specified.
Every such rule or regulation or by law shall be published in the Gazette in English and in Oriya and such publication shall be evidence that the rule or regulation or by law has been made as required by this section.
" It is contended that the mandatory requirements having not been complied with the imposition of octroi is vitiated on this account.
The appellant in para 3 of the Writ petition had alleged that the bye laws 'were not published in the State Gazette either in Oriya or in English.
This allegation has, however, been controverted by the State Government in para ]8 of the counter affidavit.
It was specifically averred that the bye laws were approved and confirmed by the Government in Urban Development Department vide.
Order No. 1903/Legis 43 67/UD dated nil published in Orissa Gazette for information of the general public on 23rd May, 1969 at pages 691 to 697.
There is a statutory presumption under s.3 of the Act that the publication of the rules or regulations or by laws in the Gazette shall be evidence that the rule or regulation or bye law has been made as required by this section.
In view of this statutory presumption the Court will assume that the bye law has been made in accordance with law in the absence of anything more from the side of the appellant.
As a second limb to this argument it was contended by the appellant that even assuming that the bye laws when initially enforced might be presumed to be in accordance with law, in the absence of similar steps being taken at the time of extension of bye Jaws to the newly added area, the bye laws are not enforceable in the new area.
411 This argument has proceeded in utter oblivion of the provisions of s.5 of the Municipal Act.
It reads: "5.
When any local area is included in a municipality, by a notification under clause (b) or (c) of sub section (3) of section 4, all the provisions of this Act and of any rules, by laws, notifications, or orders made thereunder, which immediately before such inclusion were in force throughout such municipality, shall be deemed to apply to such area, unless the State Government, in and by the notification, otherwise direct." The learned counsel for the appellant, however, has placed strong reliance upon Visakhapatnam Municipality vs Kandrequla Nukaraju & Ors.
In that case the question that fell for consideration was whether the property tax which could lawfully be levied under the District Municipalities Act 1929 can be levied after the repeal of that Act, on property situated in the areas included within the municipal limits after the constitution of the municipality.
Section 391(1) of the Andhra Pradesh Municipalities Act 1965 expressly repealed the.
District Municipalities Act, 1920 from which it must follow that ordinarily no action can be taken under the Act of 1920 after April 1, 1966 when the repeal became effective on the coming into force of the Act.
It was, however, contended in that case that cl.
la of Schedule 9 of the Act keeps the repealed enactment alive for tax purposes and, therefore, the municipality had the authority to impose the property tax under the Act of 1920 notwithstanding its repeal by the new Act.
This Court, however, took the view that the provisions contained in the Schedule are of a transitional nature.
They were intended to apply during the period of transition following upon the repeal of old municipal laws and the introduction of the li new law.
The object of clause 12 of Schedule 9 was to authorise the levy of taxes which, on the commencement of the Act, Were levied under the repealed laws.
This Court further added that the municipality might have been levying property tax since long on properties situated within its limits, but until April 1, 1966 the villages of Ramakrishnapuram and Sriharipuram were outside those limits.
Qua the areas newly included within the municipal limits, the tax was being imposed for the first time and therefore it was incumbent on the municipality to follow the procedure prescribed by the first proviso to section 81(2).
Residents and tax payers of those areas never had 412 an opportunity to object to the imposition of the tax and that valuable opportunity cannot be denied to them.
It is obligatory upon the municipality not only to invite objections to the proposed tax but also to consider the objections received by it within the specified period.
For the State, however, reliance was placed in that case on s.3(4) of the Act to contend that the inclusion of the two villages within the municipal area attracts of its own force every provision of the Act with effect from the dale on which the final notification is published.
by the Government under s.3(3).
In support of this contention it cited the decision of this Court in Atlas Cycle Industrial Ltd. vs State of Haryana & Anr.
This argument on behalf of the State was, however, repelled and the Court observed :.
"Far from supporting the argument, we consider that the decision shows how a provision like the one contained in Section 3(4) cannot have the effect contended for by the appellant.
In the Atlas Cycle case, section 5(4) of the Punjab Municipality Act, 1911 provided that when any local area was included in the municipality, "this Act and. all .
rules, bye laws, orders, directions and powers made, issued or conferred under this Act and in force throughout the whole municipality at the time, shall apply to such areas.".
" But this Court took the view that since section 5(4) of the Punjab Act did not, significantly, refer to notifications and since section 62(1) of the Punjab Act spoke of "notification" for the imposition of taxes, it was not competent to the municipality to levy and collect octroi from the company on the strength merely of the provision contained in section 5(4) of the Punjab Act.
That case, however, is distinguishable and cannot be of much assistance for solving the problem before us.
Section 5 of the orissa Municipal Act makes all the provisions of the Act and of any rules, by laws, notifications, or orders made thereunder, which immediately before such inclusion were in force throughout such municipality, applicable to such area, unless the State Government, in and by the notification, otherwise direct.
This section, therefore, includes not only the provisions of the Act, rules and bye laws but also includes notifications.
This distinguishes the.
present case from the Visakhapatnam Municipality 's case (supra).
413 For the appellant, next reliance was placed upon Bagalkot City Municipality vs Bagalkot Cement.(1) In that case also at the time of the imposition of the octroi duty the respondent 's factory was situated outside the municipal district and was not subject to the octroi duty.
Subsequently, the Government extended the municipal district so that the factory came to be included within that district.
The appellant in that case contended that upon such extension its octroi limits also stood extended to include the factory and the respondent became liable to pay octroi duty in respect of goods brought into the factory.
The majority view was that the expression "municipal district" in the bye law referred to the municipal district as existing when the bye law was framed.
The context prevented the definition of "municipal .
district" in the Act, namely, the municipal district as from time to time existing from being applied under s.20 of the Bombay General Clauses Act to interpret the bye law The bye law had been made without being published to the respondent, and if it was so read referring to the municipal district from time to time existing it would be invalid for non compliance with the provisions of s.48 of the Act.
This case again is distinguishable in view of the wording of s.5 of the orissa Municipal Act: .
Lastly it is urged that the octroi duty levied in this case by the Municipality is unreasonable and excessive.
The Municipality is required to provide certain amenities not only for the permanent residents within the municipality, but also even for casual visitors who may on occasions enter the limits of the municipality.
The entry of large quantities of goods within the municipality almost daily from outside necessarily creates innumerable problems such as provisions of water supply, lighting facilities, facilities for conservancy, sanitation, maintenance of good roads and markets etc.
which the Jharsuguda Municipality has done and there is no allegation to the contrary by the appellant.
From the material placed before us we are of the view that the levy is not an unreasonable one.
It is not also excessive.
The imposition of octroi cannot, therefore, be challenged on the ground that there is violation of article 19(1)(g) of the Constitution.
Considering the case from any aspect the imposition of octroi duty, in our opinion, does not suffer from any infirmity.
414 For the foregoing discussion the appeal cannot succeed.
It is accordingly dismissed.
In the circumstances of the case, however, we allow the parties to bear their own costs.
S.R. Appeal dismissed.
| The appellant Textile Mills is a company duly incorporated under the Indian having its mills located at Village Ektaji under the Jharsuguda police station in district Sambalpur, Orissa.
The company mainly carries on spinning of Cotton which in the manufacturing process is transformed from loose fibres into finished yarn The area under the Ektaji village in which the appellant 's factory was located was earlier constituted as a Grama by a declaration made under Section 3 of the Orissa Grama Panchayat Act 1964.
On or about March 25, 1970 Jharsuguda Municipality passed a resolution for the inclusion of the Ektaji and other villages within its jurisdiction.
After considering the objections and representations against the inclusion of Ektaji village in the Municipal Limit and after following once again the other statutory requirement of further notice etc.
, the State Government published in the Orissa Gazette dated 12.8.1975 a notification approving the inclusion.
Soon thereafter on September 1, 1975 the said Jharsuguda Municipality sent a letter to the appellant directing it to pay octroi duty at the rate of I percent ad valorem on cotton as soon as it entered the Municipal check post for the purpose of its being spun into yarn.
The levy of octroi was challenged by filing a petition under articles 226 and 227 of the Constitution on various grounds, but the writ Petition was dismissed.
Petition seeking permission for issuance of a certificate under Article 133(1) of the Constitution was also dismissed.
Hence the appeal after obtaining Special Leave of the Court.
Dismissing the appeal the Court.
^ HELD: 1.
Considering the case from any aspect the imposition of Octroi duty under section 5 of the Orissa Municipal Act, 1950 does not suffer from any infirmity [413 H] 2.
The levy, being neither an unreasonable one nor also excessive, cannot .
be challenged on the ground that there is violation of Article 19(1)(e) of the Constitution.
[413 a] 402 3.
It is true that when a duly constituted Grama under sub section (I) of section 3 of the Grama.
Panchayat Act is to go out of existence an order of the Magistrate cancelling the Notification in terms of sub section (2) of Section 3 of the said Act is a pre requisite.
But in the instant case the Gram Panchayat never challenged the Notification of inclusion of the Village Ektaji in Jharsuguda ' Municipality.
Rather on the other hand the Gram panchayat was consulted before the impugned notification dated 12th August 1975 was issued.
[406 H; 407 A] 4.
The proviso to sub section 1 of Section 4 of the Orissa Municipal.
Act, 1950 has no application to the present case and that cannot be taken to be a ground for challenging the Notification for inclusion of Village Ektaji hl the Jharsuguda Municipality.
A bare perusal of the proviso clearly indicates that the requirement is that two thirds of the adult, male population of the town to which it refers should be engaged in non agricultural pursuits The proviso applies not to all the clauses of sub section (I) of section 4 but it.
applies only to clause (a) of sub section (1) of Section 4, because it is clause (a) of section 4 (1) which talks of town.
[408 E F] 5.
The contention that the objection raised by the appellant against the inclusion of the village in question into Municipality has not been considered by the State has no force.
The objection is required to be made through the Magistrate of the District.
Naturally the District Magistrate.
while forwarding the objection to the State Government made his comment.
The Revenue Divisional officer who intervenes in the channel of communication between the District Magistrate and the State Government had an occasion to process the matter.
The State Government while dealing with the matter consulted the Panchayat Raj Department and ultimately notified in terms of the notification dated August 12, 1975.
[408H; 409A B] 6.
Section 131(1) of the Municipal Act empower the Municipal Council to impose various kinds of taxes which includes octroi as provided in Clause (kk) with the sanction of the Government since the goods are brought into the municipal limits at least for the purpose of use" one of the three conditions laid down in clause (kk the imposition of Octroi is valid.
Burmah Shell Oil Storage & Distribution Co. vs The Belgam Borough Municipality ' [1963] Supp 2 SCR 216 referred to and held inapplicable.
[409 D E] 7:1.
There is a statutory presumption under section 392 of the Orissa Municipal Act, 1950 that the publication of the rules or regulations or bye laws in the Gazette shall be evidence that the rule pr regulation or bye law has, been mad as required by the section Therefore the court will assume that the bye law has been made in accordance with law in the absence of anything more from the site of the appellant.
1410 F G] 7 :2; The argument that even assuming that the bye laws when initially enforced might be presumed to be in accordance with law in the absence of similar steps being taken at the time of extension of bye laws to the newly added area, the bye laws are not enforceable in the new areas is not correct as it has, proceed in utter oblivion of the provisions of section 5 of the Municipal Act.
[410H; 411 A] Vishakhapatanam Municipality vs Kandregula Nukarajau & Ors. ; ; Atlas Cycle Industries Ltd. vs State of Haryana and Anr. ; ; Bagalkot City Municipality v Bagalkot Cement [1963] 2 Supp S.C.R. 710; distinguished 403
|
Civil Appeal Nos.
2254 & 2255 of 1968.
(From the Judgment and Order dated the 10 1 1967 of the Madhya Pradesh High Court in Misc.
First Appeal No. 12/64) Ram Panjwani, Rameshwar Nath, for the appellant in both the appeals.
A. G. Ratnaparkhi, for respondent No. 1 in CA 2254/68.
S.K. Gambhir, for respondent No. 1 in CA No. 2255/68.
The Judgment of the Court was delivered by GUPTA, J.
On June 23, 1961 a bus owned by the appellant which was going from Gwalior to Indore met with an accident as a result of which two of the passengers, Mrs. Usha Kotas thane, aged about 23 years, and her one year old son, died and several others received serious injuries.
Among the injured was one Sailesh Kumar, a boy of about four years.
Claims for compensation were filed before the Motor Acci dent Claims Tribunal at Gwalior.
The application for com pensation for the death of Mrs. Usha Kotasthane and her child was made by her husband Shri Sudhakar Kotasthane, and the claim in respect of the injury to minor Sailesh Kumar was made on his behalf by his guardian mother Shrimati Indubala Bhandari.
Sudhakar Kotasthane and Indubala Bhand ari were also travelling in the same bus and both sustained injuries and were awarded compensation by the tribunal, but these appeals do not concern their cases or the claim in respect of Kotasthane 's dead child.
The two appeals before us at the instance of the Madhya Pradesh State Road Trans port Corporation, on certificate granted by the Madhya Pradesh High Court, are against the common judgment of the High Court enhancing the quantum of damages awarded by the claims tribunal in respect of the death of Mrs. Usha Kotas thane and the injury sustained by Sailesh Kumar.
C.A. 2254 of 1968 relates to the award in Mrs. Kotasthane 's case and C.A. 2255 of 1968 to that in the case of Sailesh Kumar.
629 As regards the death of Mrs. Usha Kotasthane, the claims tribunal awarded Rs. 15000/ as damages to her hus band Sudhakar.
At the time of her death she was employed as a Physical Instructress in a school at Indore, getting a salary of Rs. 190/ per month, in the grade of Rs.150 10 250.
Admittedly Sudhakar remarried within a year of the death of his first wife.
This is how the tribu nal dealt with the claim: "In the present case, it is a case of the death of the wife.
The husband was not dependent on the earning of his wife.
He was himself earning independently.
The applicant has no where stated that on account of the death of his former wife, he has been deprived of her income, nor that he was dependant upon her.
It is true; that 'the wife of the appli cant was educated, healthy, employed, and earning.
As far as, the loss of companionship is concerned, it is again true that he faced this loss for nearly, 11 months, after which, he married for the second time.
No cross examination has been led by the non applicant on the point that the second wife is as accom plished, educated, and healthy as the former one was.
The death of the wife of the appli cant must have caused him mental shock, pain and inconvenient in his house hold.
The work in the house, which he could take from his wife in looking to the household was also not available to the applicant during this period of 11 month.
The advantage of established married life with a child in the lap, was also lossed to the applicant during this time.
Taking into consideration all these facts, in favour of the applicant, and the fact, against him that he was married again after 11 months, of the death of his wife, I think, it will be proper to award damages amounting to Rs. 15000/ for the loss of life of his wife, which resulted into conditions of inconven ience, suffering shock derangement in house and the life, for a period of nearly 11 months.
" Both sudhakar Kotasthane and Madhya Pradesh State Road Transport Corporation preferred appeals to the High Court from the decision of the tribunal.
The High Court proceeded as follows.
The "span of her earning life" was counted as 35 years taking 58 years as the age of superannuation.
For the first six years from the date of accident, the High Court took Rs. 200/ as the average monthly income, and for the remaining twenty nine years of service the average income per month was fixed at Rs. 250/ .
On this basis the High Court computed her total earning to be Rs. 96,000/ .
Giving allowance for her own expenses and also taking into account the promotions and consequently the increased salary she might have earned, the High Court thought that she could have "easily spread" half of this amount for the household and estimated the loss of income on account of her death in round figures, at Rs. 50,000/ .The High Court enhanced the compensation accordingly.
Regarding Sudhakar 's second, marriage the High Court observed: 630 "But even so the second marriage cannot be said to be a substitute for the ' first one.
The second wife is not an earning member of the family nor is it shown that Sudhakar has in any way benefitted from the second marriage financial ly.
Therefore the financial loss would be there despite the second marriage.
" On these findings the High Court allowed the appeal filed by Sudhakar Kotasthane and dismissed that preferred by the Madhya Pradesh State Road Transport Corporation.
The extract from the tribunal 's order quoted above suggests that in fixing the quantum of compensation the tribunal was under the impression that the applicant had made no claim on the ground of ' pecuniary loss resulting from his wife 's death.
In this the tribunal was clearly in error.
In paragraph 11 of the claim petition, Rs. 75,000/is claimed as compensation and the paragraph makes it clear, that the sum is computed on the deceased 's expected earn ings.
If there were no such claim the tribunal would have been hardly justified in awarding Rs. 15000/ as damages for the mental shock and inconvenience suffered by the applicant for a period of 11 months only, after which he remarried.
The High Court also does not seem to be right in estimating the damages at Rs. 50,000/ in the manner it did.
Whether the deceased 's average monthly salary is taken to be Rs. 200/ or Rs. 250/we find it difficult to agree that only half of that amount would have been sufficient for her monthly expenses till she retired from service, so that the remaining half may be taken as the measure of her husband 's monthly loss.
It is not impossible that she would have contributed half of her salary to the household but then it is reasonable to suppose that the husband who was employed at a slightly higher salary would have contributed his share to the common pool which would have been utilised for the lodging and board of both of them.
We do not therefore think it is correct to assume that the husband 's loss amounted to half the monthly salary the deceased was likely to draw until she retired.
If on an average she contributed Rs. 100/every month to the common pool, then his loss would be roughly not more than Rs. 50/ a month and, assuming she worked till she was 58 years, the total loss would not exceed Rs. 19,000/ .
But in assessing damages certain other factors have to be taken note of which the High Court over looked, such as the uncertainties of life and the fact of accelerated payment that the husband would be getting a lump sum payment which but for his wife 's death would have been available to him in driblets over a number of years Allowance must be made for the uncertainties and the total figure scaled down accordingly.
The deceased might not have been able to earn till the age of retirement for some reason or other, like illness or for having.
to spend more time to look after the family which was expected to grow.
Thus the amount assessed has to be reduced taking into account these imponderable factors.
Some element of conjecture is inevitable in assessing damages Pearce in Mallet v Mc Monagle, 1970 (A.C.) (H.L.) 166 Lord( 174)calls it "reson able prophecy"sTaking note of all the relevant factors, the sum of Rs.15000/ awarded by the tribunal appears to be a reasonable figure which h we do not find any reason to disturb.
631 A method of assessing damages, usually followed in England, as appears from Mallet vs Mc Monagle (supra), is to calculate the net pecuniary loss upon an annual basis and to "arrive at the total award b multiplying the figure as sessed as the amount of the annual "dependency" by a number of "year 's purchase" ", (p. 178) that is, the number of years the benefit was expected to last, taking into consid eration the imponderable factors in fixing either the multi plier or the multiplicand, The husband may not be dependant on the wife 's income, the basis of assessing the damages payable to the husband for the death of his wife would be similar.
Here, the lady had 35 years of service before her when she died.
We have found that the claimant 's loss reasonably works out to Rs. 50/ a month i.e. Rs. 600/ a year.
Keeping in mind all the relevant facts and contingen cies and taking 20 as the suitable multiplier, the figure come to Rs. 12,000/ .
The tribunal 's award cannot there fore ' be challenged as too low though it was not based on proper grounds.
In a decision of the Kerala.
High Court relied on by the appellant (P. B. Kader vs Thatchamma: AIR 1970 Kerala 241 ), to which one of us was a party, the same method of assessing compensation was adopted.
The other appeal (C.A. No. 2255 of 1968) relates to the injury sustained by a boy aged about four years.
He suf fered compound fracture of his right tibia and fabula lower third near the ankle joint with infection of the wound.
Skin grafting had to be done and the boy had to remain in hospital from June 25, to August 4, 1961.
AccOrding to the doctor who examined him, the child was likely to develop a permanent limp which might require another operation at the age of 16 years or so.
In any case, in the opinion of the doctor the deformity was certain to persist till the boy was 16 years when another operation might remove it.
The tribu nal awarded Rs. 10,000/as general damages and Rs. 890/ as special damages.
The High Court increased the general damages to Rs. 20,000/ .
It appears from the evidence that the boy comes from a well to do family.
Though the possibil ity was there of the deformity being removed by surgical operation when he grew up to be 16 years, the other possi bility cannot be altogether ruled out.
That being the position, we are not inclined to interfere with the sum awarded by the High Court.
In the result, appeal No. 2254 of 1968 is allowed, the judgment of the High Court is set aside and the award of the tribunal is restored; appeal No. 2255 of 1968 is dismissed.
There will be no order as to costs in either appeal.
C.A. 2254 of 1968 allowed.
S.R. C.A. 2255 of 1968 dismissed.
| In a bus accident on June 23, 1961, one Mrs. Usha Kotas thane and her one year old son died.
One Sailesh Kumar.
a boy of about four years coming from a well to do family was disabled due to a compound fracture of his right tibia and fabula lower third near the ankle joint.
_ Sudhakar Kotas thane, the husband of the deceased and respondent No. 1 in C.A. 2254 of 1968 and Smt.
Indu Bala Bhandari.
mother of Sailesh Kumar and respondent No. 1 in C.A. 2255 of 1968 applied to the Motor Accident Claims Tribunal, Gwalior for compensation.
The Tribunal took into consideration (i) the loss of life of Sudhakar 's wife which resulted into condi tions of inconvenience, suffering, shock, derangement in house and the life for a period of nearly 11 months i.e., till he remarried and (ii) The fact that Mrs. Usha was working as Physical Instructress in a school getting a salary of Rs. 190/ p,m.
in the scale of Rs. 150 10 250 and awarded a sum of Rs. 15,000/ as compensation as against the claim of Rs. 75,000/ computed on the deceased 's earn ings.
The Tribunal also awarded a sum of Rs. 10,000/ as damages and Rs. 890/ as special damages to Smt.
Indubala.
Both the respondents and the appellant preferred appeals to the High Court from the decision of the Tribunal.
The High Court enhanced the compensation to Rs. 50,000/ in the case of Sudhakar and to Rs. 20,000/ in the case of Indubala.
Allowing the appeal in C.A. No. 2254 of 1968 and dis missing the appeal in C.A. No. 2255 of 1968, the Court.
HELD: (1) A method of assessing damages usually followed in England is to calculate the net pecuniary loss upon an annual basis and "to arrive at a total award by multiplying the figure assessed as the amount of the annual 'dependency ' by a number of year 's purchase", that is, the number of years that benefit was expected to last taking into consid eration the imponderable factors in fixing either the multi plier or the multiplicand.
The husband may not be dependant on the wife 's income.
the basis of assessing the damages payable to the husband for the death of his wife would be similar.
[631 AB] Rule in Mallet vs Mc Mongale 1970 (A.C.) H.L. 166 at 174 quoted with approval.
P.B. Kaclar vs Thatchamma AIR 1970 Kerala 241, approved.
In assessing damages certain other factors have to be taken note of, such as, the uncertainties of life and the fact of accelerated payment that the husband would be getting a lump sum payment which but for his wife 's death would have been available to him in driblets over a number of years.
Allowance must be made for the uncertainties and the total figure sealed down accordingly.
The deceased might not have been able to earn till the age of retirement 628 for some reason or other, like illness or for having to spend more time to look after the family which was expected to grow.
Thus, the amount assessed has to be reduced taking into account these imponderable factors.
[630 G H] In the instant case, the deceased had 35 years of serv ice before her when she died.
The claimant 's loss reasona bly works out to Rs. 50/ a month i.e., Rs. 600/ a year.
Keeping in mind all the relevant factors and contingencies and taking 20 as the suitable multiplier, the figure comes to Rs. 12,000.
The Tribunal 's award cannot, therefore, be challenged as too low though it was not based on proper grounds.
The High Court was also not right in estimating the damages at Rs. 50,000/ in the manner it did.
2255 of 1968: Though the possibility was there, in the instant case, of the deformity being removed by surgical operation when the boy grew up to be 16 years, the other possibility of "likelihood to develop a permanent limp" cannot be altogeth er ruled out.
That being the position, the increase of general damages to Rs. 20,000/ , in the instant case, in addition to Rs. 890/ as special damages is proper.
[631 D F]
|
ivil Appeal No. 3535 of 1982.
From the Judgment and Order dated 16.3.
1982 of the Calcutta High Court in F.M.A No. 282 of 1981 & C.R. No. 3842 (m) of 1980.
T.S. Krishnamurthy Iyer, G.L. Sanghi, G.S. Chatterjee and D.P. Mukherjee for the Appellant.
L.N. Sinha, M.P. Jha, K.C. Mittal and A.K. Chopra for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal directed against the judg ment of a Division Bench of the High Court of Calcutta in Appeal from Original Order No. 282 of 1981 with C.R. No. 3842 (m) of 1980.
The relevant facts for the purpose of this appeal can be shortly stated.
In August 1969, the appellant before us obtained a money decree in the High Court at Calcutta against the judgment debtor Maharaj Kumar Maley Chand Mahatab.
On 31st July 1970 the appellant filed a petition for execution of the decree, numbered as Title Execution Case No. 19 of 1970.
On 3rd August 1970 attachment was levied in execution on open land 1040 belonging to the judgment debtor admeasuring about 19 Kathas at 10A, Diamond Harbour Road, and portion of premises No. 2 Judges Court Road, now, numbered as 6/1D, Diamond Harbour Road and 2/A, Judges Court Road, 24 Paraganas respectively.
On 14th September 1970, the judgment debtor sold a portion of the attached property admeasuring a little over to 11 Kathas to one Bharat Shamshere Jung Bahadur Rana.
On 29th March, 1972 Bharat Shamshere ,lung Bahadur Rana sold a portion of the said land admeasuring a little over 9 Kathas (referred to hereinafter as "the said property") to Prabhat ilal Chowdhary and others who are the respondents in the present appeal.
On 9th May, 1972 the aforesaid Execution Petition, namely.
Title Execution Case No. 19 of 1970 was dismisssed for default.
On 16th September, 1975, on an application by the appellant, the said Title Execution Case No. 19 of 1970 was restored.
On a petition dated 26th Sep tember, 1975 the said property was again attached.
Thereaf ter.
a proclamation for sale of the said property was issued under Order 21 Rule 66 of the Code of Civil Procedure.
The respondents Prabhatilal Chowdhary & Others filed a petition under Order 21 Rule 58 of C.P.C. for releasing the said property from attachment.
This application was registered as Misc.
Case No. 8 of 1978.
On 11th August, 1980 the said Misc.
Case No. 8 filed by Prabhatilal and Others was dis missed.
On 16th March, 1982 the aforesaid appeal from Order No. 282 of 1981 and C.R. NO. 2843(m) of 1980 was allowed by the Calcutta High Court.
It is this decision allowing the said appeal which is assailed before us.
Mr. Sanghi, learned counsel for the appellant urged that the sale of the said property by the judgment debtor to Bharat Shamshere Jung Bahadur Rana and the sale of the said property by the said Bharat Shamshere Jung Bahadur Rana to the respondent were both effected during the subsistence of the attachment.
Although the attachment ceased on the dis missal of the said Title Execution Case on 9th May, 1972, the said attachment was revived by reason of restoration of the said case on 16th September, 1975.
It was submitted by him that, in view of the provisions of Section 64 of the Code of Civil Procedure, the sale of the said property by the judgment debtor to Bharat Shamshere Jung Bahadur Rana and the sale of the same by the Bharat Shamshere Jung Baha dur Rana to the respondent are both void as against the appellant decree holder.
Section 64 of the Code of Civil Procedure runs as follows: "Where an attachment has been made, any private transfer 1041 or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attach ment.
" There is an Explanation to this Section, but it is not material for our purposes.
Order 21 Rule 57 as it stood prior to its amendment in 1976 and as amended by the Calcutta High Court as follows: "Where any property has been attached in execution of a decree but by reason of the decree holder 's default the Court is unable to proceed further with the application for execution, it shall either dismiss the appli cation or for any sufficient reason adjourn the proceedings to a future date.
Upon the dismissal of such application the attachment shall cease unless the Court shall make an order to the contrary.
" The words "unless the Court shall make an order to the contrary" have been added by way of amendment to the said Rule made by the Calcutta High Court.
In view of the plain wording of the aforesaid Rule, it is clear that when the aforesaid Title Execution Suit was dismissed for default, the attachment levied ceased as no order to continue that attachment was made by the Court.
The question as to what is the effect of the restoration of the said Title Execution Suit, that is, whether the said resto ration would restore the original attachment and, if so, to what extent.
In this connection, it has been held by the Calcutta High Court that where an order for releasing property from attachment is set aside on appeal, the effect is to make the property still subject to the attachment and to restore the state of things which had been disturbed by the order of release.
It makes no difference whether the order for releasing the attachment under Order 21 Rule 63 of the Code of Civil Procedure is passed in appeal or revision.
(See Sushila Bala Dasi vs Guest Keen Williams, Ltd., I.L.R. 1949 Vol.
1 Calcutta, p. 177.
A Division Bench of the Madras High Court in Annapurna Patrani & Ors.
vs Lakshmana Kara & Anr., A.I.R. 1950, Ma dras, p. 740 has held that where in execution of decree property is attached 1042 but the petition for execution is dismissed for default and on appeal the order of dismissal for default is set aside, the effect of the appellate order is to restore the order attaching property and the trial Court would have to proceed with the execution application from the stage at which it had interrupted it by dismissing it for default.
The appel late order restoring attachment would relate back to the date when the attachment was first made and would render invalid any alienation in the interim period.
A similar view has been taken by a learned Single Judge of the Bombay High Court in Pradyut Natwarlal Shah vs SuryakantN. Sangani & Ors., A.I.R. 1979 Bombay, p. 166.
However, in the present case the restoration of the Title Execution Case was not made on an appeal or revision, whereby order of dismissing the said suit for default was set aside, but the said suit has been restored on an appli cation made for restoration.
Such an order for restoration cannot be equated with an order passed on appeal or in 2revision setting aside the dismissal.
In this case we are not called upon to consider what is the effect of an order of dismissing the Execution Application for default being set aside on appeal or revision, and we do not propose to express any opinion in that connection.
In a case which is more relevant for determination of the question before us, namely, Tavvala Veeraswami vs Pulim Ram anna & Ors., A.I.R 1935 Madras, p. 365 which was decided by a full Bench of the Madras High Court an order dismissing a suit for default was set aside on an application for that purpose.
It was held that where an order dismissing a suit for default is set aside on an application for that purpose, the suit remains as it was on the day when it was dismissed and all proceed ings taken up upto that date must be deemed to be in force when the dismissal is set aside and all interlocutory orders will be revived on the setting aside of the dismissal.
Similarly, an order for attachment of property will also be revived.
In that case an attachment before judgment was raised on security being furnished.
The suit in which the attachment was levied was dismissed for default, but was restored on an application made for that purpose and decreed and the decreeholder sought to enforce the security bond.
It was held that on the restoration of the suit, all ancillary orders were restored without any further order, and that therefore, the security bond given for the raising of at tachment before judgment was also restored and the decree holder was entitled to enforce the security bond.
It was observed by Beasley C.J., who delivered the judgment with which other learned Judges concurred, as follows: "It does not seem to be reasonable that the plaintiff in a 1043 suit who has got an attachment before judgment should have again, after the restoration of the suit after its dismissal for default, to apply to the Court for a fresh attachment and that having done so, the defendant should have to apply to raise the attachment by producing a surety or sureties.
The commonsense view of the matter is that all ancillary orders should be restored on the suit 's restoration without any further orders.
" In the present case both, the sale by the judgment debtor to Bharat Shamshere Jung Bahadur Rana and the sale by Bharat Shamshere Jung Bahadur Rana to the respondent, were effected during the subsistence of the attachment and before the Title Execution Case was dismissed for default.
In our view, even if a doubt were to be entertained as to whether an order for restoration of the suit or execution applica tion would have the effect of restoring the attachment retrospectively so as to affect alienations made during the period between dismissal of the suit or execution applica tion and the order directing restoration, it is clear that an order of restoration would certainly restore or revive the attachment for the period during which it was in sub sistence, namely, prior to the dismissal of the suit or execution application.
The learned counsel for the respondent drew our atten tion to the decision of the Division Bench of the Calcutta High Court in the case of Patringa Koer vs Madhavanand Ram & Ors., Calcutta Law Journal, 1911, Vol.
14 p. 476 where it was held that a revival of execution proceedings does not operate as revival of the attachment so as to prejudice the rights of strangers who have in the interval acquired a title to the property.
The reversal of judicial orders leaves unaffected the rights of strangers, bona fide pur chasers, whether under execution sale or under private sale, who have acquired title on the assumption that such orders were valid in law.
A careful reading of this decision shows it is of no assistance to the case of the respondent because the judgment makes it clear that what was really held was that in the absence of statutory provisions to the contrary, the court cannot cancel the order of dismissal for default of an execution application with retrospective effect so as to prejudice the title that might have been acquired in the interval by a stranger, when the property was admittedly not in the custody of the Court.
This decision might have helped the respondents if the alienations in question had been effected during the interval between the dismissal of the Title Execution Case and its restoration.
But, in the present case, the alienations were effected 1044 when the attachment was subsisting as we have already point ed out and hence this decision is of no assistance to the respondents.
We are not called upon to consider as to wheth er the aforesaid decision lays down good law or as to what would have been the effect of the restoration of the Title Execution Case had the alienations been effected during the aforesaid interval and we do not propose to say anything in this regard.
In our view, the Division Bench of the Calcutta High Court was in error in taking the view, in the judgment appealed against, that by reason of the dismissal of the said Title Execution Case, the attachment came to an end and the order of restoration of the said case would not affect any alienation made before the restoration although such alienations might have been made during the subsistence of the attachment.
We may mention that our attention was drawn to the amendment of Rule 57 of Order 21 made by the Calcutta High Court, but in our view that amendment merely provides that although under Rule 57 of Order 21 the attachment would cease on an order dismissing the application for execution it is open to the Court to make an order to the contrary.
which would mean that the Court could make an order to continue the attachment for some time.
The amendment, howev er, is of no relevance in the case before us.
In the result, the appeal is allowed, the impugned judgment set aside and the order of First Subordinate Jude at Alipore in Misc.
Case No. 8 of 1978 which was set aside by the Calcutta High Court restored.
The respondents must pay to the appellant the cost of the appeal.
N.P.V. Appeal allowed.
| The appellant filed a petition for execution of the money decree obtained by her in High Court against the judgment debtor and attachment was levied in execution on open land and a portion of the premises in question belong ing to the judgment debtor.
Subsequently, the judgment debtor sold a portion of the attached property.
The purchas er in turn, sold a portion thereof to the respondents.
The aforesaid execution petition was dismissed for default but later on an application by the appellant, the said Execution Case was restored, and the said property was again attached, and a proclamation for sale of the said property was issued under Order 21 Rule 66 of the Code of Civil Procedure.
The respondents ' petition under Order 21, Rule 58 of C.P.C. for releasing the property purchased by the respondents from attachment was dismissed.
The High Court allowed the appeal.
In appeal to this Court, it was urged on behalf of the appellant that in view of the provisions of Section 64 of the Code of Civil procedure, the sale of the property by the judgment debtor to the purchaser and the sale thereafter by him to the respondents, which were both effected during the subsistence of the attachment, were void as against the appellant decree holder, and although the attachment ceased on the dismissal of the Title Execution Case, on May 9, 1972, it was revived by restoration of the case.
Allowing the appeal, this Court, HELD: An order of restoration of a suit dismissed for default would certainly restore or revive the attachment for the period during which it was in subsistence, namely, prior to the dismissal of the suit or execution application.
[ 1043D] 1039 In the present case both transactions, sale by the judgment debtor and subsequent sale by the purchaser to the respondents, were effected during the subsistence of the attachment and before the Title Execution Case was dismissed for default.
[1043C] The Division Bench of the High Court was in error in taking the view that by reason of the dismissal of the said Title Execution Case, the attachment came to an end and the order of restoration of the said case would not affect any alienations made before the restoration, although such alienations might have been made during the subsistence of the attachment.
[1044C] Sushila Bala Dasi vs Guest Keen Williams Ltd., I.L.R. 1949 Vol.
1 Calcutta, p. 177 Annapuma Patrani & Ors.
vs Lakshmana Kara & Anr., A.I.R. 1950, Madras, p. 740; Pradyut Natwarlal Shah vs Suryakant H. Sangani & Ors., A.I.R. 1979 Bombay, p. 166; Tavvala Veeraswami vs Pulim Ramanna & Ors., A.I.R. 1935 Madras, p. 365 and Patringa koer vs Madhavanand Ram & Ors., Calcutta Law Journal, 1911, Vol.
14 p. 476, referred to.
|
Municipal Corporation Act, cannot be interpreted so as to justify imposition of terminal tax even on goods which merely passed through the territory of Delhi, although their destination is not Delhi but places beyond Delhi.
[908 F G] 3.2.
Merely because the goods after having been unloaded in the godown of appellant Tuli are sorted, reloaded in different trucks and thereafter pass through the territory of Delhi, they do not become exigible to terminal tax.
[908 G H] 3.3.
Rule 26 of the Terminal Tax cannot be interpreted so that exemption could be granted only if the goods are exported immediately which means within a very short time irrespective of any other consideration.
Terminal tax can be leviable only if it is proved that the goods remained at the godown for an indefinite and unexplained period which could not be said to be reasonable in the circumstances.
[908 H, 909 A B] 3.4.
Where the goods are carried by trucks into the territory of Delhi and unloaded there and are also meant for Delhi and soon thereafter may be re booked by the receiver of the goods to some other place, terminal tax would be leviable because in this case there are two separate transactions (i) by which the goods are meant for Delhi and (ii) by which after having reached and having been unloaded at Delhi they are rebooked and reloaded for some other place and which therefore is a fresh and different transaction.
In such a case, terminal tax would be leviable at the entry point in the territory of Delhi.
[909 B C] 3.5.
The direction given by the High Court to the Terminal Tax Officer to fix a reasonable time for unloading, sorting and reloading the goods which are 897 meant for different destinations taking into consideration the quantity of the goods.
the time for unloading, sorting etc.
and for further reloading and transhipment should be done within a time to be fixed by a Terminal Tax Officer is correct.
[909 E F] & CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
2004 2005 Of 1980.
Appeals by Special Leave from the Judgment and Order dated 13 10 1978 of the Delhi High Court in LPA Nos.
73/77 and 103/77.
Madan Bhatia and Sushil Kumar for the Appellant in both the appeals.
R.B. Datar, Lalit Bhardwaj and Miss Madhu Mulchandani for Respondent Nos.
P.R. Rao, S.R. Venkataraman, P.C. Kapur, R.C. Bhatia and S.L. Sharma for Respondent No. 5 in Civil Appeal No. 2004/80.
N.B. Sinha and S.K. Sinha for Respondent No. 4.
The Judgment of the Court was delivered by FAZAL ALI, J.
These appeals by special leave are directed against a Division Bench common judgment dated October 13, 1978 of the High Court of Delhi by which the Letters Patent Appeals were allowed and the impugned Orders dated May 23, 1975 and July 7, 1975 passed by the Terminal Tax Officer, Municipal Corporation of Delhi were quashed.
The facts of the case lie within a very narrow compass and may be summarized as follows.
Manmohan Tuli, appellant in C.A. No. 2004/80, is the owner of a piece of land situate on the Grand Trunk Road near the sixth milestone as one goes from Delhi to Ghaziabad.
Appellant Tuli has constructed various buildings on his land for use as godowns and has rented them out to various transport companies engaged in bringing good from other States and storing them before their transhipment to Delhi and other States beyond Delhi.
The trucks carrying the goods for various destinations pass along the G.T. Road and move into Tuli 's land.
It is not disputed that after the trucks enter the land, the goods are unloaded into the godowns, sorted out and reloaded into the respective trucks meant for various destinations.
Thereafter the trucks move out of the land and passing through the Union Territory of Delhi after crossing the border line, proceed to their destinations.
The Municipal Corporation of Delhi (hereinafter referred to as the Corporation,) by its Orders dated May 23, 1975 and July 7, 1975 (hereinafter referred to as the "inpugned orders ') directed that a Terminal Tax post be sets up at the entrance to Tuli 's land in order to collect 898 terminal tax on goods carried into that land.
The Ghaziabad Nagar Palika also purported to levy terminal tax on such goods but this levy was neither assailed before the High Court nor has been challenged before us and is therefore left out of consideration.
A writ was filed before the High Court by the owners of transport companies as also by Tull for quashing the orders of the Corporation seeking to levy terminal tax on the goods which were not meant for Delhi but for places beyond Delhi.
Further details are not necessary for the decision of these appeals and both the appeals (C.A. Nos. 2004 and 2005 of 1980) will be disposed of by a common judgment.
The High Court vide the impugned judgment was of the opinion that even though the goods were stored in the godown of Tull, sorted out and reloaded but as they while passing through the territory of Delhi undoubtedly entered the said territory, the Corporation was legally entitled to levy terminal tax at the point of entry into the Union Territory of Delhi.
The case of the appellant was that the goods were not meant either to be used or consumed in Delhi nor was Delhi the final destination of the goods.
It was a different matter that as the goods were to be sent to destination beyond Delhi the transport carrying the goods had perforce to pass through the territory of Delhi.
It was thus contended that the goods were not carried into the territory of Delhi but were merely carried through the territory of Delhi to other destinations which were beyond Delhi.
It was argued that section 178 of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the 'Act ') had in terms no application to the case and that therefore the terminal tax imposed by the impugned orders was legally invalid.
The counsel for the respondent, however, submitted that even though the goods may have been meant for other destinations but as they were unloaded in the godown and reloaded in various trucks and actually entered into the territory of Delhi, they were factually carried into the Delhi territory and that was sufficient to empower the Corporation to levy the terminal tax.
According to the argument of the counsel for the Corporation, the question of destination was not at all germane for the purpose of adjudicating the competency of the Corporation to levy terminal tax at the point of entry into Delhi.
Thus, the entire question turns upon the interpretation of s.178 of the Act and some Rules framed under the Act.
Relevant portion of section 178 runs thus: "178(1).
On and from the date of the establishment of the Corporation under section 3, there shall be levied on all goods carried by railway or road into the Union Territory of Delhi 899 from any place outside thereof, a terminal tax at the rates specified in the Tenth Schedule." (Emphasis supplied) The crucial words which have to be interpreted are: 'goods carried by railway or road into the Union Territory of Delhi from any place outside Delhi '.
The contention of the appellant is that the words 'goods carried into the Union Territory ' clearly indicate that the final destination of the goods must be Delhi and by virtue of this fact, the natural consequence would be that the goods should be carried from other places either by rail or by road into the territory of Delhi.
This argument was reinforced by the words 'terminal tax ' used in section 178 which imply that the terminus of the journey of the goods must be Delhi and only in that event the Corporation would be competent to levy a terminal tax.
This argument was sought to be rebutted by the respondents on the ground that the words 'carried into the Union Territory of Delhi ' should be interpreted independently and literally so as to indicate that even if the goods passed through Delhi, the moment they entered into the territory of Delhi terminal tax became exigible.
So far as this aspect of the argument is concerned, we are unable to accept the same because it is well settled that taxing statutes must be strictly interpreted giving every benefit of doubt to the tax payer.
Before, however, examining the respective contentions of the parties it may be necessary to refer to the authorities dealing with the history of terminal tax or octroi duty.
To begin with, it is not disputed that the power to subject the goods either to octroi or to terminal tax squarely falls within entries numbers 52 and 56 of List II to the Seventh Schedule of the Constitution.
In Punjab Flour & General Mills vs Lahore Corporation the Court while drawing a distinction between the type of taxes referred to as terminal taxes in Entry No. 58 of List I of Schedule 7 to the Government of India Act, and those described as cesses in Entry No. 49 of List II thereof observed as follows: "There appears to us a definite distinction between the type of taxes referred to as terminal taxes in Entry No. 58 of List I of Sch. 7 and the type of taxes referred to as cesses on the entry of goods into a local area in Entry No. 49 of List II.
The former taxes must be (a) terminal (b) confined to goods and passengers carried by railway or air.
They must be chargeable at a rail or air terminus and be 900 referable to services (whether of carriage or otherwise) rendered or to be rendered by some rail or air transport organisation.
The essential features of the cesses referred to in Entry No. 49 of List II are on the other hand simply (a) the entry of goods into a definite local area and (b) the requirement that the goods should enter for the purpose of consumption, use or sale therein.
The grounds of taxation under the two entries are, as indicated above, radically different, and there is no case for suggesting that taxation under the one entry limits or interferes in any way with taxation under the other." In The Central India Spinning & Weaving & Manufacturing Co. Ltd., The Empress Mills, Nagpur vs The Municipal Committee, Wardha this Court examined the entire matter exhaustively and after giving the history of terminal tax or octroi observed as follows: "If `terminal ' besides the above meaning has an additional meaning also and that meaning signifies the termini or the jurisdictional limits of the municipal area even then the construction to be placed on the term should be the one that favours the tax payer, in accordance with the principle of construction of taxing statutes, which must be strictly construed and in case of doubt must be construed against the taxing authorities and doubt resolved in favour of the tax payer." . . "The legislative history of this tax thus shows that octroi was leviable on the entry of goods in a local area when the goods were for consumption, use or sale therein.
The substituted tax was terminal tax on goods imported into or exported from a local area and by rules this tax in the case of Wardha Municipal Committee was imposed on certain class of goods imported and on others exported by railway or road." . . "That by the substitution of terminal tax on goods imported into a local area the nature of the tax had not been altered from what it was when octroi was in force or when instead of "terminal tax" octroi (without refund) was substituted . .
Therefore terminal tax on goods imported or exported is similar in its incidence and is payable on 901 goods on their journey ending within the municipal limits or commencing therefrom and not where the goods were merely in transit through the municipal limits and had their terminus elsewhere." . . "Therefore, according to the Federal Court "terminal" has reference to the terminus of the railway or air, i.e., the end of journey.
" A close analysis of this decision, therefore clearly discloses that a terminal tax signified that there must be a terminus for the journey of the goods.
The word 'terminus ' according to Oxford Dictionary means a point situated at or forming the end or extremity of something, situated at the end of a line of railway.
In other words, terminus means the point to which main action tends, goal, end, finishing point, the point at which something comes to an end.
In Corpus Juris Vol.
62 at p. 729 the word 'terminal ' in connection with transportation means the fixed beginning or ending point of a given run.
It would thus appear that a terminal tax could be levied only by the Corporation or the State which is the final destination of the goods sent from any other area.
A similar view was taken by a later decision of this Court in Bangalore Woollen, Cotton & Silk Mills Co. Ltd. Bangalore vs Corporation of the City of Bangalore where Kapur, J., speaking for the Court observed as follows: "The history of these taxes therefore shows that in the Devolution Rules under the Government of India Act, 1915 octroi, terminal tax and taxes on professions and callings were three distinct heads of taxation.
Therefore, when section 142 A was added in the Government of India Act, 1935, its operation was limited to entry 46 of List II and had no reference to entry 49 which deals with cesses on entry of goods.
The position under the Constitution is exactly the same and therefore neither section 142 A of the Government of India Act, 1935 nor article 276 has any effect on entry 49 in the Government of India Act, 1935 or entry 52 in the Constitution.
" In this case also a distinction between a terminal tax and octroi was clearly brought out.
In Diamond Sugar Mills Ltd. & Anr.
vs The State of Uttar Pradesh & Anr.
while defining a local area within 902 the meaning of Entry 52 of List II of Seventh Schedule to the Constitution, the Court observed as follows: "We are of opinion that the proper meaning to be attached to the words 'local area ' in Entry 52 of the Constitution, (when the area is a part of the State imposing the law) is an area administered by a local body like a municipality, a district board, a local board, a union board, a Panchayat or the like." In Burmah Shell Oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Municipality this Court again fully discussed the matter and Hidayatullah, J., speaking for the Court stressed the essential distinction between octroi and terminal tax in the following words: "Octrois and terminal taxes were different taxes though they resembled in one respect, namely, that they were leviable in respect of goods brought into a local area.
While terminal taxes were leviable on goods 'imported or exported ' from the Municipal limits denoting thereby that they were connected with the traffic of goods, octrois, according to the legislative practice then obtaining were, leviable in respect of goods brought into a Municipal area for consumption or use or sale. .
The history of these two taxes clearly shows that while terminal taxes were a kind of octroi which were concerned only with the entry of goods in a local area irrespective of whether they would be used there or not; octrois were taxes on goods brought into the area for consumption, use or sale.
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." In Khyerbari Tea Co. Ltd. & Anr.
vs The State of Assam Gajendragadkar, J. speaking for the Court drew a very apt distinction regarding the concept of import and observed as follows: "In that connection, the legislative history of the octroi duty was examined and it was held that the concept of import requires that the goods which are brought into must mix up with the mass of the property in the local area where the goods are alleged to have been imported.
If the goods are just carried and not mixed with the mass of the property in the area through which they are carried, they cannot be said 903 to have been imported into that area. .
The word "carried" is of much wider denotation, and it would be unreasonable to limit its scope by introducing considerations which are relevant in dealing with the question of import.
" Thus, from a consideration of the cases cited above, the following propositions emerge: (1) Terminal tax and octroi are similar kinds of levies which are closely interlinked with (1) destination of the goods, (2) the user in the local area on arrival of the goods.
Where the goods merely pass through a local area without being consumed therein the mere fact that the transport carrying the goods halt within the local area for transhipment or allied purposes would not justify the levy of either the terminal tax or octroi duty.
This is because the halting of the goods is only for an incidental purpose to effectuate the journey of the goods to the final destination by unloading, sorting and reloading them at a particular place.
(2) There is a very thin margin of difference between a terminal tax and octroi.
In the case of the former (terminal tax) the goods reach their final destination and their entry into the area of destination immediately attracts payment of terminal tax irrespective of their user.
In the case of octroi, however the tax is levied on goods for their use and consumption.
(3) But at the same time, the goods while halting at a local area should leave for their destination within a reasonable time which may depend on circumstances of each case and if the goods are kept within the area for such a long and indefinite period that the purpose of reaching the final destination lying in a different area is frustrated or defeated, they may be exigible to terminal tax.
(4) Where the goods enter into a local area which is also the destination of the goods either temporarily or otherwise, the terminal tax would be leviable.
For instance, if A consigns goods from Patna in Bihar to Delhi in the name of X and X after having received the goods at Delhi re books or reloads the same on a transport for Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi because the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax.
The fact that X 904 rebooks them to Chandigarh would not make any difference because the act of rebooking by X at Delhi would constitute a fresh transaction by which the goods after having been carried into Delhi are further exported to Chandigarh.
On the other hand, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be halted in Delhi for the purpose of unloading, sorting and reloading and may have to be kept in Delhi for a reasonable time.
In such a case terminal tax would not be exigible.
These principles are also spelt out by the American law on the subject which deals with inter state transport of goods.
In American Jurisprudence (2d, Vol.
15, p.689, para 49) the following statement is made, which is spelt out from various American decisions including those of the U.S. Supreme Court: "In the determination of whether a transportation of persons or property constitutes interstate or intrastate commerce, the essential character or unity of the movement is the decisive factor, While the intention of the shipper or passenger is probably the most important single factor in determining whether transportation is interstate or intra state intention alone has been said not to be a controlling factor in making such determination.
Inter state journeys are to be measured by the commonly accepted sense of the transportation concept. .
The parties cannot, by descriptive terms of contract, convert a local business, serving as an agency of a transportation company, into an interstate commerce business, nor, conversely, may a through shipment be transformed into intrastate commerce by separating the rate into its component parts, charging local rates, and issuing local waybills" Similar observations are to be found in the same volume of American Jurisprudence (p. 697, para 56) which relate to the continuity of transit of goods, and may be extracted thus: "The crucial question to be settled in determining whether Personal property moving in interstate commerce is subject to local taxation is that of its continuity of transit and this question is to be determined by various factors, among which are the intention of the owner, the control he retains to change destination.
the agency by 905 which the transit is effected, and the occasion or purpose of the interruption during which the tax is sought to be levied, Intent, while not alone conclusive, is probably the most important single determinant of continuous carriage.
If a break in the interstate journey is caused by the exigencies or conveniences of the safety of the goods during transit, or natural causes over which the taxpayer has no control, the continuity of the transit remains unimpaired".
The following statement of law occurs in the same volume(para 57, p. 698): "If during transit, property is stored for an indefinite time for other than natural causes or for lack of facilities for immediate transportation, it is subject to state or local laws, including inspection laws.
On the other hand, if the entry of goods into a warehouse is a convenient in termediate step in the process of getting them to their final destination, they remain in interstate or foreign commerce until they reach those points".
In the case of Champlain Realty Co. vs Town of Brattleboro one important aspect of the matter has been dealt with, viz., the fact that if the goods halt in an intermediate State whilst on their journey to their destination for a long period due to circumstances beyond the control of the owner, whether or not the goods lose the nature of the interstate transaction and could be free from the state taxation, was clearly highlighted by he following observations: "Longs of pulp wood which have been placed in a river to be floated into another state are in interstate commerce, so as to be free from state taxation, although, because of the high water in a connecting river into which they will ultimately pass, it is unsafe to permit them to enter that river, and they are temporarily held in a boom near the mouth of its tributary".
In the same case, C.J. Taft indicated the various aspects of interruptions in the journey and the incidence thereof and observed as follows: "The doubt arises when there are interruptions in the journey, and when the property, its transportation, is 906 under the complete control of the owner during the passage If the interruptions are only to promote the safe or convenient transit, then the continuity of the interstate trip is not broken.
. . . .
Chief among these are the intention of the owner, the control he retains to change destination, the agency by which the transit is effected, the actual continuity of the transportation, and the occasion or purpose of the interruption during which the tax is sought to be levied".
In Volume 78 L Ed at p. 138 the test laid down was that if the shipment was made in good faith to a destination and the interruption was not indefinite but reasonable the continuity of the journey cannot be said to be broken.
It was also pointed out that where the interruption of the movement of commodities at an intermediate point is not incidental to the transportation, the shipment loses the character of interstate commerce so as to be exigible to local taxation.
In this connection, the following observations were made: "If the shipment has been made in good faith to a destination the interruption is not indefinite, but is reason able and solely in furtherance of the intended transportation of the shipment to its ultimate destination, then the continuity of the journey is not broken by the delay nor by the mere power of the owner there to destroy its character as interstate commerce. .any interruption of the movement of commodities at an intermediate point between origin and final destination that is not incidental to the transportation or the means of transportation or, being so incidental, is used or extended for purposes of the owner not incidental to the transportation or the means used therefor, breaks the continuity in transit and subjects the shipment to local taxation at the point of interruption".
We have laid special stress on the circumstances under which the terminal tax becomes leviable if the halt or interruption of the goods at an intermediate point is for an indefinite and unexplained period.
The answer to the question as to what would be a reasonable time for interruption of the goods or halting in the instant case at the godown of Tuli, will naturally depend on the special features or circumstances of each case, viz., the nature of the goods, 907 the time taken in loading, sorting and unloading, the obstacles or difficulties which may be faced by the transporters and similar other factors.
Normally, a time of two to three days or even a week should be sufficient to clear the goods for its journey to the ultimate destination.
It may sometimes happen that goods may have to be kept in the godowns in the territory of Delhi for circumstances beyond the control of the consignee or the consignor, e.g., while the goods are lying in a godown at Delhi a dispute occurs between the concerned parties as a result of which an injunction is issued by a court restraining the transporters from moving the goods.
In considering what is reasonable time these circumstances would have to be taken into consideration.
It, was however, argued before us that according to the Terminal tax Rules framed under the Act, Rule 26 exempts goods from terminal tax if the same are exported immediately and are declared to be intended for immediate export.
In view of the interpretation we have placed on section 178 it is obvious that the word "immediately "appearing in Rule 26 has to be liberally construed so as to imply a reasonable period and if the export is delayed the rules may apply if a reasonable explanation has been given.
So far as rules regarding taking of passes, etc, at the barrier are concerned they would, of course, apply but subject to the conditions under which terminal tax can be imposed under s.178 of the Act which is the main charging section.
The High Court appears to have placed some reliance on Amrit Banspati Co. Ltd. vs The Union of India in coming to the conclusion that in the instant case the Corporation was legally entitled to levy terminal tax.
With due respect to the Judges of the High Court who decided the Appeals, we would like to point out that the case just above referred to is clearly distinguishable from the present appeals.
The most crucial fact in the Delhi decision was that the goods were being carried into the Union Territory of Delhi for the purpose of sale at Delhi.
Thus, the case proceeded on the admitted position that the goods were carried from Ghaziabad into the Delhi territory for sale at Delhi.
The final destination of the goods being Delhi, there can be no doubt that the Corporation was fully entitled to levy terminal tax on such goods.
In this connection, the High Court observed as follows: "The Petitioner company was incorporated under the companies Act, 1956, and it had its registered office at G.T.Road, Ghaziabad, in the State of Uttar Pradesh. 908 It has a factory, inter alia, at Ghaziabad for manufacturing the said Vanaspati products.
In the course of its business, the company carried and still carries its products by railway and/or road into the Union Territory of Delhi from Ghaziabad for the purpose of sale at Delhi.
. . . . The words "shall be levied on all goods carried by rail way or road" in sub section (1) show clearly that the section imposes terminal tax on the carriage or movement of goods from outside the Union Territory of Delhi into the said Territory.
In other word, the taxable event is the carriage or movement of goods into the Union Territory of Delhi".
The observations last extracted must be understood in the light of the admitted facts in Amrit Banaspati Company"s case (supra).
We are unable to accept that case as an authority for the proposition that even if the final destination of the goods was not Delhi but as the goods were carried through the territory of Delhi, they would still be exigible to terminal tax.
In the impugned Judgment the High Court, however, seems to have laid undue emphasis and special stress on the fact that the goods were carried into the Union territory of Delhi, the moment they passed through it even though the destination of the goods may be some other area.
This appeared, according to the High Court.
the real purport and intention of section 178.
We are, however, unable to agree with this view which is patently wrong and does not at all flow from the plain and unambiguous language of section 178 of the Act nor does s.178 warrant such an interpretation.
Thus, our conclusions are follows: (1) The High Court was wrong in interpreting section 178 of the Act so as to justify imposition of terminal tax even on goods which merely passed through the territory of Delhi, although their destination is not Delhi but places beyond Delhi.
(2) The High Court was wrong in holding that merely because the goods after having been unloaded in the godown of appellant Tuli are sorted, reloaded in different trucks and thereafter pass through the territory of Delhi, they become exigible to terminal tax.
(3) The High Court was wrong in interpreting Rule 26 literally and holding that exemption could be grant 909 ed only if the goods are exported immediately which means within a very short time irrespective of any other consideration.
In view of our interpretation of section 178, Rule 26 must be interpreted in the light of the object of section 178 and terminal tax can be leviable only if it is proved that the goods remained at the godown for an indefinite and unexplained period which could not be said to be reasonable as discussed by us in the circumstances.
(4) Where the goods are carried by trucks into the territory of Delhi and unloaded there and are also meant for Delhi and soon thereafter may be rebooked by the receiver of the goods to some other place, terminal tax would be leviable because in this case there are two separate transactions (1) by which the goods are meant for Delhi, and (2) by which after having reached and having been unloaded at Delhi they are rebooked and reloaded for some other place and which therefore is a fresh and different transaction.
In such a case, terminal tax would be leviable at the entry in the territory of Delhi.
We might mention that the High Court while holding that terminal tax is exigible has construed the word 'immediately ' in Rule 26 literally and directed the Terminal Tax Officer to fix a reasonable time for unloading, sorting and reloading the goods which are meant for different destinations taking into consideration the quantity of the goods, the time for unloading, sorting, etc., and has further directed that reloading or transhipment should be done within a time to be fixed by the Terminal Tax Officer.
Though the directions given are correct but they will have to be construed in the light of the various factors which we have referred to.
Rule 26 will have to be interpreted on the footing that section 178 of the fact does not contemplate levy of terminal tax for goods meant for destinations other than Delhi.
For the reasons given above, we allow these appeals, set aside the impugned judgment except the portion quashing the impugned orders.
That portion we uphold (though on grounds different from the ones given by the High Court) in the light of the decision given and the observations made by us regarding the interpretation of section 178 of the Act.
In the special circumstances of the case there will be no order as to costs.
| Man Mohan Tuli, appellant in C.A. 2004/80, is the owner of a piece of land situate on the Grand Trunk Road near the sixth milestone as one goes from Delhi to Ghaziabad.
Appellant Tuli has constructed various buildings on his land for use as godowns and has rented them out to various transport companies engaged in bringing goods from other States and storing them before their transhipment to Delhi and other States beyond Delhi.
The trucks carrying the goods for various destinations pass along the G.T. Road and move into Tuli 's land.
After the trucks enter the land, the goods are unloaded into the godowns, sorted out and reloaded into the respective trucks meant for various destinations.
Thereafter, the trucks move out of the land and, passing through the Union Territory of Delhi after crossing the border line, proceed to their destinations.
The Municipal Corporation of Delhi by its Orders dated May 23, 1975 and July 7, 1975 directed that a Terminal Tax post be set up at the entrance to Tuli 's land in order to collect terminal tax on goods carried into that land.
A writ was filed before the High Court by the owners of transport companies as also by Tuli for quashing the orders of the Corporation seeking to levy Terminal Tax on the goods which were not meant for Delhi but for places beyond Delhi.
The High Court held that the Corporation was legally entitled to levy Terminal Tax at the point of territory of the Union Territory of Delhi even though the goods were sorted out in the godown of Tuli, resorted out and re loaded since as they while passing through the territory of Delhi undoubtedly entered the said territory.
Hence the appeals by special leave by appellant Tuli and others.
Allowing the appeal in part, the Court ^ HELD: 1.
It is well settled that taxing statutes must be strictly interpreted giving every benefit of doubt to the tax payer.
A Terminal Tax could be levied only by the Corporation or the State which is the final destination of the goods sent from any other area.
A Terminal Tax signifies that there must be a terminus for the journey of the goods.
Terminus means the point to which main action tends, goal, end, finishing point, the point at which something comes to an end.
[899 D, 901 B D] 2.1 From a consideration of the decided cases of the Supreme Court, the following propositions emerge: (i) Terminal tax and octroi are similar kinds of levies which are closely interlinked with (a) destination of the goods (b) the user in the local area 895 on arrival of the goods.
Where the goods merely pass through a local area without being consumed therein the mere fact that the transport carrying the goods halt within the local area for transhipment or allied purposes would not justify the levy of either the terminal tax or octroi duty.
This is because the halting of the goods is only for an incidental purpose to effectuate the journey of the goods to the final destination by unloading, sorting and reloading them at a particular place.
[803 A C] (ii) There is a very thin margin of difference between a terminal tax and octroi.
In the case of the former (terminal tax) the goods reach their final destination and their entry into the area of destination immediately, attracts, payment of terminal tax irrespective of their user.
In the case of octroi, however, the tax is levied on goods for their use and consumption.
[903 D E] (iii) But at the same time, the goods while halting at a local area should leave for their destination within a reasonable time which may depend on circumstances of each case and if the goods are kept within the area for such a long and indefinite period that the purpose of reaching the final destination lying in a dicerent area is frustrated or defeated, they may be exigible to terminal tax.
[903 E F] (iv) Where the goods enter into a local area which is also the destination of the goods either temporarily or otherwise, the terminal tax would be leviable.
For instance, if A consigns goods from Patna in Bihar to Delhi in the name of X and X after having received the goods at Delhi rebooks or reloads the same on a transport for Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi because the destination of the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax.
The fact that X rebooks them to Chandigarh would not make any difference because the act of rebooking by X at Delhi would constitute a fresh transaction by which the goods after having been carried into Delhi are further exported to Chandigarh.
On the other hand, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be Chandigarh even though the goods may have to be halted in Delhi for the purpose of unloading, sorting and reloading and may have to be kept in Delhi for a reosonable time.
In such a case terminal tax would not be exigible.
[903 G H, 904 A C] Punjab Flour & General Mills vs Lahore Corporation, ; The Central India Spinning & Weaving & Manufacturing Co. Ltd., The Empress Mills, Nagpur vs The Municipal Committee, Wardha, ; ; Bangalore Woollen, Cotton & Silk Mills Co. Ltd. Bangalore vs Corporation of the City of Bangalore, ; Diamond Sugar Mills Ltd. & Anr.
vs The State of Uttar Pradesh, ; ; Burmah Shell Oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Municipality, [1963] Supp. 2 SCR 216; Khyerbari Tea Co. Ltd. Champlain Realty Co. vs Town of Brattleboro, 67 L. Ed.
U.S. 309, quoted with approval.
896 2.2.
What would be a reasonable time for interpretation of the goods or halting, in the instant case, at the godown of Tuli, will naturally depend upon the special features or circumstances of each case, namely, the nature of the goods, the time taken in loading, sorting and unloading, the obstacles or difficulties which may be faced by the transporters and similar other factors.
Normally, a time of two to three days or even a week should be sufficient to clear the goods for its journey to the ultimate destination.
It may sometimes happen that goods may have to be kept in the godowns in the territory of Delhi for circumstances, beyond the control of the consignee or the consignor, for example, a garnishee order.
In considering what is reasonable time these circumstances would have to be taken into consideration.
[906 H, 907 A C] 2.3.
Rule 26 of the Terminal Tax Rules will have to be interpreted on the footing that section 178 of the Delhi Municipal Corporation Act, 1957 does not contemplate levy of terminal tax for goods meant for destinations other than Delhi.
The word "immediately" appearing in Rule 26 has to be liberally construed so as to imply a reasonable period and if the export is delayed the rules may apply if a reasonable explanation has been given.
So far as rules regarding taking of passes, etc., at the barrier are concerned they would, of course, apply but subject to the conditions under which terminal tax can be imposed under section 178 of the Act which is the main charging section.
[907 C E] Amti Banaspati Co. Ltd vs The Union of India I.L.R. 1973 Delhi 237, distinguished.
|
Civil Appeal No. 1743 of 1980.
Appeal by Special Leave from the Judgment and Order dated 24 4 1979 of the Madras High Court in W.P. No. 886/77.
K. Parasarans, Solicitor General and A.V. Rangam for the Appellant.
V. Srinivasan, Chandrasekaran and A.T.M. Sampath for the Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
Special leave to appeal granted.
The respondent herein, M. N. Sundarajan was recruited as a Clerk in the Indian Army in the year 1943.
Sometime after the regiment was demobilised, he was appointed in the Revenue Secretariat of the State Government from March, 1948 in a vacancy reserved for war service candidates.
He was promoted as Section Officer in April, 1969 and he continued in the post till March 2, 1976, when he was compulsorily retired from service by the appellant State in exercise of its power under Fundamental Rule 56(d).
473 The respondent challenged the validity of the order of his compulsory retirement by a writ petition under Article 226 of the Constitution in the High Court of Madras.
One of the grounds of challenge was that as per procedure set out in G.O. No. 761.
dated March 19, 1973, the Review Committee has to consider the cases of Gazetted Government Officers in the Secretariat headed by the Chief Secretary and not by the Departmental Secretary, and that, therefore, the order passed by the appellant State based on the review made by a Committee which had no jurisdiction, cannot be sustained in law.
Following a previous decision in W.P. 1547 of 1977 (The Jawahar Mills ' case), the High Court held that since the Committee which reviewed the respondent 's case was not a Committee duly constituted under G.O. No. 761, dated March 19, 1973, and had not been presided over by the Chief Secretary, there was a violation of the procedure laid down by the Government in G.O. No. 761, dated March 19, 1973, and, this violation had vitiated the impugned order passed by the Government.
In the result, the writ petition was allowed and the impugned order was quashed.
Hence, this appeal by special leave.
The main contention of the learned Solicitor General who has appeared on behalf of the appellant State, is that the High Court has not correctly appreciated the import of the relevant Government orders.
It is submitted that under Government order No. 1782.
Public (Services J), dated June 27, 1973, all Superintendents or Section officers were given the status of Gazetted officers with effect from June 13, 1973, "but, in all matters relating to appointments, transfers, postings, punishments and drawl of pay," they continued to be treated as non Gazetted Government servants "until further orders.
" That was why the case of the respondent pursuant to the aforesaid Government order of June 27, 1973, for compulsory retirement under Fundamental Rule 56(d), was considered by the appropriate Committee constituted for non Gazetted Government servants in the Secretariat.
In the aforesaid Government order, dated June 27, 1973, the word 'appointments ', according to the learned Solicitor General includes compulsory 'retirements ', also.
In support of his contention, he has referred to the decisions of this Court in Manager Govt.
Branch Press & Anr.
vs D. B. Belliappa, and State of Uttar Pradesh vs Chandra Mohan Nigam & Ors.
On the other hand.
Shri Srinivasan, appearing for the respondent, submits that the word 'appointments ' in the G.O. No. 1782, dated June 474 27, 1973, cannot be construed to include 'retirements ' from or 'terminations ' of service.
If that had been the intention, it is argued, there was no difficulty in adding the word 'retirements ' or 'terminations ' along with the words "appointments, transfers, postings and punishments" in that Government Order.
It is urged that a restricted interpretation should be placed on this expression Thus, the short question that falls to be considered is: Was the High Court right in quashing the order of the respondent 's compulsory retirement, who was a Gazetted Officer at the material time, merely on the ground that it was considered by a Review Committee other than the one constituted for Gazetted Officers ? For the sake of perspective, it is necessary to recall that before June 27, 1973, a Section Officer in the Tamil Nadu Secretariat used to be a non Gazetted officer.
In 1972 and earlier, several representations were made by the Tamil Nadu Secretariat Associations and others that the Superintendents of the Secretariat should be accorded Gazetted status.
Ultimately, the Government by order, G.O. Ms. No. 1616, Public (Services J), dated June 13, 1973, made the post of a Superintendent of the Secretariat a Gazetted post with effect from the date of that order.
Such Superintendents were re designated as Section Officers.
In the aforesaid G.O., it was stated that the amendment to the said Rule should be issued shortly.
Since the framing of the Rules involved lot of administrative complications and unavoidable delay, the Government took a policy decision that in regard to various procedures concerning such newly designated Section Officers, the Rules under which they were functioning earlier, namely, Rules applicable to non Gazetted Government servants should continue to apply till such time as Service Rules are made with a view to avoid administrative dislocation.
This decision was the subject of Government order No. 1782, Public (Services J), dated June 27, 1973.
The net effect of this order was that although the Superintendents were given a Gazetted status and their designations were changed into Section Officers with effect from June 13, 1973: but in all matters relating lo appointments, transfers.
postings, punishments and drawl of pay, they continued to be treated as non Gazetted Government servant until further orders.
The question is, whether the expression "appointments" used in this Government order, dated June 13, 1973, will include 'termination ' of service or 'compulsory retirement ' from service, also.
It is a fundamental principle of interpretation that unless a contrary intention appears from the context, a power to appoint should include a power to terminate the appointment, including termination of the person 475 appointed by his compulsorily retirement in accordance with the terms and conditions of his service.
This fundamental principle underlies Section 16 of the General Clauses Act.
In other words, the power to terminate the appointment by compulsory retirement or otherwise is a necessary adjunct of the power of appointment and is exercised as an incident to or consequences of the power.
There is nothing in the Government order No. 1782, dated June 27, 1973, which militates against this rule of construction.
The above being the true construction of the word 'appointments ' in the aforesaid Government order of June 27, 1973, notwithstanding the conferment of Gazetted status, the respondent continued to be governed, inter alia, in the matter of 'appointment ', which would include compulsory retirement or termination of service also, by the Rules and Government orders applicable to non Gazetted Officers of the Secretariat, and therefore, the Review Committee presided over by a Departmental Secretary, set up for reviewing the cases of non Gazetted officers of the Secretariat, was fully competent to consider the case of the respondent and recommend his retirement.
Assuming that there was some irregularity in the constitution of the Review Committee, which dealt with the case of the respondent, that could not affect the validity of the impunged orders.
The "decisions" of the Review Committee had no force proprio vigore.
At best, the 'decisions ' were mere recommendations which did not, and could not, have a peremptory effect.
The ultimate power to accept or not to accept the recommendations of the Review Committee and to take an effective and definitive decision in the matter, vested in the Government.
Thus, even if there was some irregularity in the constitution of the Review Committee.
the functions of which were purely advisory, that could not by itself have the effect of vitiating the order of the respondent 's compulsory retirement, passed by the Government in the exercise of the power vested in it.
Furthermore, it was not the respondent alone (from the category of Section Officers) whose case was reviewed by the Review Committee in question.
The cases of all the Section Officers of the Secretariat, were reviewed by the same Committee.
It could not, therefore, be contended that the respondent had been singled out for a differential treatment.
Article 14 of the Constitution was not attracted and the respondent could not have any grievance on that score.
For the foregoing reasons, we allow this appeal, set aside the order of the High Court, and uphold the order of the respondent 's compulsory retirement.
The parties shall pay and bear their own costs.
N.V.K. Appeal allowed.
| Before June 27, 1973, a Section Officer in the Tamil Nadu Secretariat used to be a non Gazetted officer.
The Government by order G.O. Ms. No. 1616, Public (Services J) dated June 13, 1973 made the post of a Superintendent of the Secretariat a Gazetted post and re designated it as Section Officer, and by Government order No. 1782, Public (Services J.), dated June 27, 1973, provided that in all matters relating to appointments, transfers, postings punishments and drawl of pay, they continued to be treated as non gazetted Government servants until further orders The respondent was recruited as a Clerk in the Indian Army in the year 1943 and after demobilization was appointed in the Revenue Secretariat of the State Government (Appellant) from March 1948.
He was promoted as Section Officer in April 1969 and he continued in the post till March 2, 1976 when he was compulsorily retired from service under Fundamental Rule 56(d).
The respondent challenged his compulsory retirement in the High Court contending that the procedure set out in G.O. No. 761 dated March 19, 1973, envisaged that the Review Committee that had to consider the cases of Gazetted Government officers in the Secretariat should be headed by the Chief Secretary and not by the Departmental Secretary and since the Committee which reviewed his case was headed by a Departmental Secretary, the violation had vitiated the retirement order.
The High Court accepted this contention and quashed the retirement order In the appeal to this Court it was contended on behalf of the appellant that though under G. O. No. 1782 Public (Service J) dated June 27, 1973, all Superintendents or Section officers were given the status of Gazetted Officers in matters like appointments, transfer and posting they continued to be treated as non gazetted officers and that the constitution of the Review Committee headed by a Departmental Secretary was valid.
It was also contended that in the aforesaid order, the word 'appointments ' includes compulsory 'retirements ', also.
On the respondent 's behalf it was submitted that the word 'appointments ' in the order dated June 27, 1973 cannot be construed to include 'retirements ' from or 'terminations ' of service, for if that had been the intention there would not have been no difficulty in adding the word 'retirements ' or terminations ' along 472 with the words 'appointments, transfers, postings and punishments ' in the Government order and consequently a restricted interpretation should be placed on this expression.
Allowing the appeal, ^ HELD: 1.
The order of the High Court is set aside and the order or the respondent 's compulsory retirement upheld.
[475 H] 2.
Unless a contrary intention appears from the context, a power to appoint should include a power to terminate the appointment including termination by compulsory retirement in accordance with the terms and conditions of service.
This fundamental principle underlies Section 16 of the General Clauses Act.
[474 H 475 A] 3.
The power to terminate the appointment by compulsory retirement or otherwise is a necessary adjunct of the power of appointment and is exercised as an incident to or consequences of that power.
Nothing in the Government Order No. 1782, dated June 27, 1973, militates against this rule of construction.
[475 B] 4.
The "decision ' of the Review Committee had no force proprio vigore.
The 'decisions ' were mere recommendations which did not, and could not, have a peremptory effect.
The ultimate power to accept or not to accept the recommendations of the Review Committee and to take an effective and definitive decision vests in the Government.
Even if there was some irregularity in the constitution of the Review Committee, that could not by itself, have the effect of vitiating the order of the respondent 's compulsory retirement.
[475E F] In the instant case it was not the respondent alone (from the category of Section Officers) whose case was reviewed by the Review Committee in question.
The cases of all the Section officers of the Secretariat, were reviewed by the same committee.
The respondent had therefore not been singled out for a differential treatment.
[475G]
|
Civil Appeal No. 1872 of 1970.
From the judgment and decree dated the 24th December, 1969 of the Calcutta High Court in appeal from Original Decree No. 843 of 1966 (Probate) S.S. Ray and section Ghosh for the Appellant.
V.S. Desai D.N. Mukherjee and N.R. Choudhary for the Respondents.
1190 The Judgment of the Court was delivered by BAHARUL ISLAM, J.
This appeal by certificate granted by the Calcutta High Court under Article 133(1) (b) of the Constitution is from a decree dated December 24, 1969 and arises out of a probate suit.
The material facts may be briefly stated as follows.
One Manindra Chandra Bose (original respondent No. 1 since deceased) and Jogendra Nath Mitra (respondent No. 2 before us) filed an application before the Subordinate Judge, Alipore, for probate of a will alleged to have been executed by one Ranendra Chandra Bose on November 8, 1952, Jitendra Chandra bose, a brother of the testator entered caveat and filed a written statement and contested the application for probate.
The plaintiffs ' case was that Renendra died unmarried on November 16, 1952, leaving the alleged will (Exhibit 1) executed on November 8, 1952.
Ranendra left behind him three brothers Jitendra, aforesaid, Gopendra and plaintiff No. 1.
Manindra.
Manindra and Jogendra (plaintiff No. 2) had been appointed executors of the will.
By the will Ranendra bequeathed one half of his properties to his nephew, Bhabesh, who was the son of his younger brother, Phanindra, who had pre deceased him, and the remaining half to his younger brother Manindra for life, and after his (Manindra 's) death to Bhabesh absolutely.
During the pendency of the suit, Jitendra died and his heirs who were substituted, contested the suit.
The contentions of the defendants were that Ranendra on November 8, 1952, was not in a physical or mental condition to execute a will; he was in a semiconscious state of mind and had not the testamentary capacity to execute the alleged will.
They alleged that the will was brought into existence at the instance, and under the influence of, the propounder Manindra; that the signatures of Ranendra on the will were not genuine and that must have been obtained on blank papers by Manindra who was looking after the properties of Ranendra as well as all litigations in which Ranendra was involved.
The trial court found that the signatures of the testator and the attesting witnesses on the will were genuine, and that the provisions of the will was neither unfair nor unnatural.
But he dismissed the suit and refused to grant probate of the will on the ground that there were certain "doubts and suspicions about the condition of the testator 's mind on 8.11.1952".
1191 5.
The plaintiffs filed an appeal before the high Court.
The High Court held that "there was no suspicious circumstance relating to the will and whatever little suspicion there was has been satisfactorily explained by the plaintiff", with the result that the High Court set aside the decree of the trial court and granted probate of the will.
The judgment and decree of the High Court has been challenged by the appellants before us.
Mr. S.S. Ray, learned counsel appearing for the appellants has not challenged the trial court 's findings that the signatures of the testator and the signatures of the attesting witnesses on the will were genuine.
In other words, the execution and the attestation of the will have not been challenged before us.
The only submission of learned counsel is that the "suspicious circumstances" surrounding the execution of the will have not been satisfactorily explained by the propounders.
This Court has held that the mode of proving a will does not ordinarily differ from that of proving any other document except to the special requirement of attestation prescribed in the case of a will by Section 63 of the Successions Act.
The onus of proving the will is on the propounder and in the absence of suspicious circumstances surrounding the execution of the will, proof of testamentary capacity and the signature of the testator as required by law is sufficient to discharge the onus.
Where however there are suspicious circumstances, the onus is on the propounder to explain them to the satisfaction of the court before the court accepts the will as genuine.
Even where circumstances give rise to doubts, it is for the propounder to satisfy the conscience of the court.
The suspicious circumstances may be as to the genuineness of the signatures of the testator, the condition of the testator 's mind, the disposition made in the will being unnatural, improbable or unfair in the light of relevant circumstances, or there might be other indications in the will to show that the testator 's mind was not free.
In such a case the court would naturally expect that all legitimate suspicions should be completely removed before the document is accepted as the last will of the testator.
If the propounder himself takes a prominent part in the execution of the will which confers a substantial benefit on him, that is also a circumstance to be taken into account, and the propounder is required to remove the doubts by clear and satisfactory evidence.
If the propounder succeeds in removing the suspicious circumstances the court would grant probate, even if the will might be unnatural and might 1192 cut off wholly or in part near relations.
(See AIR 1964 SC 529, [1959] Suppl.
1 SCR 426 & [1962]3 SCR 195).
Needless to say that any and every circumstance is not a 'suspicious ' circumstance.
A circumstance would be 'suspicious ' when it is not normal or is not normally expected in a normal situation or is not expected of a normal person.
Learned counsel relied on the decision of this Court in the case of Rani Purnima Devi and Another vs Kumar Khagendra Narayan Dev and Another.
In this case the will in question gave the entire property by the testator to a distant relation of his to the exclusion of the testator 's widow, sister and his other relations, and even his daughter, who would be his natural heirs, but subject, of course, to the condition that the legatee would maintain the widow and the sister of the testator.
The testator 's signatures were not his usual signatures, nor in the same ink as the rest of the will; the testator used to sign blank papers for use in his cases in court and he used to send them to his lawyer through his servants; the testator did not appear before the Sub Registrar for the purpose of registration of the will but the Sub Registrar sent only his clerk to the residence of the testator for the purpose of registration; there were 16 attesting witnesses who attested the will, but of them, only 4 interested witnesses were examined to the execution of disinterested witnesses.
The above are undoubtedly suspicious circumstances, circumstances creating doubt in the mind of the Court.
In spite of these circumstances, it was held by the Trial Court that the will was duly executed and attested.
On appeal, the High Court affirmed the order of the Trial Court.
On further appeal, this Court held that the circumstances were suspicious and were not satisfactorily explained and hence held that "the due execution and attestation of the will were not proved.
As in the instant appeal, the judgment of the High Court is one of reversal of the judgment of the Trial Court, we should also examine the law under which the order of the appellate court can be or should be interfered with, inasmuch as learned counsel has cited the two following decisions before us, and urged that the High Court ought not to have interfered with the judgment of the Trial Court.
The first case cited is The Bank of India Ltd. and others vs Jamsetji 1193 A.H. Chinoy and Messrs. Chinory and Co.
In that case the Privy Council has held: "The appellate Court would be reluctant to differ from the conclusion of the trial Judge if his conclusion is based on the impression made by a person in the witness box.
If however, the trial Judge based his finding and his opinion of the person on a theory derived from documents and a series of inferences and assumptions founded on a variety of facts and circumstances which, in themselves, offer no direct or positive support for the conclusion reached, the right of the appellate Court to review this inferential process cannot be denied.
" The other case cited is Madholal Sindhu of Bombay vs Official Assignee of Bombay and others, in which the Federal Court held: "It is true that a Judge of first instance can never be treated as infallible in determining on which side the truth lies and like other tribunals he may go wrong on question of fact, but on such matters if the evidence as a whole can reasonably be regarded as justifying the conclusion arrived at, the appeal Court should not lightly interfere with the judgment.
Keeping the above principles of law in view let us now turn to the facts of the present case.
Learned counsel for the appellant has enumerated the following 11 'suspicious ' circumstances: (i) Attempt on the part of the propounder to conceal the real nature of testator 's illness.
(ii) The propounder failed to tell the date when the testator went to his lawyer (P.W. 3s ') house or when the draft was given by the lawyer to the testator.
(iii)The draft has not been produced and no explanation has come forth as to what happened to the draft.
1194 (iv) No date has been mentioned when the testator sent for his lawyer trough Banqshidhar for corrections in the draft.
(v) The diary of P.W. 3 has not been produced.
(vi) The senior lawyer (Sudhangshu Babu) has not been examined.
The lawyer examined, namely P.W.3, is a partisan witness.
(vii)Banqshidhar has not been examined as a witness although he was attending court during the trial of the suit.
(viii)The statement of the propounder, Manindra, that he knew about the will only three or four days after its execution cannot be accepted as true when one of the attesting witnesses, namely P.W. 5, had been told of it a month earlier.
(ix) No body knows what alterations were made in the draft.
(x) The scribe and one of the attesting witnesses are employees, another witness (P.W.4) is a friend and the other attesting witness (P.W.5) is a relation.
(xi) The evidence of the propounder, Manindra, is partly false; he disavows all knowledge of the will.
A careful perusal of the above circumstances shows that they are by no means suspicious circumstances and stand self explained.
Circumstances Nos.
(ii) and (iv) are really test of memory.
It may be remembered that the witnesses were deposing thirteen years after the execution of the will.
It will be difficult for any witness after such a long lapse of time to give the dates when the testator went to the house of his lawyer or when the draft was given by the lawyer to the testator or when the testator sent for the lawyer through Banqshidhar for correction of the draft.
With regard to circumstance No. (iii) there is no evidence to show that there was any invariable practice that the draft of a will had to be preserved.
No question was put in cross examination to the scribe (P.W. 1) who perhaps might have been able to say what he had done with it.
Similar is the position with regard to the diary of P.W. 3.
P.W. 3 1195 who deposed that his diary would show that he had drafted the will was not asked in cross examination as to whether he at all preserved in 1965 the diary of 1952 or whether he could produce it.
With regard to grievances Nos.
(vi) and (vii) we do not see any necessity of calling the testator 's employee Banqshidhar, as witnesses in the case.
So far as Sudhangshu Babu was concerned, Manindra was not asked as to why he had not been called as a witness; possibly he had died as P.W. 3 spoke of him as "my late senior".
With regard to circumstance No. (ix), it may be said that there was no necessity of knowing what alterations had been made in the draft.
With regard to the circumstance that the scribe and the attesting witnesses were either employees, or friend or relation of the propounders ' group, the answer is simple.
No body would normally invite a stranger or a foe to be a scribe or a witness of a document executed by or in his favour; normally a known and reliable person, a friend or a relation is called for the purpose.
The same argument applies to P.W.3 who is said to be a partisan witness for the reason that he was the testator 's advocate.
But there is nothing to show that he was not telling the truth in his deposition.
With regard to the circumstances Nos.
(viii) and (x) that Narendra was not telling the whole truth, when he said that he had come to know of the will three or four days after its execution the complaint may be correct, although it was not impossible that he had not been taken into confidence in the matter of the will in his favour, although P.W. 5 had been.
Another possibility is that Manindra deposed so in order to avoid cross examination.
In any case this does not appear to be a suspicious circumstance surrounding the execution of the will.
With regard to circumstance No. (i), the submission is that the testator, according to the medical evidence, was at the time of the execution of the will suffering from high blood pressure, diabetes, acidosis, kidney trouble and that he had no food for two days before 8.11.1952.
The evidence of P.W.2 Naresh C. Das Gupta who is a medical practitioner is that "Ranen Babu was not taking his meals and usual food", which means, he was taking sick diet with 'hydro protien ' prescribed by him.
But P.W. 2 deposes in cross examination that "the patient was not in coma .
The patient had talks with me on the last day" which was eight days after the execution of the will when the testator "suddenly" died of coronary thrombosis in the lap of his employee, Banqshidhar.
There is no evidence that Ranendra did not have the mental capacity to execute the will.
Even D.W. 2 Sailendra Bose who visited Ranendra during his illness, and 1196 D.W. 1, Dr. Amal Chakravorty who deposed by perusing the prescriptions, did not depose that Ranendra was in coma or had lost his mental faculty.
On the contrary the following circumstances lend strong support to the plaintiff 's case of genuineness and valid execution of the will.
(1) Gopendra, one of the brothers, who has not been given anything under the will had filed a written statement stating that he "has no objection to the grant of probate inasmuch as the will is executed and attested according to law.
" (2) The disposition under the will is quite fair and there are no suspicious circumstances in it at all.
(3) As there were litigations between the two groups of the brothers, the will was the natural outcome to avoid further future litigation.
We do not find any suspicious circumstance surrounding the execution of the will.
The circumstances pointed out by learned counsel are not only not suspicious but normal as pointed out above.
The rule, as observed by the Privy Council, is that "where a will is charged with suspicion, the rules enjoin a reasonable septicism, not as obdurate persistence in disbelief.
They do not demand from the judge, even in circumstances of grave suspicion, a resolute and impenetrable incredulity.
He is never required to close his mind to the truth.
" (See 14.
The trial court was wrong in holding that the circumstances in question were suspicious and the High Court was fully justified in setting aside the judgment of the trial court.
We are in entire agreement with the judgment of the High Court.
In the result this appeal fails and is dismissed with costs.
S.R. Appeal dismissed.
| One Ranendra died unmarried on November 16, 1952 leaving the alleged will (Exhibit 1) executed on November, 8, 1952.
Ranendra left behind him three brothers Jitendra Chandra Bose, Gopendra and Manindra plaintiff No. 1.
Manindra and Jogendra (Plaintiff No. 2) had been appointed executors of the will.
By the will Ranendra bequeathed one half of his properties to his nephew, Bhabesh, who was the son of his younger brother, Phanindra, who had predeceased him, and the remaining half to his younger brother Manindra for life, and after Manindra 's death to Bhabesh absolutely.
The executors of the will as aforesaid filed an application before the Subordinate Judge.
Alipore, for probate of a will executed by Ranendra.
Jitendra entered caveat and filed a written statement and contested application for probate.
During the pendency of the suit, Jitendra died and his heirs who were substituted, contested the suit.
The contentions were that Ranendra was not in a physical or mental condition to execute a will; he was in a semi conscious state of mind and had not the testamentary capacity to execute the alleged will and that the alleged will was brought into existence at the instance, and under the influence of the propounder Manindra; that the signatures of Ranendra on the will were not genuine.
The trial court found that the signatures of the testator and the attesting witnesses were genuine and that the provisions of the will was neither unfair nor unnatural.
But the trial court dismissed the suit and refused to grant probate of the will on the ground that there were certain "doubts and suspicions about the condition of the testator 's mind on 8 11 1952".
In appeal before the High Court, the decree of the trial court was set aside and the propounder was granted probate of the will.
Dismissing the appeal by certificate granted by the Calcutta High Court under Article 133(1)(b) of the Constitution, the Court, ^ HELD: 1.1.
The mode of proving a will does not ordinarily differ from that of proving any other document except to the special requirement of attestation prescribed in the case of a will by section 63 of the Successions Act.
[1191 D] 1:2.
The onus of proving the will is on the propounder and in the absence of suspicious circumstances surrounding the execution of the will, proof of test a 1189 mentary capacity and the signature of the testator as required by law is sufficient to discharge the onus.
Where, however, there are suspicious circumstances, the onus is on the propounder to explain them to the satisfaction of the court before the court accepts the will as genuine.
Even where circumstances give rise to doubts, it is for the propounder to satisfy the conscience of the court.
The suspicious circumstances may be as to the genuineness of the signatures of the testator, the condition of the testator 's mind, the dispositions made in the will being unnatural, improbable or unfair in the light of relevant circumstances, or there might be other indications in the will to show that the testator 's mind was not free.
In such a case the court would naturally expect that all legitimate suspicions should be completely removed before the document is accepted as the last will of the testator.
If the propounder himself takes the prominent part in the execution of the will which confers a substantial benefit on him, that is also a circumstance to be taken into account, and the propounder is required to remove the doubts by clear and satisfactory evidence.
If the propounder succeeds in removing the suspicious circumstances the court would grant probate, even if the will might be unnatural and might cut off wholly or in part near relations.
[1191 D H 1192 A] Shashi Kumar Banerjee & Ors.v.
Subodh Kumar Banerjee & Ors, A.I.R. 1964 S.C. 529; H. Venkatachala Iyengar vs B.N. Thimmajamma & Ors., [1959] Supp. 1 S.C.R. 426; Rani Purnima Devi and Another vs Kumar Khagendra Narayan Dev and Another, followed.
A circumstance would be "suspicious" when it is not normal or is not normally expected in a normal situation or is not expected of a normal person.
[1192 A B] 1:4.
A careful perusal of the eleven circumstance shows that they are by no means suspicious circumstances and stand self explained.
On the contrary the following circumstances lend strong support to the plaintiffs ' case of genuineness and valid execution of the will: (i) Gopendra one of the brothers, who has not been given anything under the will had filed a written statement stating that the "has no objection to the grant of probate inasmuch as the will is executed and attested according to law"; (ii) the disposition under the will is quite fair and there are no suspicious circumstances in it at all; (iii) as there were litigations between the two groups of the brothers, the will was the natural outcome to avoid further future litigation.
B C] Harmes and Anr vs Hinkson, , referred to.
|
ON: Criminal Appeal No. 137 of 1957.
Appeal from the judgment and order dated October 31, 1956, of the Madras High Court in Criminal Appeal No. 20/1956.
B. Dadachanji, C. B. Aggarwala , section N. Andley, J., Rameshwar Nath and P. L. Vohra, for the appellant.
R. Ganapathy Iyer and T. M. Sen, for the respondent.
C. K. Daphtary, Solicitor General of India, H. J. Umrigar_ and T. M. Sen, for the Intervener (Union of India).
1960, February, 26.
The Judgment of the Court was delivered by IMAM, J.
This is an appeal on a certificate granted by the High Court of Madras.
The appellant was tried by the Special Judge of Tiruchirappalli under section 165A of the Indian Penal Code for attempting to bribe Mr. Kaliyappan, Deputy Superintendent of Police of Ramanathapuram.
The Special Judge came to the conclusion that the charge framed against the accused had not been established.
He accordingly, acquitted the appellant.
Against the order of acquittal the State of Madras appealed to the High Court of Madras under section 417 of the Code of Criminal Procedure.
The High Court came to the conclusion that the evidence established that the appellant had attempted to bribe the aforesaid Deputy Superintendent of Police.
It accordingly convicted the appellant under section 165A, Indian Penal Code and sentenced him to 6 month 's rigorous imprisonment and a fine of Rs. 1,000, in default, to undergo further rigorous imprisonment for 6 months.
According to the prosecution case, the appellant attempted to bribe Mr. Kaliyappan, the Deputy Superintendent of Police, by offering him a Bum of money contained in an envelope at his bungalow in the morning of June 14, 1954.
In order to appreciate the circumstances in which the bribe was offered, reference to certain events which led to the incident 118 on June 14 at the bungalow of the Deputy Superintendent of Police becomes necessary.
In village Irwadi there are two factions one headed by the appellant and his brother and the other headed by the village munsif.
On June 3, 1954, two complaints reached the Keelakarai Police Station, one by the appellant against the village munsif and the other by the village munsif against the appellant.
According to the appellant on June 3, 1954 after prayers in the mosque the village munsif had abused him and had attempted to murder him with a knife.
Some persons intervened but he managed to escape but was chased by the village munsif to his house.
The version of the village munsif was that he was busy that day preparing the receipt for the release of the appellant 's impounded cattle when the latter abused him, beat him with his shoe and kicked him in the stomach causing minor injuries.
On June 5, 1954, the appellant met Mr. Kaliyappan at the Central Bus stand at Madurai and handed over to him a petition, Ext.
P 1 in which he complained against the village munsif.
Mr. Kalivappan made ail endorsement on this petition directing the Inspector of Ramanathapuram Circle to send for both the parties and warn them against doing acts which would create a breach of the peace in the village and that this petition was not to be sent to the Sub Inspector (P.W. 8) as it was alleged that he was siding against the appellant.
On June 12, 1954, Mr. Kaliyappan sent a memo (Ext.
P 2) to the Inspector of Ramanathapuram Circle directing him to take steps to see that peace was preserved in the village.
This Police Officer 'Was also asked to take action against the offenders with respect to whom there was evidence in connection with the occurrence of June 3, 1954.
Mr. Kaliyappan also, in view of the situation, had directed this Police Officer to see whether steps should not be taken to seize the revolver of the appellant 's brother Rashid for which he had a licence.
The Inspector of Ramanathapuram Circle thereafter prepared a detailed report (Ext.
P 7) of the result of his enquiry and handed it over to Mr. Kali yappan on June 13, 1954.
On the night of June 13, 1954, at about 10 p.m. the appellant went to the 119 bungalow of Mr. Kaliyappan, the Deputy Superintendent of Police, at Ramanathapuram and complained against the Inspector of Police of Ramanathapuram Circle and the Sub Inspector requesting the s Deputy Superintendent of Police to look into the matter personally and not to leave the investigation exclusively in the hands of the Inspector.
Mr. Kaliyappan told the appellant that he knew nothing about the case and could not say or do anything off hand and that the appellant should see him about a week later by which time he would have perused the record and would be in a position to look into his grievances.
According to the appellant, however, the Deputy Superintendent of Police had asked him to come to him next morning.
On June 14, 1954, according to the prosecution, the appellant went to Mr. Kaliyappan 's bungalow at about 7 15 a.m. who was at that time looking into certain papers.
He was informed that a visitor bad come to see him.
The appellant accordingly entered his office room when he again complained to the Deputy Superintendent of Police against the village munsif.
At the same time he presented to this Police Officer a closed envelope.
Mr. Kaliyappan thought that the envelope contained a petition but on opening it he found that it contained currency notes.
He was annoyed at the conduct of the appellant.
He threw the envelope at the appellant 's face, but the envelope fell down on the floor and the appellant picked it up.
The Deputy Superintendent of Police called his office orderly but as there was no response he went out of the office room and told his milk maid to get the camp clerk.
By that time the orderly turned up.
The appellant had in the meantime remained in the office room and on the appearance of the orderly Mr. Kaliyappan asked the appellant to produce the envelope which he had thrown down and which the appellant had picked up.
The appellant after taking out of his pocket some currency notes placed them on the table without the envelope.
Subsequently, during the police investigation, torn bits of paper were collected from near the office window and it is alleged that those torn bits of paper 120 were the pieces of the envelope in which the currency notes were presented to Mr. Kaliyappan.
Thereafter, Mr. Kaliyappan asked his orderly to put office rubber stamp date seal on the notes and the same was done.
By that time the camp clerk, P.W. 2 had arrived.
Mr. Kaliyappan asked the camp clerk to note down the numbers of the currency notes which he did.
The list so prepared is Ext.
Mr. Kaliappan then dictated the memo.
P 5 to the local Sub Magistrate informing the latter that the appellant bad offered him Rs. 500 in currency notes requesting him to "drop action" registered against the appellant at Keelakarai Police Station.
Mr. Kaliyappan informed the Magistrate in this connection that he had seized the currency notes and his office rubber stamp seal had been placed on them and that he would be grateful to the Magistrate if he would come to his office and record the statement of the appellant whom he had detained in his office.
The case of the appellant, as would appear from his statement to the Special Judge, was that he had been to Mr. Kaliyappan, the Deputy Superintendent of Police, in the night of June 13, 1954, and in the morning at 7 15 a.m. on June 14,1954.
He had gone to Mr. Kaliyappan 's bungalow in the morning of June 14 as he bad been requested to do so.
He had told the Deputy Superintendent of Police that he had been humiliated by his Police Officers who had arrested him and had searched his house and that Mr. Kaliyappan should redress his grievances.
Mr. Kaliyappan showed him scant courtesy and insulted him upon which the appellant told Mr. Kaliyappan not to insult him and that he should tell the appellant whether he would redress the grievances of the appellant or not and that if he was not prepared to redress the grievances, the appellant would take the matter to the higher authorities.
On this Mr. Kaliyappan got up from his chair and enquired of the appellant what could he do by going to the higher authorities and threatened to beat the appellant.
The appellant also got up and said something to him upon which Mr. Kaliyappan called out for his orderly.
The orderly came and was told by Mr. Kaliyappan 121 that he was going to be beaten by the appellant and therefore he should catch hold of the appellant which the orderly did.
Then Mr. Kaliyappan told the orderly ' that there was money in the appellant 's pocket and that he should remove it.
The orderly accordingly removed the money from the appellant 's pocket and gave it to Mr. Kaliyappan.
The money in his pocket was Rs. 500.
Mr. Kaliyappan then directed his orderly to put his seal on the notes.
The Special Judge gave various reasons for not accepting the uncorroborated testimony of Mr. Kaliyappan and held that 'the presumption of the innocence of the accused had not been displaced by his solitary testimony.
The High Court did not consider the grounds given by the Special Judge for discarding the testimony of Mr. Kaliyappan as at all justified and was of the opinion that the Special Judge had taken a perverse view of his evidence and of the other evidence in the case.
In the main three points were urged in support of the plea that the conviction of the appellant should be set aside.
The first point urged was that the provisions of section 422 of the Code of Criminal Procedure had riot been complied with.
Accordingly the High Court judgment setting aside the acquittal of the appellant was vitiated.
The second point urged was that, there had been violation of the provisions of article 20(3) of the Constitution which vitiated the conviction.
The third point urged was that the appellant having been acquitted by the Special Judge the High Court should not have set aside the acquittal unless there were compelling reasons.
The several grounds stated by the Special Judge in distrusting the evidence of Mr. Kaliyappan had not been specifically considered by the High Court and without those grounds being displaced the High Court erred in setting aside the order of acquittal passed by the Special Judge.
Lastly, it was urged that in the circum stances of the present case the sentence passed by the High Court was severe.
The circumstances relied upon in this connection will be stated in due course.
Regarding the first point a few facts have to be stated.
The State 's appeal against the acquittal of 122 the appellant was admitted by the High Court on February 22, 1956.
Appearince.
on behalf of the appellant was filed on February 24, 1956.
The advocates for the appellant ere M/s. V. L. Ethiraj and section M. Cassim.
One Mr. R., Santanamn an 'advocate who worked in the office of the partnership of M/s. V. L. Ethiraj & V. T. Rangaswami Ayyangar, wrote to the High Court office on February 27, 1956, requesting that summons need not be issued and compliance with rule 240 A, Criminal Rules of Practice, might be dispensed with, in view of the appearance for the appellant having been filed on February 24, 1956.
As appearance had been entered on behalf of the appellant even before the issue of notice to him, notice under section 422 of the Code of Criminal Procedure was issued by the Court on March 5, 1956, to M/s Ethiraj and Cassim, advocates for the appellant on the records of the High Court.
After the appeal was ready for hearing the usual intimation under rule 240A was also sent on September 4, 1956, to the Special Judge, Tiruchirappalli for being communicated to the appellant as it was the practice of the High Court not to dispense with altogether the issue of such intimation under any circumstance.
Mr. Ethiraj appeared for the appellant at the hearing of the appeal and made submissions on questions of fact as well as on questions of law before the learned Judge of the High Court who heard the appeal.
It was contended for the appellant that the of the appeal filed by the State against his acquittal because if the acquittal was set aside and the appellant was sentenced serious consequences would arise.
As to the second submission, article 20 (3) of the Constitution states : "No person accused of any offence shall be compelled to be a witness against himself ".
Before this provision of the Constitution comes into play two facts have to be established (1) that the individual concerned was a person accused of an offence and (2) that he was compelled to be a witness against himself.
If only one of these facts and not the other is established, the requirements of article 20(3) will not be fulfilled.
It was, however, urged that on the facts the appellant must be regarded as a person who was accused of an offence at the time that Mr. Kaliyappan asked him to produce the money.
The circumstances also showed that the appellant did so on compulsion.
He was at the time within the power of the Deputy Superintendent of Police and was compelled to comply with his direction.
Mr. Kaliyappan being of the rank of a Deputy Superintendent of Police could himself make the investigation.
The offence had been committed in his presence and the appellant was in the situation of an arrested person, Reliance was placed upon the decision of this Court in M. P. Sharma vs Satish Chandra and Others (1) in support of the proposition that a compelled production of incriminating document by a person during police investigation is testimonial compulsion within the meaning of article 20 (3) of the Constitution.
In that case, this Court had observed at p. 1088; " Indeed, every positive volitional act which furnishes evidence is testimony, and testimonial (1) (1954] S.C.R. 1077.
126 compulsion connotes coercion which procures the positive volitional evidentiary acts of the person, as opposed to the negative attitude of silence or submission on his part.
Nor is there any reason to think that the protection in respect of the evidence so procured is confined to what transpires at the trial in the court room.
The phrase used in article 20 (3) is to be a witness " and not to " appear as a witness It follows that the protection afforded to an accused in so far as it is related to the phrase "to be a witness " is not merely in respect of testimonial compulsion in the court room but may well extend to compelled testimony previously obtained from him.
It is available therefore to a person against whom a formal accusation relating to the commission of an offence has been levelled which in the normal course may result in prosecution.
Whether it is available to other persons in other situations does not call for decision in this case.
Considered in this light, the guarantee under article 20(3) would be available in the present cases these petitioners against whom a First Information Report has been recorded as accused therein.
It would extend to any compulsory process for production of evidentiary documents which are reasonably likely to support a prosecution against them.
" These observations were unnecessary in Sharma 's case, having regard to the fact that this Court held that the seizure of documents on a search warrant was not unconstitutional as that would not amount to a compulsory production of incriminating evidence.
In the present case, even on what was stated in Sharma 's case there was no formal accusation against the appellant relating to the commission of an offence.
Mr. Kaliyappan had clearly stated that he was not doing any investigation.
It does not appear from his evidence that he had even accused the appellant of having committed any offence.
Even if it were to be assumed that the appellant was a person accused of an offence the circumstances do not establish that he was compelled to produce the money which he had on his person.
No doubt he was asked to do so.
It 127 was, however, within his power to refuse to comply with Mr. Kaliyappan 's request.
In our opinion, the facts established in the present case show that the appellant was not compelled to produce the currency notes and therefore do not attract the provisions of article 20(3) of the Constitution.
As to the 3rd point, we have read the evidence in the case, the judgments of the Special Judge and of the High Court and have no hesitation in saying that the High Court 's view that the judgment of the Special Judge was perverse is correct.
This is an appeal on a certificate and the findings on questions of fact are not concurrent.
Accordingly, we can form our own conclusions irrespective of the grounds given by the High Court for believing that the grounds given by the Special Judge for distrusting Kaliyappan 's evidence were perverse.
Those grounds have, however, been placed before us and after a careful examination of them we have come to the conclusion that the grounds given by the Special Judge for distrusting Mr. Kaliyappan 's evidence are perverse.
It was suggested that the documentary evidence and the manner in which Mr. Kaliyappan gave his evidence indicated that in the quarrel between the village munsif and the appellant he was siding with the village munsif.
Assuming that to be so, though we make it quite clear that we do not hold it to be so, it is impossible to believe that Mr. Kaliyappan would have concocted a false case of an attempt made by the appellant to bribe him if he had not (lone so.
He could have quite easily told the appellant to leave his bungalow without concocting a false case against him.
If he was siding with the village munsif he could have as easily got his subordinate Police Officers to report that the village munsif 's story was true and that the appellant should be prosecuted.
There seems to be no occasion for him to have made an elaborate story of an attempt on the part of the appellant to bribe him when, in fact, the appellant had done nothing of the kind.
A great deal ' of emphasis was laid on the fact that in the information which Mr. Kaliyappan sent to the Magistrate he had made no mention of money being offered to him in an 128 envelope and that the torn bits of paper found outside the window of Mr. Kaliyappan 's office were not proved to be part of the envelope in which the bribe had been offered and that it was also not at all clear that the Rs. 500 found on the person of the appellant were actually the currency notes offered to Mr. Kaliyappan as bribe.
It seems to us, however, that too much emphasis has been laid on all this.
Mr. Kaliyappan had certainly alleged in his information to the Magistrate that the appellant had offered him a bribe of Rs. 500.
Whether that was the sum in the envelope or whether it had been offered in an envelope was beside the point.
The important question for consideration was whether Mr. Kaliyappan had been offered a bribe by the appellant.
For that purpose it was a relevant circumstance that in fact on his person the appellant had a sum of Rs. 500 and that if Mr. Kaliyappan 's story was true that it was offered in an envelope, no envelope was produced with the currency notes of Rs. 500 which were placed on the table.
On the other hand, torn bits of paper which could form an envelope were found outside the Window of the room where the bribe had been offered.
It seems to us on a careful reading of Mr. Kaliyappan 's evidence that he had substantially told the truth and that there was no real reason for him to concoct a false case against the appellant, Having regard to the circumstances.
in which the bribe was offered, corroboration of his evidence in that respect could hardly be expected.
His conduct, however, throughout showed that he had acted in a bona fide manner.
After a careful consideration of his evidence and of the circumstances established in the case we entirely agree with the High Court that there was no real ground upon which his evidencc, could be disbelieved.
In the circumstances, the High Court was entirely justified in acting upon it and setting aside the order of acquittal made by the Special Judge.
Lastly, on the question of sentence, it may be mentioned at once that on the second day of the hearing of this appeal, learned Advocate for the appellant stated that his client threw himself at the mercy of Court and apologized for what had happened.
The 129 learned Advocate further urged that the appellant, though an Indian citizen, was carrying on business in Burma and had a visa from the Burmese Government for permanent residence and that unless he returned to Burma by the 2nd of March by would lose the benefit of the visa and would no longer be allowed to reside in Burma as a permanent resident.
Conse quently, he would lose his entire business and property in that country which 'Would be a severe penalty if his sentence of imprisonment was upheld.
It is also pointed out that on two occasions this Court on this very ground, on the appellant furnishing security and giving an undertaking to return to this country, had allowed him to go to Burma in order that he might not contravene the conditions of 'his visa.
It was further pointed out that the incident took place in June, 1954, some 5 years and eight months ago.
Even a substantial fine in lieu of the sentence of imprisonment would be sufficient punishment and a deterrent to the appellant.
We have given the matter of sentence our anxious consideration.
It seems, prima facie, that a sentence of 6 months ' imprisonment and fine of Rs. 1,000 could not be said to be severe for an offence of the kind established against the appellant.
The circumstances mentioned above, if correct, in plea of mitigation of sentence may attract attention but so far as a court of law is concerned, judicially, it is impossible to say that the sentence imposed by the High Court is severe in a case where there had been an attempt to corrupt a responsible public servant.
The appeal is accordingly dismissed.
Appeal dismissed.
| The appellant was tried by the Special judge Tiruchirappalli under section 165A of Indian Penal Code for attempting to bribe K, a Deputy Superintendent of Police.
The prosecution case was that in connection with the.investigation by the Inspector of Police of a case involving the appellant, the latter went to K 's bungalow and presented to him a closed envelope, that when K found that it contained currency notes he threw it away which the appellant picked up, that thereupon K asked the appellant to produce the currency notes and the appellant complied with the demand that K then gave information to a Magistrate about the attempt made by the appellant to offer him a bribe.
The Special judge acquitted the appellant.
On appeal, the High Court accepted the prosecution case and convicted the accused.
In the High Court Counsel for the appellant entered appearance before notice of appeal under section 422 of the Code of Criminal Procedure was issued to the appellant and when the appeal was ready for hearing intimation was given under the rules to the Special judge to communicate to the appellant about the appeal filed against him.
The questions for determination were (1) whether the protection under article 20(3) of the Constitution of India had been violated by ask ing the accused to produce the currency notes, and (2) whether the provisions of section 422 of the Code of Criminal Procedure, had not been complied with because notice of the appeal had not been served on the appellant.
Held, (i) that there was no contravention of article 20(3) as the appellant was not in the position of a person accused of an offence when he was asked to produce the currency notes and that, in any case, on the facts proved the appellant was not compelled to be a witness against him.
M. P. Sharma vs Satish Chandra and others, [1954] S.C.R. 1077.
considered.
(2) that in an appeal under section 4I7 Of the Code of Criminal Procedure under section 422 notice of the appeal has to be given to the accused, but where, as in the present case, the High Court found on the facts that the appellant was fully apprised of the time and place at which the appeal would be heard, and counsel 117 appeared on his behalf and argued the appeal the fact that a formal notice of the appeal was not served on him would not vitiate the conviction.
|
Criminal Appeal No. 21 of 1965.
Appeal by special leave from the judgment and order dated May 19, 1964 of the Punjab High Court, Circuit Bench at Delhi in Criminal Appeal No. 7 D of 1963.
A.S.R. Chari, C.L. Sareen and R.L. Kohli, for the appellant.
B.R.L. lyenger, S.P. Nayar for R.N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave was limited to the question whether the case comes under section 302 of the Indian Penal Code.
The case of the prosecution which has been accepted by 247 the learned Sessions JUdge and the High Court was,.
in brie as follows: On January 31, 1962, at about 2.30 p.m., a fight took place ' between Dalip Kumar, P.W. 12, and Harjinder Singh, appellant, near the water tap in front of a tin factory in Zamirwali lane, Delhi.
Harjinder was apparently worsted in the fight and he then left the place holding out a threat that he would teach a lesson to Dalip Kumar.
The appellant.
returned with his brother Amarjit Singh to the house of Dalip Kumar and shouted to Dalip Kumar to come out.
Tejibai opened the door of the house and asked the appellant and Amarjit Singh to go away, but either these two or the appellant pulled Dalip Kumar out of the house into the lane and gave him beating near a lamp post in the comer of Zamirwali lane.
that time the deceased Kewal Kumar, who was the brother of Dalip Kumar, came and tried to intervene and rescue his brother.
It is at this stage that the evidence conflicting as to what exactly happened, According to one version, Amarjit Singh accused caught hold of Kewal Kumar and the appellant took out the knife and stabbed the deceased.
According to the other version, given by Mohd. Ali, P.W. 5, this is what happened: "Dalip Kumar 's brother holding Jinda accused asked him not to fight.
Jinda at that time took out the knife from his pocket and opened it with both his hands and then gave a blow with it under the belly and the upper portion of the left thigh.
Amarjit Singh accused did not do.
anything.
" In cross examination he stated: "Jinda accused was holding Dalip Kumar from the collar of his shirt by his left hand.
At that time Kewal Kumar was on right hand side of Jinda accused.
When Jinda took out the knife and opened it with both his hands, Dalip Kumar and his brother Kewal were grappling with Jinda accused Jinda accused gave only one knife blow to Kewal Kumar.
Kewal Kumar was m bent condition when he was stabbed only once." After inflicting this injury the appellant ran away.
Dr. G. section ,Mittal, P.W. 8, noted the following injuries on the person of the deceased: 1.
A stab wound 1"x1/4"x? On left thigh upper and below the inguinal ligament.
Abrasion l" x linear on back of left fore arm middle.
He described the other features of the injuries as follows: 248 "The direction of the stab wound was Oblique and was going medially.
Sartorius muscle was cut underneath along with femoral artery and vein.
Cut over major part of their diameter.
There was effusion of blood in the muscles and around the track over left thigh upper end. " He deposed that death was due to shock and hemorrhage from injury to femoral vessels by stab wound of the thigh.
He further stated: "It is correct that femoral artery and vein are important main vessels of.
the body.
The cutting of these vessels would result in great loss of blood.
The cutting injuries of these vessels could result in immediate death or after short duration.
" It was urged before the Sessions Judge 0n behalf of the appellant that, in the circumstances of the case; the offence, if at all committed, Would fall under section 326, I.P.C. The learned Sessions Judge, relying on Virsa Singh vs State of Punjab (1), he/d: "In this case, the prosecution has proved that the bodily injury, the nature of which has been described above was present.
This injury was caused with the pen knife deliberately.
It was not accidental or unintentional.
Injury of any other kind.
was not intended.
This injury in the opinion of this doctor was sufficient in the ordinary course of nature to cause death.
This being so the case ; would apply and the offence which the accused Jinda has committed falls u/s 302 Indian Penal Code." The High Court, on appeal, over ruled a similar contention in the following words: "Lastly, the counsel has attempted to take the case out of the purview of the offence of murder.
It has been contended that it was.
just a small knife with which a blow was given and that it was not on the vital part of the body and, therefore, the appellant should not be held guilty of murder.
In my opinion, the contention is wholly unsustainable.
The deceased, a boy of about 16 years of age had merely come to help his brother, when the appellant, who had deliberately come armed with knife from his house, stabbed the deceased with that knife on vulnerable part.
1 do not see how the (1) ; 249 offence can be considered not to fall within the purview of murder.
" Later, the High Court observed: "It is futile to contend that he did not intend to kill the deceased.
The injury and the weapon are quite eloquent in this respect.
" The learned counsel for the appellant, Mr. Chari, contends on the facts established in this case no offence under section 302 s been committed and the appellant should have been connected under section 326 or at the most under section 304, part two.
The learned counsel for the respondent strongly relies.
on the decision this Court in Virsa Singh vs Slate of Punjab(1) and he says at all the ingredients laid down in that case by this Court are ascent in this case and, therefore, the High Court was correct in firming the conviction of the appellant under section 302, I.P.C. It seems to us.
that all the ingredients which were laid down this Court in that case have not been established in this case.
Bose, J., speaking for the.
Court observed: "To put it shortly, the prosecution must prove the following facts before it can bring a case under section 300, "3rdly"; First, it must establish, quite objectively, that a bodily injury is present; Secondly, the nature of the injury must be proved.
These are purely objective investigations.
Thirdly, it must be proved that there was an intention to inflict that particular bodily injury, that is to say, that it was not accidental or unintentional, or that some other kind of injury was intended.
Once these three elements are proved to be present, the enquiry proceeds further and,.
Fourthly, it must be proved that the injury of the type just described made up of the three elements set out above is sufficient to cause death in the ordinary course of nature.
This part of the enquiry is purely objective and inferential and has nothing to do with the intention of the offender.
" The learned Judge further explained the third ingredient at p. 1503 in the following words: "The question is not whether the prisoner intended to inflict a serious injury or a trivial one but whether he (1) ; 250 intended to inflict 'the injury ' that is proved tO be present.
If he can show that he did not, or if the totality of ' the circumstances justify such an inference, then, of 'course, the intent that the section requires is not proved.
But if there is nothing beyond the injury and the fact that the appellant inflicted it, the only possible inference is that he intended to inflict it.
Whether he knew of its seriousness, or intended serious consequences, is neither here nor ,there.
The question, so far as the intention is concerned, is not whether he intended to kill, or to inflict an injury of a particular degree of seriousness, but whether he intended to inflict the injury in question; and once the existence of the injury is proved the intention to cause it will be presumed unless the evidence or the circumstances warrant an opposite conclusion.
In Rajwant singh vs
State of Kerala(1), Hidayatullah, J. referring to Virsa Singh vs state of Punjab(2), observed: "As was laid down in Virsa Singh vs State of Punjab. for the application of this clause it must be first established that an injury is caused, next it must be established objectively what the nature of that injury in the ordinary course of nature is.
If the.
injury is found to be sufficient to cause death one test is satisfied.
Then it must be proved that there was an intention to inflict that very injury and not so.me other injury and that it was not accidental or unintentional.
If this is also held against the offender the offence of murder is satisfied.
" It seems to us that the.
High Court has not considered whether the third ingredient laid down by Bose, J. in Virsa Singh vs State Punjab(2) has been proved in this case or not.
In our opinion the circumstances justify the inference that the accused did not intend to cause an injury on this particular portion of the thigh.
The evidence indicates that while the appellant was trying to assault Dalip Kumar and the deceased intervened, the appellant timing 'himself one against two took out the knife and stabbed 1he deceased, It also indicates that the deceased at that stage was in a crouching position presumably to intervene and separate the two.
It cannot, therefore, be said With any definiteness that the appellant aimed the blow tat this particular part of the thigh knowing that it would cut the artery.
It may be observed that the appellant had not used the knife While he was engaged in the fight with Dalip Kumar.
It was only when he felt that the deceased also came up against him that he whipped out the knife.
(1) A.I.R. 1965 S.C.1874, 1878 (2) ; 251 in these circumstances it cannot be said that it has been proved that it was.
the intention of the appellant to inflict this particular injury on tiffs particular place.
It is, therefore, not possible to apply cl. 3 of section 300 to the act of the accused.
Nevertheless, the deceased was in a crouching position when the appellant struck him with the knife.
Though the knife was " 5 to. 6" in length including the handle it was nonetheless a dangerous weapon.
When the appellant struck the deceased with the knife, he must have known that the deceased then being in a bent position the blow would land in the abdomen or near it a vulnerable part of the human body and that such a blow was likely to result in his death.
In these circumstances it would be quite legitimate to hold that he struck the deceased with the knife with the intention to cause an injury likely to cause death.
We are, therefore, of the opinion that the offence falls under section 304 Part 1.
The appeal is allowed and the conviction is altered from one under section 302 to section 304 Part 1 and the appellant is sentenced to seven years rigorous imprisonment.
G.C. Appeal allowed.
| The appellant was convicted by the Sessions Judge under section 302 of the Indian Penal Code and the conviction was upheld by the High Court.
According to the prosecution evidence the appellant was trying to assault one D when the latter 's brother K intervened.
The appellant took out a knife and caused an injury on K 's thigh which cut an artery and resulted in his death.
In appeal, by special leave, before this Court it was urged that in the circumstances of the case the intention and knowledge requisite for an offence under section 302 I.P.C., had not been established.
HELD: (i) The appellant had not used the knife while he was engaged in the fight with D.
It was only when he felt that the deceased also came up against him that . he whipped out the ' knife.
The deceased was at that time in a crouching position.
In these circumstances it could not be said that the appellant intended to cause the injury in the thigh knowing that it would cut the artery.
It was, therefore, not possible to apply cl. 3 of section 300 to the act of the accused, and he was not guilty of murder.
[250 G H] Virsa Singh vs State of Punjab. ; , applied.
(ii) However, when the appellant struck the deceased with the knife, he must have known that the deceased then being in a bent position, the blow would land in the abdomen or near it a vulnerable ' part of the human body and that such a blow was likely to result in his death.
In these circumstances it would be quite legitimate to hold that he struck the deceased with the knife with the intention to cause an injury likely to cause death.
The offence, therefore.
clearly fell under section 304 Part 1.
[251 B C]
|
Appeal No. 157 of 1959.
Appeal from the judgment and decree dated January 5, 1956, of the Allahabad High Court in Special Appeal No. 205 of 1954 and Civil Appeal No. 158 of 1959.
Appeal by special leave from the judgment and order dated January 15, 1952, of the Labour Appellate Tribunal of India, Allahabad, in Appeal No. Cal.
47 of 1951.
M.C. Setalvad, Attorney General for India and G. C. Mathur, for the appellant.
M. R. Krishna Pillai, for respondent No. 5 (In C.A. No. 157/1959).
C. P. Lal, for the State of U. P. and Respondents Nos. 2 and 4 (In C. A. No. 157/59).
O. P. Verma, for respondent No. 5 (in C. A. No. 158/59).
December 12.
The Judgment of the Court was delivered by DAs GUPTA, J.
These two appeals raise the question of the maintainability of an application made by the Employers ' Association of Northern India, Kanpur on behalf of , the J. K. Cotton and Weaving Mills 187 Co., Ltd., a member of the Association in connection with the proposed termination of service of certain members of its Watch and Ward Staff.
But before we come to the consideration of this question it is necessary to indicate in brief the long and tortuous path this matter has traveled before coming to us.
The application of the Employers ' Association purported to be under clause 5(a) of the Government order dated March 10, 1948, as amended by a later order of May 15, 1948.
This order was issued by the Governor of the United Provinces in exercise of the powers conferred on him by cl.
(b), (c), (d) and (g) of section 3 and by section 8 of the U. P.
The application after stating that a number of thefts of Dhoties had taken place in the Mill further stated that it was obvious to the management of the J. K. Cotton Spinning and Weaving Mills Co., Ltd., that this state of affairs could not exist and continue if Watch and Ward staff were carrying out their duties vigilantly, correctly and honestly.
It stated further that the management having lost confidence in the honesty of the Watch and Ward Staff had decided to terminate the services of all the per.
sons of the Watch and Ward Staff and to recruit fresh men from the employment exchange and that in lieu of notice of termination of service the management would pay to these persons 12 days ' wages in accordance with Standing Order No. 17A. The prayer made in the application was that "the Board be pleased to record the award entitling the J. K. Cotton and Weaving Mills Co., Ltd., to terminate the services of all the members of the Watch and Ward Staff whose names appear in Annexure A".
During the pendency of the application before the Board the applicant withdrew its prayer as regards 5 of the workmen.
As regards the remaining workmen, after rejecting the preliminary objection raised on their behalf that the Board had no jurisdiction to entertain the application, the Board held that "it would not be in the interests of either party or in the interest of industry to allow the remaining 27 sepoys to continue in the employment of the Mills" and the Board 188 accordingly made the award permitting the appellants to terminate the services of these 27 sepoys after giving them compensation at the rates set out by it starting with 15 days full wages and compensation for those with one year of service with additional amount of compensation on a graduated scale for longer periods of service.
Against this order both the parties appealed to the Industrial Court.
That court agreed with Board 's conclusion on the question of jurisdiction but pointed out that the "procedure adopted by the employers association was defective inasmuch as the mills did not apply to the Regional Conciliation Officer to discharge the sepoys in question".
On merits the court held that the evidence justified the conclusion of the Board that the management had lost confidence in the members of the Watch and Ward Staff and that having regard to the Standing Orders their services should be terminated in accordance with the Standing Orders.
It accordingly directed in modification of the order made by the Board "that the services of the 27 sepoys in question be terminated in accordance with the Standing Orders and that they would not be paid extra compensation as directed by the Board.
" The workmen then appealed to the Labour Appellate Tribunal of India.
The appellate tribunal held relying on an earlier decision of its own in Kanpur Mill Mazdoor Union vs Employers ' Association of Northern India (1) that the application under cl.
5(a) of the Government Order was not maintainable.
Accordingly it allowed the appeal and set aside the award of the Board as well as the Industrial Court.
J.K. Cotton and Weaving Mills Co., Ltd., thereupon filed an application under article 226 of the Constitution to the High Court of Judicature at Allahabad praying for a writ in the nature of certiorari calling for the records of the case from the Labour Appellate Tribunal of India and quashing the order of the Tribunal which has been mentioned above.
Mr. Justice Chaturvedi, before whom this application came up for hearing held that the application under (1)(1952) 189 cl.
5(a) was maintainable and the Appellate Tribunal had erred in holding otherwise.
Being however, of opinion that there had been undue delay in making this application for a writ, he dismissed the petition on that ground.
In the Letters Patent appeal preferred by the company against this decision a preliminary objection was raised on behalf of the Union representing the workmen that the Allahabad High Court could not call for the records and quash the order of the Labour Appellate Tribunal of India as those records were in Calcutta and consequently beyond the reach of the Court.
The learned Judges who heard the appeal upheld this objection and dismissed the appeal.
They however issued a certificate under article 132(1)and article 133(1)(c) of the Constitution.
Thereafterthe company also obtained special leave from this court to appeal directly against the order of the Labour Appellate Tribunal of India.
These two appeals preferred one on the certificate granted by theHigh Court and the other on the strength of the special leave granted by this Court, have been heard together.
The main controversy, as already indicated, is on the question of the maintainability of the application under cl.
5(a) of the Government order.
This order issued by the Governor of the United Provinces in exercise of the powers conferred on him by the U. P. 'contains detailed provisions as regards the settlement of industrial disputes.
The first clause provides for the constitution of Conciliation Boards consisting of three members.
Clause 2 provides for the appointment of conciliation officers for specified areas.
Clause 5 contains the important provisions as to commencement of proceedings before the Boards.
It provides two ways of starting these proceedings: one mentioned in cl.(b) is by an order made in writing by the Provincial Government for enquiring into a matter in respect of which an industrial dispute has arisen or is likely to arise.
The other method is by means of an application by an employee or recognised association of employers or registered trade union of workers or where there is 190 no such registered trade union the representatives not more than five in number duly elected by a majority of the workmen in the industry.
Any of these may by an application in writing move the Board to inquire into an industrial dispute.
This provision is in cl.
5(a) which may be set out in full: "5(a).
Any employee or recognised association of employers or registered Trade Union of workmen or, where no registered trade union of workmen exists in any particular concern or industry, the representatives not more than five in number of the workmen in such concern or industry duly elected in this behalf by a majority of the workmen, in such concern or industry as the case may be, at a meeting held for the purpose, may by application in writing move the Board to enquire into any industrial dispute.
The application shall clearly state the industrial dispute or disputes which are to be the subject of such inquiry.
" Clause 10 provides for the constitution of industrial courts for specified areas.
Clause 12 provides for appeals to this Court against the awards made by the Board.
The other clauses up to clause 22 deal with the powers and procedure of the Board or the Industrial Court and with the duties of employers to permit certain meetings to be held.
Then comes cl. 23 which is in these words: "Save with the written permission of the Regional Conciliation Officer or the Additional Regional Conciliation Officer concerned, irrespective of the fact whether an inquiry is pending before a Regional Conciliation Board or the Provincial Concilia tion Board or an appeal is pending before the Industrial Court, no employer, his agent or manager, shall during the continuance of an inquiry or appeal, discharge or dismiss any workman.
" Section 24 provides that every order made or direction issued under the provisions of this Government order shall be final and conclusive.
Clause 26 provides for penalties for contravention or an attempt to contravene any of the provisions of the order.
A consideration of the scheme of this legislation 191 makes it clear that while two modes are provided in clauses 5(a) and 5(b) for the commencement of proceedings for settlement of industrial disputes generally, a special provision is made in clause 23 that if an enquiry is proceeding before a Regional Conciliation Board or the Provincial Conciliation Board or an appeal is pending before the Industrial Court, no workman shall be discharged except with the written permission of the Regional Conciliation Officer or the Additional Conciliation Officer concerned.
The consequence in cl. 26 is that if any workman is discharged or dismissed during the continuance of such enquiry or appeal without such permission the employer shall be liable to fine or to imprisonment not exceeding three years or both.
The heavy punishment provided for contravention of the order shows the importance attached by the legislating authority to the directions given by the Order.
In deciding whether an application under cl.
5(a) was maintainable in the facts of the present case two questions arise for consideration.
The first is whether an industrial dispute comes into existence as soon as an employer decides on the dismissal of some of the workmen and proposes to give effect to such decision.
One view is that it is only the party aggrieved by the proposed dismissal, in other words, the workmen, who by objecting to the same can raise the dispute and that the employer cannot by his own proposal to dismiss the workmen be heard to say that a dispute had come into existence even before the workmen had a chance to object to the dismissal.
The contrary view which has found favour with Mr. Justice Chaturvedi of the High Court is that even at the stage the employer proposes to dismiss his workmen it is a case of contemplated non employment which will come within the expression "industrial dispute".
The other question is whether the provisions of cl. 23 of the order bar an application under cl.
5(a) during the con tinuance of any enquiry before the Regional Conciliation Board or the Additional Conciliation Board or during the pendency of the appeal before the Industrial Court.
There is no dispute that on June 13, 192 1950 when the application under clause 5(a) was made an inquiry was in fact pending before a Conciliation Officer.
It appears that on July 9, 1949 the Governor of the United Provinces made an order directing the Labour Commissioner of the United Provinces or a Conciliation Officer nominated by him in this behalf to redstart the adjudication proceedings between the J. K. Cotton & Weaving Mills Co., and section N. Shukla, a dismissed employee of the concern.
The Adjudica tor was directed to conclude the adjudication and submit his award by August 15,1949.
The time was extended by subsequent orders first to November 15, 1949 and then to March 31, 1950, again to June 30, 1950 and thereafter to September 30, 1950.
It is true that at the time these orders extending time for submission of award were made the Governor had no authority to make these orders and these orders were invalid.
They were validated by the provisions of section 3 of the U.P. Act XXIII of 1953.
In view of this position of the law the learned Attorney General has not disputed that on June 13, 1950 when the application under cl. 5(a) was made an enquiry was actually pending before a Conciliation Officer.
Consequently, before the management could make any order discharging or dismissing any of its workmen it was required by cl. 23 to obtain permission for the same from the Regional Conciliation Officer.
The question is whether in spite of this provision in cl. 23 the employer could make and the Board entertain an application under cl.
5(a) on this question of proposed dismissal.
We propose to consider this question first and for that purpose assume that an industrial dispute comes into existence as soon as the employer decides to dismiss his workmen and proposes to do so and that ordinarily he can make an application in such a dispute to the Board under the provisions of cl. 5(a).
If such application is decided against the employer and no permission is given to make the proposed dismissal, no difficulty arises.
What however is the position if on such an application the Board makes an order granting the employer the requisite permission to 193 dismiss his workmen? Under cl. 24 this order unless modified in appeal will be final and conclusive and shall not be questioned by any party thereto.
So far as the workmen are concerned they will not be able to dispute the correctness of the order except in the mode provided in the Government order itself.
What however is the position of the employer if in pursuance of the order made on his application under cl.
5(a) he discharges or dismisses his workmen? By doing so he will have clearly contravened the provisions of cl. 23, and will become liable to the severe penalty provided in cl.
26 a, penalty which might even extend to imprisonment up to three years.
To remove this incongruity, says the learned Attorney General, apply the rule of harmonious construction and hold that cl.
23 of the order has no application when an order is made on an application under cl. 6(a).
On the assumption that under cl.
5(a) an employer can raise a dispute sought to be created by his own proposed order of dismissal of workmen there is clearly this disharmony as pointed out above between two provisions viz., cl. 5(a) and cl. 23; and undoubtedly we have to apply the rule of harmonious construction.
In applying the rule however we have to remember that to harmonise is not to destroy.
In the interpretation of statutes the court,% always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect.
These presumptions will have to be made in the case of rule making authority also.
On the construction suggested by the learned Attorney General it is obvious that by merely making an application under cl.
(5) on the allegation that a dispute has arisen about the proposed action to dismiss workmen the employer can in every case escape the requirements of cl. 23 and if for one reason or other every employer when proposing a dismissal prefers to proceed under cl.
5(a) instead of making an application under cl. 23, cl. 23 will be a dead letter.
A construction like this which defeats the intention of the rule making authority in cl. 23 must, if possible, be avoided.
25 194 It is hardly necessary to mention that this rule in cl. 23 was made with a definite purpose.
The provision here is very similar to section 33 of the before its amendment, though there are some differences.
It is easy to see however that the rule making authority in making this rule was anxious to prevent as far as possible the recrudescense of fresh disputes between employers and workmen when some dispute was already pending and that purpose will be directly defeated if a fresh dispute is allowed to be raised under cl.
5(a) in the very cases where cl. 23 in terms applies.
There will be complete harmony however if we hold instead that cl.
5(a) will apply in all other cases of proposed dismissal or discharge except where an inquiry is pending within the meaning of cl. 23.
We reach the same result by applying another well known rule of construction that general provisions yield to special provisions.
The learned Attorney General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a con flict between general and special provisions in the same legislative instrument.
This suggestion does not find support in either principle or authority.
The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect.
In Pretty vs Solly (1) (quoted in Craies on Statute Law at p. 205, 5th Edition) Romilly, M.R. mentioned the rule thus:"The rule is, that whenever there is a particular enactment and a general enactment in the same statute and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment (1) ; , 610. 195 must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply".
The rule has been applied as between different provisions of the same statute in numerous cases some of which only need be mentioned: De Winton vs Brecon (1), Churchill vs Crease (2), United States vs Chase (3) and Carroll vs Greenwich Ins.
Applying this rule of construction that in cases of conflict between a specific provision and a general provision the specific provision prevails over the general provision and the general provision applies only to such cases which are not covered by the special provision, we must hold that cl.
5(a) has no application in a case where the special provisions of cl. 23 are applicable.
As in the present case an inquiry was in fact pending before a Conciliation Officer, cl. 23 applied in respect of any discharge or dismissal of a workman and the employer could not take advantage of cl.
5(a) of the Government Order and such an application could not in law be entertained by the Board.
In view of this conclusion it is unnecessary for us to consider the other question that was raised, viz., whether an industrial dispute within the meaning of cl.
5(a) comes into existence as soon as an employer decides on the dismissal of some of its workmen and proposes to give effect to such a decision.
On the above conclusions we hold that the Labour Appellate Tribunal of India rightly held that the application under cl. 5(a) filed on June 13, 1950 was not maintainable and rightly set aside the awards of the Conciliation Board and the Industrial Court.
The appeal against the order of the Labour Appellate Tribunal of India is therefore dismissed.
As we have already pointed out above the order made by the appellate Bench of the High Court in the writ petition was based on its acceptance of the preliminary objection that the records of the Labour Appellate Tribunal being in Calcutta could not be (1)(1858) (2)(1828) 5 Bing.
(3)(1890) ; (4)(1905) ; 196 reached by any writ of the Allahabad High Court.
In view of our conclusion that the application under cl.
5(a) was not maintainable, the appellant was on merits not entitled to any writ and on that ground the appeal against the High Court 's order must also be dismissed.
It is unnecessary to consider the question whether the High Court was right in its view as regards the preliminary objection and we express no opinion on the same.
Both the appeals are accordingly dismissed with costs to the contesting respondent.
There will be one set of hearing fee.
Appeals dismissed.
| Under sections 3 and 8 of the U. P. the Governor issued an Order dated March 10, 1948, making dletailed provisions for the settlement of Industrial Disputes.
Clause 5(a) of the Government Order empowered, among others, a recognised association of employers to refer an industrial dispute for adjudication to the Conciliation Board.
Clause 23 provided that no employer shall discharge or dismiss any workman during the pendency of an inquiry except with the written permission of the Regional Conciliation Officer, and Cl. 26 provided for penalties for contravention of Cl. 23.
The appellant proposed to dismiss certain workmen.
Though at the time there was a dispute pending inquiry, the appellant did not seek permission under cl. 23 to dismiss the workmen; but the Employers ' Associa tion of Northern India made an application under cl.
5(a) to the Board to adjudicate and give an award that the appellant was entitled to dismiss the workmen.
The workmen contended that the reference under cl.
5(a) was incompetent as the appellant had ,not first taken proceedings under Cl.
Held, that the application under cl.
5(a) of the G. O. was not 24 186 maintainable, as the employer could not take advantage of cl.
5(a) during the pendency of an inquiry when Cl. 23 was applicable.
If cls.
5(a) and 23 were held to ' apply at the same time there would be disharmony as by resorting to cl.
5(a) when Cl. 23 was applicable, the employers would be contravening cl. 23 and rendering themselves liable to the penalties under section 26.
But there was complete harmony if it was held that cl.
5(a) applied in all other cases of dismissal or discharge except where an inquiry was pending within the meaning of Cl. 23.
Besides Cl. 23 was a special provision which prevailed over the general provisions in cl.
Kanpur Mill Mazdoor Union vs Employers ' Association of Northern India, , approved.
De Winton vs Brecon, , Churchill vs Crease, (182S) 5 Bing.
177 and United States vs Chase, ; , referred to.
|
Appeal No. 85 of 1956.
20 154 Appeal from the judgment and order dated January 8, 1954, of the High Court of Saurashtra, at Rajkot, in Civil Misc.
Application No. 70 of 1952.
R. J. Kolah and A. C. Dave, for the appellant.
Porus A. Mehta and R. H. Dhebar, for respondent No. 1. 1956.
November 23.
The Judgment of the Court was, delivered by BHAGWATI J.
This appeal with a certificate of fitness granted by the High Court of Saurashtra raises an interesting question whether the agarias working in the Salt Works at Kuda in the Rann of Cutch are workmen within the meaning of the term as defined in the , hereinafter referred to as the Act.
The facts as found by the Industrial Tribunal are not in dispute and are as follows.
The appellants are lessees of the Salt Works from the erstwhile State of Dharangadhara and also hold a licence for the manufacture of salt on the land.
The appellants require salt for the manufacture of certain chemicals and part of the salt manufactured at the Salt Works is utilised by the appellants in the manufacturing process in the Chemical Works at Dharangadhara and the remaining salt is sold to outsiders.
The appellants employ a Salt Superintendent who is in charge of the Salt Works and generally supervises the Works and the manufacture of salt carried on there.
The appellants maintain a a railway line and sidings and also have arrangements for storage of drinking water.
They also maintain a grocery shop near the Salt Works where the agarias can purchase their requirements on credit.
The salt is manufactured not from sea water but from rain water which soaking down the surface becomes impregnated with saline matter.
The operations are seasonal in character and commence sometime in October at the close of the monsoon.
Then the entire area is parceled out into plots called pattas and they are in four parallel rows intersected by the railway 155 lines.
Each agaria is allotted a patta and in general the same patta is allotted to the same agaria year after year.
If the patta is extensive it is allotted to two agarias who work the same in partnership.
At the time of such allotment, the appellants pay a sum of Rs. 400/ for each of the pattas and that is to meet the initial expenses.
Then the agarias commence their work.
They level the lands and enclose and sink wells in them.
Then the density of the water in the wells is examined by the Salt Superintendent of the appellants and then the brine is brought to the surface and collected in the reservoirs called condensers and re tained therein until it acquires by natural process a certain amount of density.
Then it is flowed into the pattas and kept there until it gets transformed 'into crystals.
The pans have got to be prepared by the agarias according to certain standards and they are tested by the Salt Superintendent.
When salt crystals begin to form in the pans they are again tested by the Salt Superintendent and only when they are of a particular quality the work of collecting salt is allowed to be commenced.
After the crystals are collected, they are loaded into the railway wagons and transported to the depots where salt is stored.
The salt is again tested there and if it is found to be of the right quality, the agarias are paid therefore at the rate of Rs. 0 5 6 per maund.
Salt which is rejected belongs to the appellants and the agarias cannot either remove the salt manufactured by them or sell it.
The account is made up at the end of the season when the advances which have been paid to them from time to time as also the amounts due from the agarias to the grocery shop are taken into account.
On a final settlement of the accounts, the amount due by the appellants to the agarias is ascertained and such balance is paid by the appellants to the agarias.
The manufacturing season comes to an end in June when the monsoon begins and then the agarias return to their villages and take up agricultural work.
The agarias work themselves with their families on the pattas allotted to them.
They are free to engage extra labour but it is they who make the payments to 156 these labourers and the appellants have nothing to do with the same.
The appellants do not prescribe any hours of work for these agarias.
No muster roll is maintained by them nor do they control how many hours in a day and for how many days in a month the agarias should work.
There are no rules as regards leave or holidays.
They are free to go out of the works as they like provided they make satisfactory arrangements for the manufacture of salt.
In about 1950, disputes arose between the agarias and the appellants as to the conditions under which the agarias should be engaged by the appellants in the manufacture of salt.
The Government of Saurashtra, by its letter of Reference dated November 5, 1951, referred the disputes for adjudication to the Industrial Tribunal, Saurashtra State, Rajkot.
The appellants contested the proceedings on the ground, inter alia, that the status of the agarias was that of independent contractors and not of workmen and that the State was not competent to refer their disputes for adjudication under section 10 of the Act.
This question was tried as a preliminary issue and by its order dated August 30, 1952, the Tribunal held that the agarias were workmen within the meaning of the Act and that the reference was intra vires and adjourned the matter for hearing on the merits.
Against this order the appellants preferred an appeal being Appeal No. 302 of 1952, before the Labour Appellate Tribunal of India, and having failed to obtain stay of further proceedings before the Industrial Tribunal pending the appeal, they moved the High Court of Saurashtra in M.P. No. 70 of 1952 under articles 226 and 227 of the Constitution for an appropriate writ to quash the reference dated November 5, 1951, on the ground that it was without jurisdiction.
Pending the disposal of this writ petition, the appellants obtained stay of further proceedings before the Industrial Tribunal and in view of the same the Labour Appellate Tribunal passed an order on September 27, 1953, dismissing the appeal leaving the question raised therein to the decision of the High Court.
By their judgment dated January 8, 1954, the learned Judges 157 of the High Court agreed with the decision of the Industrial Tribunal that the agarias were workmen within section 2(.s) of the Act and, accordingly, dismissed the application for writ.
They, however, granted a certificate under article 133(1) (c) of the Constitution and that is how the appeal comes before us.
The sole point for determination in this appeal is whether the agarias working in the Salt Works of the appellants at Kuda are workmen within the definition of that term in section 2(s) of the Act.
" Workman " has been thus defined in section 2 (s) of the Act: "(s) 'Workman ' means any person employed (including an apprentice) in any industry to do any skilled or unskilled manual or clerical work for hire or ' reward and includes, for the purposes of any proceedings under this Act in relation to an industrial dispute, a workman discharged during that dispute, but does not include any person employed in the naval, military or air service of the (Government).
" The essential condition of a person being a workman within the terms of this definition is that he should be employed to do the work in that industry, that there should be, in other words, an employment of his by the employer and that there should be the relationship between the employer and him as between employer and employee or master and servant.
Unless a person is thus employed there can be no question of his being a workman within the definition of the term as contained in the Act.
The principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled.
The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done.
A distinction is also drawn between a contract for services and a contract of service and that distinction is put in this way: " In the one case the master can order or require what is to be done while in the other case he can not only order or require what is to be done 158 but how itself it ,;hall be done." (Per Hilbery, J. in Collins vs Hertfordshire County Council (1).) The test is, however, not accepted as universally correct.
The following observations of Denning L.J., at pp. 110, III in Stevenson, Jordan and Harrison Ltd. vs Macdonald and Evans (2) are apposite in this context: "But in Cassidy vs Ministry of Health (3) Lord Justice Somervell, pointed out that test is not universally correct.
There are many contracts of service where the master cannot control the manner in which the work is to be done as in the case of a captain of a ship.
Lord Justice Somervell, went on to say: One perhaps cannot get much beyond this: 'Was the contract a contract of service within the meaning which an ordinary man would give under the words '? " I respectfully agree.
As my Lord has said, it is almost impossible to give a precise definition of the distinction.
It is often easy to recognize a contract of service when you see it, but difficult to say wherein the difference lies.
A ship 's master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ship 's pilot, a taxi man, and a newspaper contributor are employed under a contract for services.
One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas., under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it.
" We may also refer to a pronouncement of the House of Lords in Short vs J. & W. Henderson, Ltd. (4) where Lord Thankerton recapitulated the four indicia of a contract of service which had been referred to in the judgment under appeal, viz., (a) the master 's power of selection of his servant, (b) the payment of wages or (1) , 615.
(2) , Ill. (3) , 543 s.c. , 352 3.
(4)(1946)62T.L.R. 427,429.
159 other remuneration, (c) the master 's right to control the method of doing the work, and (d) the master 's right of suspension or dismissal, but observed: "Modern industrial conditions have so much affected the freedom of the master in cases in which no one could reasonably suggest that the employee was thereby converted into an independent contractor that, if and when an appropriate occasion arises, it will be incumbent on this House to reconsider and to restate these indicia.
For example, (a), (b) and (d) and probably also (c), are affected by the statutory provisions and ,rules which restrict the master ',% choice to men supplied by the labour bureaux, or directed to him under the Essential Work provisions, and his power of suspension or dismissal.
is similarly affected.
These matters are also affected by trade union rules which are atleast primarily made for the protection of wage earners.
" Even in that case, the House of Lords considered the right of supervision and control retained by the employers as, the only method if occasion arose of securing the proper and efficient discharge of the cargo as sufficiently determinative of the relationship between the parties and affirmed that " the principal requirement of a contract of service is the right of master in some reasonable sense to control the method of doing the work and this factor of superintendence and control has frequently been treated as critical and decisive of the legal quality of relationship.
The position in law is thus summarised in Halsburv 's Laws of England, Hailsham edition, Vol. 22, page 112, para. 191: " Whether or not, in any given case, the relation of master and servant, exists is a question of fact; but in all cases the relation imports the existence of power in the employer not only to direct what work the servant is to do, but also the manner in which the work is to be done.": and until the position is restated as contemplated in Short vs J. & W. Henderson Ltd., (supra), we may take it as the prima facie test for determining the relationship between master and servant, 160 The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work, or to borrow the words of Lord Uthwatt at page 23 in Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd., and Another (1), " The proper test is whether or not the hirer had authority to control the manner of execution of the act in question The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition.
As has been noted above, recent pronouncements of the Court of Appeal in England have even expressed the view that it is not necessary for holding that a person is an employee, that the employer should be proved to have exercised control over his work, that the test of control was not one of universal application and that there were many contracts in which the master could not control the manner in which the work was done (Vide observations of Somervell, L.J., in Cassidy vs Ministry of Health (supra), and Denning, L.J., in Stevenson, Jordan and Harrison Ltd. vs MacDonald and Evans (supra).) The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer or to use the words of Fletcher Moulton, L.J., at page 549 in Simmons vs Health Laundry Company (2): " In my ' opinion it is impossible to lay down any rule of law distinguishing the one from the other.
It is a question of fact to be decided by all the circumstances of the case.
The greater the amount of direct control exercised over the person rendering the services by the person contracting for them the stronger the (1) ; 23.
(2) [1910] 1 K.B 543, 54 550.
9 161 grounds for holding it to be a contract of service, and similarly the greater the degree of independence of such control the greater the probability that the services rendered are of the nature of professional services and that the contract is not one of service.
" The Industrial Tribunal on a consideration of thes facts in the light of the principles enunciated above, came to the conclusion that though certain features which are usually to be found in a contract of service were absent, that was due to the nature of the industry and that on the whole the status of the agarias was that of workmen and not independent contractors.
It was under the circumstances strenuously urged before ,us by the learned counsel for the respondents that the question as regards the relationship between the appellants and the agarias was a pure question of fact, that the Industrial Tribunal had jurisdiction to decide that question and had come to its own conclusion in regard thereto, that the High Court, exercising its jurisdiction under articles 226 and 227 of the Constitution, was not competent to set aside the finding of fact recorded by the Industrial Tribunal and that we, here, entertaining an appeal from the decision of the High Court, should also not interfere with that finding of fact.
Reliance was placed on the observations of Mahajan, J., as he then was, in Ebrahim Aboobakar vs Custodian General of Evacuee Property (1) "It is plain that such a writ cannot be granted to quash the decision of an inferior court within its jurisdiction on the ground that the decision is wrong.
Indeed, it must be shown before such a writ is issued that the authority which passed the 'order acted without jurisdiction or in excess of it or in violation of the principles of natural justice.
But once it is held that the court has jurisdiction but while exercising it made a mistake, the wronged.
party can only take the course prescribed by law for setting matters right inasmuch as a court has jurisdiction to decide rightly as well as wrongly. " (1) ; ,702.
21 162 There is considerable force in this contention of the respondents.
The question whether the relationship between the parties is one as between employer and employee or between master and servant is a pure question of fact.
Learned counsel for the appellants "relied upon a passage from Batt 's "Law of Master and Servant", 4th edition, at page 10: " The line between an independent contractor and a servant is often a very fine one; it is a mixed question of fact and law, and the judge has to find and select the facts which govern the true relation between the parties as to the control of the work, and then he or the jury has to say whether the person employed is a servant or a contractor.
" This statement, however, rests upon a passing observation of Mc Cardie, J. in Performing Right Society Ltd. vs Mitchell and Booker (Palais de Danse)(1) and is contrary to the oaten& of authorities which lays down that whether or not in any given case the relation of master and servant exists is purely one of fact.
(Vide Halsbury 's "Laws of England", Hailsham edition, Vol. 22, page 112, para.
191; Per Cozens Hardy, M.R. at page 547 and Per Fletcher Moulton, L.J. at page 549 in Simmons vs Heath Laundry Company (supra).
It is equally well settled that the decision of the Tribunal on a question of fact which it has jurisdiction to determine is not liable to be questioned in proceedings under article 226 of the Constitution unless at the least it is shown to be fully unsupported by evidence.
Now the argument of Mr. Kolah for the appellants is that even if all the facts found by the Tribunal are accepted they only lead to the conclusion that the agarias are independent contractors and that the finding, therefore, that they are workmen is liable to be set aside on the ground that there is no evidence to support it.
We shall, therefore, proceed to determine the correctness of this contention.
Apart from the facts narrated above in regard to which there is no dispute, there was the evidence of the Salt Superintendent of the appellants which was recorded before the Tribunal: (1) 163 "The panholders are allotted work on the salt pans by oral agreement.
The Company has no control over the panholders in regard to the hours of work or days of work.
The Company 's permission is nor sought in matter of sickness or in matter of going out to some village.
The Company has no control over the panholders as to how many labourers they should engage and what wages they should pay them.
The company 's supervision over the work of the panholders is limited to the proper quality as per requirements of the Company and as per standard determined by the Government in matter of salt.
, The company 's supervision is limited to this extent.
The Company acts in accordance with Clause 6 of the said agreement in order to get the proper quality of salt.
Panholders are not the workmen of the Company, but are contractors.
The men, who are entrusted with pattas, work themselves.
They can engage others to help them and so they do.
There is upto this day no instance that any penholder who is entrusted with a patta, has not turned up to work on it.
But we do not mind whether he himself works or not.
If any penholder after registering his name (for a patta) gets work done by others, we allow it to be done.
We own 319 pattas.
Some patta8 have two partners.
In some, one man does the job.
ID all the pans, mainly the panholders work with the help of their (respective) families.
" Clause 6 of the agreement referred to in the course of his evidence by the Salt Superintendent provided: " 6.
We bind ourselves to work as per advice and instructions of the officers appointed by them in connection with the drawing of brine or with the process of salt production in the pattas and if there is any default, negligence or slackness in executing it on our part or if we do not behave well in any way, the Managing Agent of the said Company can annul this agreement and can take possession of the patta, brine, well etc., and as a result we will not be entitled to claim any 164 sort of consideration or compensation for any half processed salt lying in our patta; or in respect of any expense incurred or labour employed in preparing kiwa patta, well bamboo lining etc.
" There was also the evidence of Shiva Daya, an agaria, who was examined on behalf of the respondents: " There is work of making enclosures and then of sinking wells.
The company supervises this work.
While the wells are being sunk, the company measures the density of the brine of wells.
In order to bring the brine of wells to the proper density, it is put in a condenser and then the Company tests this and then this brine is allowed to flow in the pattas.
The bottom of a patta is prepared after it is properly crushed under feet and after the company inspects and okays that it is alright, water is allowed to flow into it.
When salt begins to form at the bottom of a patta, an officer of the company comes and inspects it.
At the end of 21 months, the water becomes saturated, i.e., useless, and so it is drained away under the supervision of the company.
Then fresh brine is allowed to flow into the patta from the condenser.
This instruction is also given by the company 's officer.
" It was on a consideration of this evidence that the Industrial Tribunal came to the conclusion that the supervision and control exercised by the appellants extended to all stages of the manufacture from beginning to end.
We are of opinion that far from there being no evidence to support the conclusion reached by the Industrial Tribunal there were materials on the record on the basis of which it could come to the conclusion that the agarias are not independent contractors but workmen within the meaning of the Act.
Learned counsel for the appellants laid particular stress on two features in this case which, in his submission, were consistent only with the position that the agarias are independent contractors.
One is that they do piece work and the other that they employ their own labour and pay for it.
In our opinion neither of these two circumstances is decisive of the question.
As 165 regards the first, the argument of the appellants is that as, the agaria8 are under no obligation to work for fixed hours or days and are to be paid wages not per day or hours but for the quantity of salt actually produced and passed, at a certain rate,, the very basis on which the relationship of employer and employees rests is lacking, and that they can only be regarded as independent contractors.
There is, however, abundant authority in England that a person can be a workman even though he is paid not per day but by the job.
The following observations of Crompton, J. in Sadler vs Henlock (1) are pertinent in this behalf : " The test here is, whether the defendant retained the power of controlling the work.
No distinction can be drawn from the circumstances of the man being employed at so much a day or by the job.
I think that here the relation was that of master and servant, not of contractor and contractee." (See also Blake, vs Thirst (2) and Halsbury 's " Laws of England ", Hailsham edition, Vol. 22, page 119, para.
194, wherein it is stated that if a person is a worker and not a contractor, " it makes no difference that his work is piece work ".) As regards the second feature relied on for the appellants it is contended that the agaria8 are entitled to engage other persons to do the work, that these persons are engaged by the agaria8 and are paid by them, that the appellants have no control over them and that these facts can be reconciled only with the position that the agaria8 are independent contractors.
This argument, however, proceeds on a misapprehension of the true legal position.
The broad distinction between a workman and an independent contractor lies in this that while the former agrees himself to work, the latter agrees to get other persons to work.
Now a person who agrees himself to work and does so work and is, therefore, a workman does not cease to be such by reason merely of the fact that he gets other persons to work along (1) ; , 578 ; ; , 212.
(2) (1863) 32 L.J. (Exchequer) 188. 166 with him and that those persons are controlled and paid by him.
What determines whether a person is a workman or an independent contractor is whether he has agreed to work personally or not.
If he has, then he is a workman and the fact that he takes assistance from other persons would not affect his status.
The position is thus summarised in Halsbury 's 'Laws of England ', Vol. 14, pages 651 652: " The workman must have consented to give his personal services and not merely to get the work done, but if he is bound under his contract to work personally, he is not excluded from the definition, simply because he has assistance from others, who work under him." (See also Grainger vs Aynsley : Bromley vs Tams (1); Weaver vs Floyd (2) and Whitely vs Armitage (a).) In the instant case the agarias are professional labourers.
They themselves personally work along with the members of their families in the production of salt and would, therefore, be workmen.
The fact that they are free to engage others to assist them and pay for them would not,in view of the above authorities, affect their status as workmen.
There are no doubt considerable difficulties that may arise if the agarias were held to be workmen within the meaning of section 2 (s) of the Act.
Rules regarding hours of work etc., applicable to other workmen may not be conveniently applied to them and the nature as well as the manner and method of their work would be such as cannot be regulated by any directions given by the Industrial Tribunal.
These difficulties, however, are no deterrent against holding the agarias to be workmen within the meaning of the definition if they fulfil its requirements.
The Industrial Tribunal would have to very well consider what relief, if any, may possibly be granted to them having regard to all the circumstances of the case and may not be able to regulate the work to be done by the aqarias and the remuneration to be paid to them by the employer in (1) (1881) 6 Q.B.D. 182.
(2) (3) 167 the manner it is used to do in the case of other industries here the conditions of employment and the work to be done by the employees is of a different character.
These considerations would necessarily have to be borne in mind while the Industrial Tribunal is adjudicating upon the disputes which have been referred to it for adjudication.
They do not, however, militate against the conclusion which we have come to above that the decision of the Industrial Tribunal to the effect that the agarias are workmen within the definition of the term contained in section 2 (s) of the Act was justified on the materials on the record.
We accordingly see no ground for interfering with that decision and dismiss this appeal with costs.
Appeal dismissed.
| The appellants were lessees holding a license for the manufacture of salt on the demised lands.
The salt was manufactured by a class of professional labourers known as agarias from rain water that got mixed up with saline matter in the soil.
The work was seasonal in nature and commenced in October after the rains and continued till June.
Thereafter the agarias left for their own villages for cultivation work.
The demised lands were divided into plots called Pattas and allotted to the a arias with a sum of Rs. 400/ for each Patta to meet the initial expenses.
Generally the same patta was allotted to the same aigaria every year and if a patta was extensive in area, it was allotted to two agarias working in partnership.
After the manufacture of salt the agayias were paid at the rate Of 5 as.
6 pies per maund.
At the end of each season the accounts were settled and the agarias paid the balance due to them.
The agarias who worked themselves with the members of their families were free to engage extra labour on their own account and the appellants had no concern therewith.
No hours of work were prescribed, no muster rolls maintained, nor were working hours controlled by the appellants.
There were no rules as regards leave or holidays and the agarias were free to go out of the factory after making arrangements for the manufacture of salt.
The question for decision was whether in such circumstances the agarias could be held to be workmen as defined by section 2(s) Of the Industrial Disputes Act of 1947, as found by the Industrial Tribunal and agreed with by the High Court or they were independent contractors and the reference for adjudication made by the Government competent under section 10 of the Act.
Held, that the finding of the Industrial Tribunal that the agarias were workmen within the meaning of section 2(S) of the Industrial Disputes Act of 1947 was correct and the reference was competent.
The real test whether a person was a workman was whether he had been employed by the employer and a relationship of employer and employee or master and servant subsisted between them and it was well settled that the prima facie test of such 153 relationship was the existence of the right in the employer not merely to direct what work was to be done but also to control the manner in which it was to be done, the nature or extent of such control varying in different industries and being by its nature incapable of being precisely defined.
The correct approach, therefore, was to consider whether, having regard to the nature of the work, there was due control and supervision of the employer.
Mersey Docks and Harbour Board vs Coggins & Griffith (Liver Pool) Ltd., and Another ; , and Simmons vs Heath Laundry Company , referred to.
The question whether the relation between the parties was one as between an employer and employee or master and servant was a pure question of fact and where the Industrial Tribunal having jurisdiction to decide that question came to a finding, such finding of fact was not open to question in a proceeding under article 226 of the Constitution unless it could be shown to be wholly unwarranted by the evidence.
Ebrahim Aboobakar vs Custodian General of Evacuee Property ; , referred to.
Performing Right, Society Ltd. etc.
vs Mitchell and Booker (Plaise De Danse) [1924] i K.B. 762, not followed.
A person could be a workman even though he did piece work and was paid not per day but by the job or employed his own labour and paid for it.
Sadler vs Henlock ; and Blake vs Thirst (1863) 32 L.J. (Exchequer) 188, referred to.
The broad distinction between a workman and an independent contractor was that while the former would be bound by agreement to work personally and would so work the latter was to get the work done by others.
A workman would not cease to be so even though lie got other persons to work with him and paid and controlled them.
Grainger vs Aynsley : Bromley vs Tams (1881) 6 Q.B.D. 182, Weaver vs Floyd (1825) 21 L.H., Q.B. 151 and Whitely vs Armitage , referred to.
As in the instant case the agayias, who were professional labourers and personally worked with the members of their families in manufacturing the salt, were workmen within the meaning of the Act, the fact that they were free to engage others to assist them and paid for them, could not affect their status as workmen.
|
minal Appeals Nos. 102 & 103 of 1965.
Appeals by special leave from the judgments and orders dated October 12, 1964 of the Kerala High Court in Criminal Appeal No. 80 of 1964, and Criminal Appeal No. 70 and Referred Trial No. 13 of 1964 respectively.
Jai Gopal Sethi, C. L. Sareen and R. L. Kohli, for the appellant (in Cr. A. No. 102/65).
Harbans Singh, for the appellant (in Cr. A. No. 103/65).
A. section R. Chari, V. Narayana Menon and M. R. K. Pillai, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Hidayatullah, J.
This judgment will also govern the disposal of Criminal Appeal No. 102 of 1965 (Rajwant Singh vs The State of Kerala).
The appellants in these two appeals have been convicted under sections 302/34, 364, 392, 394 and 447 of the Indian Penal Code.
Unni (appellant in this appeal) has been sentenced to death and Rajwant Singh (appellant in the other appeal) has been sentenced to imprisonment for life.
No separate sentences under the other sections have been imposed on Unni but Rajwant Singh has been sentenced to four years ' rigorous imprisonment under sections 392 and 394, Indian Penal Code, with a direction that the sentences shall run concurrently with the sentence of imprisonment for life.
The High Court of Kerala has dismissed their appeals and confirmed the sentence of death on Unni.
They now appeal by special leave of this Court.
These appellants were tried with three others, of whom two were acquitted.
One Taylor was also convicted of the same offences and was sentenced in the aggregate to imprisonment for life.
He has not appealed to this Court.
We are not concerned with them.
The case relates to the death of one Lt. Commander Menianha of the Naval Base, I.N.S. Vendurthy, Willingdon Island, Cochin Harbour, on the night of March 30, 1963.
Unni was attached as a rating to this Naval Base and at the time of the offence was on leave,.
Taylor, who has not appealed was an ex sailor and Rajwant Singh was attached to I.N.S. Vikrant.
The case of the prosecution was that these persons conspired together to burgle the safe of the Base Supply Office on the eve of the pay day, when a large sum of money was usually kept there for distribution on the pay day.
They collected various articles such as a Naval Officer 's dress, a bottle of chloroform, a hacksaw with spare blades, adhesive plaster, cotton wool and ropes.
On the night in question they decoyed the Lt. Commander from his house on the pretext that he was wanted at the Naval Base, and in a lonely place caught hold of him.
They covered his mouth 233 with the adhesive plaster and tied a handkerchief over the plaster and plugged his nostrils with cotton wool soaked in chloroform.
They tied his hands and legs with rope and deposited him in a shallow drain with his own shirt put under his head as a pillow.
They then went up to the sentry, who was induced to part with his rifle to one of the accused who had dressed himself as an officer, and attacked him.
The sentry would have received the same treatment as his Lt. Commander but he raised a hue and cry and attracted the attention of the watchman.
Fearing detection the assailants released the sentry and took to their heels.
The sentry after escaping informed the Officer on duty at the Base and stated that he had recognised Rajwant Singh as one of his assailants.
Next morning the dead body of the Lt. Commander was discovered in the drain where he had been left by the assailants.
Investigation followed and five persons were placed on trial before the Session Judge, Ernakulam Division, who convicted three and sentenced them as stated above and acquitted the other two.
The appeals of these persons before the High Court failed.
In these appeals the complicity of the appellants in the offence is not challenged but it is argued that the evidence for the prosecution does not establish the offence of murder but of causing grievous hurt or of culpable homicide not amounting to murder.
It is also contended that section 34 of the Indian Penal Code could not be used against any of the accused.
Unni has also contended that the sentence of death was not proper as the case against him was indistinguishable from that of the other two.
We shall deal.
with these arguments.
Our attention has been drawn to the inquest and postmortem reports to establish what was actually done to the Lt. Commander.
From these, it is established that the legs of the victim were tied with rope and his arms were tied behind his back.
A large adhesive plaster was stuck over his mouth and completely sealed it.
A handkerchief was next tied firmly over the adhesive plaster to secure it in position.
The nostrils were plugged with cotton soaked in chloroform.
Counsel for the appellants submit that all this shows that the assailants did not intend to kill the Lt. Commander but to render him unconscious.
It is admitted that the closing of the mouth with the adhesive plaster and the handkerchief was complete and that it must have been impossible for the Lt. Commander to breathe through his mouth.
The description, however, shows that the nostrils were also plugged with cotton wool soaked in chloroform.
This was clearly stated in the inquest report and also in the postmortem report and was established not only by the witnesses proving the inquest report but also by the doctor who performed the autopsy.
In addition the prosecution has exhibited and proved numerous photographs of the dead body from various angles and these things are clearly seen in the L/S5SCI 17 (a) 234 photographs.
According to the doctor death was due to asphyxiation.
In addition to the other evidence establishing the connection of Unni and Rajwant Singh with this crime there is a confession by Rajwant Singh before the Sub Magistrate, Cochin in which he graphically describes the part played by him and Unni.
Rajwant Singh also stated that they only wanted the Lt. Commander and the sentry to remain unconscious while they rifted the safe and took away the money.
It is contended that we must accept the confession as a whole and must hold on its basis that the intention was not to kill, and that the offence of murder is therefore not established.
As this is the most important point in the case we shall consider it first.
This point was argued by Mr. J. G. Sethi on behalf of Rajwant Singh and his arguments were adopted by Mr. Harbans Singh on behalf of Unni.
Mr. Sethi argued that the offence was one of causing grievous hurt or at the worst of culpable homicide not amounting to murder and punishable under section 304 (second part) of the Indian Penal Code.
It is quite plain that the acts of the appellants resulted in the death of the victim and the offence cannot be placed lower than culpable homicide because the appellants must have known that what they were doing was likely to kW. The short question, therefore, is whether the offence was murder or culpable homicide.
Mr. Sethi submits that of the three clauses of section 299.
which define the offence of culpable homicide, the first deals with intentional killing and the second with injuries which are intentionally caused and are likely to cause death.
He submits that these two clauses form the basis of the offence of murder and culpable homicide punishable under he first part of section 304 and the third clause, which involves the causing of death with the knowledge that by his act the offender is likely to cause death, is the foundation of offence of culpable homicide not amounting to murder punish able under the second part of section 304.
He submits that the appellants did not intend causing the death of the Lt. Commander but took action to keep him immobilised and silent while they rifled the safe.
To achieve their purpose they tied the victim and closed his mouth and plugged the nostrils with cotton soaked in chloroform.
Each of these acts denoted a desire to keep the Lt. Commander out of the way for the time being but not to kill him.
Nor can the acts be described as done with the intention of causing such bodily injury as was likely to kill.
At the most, says he, it can be said that the death was caused with the knowledge on the part of the appellants that by their acts they were likely to cause death and that brings the matter within section 304 II, I.P.C. 235 The argument requires close examination.
Two offences in volve the killing of a person.
They are the offence of culpable homicide and the more henious offence of murder.
What distinguishes these two offences is the presence of a special mens rea which consists of four mental attitudes in the presence of any of which the lesser offence becomes greater.
These four mental attitudes are stated in section 300, I.P.C. as distinguishing murder from culpable homicide Unless the offence can be said to involve at least one such mental attitude it cannot be murder.
We shall consider the acts of the appellants in relation to each of the clauses of section 300.
The first clause says that culpable homicide is murder if the act by which death is caused is done with the intention of causing death.
An intention to kill a person brings the matter so clearly within the general principle of mens rea as to cause no difficulty.
Once the intention to kill is proved, the offence is murder unless one of the exceptions applies in which case the offence is reduced to culpable homicide not amounting to murder.
As there is no question of any of the exceptions they need not be mentioned.
But it is plain that the appellants did not contemplate killing the Lt. Commander.
No part of their preparations shows an intention to kill.
Had they so desired, they had ample time and opportunity to effectuate that purpose without going to the trouble of using cotton soaked in chloroform to stuff the nostrils.
They had only to hold his nose closed for a few minutes.
The confession to which we have referred also shows that the news of the death of the Lt. Commander came to them with as much surprise as shock.
In these circumstances, the first clause of section 300 cannot apply.
The second clause deals with acts done with the intention of causing such bodily injury as the offender knows to be likely to cause the death of the person to whom harm is caused.
The mental attitude here is two fold.
There is first the intention to cause bodily harm and next there is the subjective knowledge that death will be the likely consequence of the intended injury.
English Common Law made no clear distinction between intention and recklessness but in our law the foresight of the death must be present.
The mental attitude is thus made of two elements (a) causing an intentional injury and (b) which injury the offender has the foresight to know would cause death.
Here the injury or harm was intended.
The appellants intended tying up the victim, closing his mouth by sticking adhesive plaster and plugging his nose with cotton wool soaked in chloroform.
They intended that the Lt. Commander should be rendered unconscious for some time but they did not intend to do more harm than this.
Can it be said that they had the subjective knowledge of the fatal consequences of the bodily harm they were causing? We think that on the facts the answer cannot be in the affirmative.
To say that the act satisfied the test of subjective knowledge would be really 236 tantamount to saying that the appellants intended to commit the murder of the Lt. Commander which, as said already, was not the case.
The third clause discards the test of subjective knowledge.
It deals with acts done with the intention of causing bodily injury to a person and the bodily injury intended to be inflicted is sufficient in the ordinary course of nature to cause death.
In this clause the result of the intentionally caused injury must be viewed objectively.
If the injury that the offender intends causing and does cause is sufficient to cause death in the ordinary way of nature the offence is murder whether the offender intended causing death or not and whether the offender had a subjective knowledge of the consequences or not.
As was laid down in Virsa Singh vs The State of Punjab(1) for the application of this clause it must be first established that an injury is caused, next it must be established objectively what the nature of that injury in the ordinary course of nature is.
If the injury is found to be sufficient to cause death one test is satisfied.
Then it must be proved that there was an intention to inflict that very injury and not some other injury and that it was not accidental or unintentional.
If this is also held against the offender the offence of murder is established.
Applying these tests to the acts of the appellants we have to see first what bodily injury has been established.
The bodily injury consisted of tying up the hands and feet of the victim, closing the mouth with adhesive plaster and plugging the nostrils with cotton soaked in chloroform.
All these acts were deliberate acts which had been preplanned and they, therefore, satisfy the subjective test involved in the clause.
The next question is whether these acts considered objectively were sufficient in the ordinary course of nature to cause death.
In our judgment they were.
The victim could only possibly breathe through the nostrils but they were also closed with cotton wool and in addition an asphyxiating agent was infused in the cotton.
All in all it would have been a miracle if the victim had escaped.
Death of the victim took place as a direct result of the acts of his assailants.
Mr. Sethi suggested that the victim must have struggled to free himself and had rolled into the drain and this must have pushed up the cotton further into the nostrils.
This is not correct.
The victim was placed in the drain by his assailants because his folded shirt was placed under his head and had obviously fainted by that time.
No one seems to have been aware of his presence; otherwise discovery would have taken place earlier.
This leads to the only conclusion that there was no change in the circumstances in which the victim was left by the assailants.
The bodily injury proved fatal in the ordinary course of nature.
The ordinary course (1)[1968] S.C.R. 1495.
237 of nature was neither interrupted nor interfered with by any intervening act of another and whatever happened was the result of the acts of the assailants, and their acts alone.
Mr. Sethi argues that the sufficiency of the injury to cause death in the ordinary course of nature is something which must be proved and cannot be inferred from the fact that death has in fact taken place.
This is true of some cases.
If a blow is given by reason of which death ensues, it may be necessary to prove whether it was necessarily fatal or in the language of the Code sufficient in the ordinary course of nature to cause death.
In such a case it may not be open to argue backwards from the death to the blow, to hold that the sufficiency is established because death did result.
As death can take place from other causes the sufficiency is required to be proved by other and separate evidence.
There are, however, cases and cases.
Where the victim is either helpless or rendered helpless and the offender does some act which leads to death in the ordinary course and death takes place from the act of the offender and nothing else, it is hardly necessary to prove more than the acts themselves and the causal connection between the acts and the end result.
Mr. Sethi contends that the concentration of chloroform, the quantity actually used and its effect on the victim ought to have been proved.
Alternatively he argues that the quantity of the cotton wool used to plug the nostrils and the manner of plugging should have been established before a finding can be given that the bodily injury was sufficient in the ordinary course of nature to cause death.
This would, of course, have been necessary if it could at all be thought that not the acts of the assailants but some other intervening circumstance might have led to the death of the victim.
But there was none.
There was no interference by anyone else.
Death was due to asphyxiation whether caused by the mechanical obstruction of the nostrils or by chloroform as an asphyxiating agent, or both.
Whichever way one looks at it, the injury which caused the death was the one inflicted by the assailants.
The sufficiency of the injury was objectively established by the nature and quality of the acts taken with the consequence which was intimately related to the acts.
There was no need to establish more than this in the case.
As was pointed out in Anda vs State of Rajasthan(1) "the emphasis in clause thirdly is on the sufficiency of the injury in the ordinary course of nature to cause death.
The sufficiency is the high probability of death in the ordinary way of nature and when this exists and death ensues, and if the causing of the injury is intended, the offence is murder".
In this case the acts of the appellants were covered by the third clause in section 300.
As we are satisfied that this case falls within clause thirdly we need hardly consider whether it falls also within the fourth clause or not.
That clause comprehends, generally, the commission of (1) A.I. R. at 151.
238 imminently dangerous acts which must in all probability cause death.
To tie a man so that he cannot help himself, to close his mouth completely and plug his nostrils with cotton wool soaked in chloroform is an act imminently dangerous to life, and it may well be said to satisfy the requirements of the last clause also, although that clause is ordinarily applicable to cases in which there is no intention to kill any one in particular.
We need not, however, discuss the point in this case.
We accordingly hold that the offence was murder.
All the acts were done after deliberation by the appellants.
They were of a type which required more than one person to perpetrate.
What was done had already been discussed and the execution of the plan was carried out as contemplated.
That there was a common intention admits of no doubt and as clause 3 of section 300 views the consequence of the act objectively all those who shared the common intention of causing the bodily injury which was sufficient to cause death in the ordinary course of nature must be held responsible for the resulting offence.
Even if the consequence was different from what was actually intended, those who abetted (and the appellants were either offenders principally or abetters) would be equally responsible under section 113 of the Indian Penal Code provided they knew that the act which they were abetting was likely to cause that effect.
On the argument of the appellants that section 304 11 applies, it is obvious that the above provision must be attracted.
In our judgment the appellants were rightly adjudged guilty under section 302/34, Indian Penal Code.
As regards the sentence of death passed on Unni, we see no reason to interfere.
He was the master mind behind the whole affair and the sentence of death was, therefore, appropriate.
We see no force in either appeal.
They will be dismissed.
Appeals dismissed.
| The appellants were convicted of murder under section 302 read with section 34 I.P.C. on the allegation that they had laid their victim in a drain after closing his mouth with adhesive tape and plugging his nose with cotton wool soaked in chloroform, as a result of which death was caused.
They appealed to this Court by special leave.
It was contended on their behalf: (i) that their offence did not amount to murder but only to culpable homicide under the second part of section 304, (ii) that it could not be inferred from the mere fact of death that the injury caused by the appellants was sufficient in the ordinary course of nature to cause death; this had to be proved by further evidence and (iii) that the ingredients of section 34 I.P.C. were not satisfied.
HELD : (i) What distinguishes the offences of murder and culpable homicide is the presence of a special, mens rea which consists of four mental attitudes in the presence of any of which the lesser offence becomes the greater.
These four mental attitudes are stated in the four clauses of section 300 I.P.C. [235 B] (ii)The first clause of section 300 says that culpable homicide is murder if the act by which death is caused is done with the intention of causing death.
An intention to kill a person brings the matter so clearly within the general principle of mens rea as to cause no difficulty.
Once the intention to kill is proved, the offence is murder unless one of the exceptions applies, in which case the offence is reduced to culpable hominid not amounting to murder.
On the facts of the present case an intention to cause death was not proved against the appellants and the clause therefore did not apply.
[235 C] (iii)The second clause of the section deals with acts done with the intention of causing such bodily injury as the offender knows to be likely to cause the death of the person to whom harm is caused.
The mental attitude here is two fold.
There is first the intention to cause bodily harm and next there is the subjective knowledge that death will be the likely consequence.
English Common Law made no clear distinction between intention and recklessness but in our law the foresight of the death must be Present.
The mental attitude is thus made of two elements (a) causing an intentional injury and (b) which injury the offender has the foresight to know would cause death.
The Present case could not fall under this clause either.
because, it could not be said that the appellants who only wanted to make their victim unconscious had the Subjective knowledge of the fatal consequences of the boil harm they were causing.
(iv) The appellants were however guilty of murder under the third clause of section 300.
[237 G H) The third clause discards the test of subjective knowledge.
It deals with acts done with the intention of causing bodily injury to a person and the bodily injury intended to be inflicted is sufficient in the ordinary course of nature to cause death.
In this clause the result of the intentionally caused injury must be viewed objectively.
If the injury that the offender intends causing and does cause is sufficient to cause death in the ordinary way of nature the offence is murder whether the offender intended causing death or not and whether the offender had a subjective knowledge of the consequences or not.
[236 B] For the application of this clause it must be first established that an injury is caused, next it must be established objectively what the nature of that injury in the ordinary course of nature is.
If the injury is found to be sufficient to cause death one test is satisfied.
Then it must be proved that there was an intention to inflict that very injury and not some other injury and that it was not accidental or unintentional.
[236 C D] Virsa Singh vs State of Punjab ; , referred to.
The bodily injury caused by the appellants was deliberate and preplanned and the subjective test involved in the clause was therefore satisfied.
The other test namely whether the injury was sufficient in the ordinary course of nature to cause death was also satisfied in the case as in the circumstances it would have been a miracle if the victim had escaped.
Death of the victim took place as a direct result of the acts of his assailants.
[236 E F] (v)The fourth clause of section 300 comprehends generally, the commission of imminently dangerous acts which must in all probability cause death.
What the appellants did may well be said to satisfy the requirements of this clause also, although it is ordinarily applicable to cases in which there is no intention to kill anybody in particular.
(Obiter).
[238 A] (vi)The sufficiency of an injury to cause death in the ordinary course of nature in the terms of el. 3 need not in every case be required to be proved by separate evidence in that regard.
Where the victim is either helpless or rendered helpless and the offender does some act which leads to death in the ordinary course and death takes place from the act of the offender and nothing else it is hardly necessary to prove more than the acts themselves and the causal connection between the acts and the end result.
The sufficiency of the injury in the present case was objectively established by the nature and quality of the acts taken with the consequence which was intimately related to the acts.
There was no need to establish more than this in the case.
[237 B G] Anda vs 9tate of Rajasthan, A.I.R. 1965 S.C. 148 referred to.
(vii)All the acts were done after deliberation by the appellants.
They were of a type which required more than one person to perpetrate.
That there was a common intention admits of no doubt and as clause 3 of section 300 views the consequence of the act objectively all those who shared the common intention of causing the bodily injury which was sufficient to cause death in the ordinary course of nature must be held responsible for the resulting offence.
[238 C] 232
|
Appeal No. 445 of 1966.
Appeal by special leave from the judgment and order dated March 9, 1964 of the Andhra Pradesh High Court in Letters Patent Appeal No. 2 of 1963.
M. C. Chagla and T. Satyanarayana, for the appellants.
P. Ram Reddy and K. Jayaram, for the respondents.
The Judgment of the Court was delivered by Shah, J.
One Appanna died on March 12, 1953, leaving him surviving no wife or lineal descendant.
Subba Rao claiming to be the father 's sister 's son of Appanna instituted suit No. 64 of 1953 in the Court of the Subordinate Judge, Eluru.
for partition and separate possession of his half share in the properties described in Schs.
A, B, C, D & E. The plaintiff claimed that Appanna died intestate, and that he and his brother Venugopala Rao were the nearest heirs entitled to the entire estate of Appanna.
To this suit were impleaded Pothana Apparao (husband of the sister of Mangamma wife of Appanna), his children, certain relations of Mangamma and the tenants on the lands in suit.
Venugopala Rao was impleaded as the 24th defendant.
The suit was defended by Pothana Apparao and others contending, inter alia, that Appanna had made and executed a will on July 14, 1948, devising his property in favour of various legatees and the plaintiff 's suit for a share in the property was on that account not maintainable.
The, Trial Court held that Appanna of his free will and while in a sound state of mind had executed the will on July 14, 1948, whereby he disposed of his properties described in Schs.
A, B, C, D & E, but the Court held that the disposition of the property in Schs.
C & E lapsed because Mangamma who was a legatee of the properties died before the testator, and that the direction in the will that whatever remained out of the Sch.
E property after the life time of Mangamma shall pass to Venkataswamy and Seshagirirao defendants Nos. 3 & 2 respectively or their descendants was void and incapable of taking effect.
The learned Judge accordingly passed a decree in favour of the plaintiff and the 24th defendant for possession of properties described in Schs.
C & E. 30 In appeal to the High Court of Andhra Pradesh, Chandrasekhar Sastry, J., allowed the appeal filed by Pothana Apparao and his two sons Venkataswamy and Seshagirirao, and dismissed the claim of the plaintiff in respect of Schs.
C & E properties.
An appeal under the Letters Patent filed by the plaintiffs against the judgment of Chandrasekhar, J. was dismissed.
It has been concurrently found by all the Courts that when he was in a sound and disposing state of mind Appanna executed on July 14, 1948, the will set up by the defendants.
In an appeal with special leave this Court will not ordinarily allow a question about due execution to be canvassed, and our attention is not invited to any exceptional circumstances which may justify a departure from the rule.
The only question which survives for consideration relates to the true effect of the dispositions made by the will in respect of Sch.
C and Sch.
E properties.
The relevant provisions of the will may first be set out: "I am now about forty years of age.
I do not have male or female issue.
My wife is alive.
and with the fear that I may not survive I have made the following Provisions in respect of my immovable and movable properties to be given effect to.
I have given power to my wife Mangamma to sell the immovable property mentioned in the C Schedule hereunder and utilise the amount for celebrating the marriage and other auspicious functions of Tholeti Narsimha Rao 's daughter Seetharatnam mentioned in the B Schedule and for constructing a Ramamandiram in Rajavaram village in my name.
"The immovable property mentioned in the E Schedule hereunder shall be enjoyed by my wife Mangamma with all powers of disposition by way of gift, sale, etc.
, Whatever remains out of the said E Schedule mentioned immovable property after her life time, (the said property) shall pass either to the said Ven kataswamy and Seshagiri or their descendants. .
In the event of my wife taking a boy in adoption the property mentioned in the E schedule hereunder shall pass to the said adoptee with all powers of disposition by way of gift, sale etc.
after her life time. . .
If, for any reason, the properties and rights do not pass to the individuals mentioned in the aforesaid 31 paras, such properties and rights shall be enjoyed by my wife Mangamma with absolute rights.
" Appanna had directed his wife Mangamma to sell the pro perties described in Sch.
C and to utilise the proceeds for two purposes, "celebrating the marriage and other auspicious functions" of Seetharatnam, and "for constructing a Ramamandiram in Rajavaram village" in his name.
But the marriage of Seetharatnam was celebrated during the lifetime of Appanna, and expenses in that behalf were defrayed by Appanna, and no expenses remained to be incurred after the death of Appanna.
Mangamma had no beneficial interest in Sch.
C property.
She was merely appointed to sell the property and to utilise the proceeds for the purposes specified in the will.
The Trial Judge clearly erred in holding that the estate lapsed because Mangamma died during the lifetime of Appanna.
In the view of Chandrasekhar Sastry, J., since there was a joint bequest for two purposes, and one of the purposes for which the Sch.
C properties were devised was accomplished by Appanna the bequest in its entirety must enure for the remaining purpose i.e. constructing a Ramamandiram, and the plaintiffs ' claim for possession of the C Schedule properties must fail.
The learned Judges of the High Court agreed with that view.
But there was no "joint bequest" of the properties.
In the absence of allocation of the amounts to be utilised for "celebrating the marriage and other auspicious functions" of Seetharatnam and for constructing a Ramamandiram, it must be presumed that the fund was to be utilised in equal moieties for the two purposes.
Failure of one of the purposes will result in a moiety of the amount devised falling into the residue.
In Jogeswar Narain Dea vs Ram Chund Dutt and Others(1) a devise under the will of a Hindu testator who had given a fouranna share of his estate to his daughter and her son for their maintenance with power of making alienation thereof by sale or gift fell to be construed.
The Judicial Committee held that on a true construction of the will each took an absolute interest in a two anna share in the estate.
In dealing with the contention that there was a joint estate granted to the daughter and her son the Judicial Committee observed : ". .
Mr. Branson. maintained upon the authority of Vydinada vs Nagammal (ILR that,.
by the terms of the will the Rani and the appellant became, in the sense of English law, joint tenants of the 4 annas share of Silda, and not tenants in common; and that her alienation of her share before it was severed, and without the consent of the other (1) L. R. 23 1.
A. 37,43.
32 joint tenant,, was ineffectual.
The circumstances of that case appear to be on all fours with the circumstances which occur here, and, if well decided, it would be a precedent exactly in point.
There are two substantial reasons why it ought not to be followed as an authority.
In the first place, it appears to their Lordships that the, learned Judges of the High Court of Madras were not justified in importing into the construction of a Hindu will an extremely technical rule of English conveyancing.
The principle of joint tenancy appears to be unknown to Hindu law, except in the case of coparcenary between the members of an undivided family." That principle applies here.
The fund was devised for the construction of a Ramamandiram at Rajavaram village and for "celebrating the marriage and other auspicious functions"of Seetharatnam.
Since no part of the fund was needed forthe benefit of Seetharatnam, the legacy failed pro tanto and fell into the residue.
Under the will Mangamma was made the owner of the residue, but by her death during the lifetime of Appanna the residuary bequest lapsed and vested as on intestacy in the plaintiff and the 24th defendant.
The devise of a moiety of the fund to be applied for the construction of a Ramamandiram however stands good and the trust must be carried out.
Mangamma is dead, but on that account the charitable trust is not extinguished The Trial Court must give appropriate directions for utilisation of that moiety for constructing a temple according to the direction of Appanna in the will.
The testator gave to his wife Mangamma an absolute interest in the E Schedule properties, for she was invested with all powers of disposition "by way of gift, sale etc.
" The will then proceeded to direct that whatever remained out of the E Schedule properties after her death shall pass to Venkataswamy and Seeshagirirao.
If Mangamma had survived Appanna, probably the devise in favour of Venkataswamy and Seshagirirao may have failed, but that question does not arise for consideration.
Section 105 of the , which applies to the wills of Hindus provides : "(1) If the legatee does not survive the testator, the legacy cannot take effect, but shall lapse and form part of the residue of the testator 's property, unless it appears by the will that the testator intended that it should go to some other person.
. " 33 Mr. Chagla for the plaintiffs contends that the estate in the E Schedule properties devised in favour of Mangamma lapsed, for, there was nothing in the will which expressly provided that in the event of Mangamma dying during the testator 's lifetime, the devise in favour of Venkataswamy and Seshagirirao shall be accelerated.
Counsel relies upon the judgment of Wickens, V. C., in Browne vs Hope(1) and contends that a legacy does not lapse, if the testator does two things he, in clear words, excludes lapse; and he clearly indicates the person who is to take the legacy in case the legatee should die in his lifetime.
In Browne 's case(1) the testator gave, by his will, the residue of his estate to trustees to pay and transfer the same to seven named legatees in equal shares as tenants in common, and their respective executors, administrators and assigns; and he declared that such shares shall be vested interests in each legatee immediately upon the execution thereof, and that the shares of the married women shall be for their separate use.
It was held that the share of one of the legatees a married woman who died after the date of the will but before the testator, did not belong to her husband, who was her legal personal representative, and it lapsed.
Counsel says that the rule of interpretation as enunciated by Vice Chancellor Wickens is incorporated in section 105 of the .
He submits that a legacy will not lapse only if the testator by express direction excludes lapse, and indicates clearly the person who shall take the legacy if the legatee dies during his lifetime.
We are concerned to construe the provisions of section 105 of the .
That section enacts that a legacy shall lapse and form part of the residue of the testator 's property if the legatee does not survive the testator except where it appears by the will that the testator intended that the legacy shall on the legatee not surviving him go to some other person.
We are unable to agree that the intention of the testator that a legacy shall not lapse may be given effect to only if the testator expressly directs that if the legatee dies during his lifetime the legacy shall go to some other person, and that intention to exclude lapse cannot be inferred.
Section 105(1) does not say, nor does it imply, that the testator must have expressly, envisaged the possibility of lapse in consequence of the legatee dying during his lifetime and must have made a provision for that contingency.
In In re.
Lowman Devenish vs Pester (2 ) a testator, who under a settlement was absolutely entitled to a moiety of the proceeds of a certain real estate under a trust for sale, by his will devised,, (1) L. R. 14 Equity Cases, 343.
(2) 34 that real estate by its proper description, together with certain real estate of his own, to trustees, to the use of H. for life, with remainder to trustees to preserve the contingent remainders, with remainder to the use of the first and other sons of H successively in tail male, with remainder to the use of the first and other sons of his niece E successively in tail male, with remainder to the use of the first and other sons of his niece M successively in tail male, with remainder to the use of the first and other sons of his niece F successively in tail male, with remainder over.
H survived the testator and died a bachelor.
M also survived the testator and died unmarried.
E was still alive but unmarried and seventy years of age.
F had two sons, the eldest of whom died before the testator.
It was held that when there are in a 'Will successive limitations of personal estate in favour of several persons absolutely, the first of those persons who survives the tes tator takes absolutely, although he would have taken nothing if any previous legatee had survived and had taken : the effect of the failure of an earlier gift is to accelerate, not to destroy, the later gift.
This rule was applied in In re.
Dunstan, Dunstan vs Dunstan(1).
A testatrix by her will gave freeholds absolutely to A, subject to the bequest that whatever out of the freeholds should remain after A 's death shall be given to a named charity.
It was held that if A had survived the testatrix the gift to the charity would have been repugnant and void, and A would have taken the freeholds absolutely.
But since A died in the lifetime of the testatrix, the doctrine of repugnancy did not apply, and the gift to charity was accelerated and took effect.
Mangamma died during the lifetime of the testator : thereby the estate in Sch.
E properties granted to Venkataswamy and his brother Seshagirirao was accelerated.
The plaintiffs are therefore not entitled to any share in Sch.
E properties.
The decree of the High Court is modified.
It is declared that there is intestacy in respect of a half share in the fund arising by sale of Sch.
C properties, and the plaintiff and the 24th defendant are entitled to take that half share in the fund.
It is directed that the Trial Court will issue appropriate directions for application of the other half of the fund arising by sale of Sch.
C properties for constructing Ramamandiram at Rajavaram village as directed by the testator in his will.
Subject to this modification the appeal will be dismissed.
The appellant will pay 3/4th of the costs of the contesting respondents in this Court.
Y.P. Appeal dismissed.
| A Hindu executed a will directing his wife to sell, Sch.
C property and utilise the amount for celebrating the marriage of one Sitharathnam and for constructing a Ramamandiram in his name, and further devised that his wife shall enjoy Sch.
E property absolutely and after her life time whatever remained out it, it will pass to two named persons.
The wife predeceased the testator, and the marriage of Sitharathnam was celebrated in the testator 's life time and expenses in that behalf were defrayed by the testator.
The appellants who were the testator 's nearest heirs, claimed the properties contending that the disposition of the Sch.
C & E properties lapsed, because the wife who was the legatee of the properties died before the testator and that there was nothing in the will providing for the acceleration of Sch.
E property in case of the legatee 's dying in the testator 's life time.
HELD : (i) The wife had no beneficial interest in Sch.
C property.
She was merely appointed to sell the property and to, utilise the proceeds for the purposes specified in the will.
There was no "joint bequest" of Sch.
C properties.
In the absence of allocation of the amounts to be utilised for celebrating the marriage of Sitharathnam and for constructing a Ramamandiram, it must be presumed that the fund was to be utilised in equal moieties for the two purposes.
Failure of one of the purposes will result in a moiety of the amount devised falling into the residue.
Since no part of the fund was needed for the marriage of Sitharathnam the legacy failed pro tanto and fell into the residue.
Under the will the wife was made the owner of the residue, but by her death during the life time of testator the residuary bequest lapsed and vested as on intestacy in the nearest heirs of the testator.
The devise of a moiety of the fund to be applied for the construction of a Ramomandiram however stood good and the trust had to be carried out.
The wife died during the life time of the testator but on that account the charitable trust was not extinguished.
[31 E; 32 D] Jogeshwar Narain Deo vs Ram Chund Dutt and Others, L.R. 23 I.A. 37, 43, referred to.
(ii) The wife died during the life time of the testator : thereby the estate in Sch.
E properties granted to the named persons was accelerated.
The nearest heirs of the testators were therefore not entitled to any share in Sch.
E properties.
Section 105 of the , enacts that a legacy shall lapse and form part of the residue of the testator 's property if the legatee does not survive the testator except where it appears by the will that the testator intended that the legacy shall, on the legatee not surviving him, go to some other person.
It could not be said that the intention 29 of the testator that a legacy shall not lapse may be given effect to only if the testator expressly directs that if the legatee dies during his life time the legacy shall go to some other person, and that intention to exclude lapse cannot be inferred.
Section 105(1) does not say, nor does it imply, that the testator must have expressly envisaged the possibility of lapse in consequence of the legatee dying during his life time and must have made a provision for that contingency.
[33 F] Browne vs Hope, L.R. 14 Equity Cases 343; Lowman Devenish vs Pester, ; Dunstan, Dunstan vs Dunstan, , referred to.
|
Appeals Nos. 675 to 681 of 1967.
Appeals by special leave from the Award dated March 23 1967 of the Third Industrial Tribunal, West Bengal in Misc.
Cases Nos. 161, 160, 162 64 and 167 of 1966.
AND Civil Appeal No. 1759 of 1971 Appeal by special leave from the Award dated August 11, 1969 of the Third Industrial Tribunal, West Bengal, Calcutta in Case No. VIII: 373 of 1966 published in the Calcutta Gazette dated 27 9 1969.
section V. Gupte, G. B. Pai, Bhuvanesh Kumari, B. Ram Rakhjani and J. B. Dadachanji & Co. for the appellant.
(In C.As.
675 681/67).
V. M. Tarkunde, Rathin Das, Jitendra Sharma and section K. Ganguli & Co. for the appellant.
(In C.A. 1759/71).
627 V. M. Tarkunde, Jitendra Sharma and Janardan Sharma, for the Respondent.
The Judgment of the Court was delivered by ALAGIRISWAMI, J.
The first batch of appeals are by the Hindustan Lever Ltd. (hereinafter called the Employer) and Civil Appeal No. 1759 of 1971 is by the Mazdoor Sabha of the workers of the same employer in its Calcutta Branch.
The Calcutta Branch was concerned only with marketing.
From the year 1956 at least, if not earlier, the company 's marketing Organisation was in three divisions, the Soaps Division, the Foods Division and the Toilet Preparations Division.
From 6 9 66 the Company reorganised this marketing Organisation into two divisions the Main Lines Division and the Speciality Lines Division.
On 30 9 66 the Government of West Bengal referred to the Third Industrial Tribunal the following question for adjudication : "Is the human rationalisation as a measure of economic reorganisation of the Company reflected through job integration that have either been effected or proposed to be effected justified,? To what relief, if any, are the workmen entitled?" Pending adjudication of this issue seven workers filed applications under section 33A of the before the same.
Tribunal alleging that during the pendency of the adjudication their service conditions had been changed adversely and their salary for the month of October 1966 had not been paid.
The Tribunal held in favour of the workers and passed its award on 23 3 1967.
By special leave granted by this Court the employer has filed the above 7 appeals.
The main reference was finally disposed of on 11 8 69 by the same Tribunal holding in favour of the employer and the workers have, therefore, filed Civil Appeal No. 1759 of 1971 by special leave granted by this Court.
It should be mentioned that the Presiding Officer of the Industrial Tribunal was different in the two cases but the different conclusions arrived at by the two Presiding Officers were not due to the accident of difference in personnel.
There was a vast mass of evidence let in by the employer in the main reference on a consideration of which the Tribunal held in favour of the employer.
On the other hand the evidence in the applications, filed under section 33A of the , let in by the employer was meagre and the Tribunal came to the conclusion on the material available before it that the conditions of work of workers had been changed to their prejudice, that the reorganisation was likely to lead to retrenchment and that the matter thus fell under Item 10 of Schedule IV of the .
The evi 628 dence given in the main reference not being part of the evidence in these 7 cases it is not open to this Court to take it into consideration in deciding these 7 appeals.
On an exhaustive consideration of the material in both the awards we have come to the conclusion that both the awards should be upheld.
Though the decision in the appeals by the management is based on the finding of the Tribunal that the conditions of work had been changed to the disadvantage of the workers, and the decision in the appeal filed by the workers is in effect that the conditions have not been so changed, that is due to the evidence available in the two cases.
Mr. Tarkunde appearing on behalf of the workers in the appeal filed by them in C.A. No. 1759 of 1971 in effect invited us to re assess the evidence in that case.
His whole point was that the reorganisation effected by the management in September 1966 was one which attracted items 8, 10 and 11 of the IVth Schedule to the and as such a notice in accordance with Rule 34 of the West Bengal Industrial Disputes Rules and Form (E) appended to those rules, under section 9A of that Act was necessary.
He was at pains to establish this proposition lest it should effect the workers in the others 7 appeals filed by the employer.
This Court in considering a matter under Article 136 does not ordinarily re assess the evidence on the basis of which the Tribunal came to its conclusions.
It will interfere with the findings of facts by the Tribunal only if it is unsupported by any evidence or is wholly perverse.
It will not interfere with findings of the facts if two views are possible as to the conclusions to be arrived at on the basis of the evidence even though the conclusions arrived at by the Tribunal might not commend itself to this Court.
Mr. Tarkunde even indicated that he was not very much interested in the success of the appeal of the workers in the sense that he wanted the scheme of reorganisation introduced by the employer to be dropped.
According to him the employer had the right to reorganise his business subject only to his compliance with the provisions of section 9A of the , which according to him has not been done in this case.
He wanted to establish this proposition only for laying a foundation for the argument that when after the introduction of the reorganisation by the employer the workers refused to work except on the basis of the previous system of working, they were perfectly within their rights and it was, therefore, illegal for the management to have refused to pay them their salary and that this was an alteration of the conditions of their service during the pendency of an adjudication of an industrial dispute before the Industrial Tribunal.
But in the view we are taking regarding the correctness of the award of the Industrial Tribunal on the applications of the workers under section 33A the workers would probably have no grievance.
629 We shall first of all deal with the appeal by the workers.
Two points were raised by Mr. Tarkunde : 1.
That it was necessary to give notice under section 9A and wait for 21 days before implementing the scheme of reorganisation, and 2.
as notice was necessary, the scheme cannot be said to be justified when it was implemented.
As regards nonpayment of wages, as subsidiary points, he raised the questions 1.the workmen were _justified in refusing to work under the new scheme, and 2.
the non payment of wages amounted in the circumstances of the case to an alteration in the conditions of service to the prejudice of workers.
These two are really questions which arise in the appeals filed by the employer and not in this appeal.
According to Mr. Tarkunde the very fact that three Divisions were sought to be reduced to two would show that it would increase the workload on the workmen and result in retrenchment.
We do, not think that the matter could be disposed of on such a priority consideration.
His grievance also was that the employer had agreed to consult the workers but did not do so.
He also urged that three godowns which previously existed were reduced to.
two godowns and that proved a greater burden on the Godown Keeper.
He further urged that the Journey Cycles, i.e. the period during which salesmen were expected to be on tour contacting the various dealers were increased from 4 weeks to 6 1/2 weeks and that this also proved a greater burden on the salesmen.
He urged that the Sabha had a reasonable apprehension that there will be retrenchment if the 612 week cycles were introduced.
But he conceded that this was avoided in actual working.
As already mentioned earlier, he contended that the Sabha has now no objection to the present arrangement but the employer contends that conditions are very unstable and they now have 3 and even 4 divisions.
According to him the reorganisation is either a change in usage falling under item 8 of 10th Schedule to the Act or rationalisation falling under item 10 or increase or education in the number of persons employed in any department not occasioned by circumstances over which the employer has no control falling under item 11.
According to him the workers having been accustomed to working under 3 divisions, reorganisation into 2 divisions amounted to a change in usage.
He also urged that rationalisation and standardisation per se would fall under item 10 even if they were not likely to lead to retrenchment of workmen and only improvement of plant or technique would require that they should lead to retrenchment of 8 L761Sup.
C.I./73 630 workmen in order to fall.
under item IO.
A further submission of his was that standardisation merely meant standardisation of wages.
We are not able to accept this argument.
It appears.
to us that the arrangement of words and phrases in that item shows that only rationalisation or standardisation or improvement of plant or technique, which is likely to lead to retrenchment of workmen would fall under that item.
In other words, rationalisation or standardisation by itself would not fall under item 10 unless it is likely to lead to retrenchment of workmen.
The reference to rationalisation at page 257 of the report of the Labour Cornmission and the reference to standardisation of wages in it are not.
very helpful in this connection.
Standardisation can be of anything, not necessarily of wages.
It may be standardisation of workload, standardisation of product, standardisation of working hours or standardisation of leave privileges.
Indeed in one deci sion in Alembic Chemical Works Co. Ltd. vs The Workmen(1) there is reference to standardisation of conditions of service, standardisation of hours of work, wage structure.
That case itself was concerned with standardisation of leave.
The whole question whether this reorganisation falls under item 10 depends upon whether it was likely ' to lead to retrenchment of workmen.
On this question, as already indicated, the two Tribunals have arrived at two different conclusions.
But as already indicated, it depended upon the evidence in each case.
It is not disputed that the re organisation has not resulted in any retrenchment.
Moreover, during the course of rather prolonged negotiations between the parties the employer made it abundantly clear again and again that no body would be retrenched.
It was clearly made part and parcel of the scheme of reorganisation.
Hindustan Lever Ltd. being a large organisation covering the whole of the country there was no difficulty about giving effect to this reorganisation scheme without retrenching anybody.
It was, however, urged on behalf of the workers that there have been a number of ' voluntarily induced retirements and ;that many posts were not filled after the holders of these posts had retired or left.
We are of opinion that the retrenchment contemplated under item 10 is retrenchment as defined in clause (oo) of section 2 where it is defined as the termination by the employer of the service of a workman for any reason what soever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include voluntary retirement of the workman.
The workers cannot, therefore.
make a grievance of the voluntary retirement and non filling of vacancies and try to bring it under item 10.
As regards item 1 1 it was urged that as one department out of three has been abolished, this item applies.
Though to bring the matter under this item the workmen are not required to show (1) ; 631 that there is increase in the workload, it must be remembered that the 4th Schedule relates to conditions of service for change of which notice is to be given and section 9A requires the employer to give notice under that section 'to the workmen likely to be affected by such change.
The word 'affected ' in the circumstances could only refer to the workers being adversely effected and unless it could be shown that the abolition of one department has adversely affected the workers it cannot be brought under item 11.
The same consideration applies to the question of change in usage under item 8.
Let us, therefore, see what was the scheme of reorganisation to which the workers took exception.
There can be no dispute that the employer has got the right to organise his work in the manner he pleases as was held in Parry & Company 's(1) case.
As we have pointed out earlier there was extensive and prolonged consultation between the parties.
The real grievance of the workers seems to be that the reorganisation of the working did not have their approval.
Before the Tribunal the objection of the Sabha to the Company 's scheme of reorganisation was that it was a condition of service.
of every employee to work for only one division at a time after amalgamation of the three companies and for only one company prior to amalgamation.
But the conditions in the letters of appointment of every worker in the company show the contrary.
The Tribunal also found that the Salesmen of the company did in fact handle products of more than one division at, a time in the course of joint selling operation since 1960.
It was admitted that they also did it in the course of integrated selling in Assam since 1964 but that is said to be because that was done on an experimental basis.
It was admitted that there are many employees in different departments of the company who by virtue of their _jobs cannot be attached to any one division.
The Tribunal, therefore, held on the basis of oral as well as documentary evidence that the contention of the workers that it was a condition of service of every employee to work for only one division at a time was not established.
It is in evidence that the company on occasions transferred products from one group to the other group to meet the business exigencies of the company.
After referring to such instances the Tribunal has held that in certain cases a system of joint selling of products of the three divisions by the same salesmen through 'Sales Vans in several markets in India was adopted.
According to the employer if the three divisional set up had 'been continued, it would have adversely affected the business of the company and kept a large number of salesmen of the Foods Division only partly occupied and the company could have had no option but to retrench some number of salesmen work (1) [1970] I.L.L.J. 429.
632 ing in the Foods Division.
It, therefore, effected the reorganisation to meet the challenge of change in marketing conditions.
The scheme of reorganisation in this case was : Firstly, as a result of the regrouping of the products from the three divisions into two lines, the sales management staff of the company was redeployed on a geographical basis instead of product group basis.
Secondly, the employer reorganised its trade outlets so that ReDistribution Stockists would handle all the products of the company rather than the products of any particular division.
Thirdly, the entire sales force was redeployed over two products groups, i.e. Main Lines and Speciality Lines.
The Tribunal following the decision of this Court in Parry & Co. case held that the employer has the right to decide the staff complement and to fill only such jobs as continued to exist and not automatically replace every individual.
The Tribunal has gone elaborately into the question of workload and come to the conclusion that there is no increase in the workload.
We have already referred to the question of journey cycles.
We see no reason to differ from the finding of the Tribunal that there has been no change in usage adversely effecting the worker, and that as there has been no retrenchment item 10 of Schedule IV is not attracted nor is item 11.
It is hardly necessary to refer to the various decisions which were cited before us as to what would constitute conditions of service the change of which would require notice under section 9A of the Act.
In Dharangadhara Chemical Works Ltd. vs Kantu Kalu & Ors.(1) the Labour Appellate Tribunal of India held that the increase in the weight of bags to be carried from cwt to 11/2 cwt was a change in the workload and the company was bound ,to pay wages as the workmen were willing to work but did not work on account of the unreasonable attitude adopted by the management.
In Chandramalai Estate vs Its Workmen(2) the payment of Cumbly allowance was held to have become a condi tion of service.
In The Graham Trading Co. (India) Ltd. vs Its Workmen(3) it was held that the workmen were not entitled to Puja bonus as an implied term of employment.
In Workmen of Hindustan Shipyard Ltd. vs I.T.(4) in the matter of withdrawal of concession of coming late by half an hour (than the usual hour), it was held that the finding of the Industrial Tribunal that section 9A did not apply to the case did not call for interference.
But the decision proceeded on the basis that the Court will not interfere in its jurisdiction unless there was any manifest injustice.
In McLeod & Co. vs Its Workmen (5) the provision for tiffin was held to be an amenity to which the employees were entitled, and (1) [1955] I L.L.J. 316.
(2) (3) [1960] I S.C.R. 107.
(4) (5) 633 the provision of cash allowance in lieu of free tiffin directed to be made by the industrial tribunal could not be considered to be erroneous in law.
In India Overseas Bank vs Their Workmen(1) "key allowance " was treated as a term and condition of service.
In Indian Oxygen Limited vs Udaynath Singh(2) withdrawal by the management of the supply of one empty drum at a time at reasonable intervals was held not to contravene section 9A and 33.
In Oil & Natural Gas Commission vs Their Workmen(3) where there was nothing to show that it was a condition of service that a workman should work for 61 hours only, no notice of change was held to be required under section 9A for fixing the hours of work at eight.
In Tata Iron & Steel Co. vs Workmen (4) change in weekly days of rest from Sunday to some other day was held to require notice.
A close scrutiny of the various decisions would show that whether any particular practice or allowance or concession had become a condition of service would always depend upon the facts and circumstances of each case and no rule applicable to all cases could be culled out from these decisions.
In the face of the elaborate consideration of the evidence and findings made by the Tribunal we are unable to hold that there has been any change in the terms and conditions of service of the workers in this case to their detriment.
It follows, therefore, that section 9A is not attracted.
It is, therefore, unnecessary to consider the question whether the argument advanced by Shri Gupte on behalf of the employer that in view of the very prolonged and detailed discussions that went on between the parties there was a substantial compliance with provisions of section 9A and the mere fact that a formal notice was not given under section 9A would not make the reorganisation scheme not valid.
In the applications filed by the workers the Tribunal was conscious of the employer 's right to reorganise his business in any fashion he likes for purposes of economy or convenience and that no body is entitled to tell him how he should conduct his business.
But it was of the opinion that this right of the employer is subject to the limitations contained in section 9A.
It specifically considered the applicability of item 10 of the Fourth Schedule to the Act and relying upon the decision in North Brooke Jute Co. Ltd. (1) held that no scheme of rationalisation could be given effect to if it was not preceded by a notice under section 9A.
It did not consider it necessary to give a final decision regarding 'the legality or otherwise of the scheme introduced by the company.
But it considered whether the workers" refusal to work under *,he new scheme was justified.
On the evidence it held that the Union had the apprehension that the proposed reorganisation would (1) (2) (3) (4) ; (5) , 634 result in some members of the staff becoming surplus, and that this apprehension was not without justification, and that the apprehension became true when the reorganisation was actually introduced.
It also held that the workload of the various applicants increased as a result of the reorganisation.
It, therefore, held that workers were within their legitimate right to refuse to do the work under the new scheme as no notice has been given under item 9A.
It held that however laudable the object of the reorganisation may be, it cannot be doubted for a moment on the evidence on record, that the scheme has seriously prejudiced the workers.
It, therefore, directed the employer to pay all the workers their wages for October 1966.
Mr. Gupte appearing for the employer contended relying on the decision in the case of North Brook Jute Co. Ltd. vs Their Workmen (supra) that the alteration of the conditions of service in this case, even if it should be held that non payment of wages amounted to alteration of conditions of service, was made not when a reference tinder section 10 was pending but that the reference itself having been made after the reoganisation, no application could be made under section 33A.
Technically no doubt this contention is correct because the scheme was introduced on the 5th or 6th of September and the reference was made on 30th of September.
But the applications in this case were not for the wages due for the month of September but for October.
The applications proceeded on the basis that the non payment of wages was an alteration in the conditions of service, and it is to that question that we must first address ourselves.
Mr. Gupte contended that non payment of wages is not an alteration of conditions of service and that no application under section 33A could be made in such cases as the remedy available was under section 33C.
We are not able to appreciate this argument.
Indeed payment of wages, is one of the most important among the workers ' conditions of service.
The worker works essentially only for the wages to be paid to him.
Therefore, the question that would really have to be answered is whether the refusal of the worker to work was justified or not.
It is in evidence that the workers, presented themselves for work every day and offered to work according to the old scheme but that they were not given any work according to the old scheme They were told that as long as they refused to work under the new scheme they would be paid no wages.
The refusal to pay, therefore, was not a solitary instance in respect of which an application could have been made under section 33C.
It was a continued refusal.
It was, therefore, a permanent alteration of the conditions of service.
The cause of action, so to say, arises de die in diem.
If the refusal of the workers to work under the reoganisation scheme is justified then the refusal of the management to pay unless they worked under the reorganisation scheme would amount 635 to alteration of the conditions of service of workers.
If on 'the other hand the workers were not justified in doing so then no other question arises.
But in the face of the finding of the Tribuanal that the reorganisation scheme rendered some workers surplus and that the scheme had seriously prejudiced the workers, and that the apprehension of the workers that the reorganisation would result in some member of the staff becoming surplus came true, it cannot be said that the failure of the employer to give notice under section 9A and introducing the scheme of reorganisation without such notice is justified.
It means that the workers were justified in refusing to work under the new scheme.
It follows that the refusal to pay their wages amounted to alteration of conditions of service and the applications were, therefore, rightly made under section 33A.
Even apart from that it was urged by Mr. Gupte relying upon the decision in National Coal Co. vs L. P. Dave(1) that non payment of wages was neither an alteration in, the conditions of service nor is it a punishment and as such cannot come within the mischief of section 33 of the Act.
The Patna High Court relied also for its decision on the decision in Shama Biscuit Co. vs Their Workmen(2).
The facts of that case are not quite clear, The Court gives no reason for its view that the non payment of wages is not an alteration of conditions of service applicable to workmen and that it was only a case of default of payment of wages on the pay day falling under Payment of Wages Act.
The facts there were in any case different from the facts of the present case.
We may refer to the decision of the Allahabad High Court in Rain Nath Koeri vs
Lakshmi Devi Sugar Mills & Ors.
(3) where it was observed that the payment of wages is one of the essential ingredients of the contract of employment and that the word 'conditions ' includes the idea conveyed by the word 'terms ' but goes beyond it and is not confined, to what is included in that word.
The Court also held that 'terms and conditions of employment ' is wider in.
scope than the expression 'terms and conditions of labour '.
But as we have already observed failure or refusal to pay wages for a certain period may necessitate proceeding under section 33C, but refusal to pay wages indefinitely on the refusal of the workers to work according to a scheme of reorganisation which was not a valid one, because of the failure to give notice under section 9A, cannot but be considered to be an alteration in the conditions of service of the workers.
Mr. Gupte complained that the Tribunal has not decided the question whether the reorganisation was justified.
He also contended that the applications by the workers as well as the reference (1) A.I.R. 1956 Patna 294.
(3) (2) 636 made by the company should have been heard together and should not have been disposed of separately.
That is really the main complaint of the employer.
As we have pointed out earlier if all the evidence which was let in in the reference were available to tile Tribunal which decided the applications of the workers, the result might well have been different.
But we do not consider that the Tribunal was wrong in having proceeded to dispose of the matter in the way it did.
Mr. Tarkunde rightly contended that even if an application had been made under section 33C, the whole scheme would have to be considered and it is not fair at this distance of time to drive the workers to file applications under section 33C, the procedure for which would be the same as under section 33A, merely on the ground that the introduction of the scheme had taken place before the reference to adjudication was made.
We consider that as an application under section 33A has to be decided as if it were a reference under section 10, the fact that the scheme had been introduced earlier than the reference to arbitration under section 10, does not bar ,an application under section 33A in the circumstances we have explained.
We thus come to the conclusion (1) that non payment of wages in the circumstances of this case amounts to an alteration in the conditions of service, (2) the fact that the scheme was introduced before the reference under section 10 was made does not bar an application under section 33A, and (3) that the Tribunal was justified in coming to the conclusion that this alteration in the conditions of service could not have been made without notice under section 9A.
The result is that all the appeals are dismissed.
There will be no order as to costs.
V.P.S. Appeals dismissed.
| Before September 1966 the marketing Organisation of the employercompany was in three divisions.
Thereafter it was organised into two divisions.
There were extensive and prolonged consultations between the employer and the employees but the reorganisation was not approved by the employees.
The new scheme was introduced on the 5th or 6th September and the industrial dispute arising therefrom was referred to the Tribunal on 30th September.
The workers presented themselves for work every day and offered to work according to the old scheme but they were not given any work.
They were told that as long as they refused to work under the new scheme they would not be paid any wages.
Some workers had voluntarily retired and the vacancies were not filled.
Therefore, pending the adjudication on the reference already made, seven workers filed applications under section 33A of the , alleging that during the pendency of the adjucation, their service conditions had been changed adversely and that their salary for the month of October had not been paid.
The Industrial Tribunal was different in the two cases as also the evidence let in in the two cases.
In the main reference, the Tribunal held in favour of the employer.
With reference to the applications of the employees, the other Tribunal held in favour of the employees on the grounds that the conditions of work had been changed to the workers ' prejudice, that the reorganisation was likely to lead to re trenchment, that the matter thus fell under item 10 of Schedule 4 to the Act and that therefore, the employees were justified in refusing to work.
Both parties appealed to this Court, HELD : On a consideration of the material in each of the awards 'both the awards should be upheld.
[628 A B] (1) The evidence given in the main reference not being a part of the evidence in the applications filed by the employees it is not open tothis Court to take it into consideration in deciding the appeals filed by the employer as against the award in favour of the employees.
[628A] (2) This Court, in considering a matter under article 136, does not ordinarily reassess the evidence on the basis of which the Tribunalcame to its conclusion.
It will interfere with findings of facts only if they are unsupported by any evidence or are wholly perverse.
[628 D E] (3) The reorganisation is neither a change in usage falling under item 8 of the 4th Schedule to the Act, nor rationalisation falling under item 10, nor an increase or reduction in the number of persons employed in any department falling under item 11; and hence, it was not necessary to give any notice under section 9A of the Act.
[633 D E] 625 (a) The employer has a right to organise his work in the manner he pleases.
[631C] (b) The various decisions show that whether any particular practice or allowance or concession had become a condition of service would always depend upon the facts and circumstances of each case.
, On the evidence and findings given by the Tribunal it cannot be held that there has been any change in the terms and conditions of service of the workers in this case to their detriment.
[633 C E] Parry & Company 's ; Dharangadhara Chemical ,Works Ltd., vs Kanju Kalu & Ors. [1955] 1 L.L.J. 316; Chandramalai Estate vs Its Workmen ; The Graham Trading Co. (India) Ltd. vs Its Workmen ; ; Workmen of Hindustan Shipyard Ltd. vs I.T. ; McLeod & Co. vs Its Workmen ; Indian Overseas Bank vs Their Workmen [1967 68] ; Indian Oxygen Limited vs Udaynath Singh , Oil & Natural Gas Commission vs Their Workmen and Tata Iron & Steel Co. vs Workmen ; , referred to.
(c) The Tribunal held on the basis of oral as well as documentary evidence that the contention of the workers that it was a condition of service of every employee to work for only one division at a time was not established.
The arrangement of the words and phrases in item 10 shows that only rationalisation or standardisation or improvement of plant or technique, which is likely to lead to retrenchment of workmen that would fall under that item and not mere rationalisation or standardisation.
The retrenchment contemplated is retrenchment as defined in section 2(00), which does not include voluntary retirement of the workmen.
Therefore, the workers cannot make a grievance of the voluntary retirement and non filling of vacancies and try to bring the matter under item 10.
The employer had the right to decide the staff complement and to fill only such jobs as continued to exist and not automatically replace every individual.
[630 A H] Alembic Chemical Works Co. Ltd. vs The Workmen, ; , referred to.
Therefore, there is no reason for differing from the findings of the.
Tribunal that there has been no change in usage adversely affecting the workers coming under item 8, and that there has been no retrenchment under item 10.
[632D] (4) The 4th schedule relates to conditions of service for change of which the notice is to be given, and section 9(A) requires the employer to give notice under that section to the workmen likely to be affected by such.
change.
The word 'affected ' in the circumstances could only refer to the workers being adversely affected and unless it could be shown that the abolition of one department has adversely affected the workers it cannot be brought under item 11.
[631 A C] [The question whether the prolonged and detailed discussion between the parties was a substantial compliance with the provisions of section 9A not decided].[633E] (5) But the non payment of wages in the circumstances of this case amounts to an alteration in the conditions of service and the fact that the scheme was introduced before the reference under section 10 was made does not bar an application under section 33A.
The tribunal was justified in coming to the conclusion that this alteration in the conditions of service could not have been made without the notice under section 9A. [634 C D; 635 B C] 626 (a) The applications in this case were not for wages due for the month of September but for October.
[634E] (b) The refusal to pay wages was not a solitary instance in respect of which an application could have been made under section 33C. it was a continued refusal and the cause of action arises de die in diem.
If the refusal of the workers to work under reorganisation scheme is justified then the refusal by management to pay unless they work under the reorganisation scheme would amount to alteration of the conditions of service of Workers.
[634 G H] (c) Even if an application had been made under section 33C the whole scheme would have been considered and it is not fair at this distance of time to drive the workers to file application under that section, the procedure for which would be the same as under section 33A, merely on the ground that the introduction of the scheme had taken place before the reference to the adjudication was made.
[636 B C] (d) The Tribunal had found that the reorganisation scheme had rendered some workers surplus, that the scheme had seriously prejudiced.
the workers, and that the apprehension of the workers that the reorganisation would result in some members of the staff becoming surplus had come true.
[635 A B] North Brooke Jute Co. Ltd. , National Coal Co. vs L. P. Dave, , Shama Biscuit Co. vs Their Workmen , referred to : Ram Nath Koeri vs Lakshmi Devi Sugar Mills & Ors. , approved.
(e) If all the evidence which was let in in the main reference were available to the Tribunal which decided the applications of the workers, the result might have been different.
But it could not be said that the Tribunal is wrong in having proceeded to dispose of the matter in the way it did.
[636 A D]
|
iminal Appeal No. 39 of 1955.
Appeal by special leave from the judgment and order dated January 28, 1954, of the Patna High Court in Criminal Revision No. 69 of 1954 arising out of the judgment and order dated November 23, 1953, of the Sessions Judge, Patna, in Criminal Appeal No. 288 of 1953 against the judgment and order dated August 27, 1953, of the Munsif Magistrate of Patna Sadar.
Murtaza Fazl Ali and R. C. Prasad, for the appellant.
section P. Varma, for respondent No. 1. 1957.
April 25.
The Judgment of the Court was delivered by IMAM J.
The appellant was removed from his position as mutawalli of Gholam Yahia Waqf Estate on September 1, 1951, by an order passed by the Majlis constituted under the Bihar Waqfs Act, 1947 (Bihar Act 8 of 1948) (hereinafter referred to as the Act).
He appealed to the District Judge of Monghyr, as he was entitled to do under the provisions of the Act, and the operation of the order of removal passed by the Majlis was stayed by the District Judge pending the hearing of his appeal.
A complaint against him was filed in the Court of the Sadar Sub Divisional Magistrate, Patna, on July 1, 1952, by Mahommad Sual, Nazir of the Majlis, on the order of its Sadar.
It was alleged in the complaint that it was the duty of the appellant ' to prepare a budget of the waqf estate of which he was a mutawalli, under section 58(1) of the Act, for the year 133 1034 1952 53 and to send a copy of it to the Majlis before January 15, 1952.
The appellant had deliberately failed to comply with the aforesaid provisions and therefore had committed an offence punishable under section 65(1) of the Act.
The office of the Majlis where the budget had to be filed was situated at Patna within the local jurisdiction of the Magistrate in whose Court the complaint was filed.
The appellant was subsequently tried at Patna by a Munsif Magistrate with First Class powers and convicted under section 65(1) of the Act and sentenced to pay a fine of Rs. 100, in default to undergo fifteen days simple imprisonment.
He appealed to the Sessions Judge of Patna who dismissed his appeal.
An application filed by the appellant in the Patna High Court in its criminal revisional jurisdiction was rejected.
The appellant obtained special leave to appeal against the order of the High Court.
It has been found as a fact that the appellant failed to prepare a budget of the estimated income and expenditure of the waqf estate and to send a copy of it to the Majlis before January 15, 1952.
The only question for consideration is whether the appellant 's failure to comply with the provisions of section 58(1) of the Act makes him liable to be punished under section 65(1).
At this stage, it is necessary to set out the provisions of a. 58 of the Act which are as follows: " 58 (1) The mutawalli of every waqf shall, before the fifteenth day of January in each year, prepare a budget of the estimated income and expenditure of such waqf for the next succeeding financial year and shall forthwith send a copy thereof to the Majlis.
(2)The Majlis may, within six weeks from the date on which it receives such copy, alter or modify the budget in such manner and to such extent as it thinks fit.
(3)If the Majlis alters or modifies any budget under sub section (2), it, shall forthwith send a copy of the budget as so altered or modified to the mutawalli of the waqf concerned, and the budget as so altered or modified shall be deemed to be the budget of the waqf.
(4)If within the period mentioned in subsection (2) and for two weeks thereafter the Majlis does 1035 not send to the mutawalli of the waqf concerned a copy of the budget altered or modified as aforesaid, the Majlis shall be deemed to have approved the budget without any alteration or modification.
(5)If the mutawalli fails to prepare and send a copy of the budget as required by sub section (1), the Majlis shall prepare a budget for the waqf concerned and such budget shall be deemed to be the budget of that waqf for the year in question.
(6)Nothing contained in this section shall be deemed to authorise the Majlis to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the waqif, so far as such wishes can be ascertained, or the provisions of this Act.
" Section 65 provides that a mutawalli may be punished if he fails to comply with certain matters mentioned therein including his failure to comply with sub section
(1) of section 58.
Sub section (1) of section 65 reads as follows: " 65 (1) If a mutawalli fails without reasonable cause, the burden of proving which shall be upon him, to comply with any order or direction made or issued under clauses (i), (o) or (q) of sub section (2) of section 27 or under section 56, to comply with the provisions of sub section (1) of section 57, sub section (1) of section 58, section 59 or section 60, or to furnish any statement, annual account, estimate, explanation or other document or information relating to the waqf of which he is mutawalli, which he is required or called upon to furnish under any of the other provisions of this Act, he shall be punishable with fine which may extend, in the case of the first offence, to two hundred rupees and, in the case of second or any subsequent offence, to five hundred rupees.
" It is clear from the provisions of section 58(1) that before January 15, each year, the mutawalli of each waqf shall prepare a budget for the next succeeding financial year and shall forthwith send a copy thereof to the Majlis.
Under section 65 (1), if he fails to comply with the above, he is liable to be punished with fine.
It was contended by the learned Advocate for the appellant that section 58 of the Act was an invalid provision because it gave unrestricted power to the Majlis to alter 1036 or modify the budget prepared by the mutawalli without a right of appeal against the action of the Majlis altering or modifying the budget.
The provisions of section 58 imposed an unreasonable restriction on the mutawalli in carrying on his occupation as such.
Accordingly, the provisions of section 58 offended article 19(1) (g) of the Constitution.
The Act was enacted for the purpose of providing for the better administration of waqfs in the State of Bihar as its preamble states.
Section 5 provides for the establishment of two bodies corporate known as Majlis to discharge respectively the functions assigned to them by the Act with reference to Sunni waqfs and Shia waqfs.
Section 27 provides that the general superintendence of all waqfs in the State shall be vested in the Majlis, which will do all things reasonable and necessary to ensure that waqfs are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such waqfs and in accordance with the purposes for which such waqfs were founded or for which they exist so far as such objects and purposes can be ascertained.
Sub section (2) of this section enumerates, inter alia,.
the various powers and duties of the Majlis including the removal of a mutawalli from his office under certain conditions.
The various powers set out in this subsection clearly indicate that the mutawalli is subordinate to and under the control of the Majlis.
The Majlis under section 47 may also make an application to the District Judge for an order, amongst other things, for the removal of the mutawalli.
Chapter X deals with mutawallis and their duties and under section 56 it is specifically enjoined that every mutawalli shall carry out all directions which may from time to time be issued to him by the Majlis under any of the provisions of the Act.
Previous to the passing of the Act, the Mussalman Wakf Act (Central Act XLII of 1923) was enacted to make provisions for the better management of waqf property and for ensuring the keeping and publication of proper accounts in respect of such properties.
It applied to all waqfs, except those to which section 3 of the Mussalman Wakf Validating Act, 1037 1913, applied.
Reference to some of the provisions of the Mussalman Wakf Act may now be made.
Section 3 provides for the furnishing of particulars relating to a waqf to the Court, that is to say, a District Judge or within the limits of ordinary original civil jurisdiction, to such Court subordinate to the High Court as the State Government may by notification in the Official Gazette designate.
Section 5 provides that within three months after the thirty first day of March next following the date on which the statement referred to in section 3 had been furnished, and thereafter within three months of the thirty first day of March in every year, the mutawalli shall prepare and furnish to the Court a full and true statement of accounts of all moneys received or expended by him on behalf of the waqf of which he was the mutawalli during the period of twelve months ending on such thirty first day of March.
Section 10 provides for punishment for failure to comply with the provisions of section 3 or section 4 by a mutawalli, who becomes liable to be fined a sum which may extend to five hundred rupees, or, in the case of a second or subsequent offence which may extend to two thousand rupees.
It is clear that the purpose of the Act and that of the Mussalman Wakf Act was to ensure that the waqfs were properly administered and that the income of the waqf was duly appropriated for the purposes for which the waqf had been founded.
Having regard to the fact that the mutawalli occupied the position of a manager or a custodian and that some kind of control or supervision over him by the Majlis with respect to due administration of the waqf property and due appropriation of funds was certainly necessary, we are of the opinion that the provisions of section 58 of the Act are reasonable restrictions on the exercise of his duties as a mutawalli and it cannot be said that the provisions of section 58 offend any of the provisions of the Constitution.
As was said in the case of The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1) a budget is indispensable in all public institutions and that it is not per se (1) ; , 1037.
1038 unreasonable to provide for the budget of a religious institution being prepared under the supervision of the Commissioner or the Area Committee.
Under section 58 of the Act, the mutawalli has to prepare a budget and send a copy of it to the Majlis within a specified time and the Majlis, which has the powers of supervision over him, is authorized to alter or modify the budget.
This power of alteration or modification is inherent in the power of supervision and such a provision in section 58 cannot be said to be unreasonable.
Reliance, however, was placed on a passage in the judgment of this Court in the case cited above to the effect that if an Area Committee under cl. 3 of section 70 of the Madras Hindu Religious and Charitable Endowments Act, 1951, makes any addition or alteration in the budget, an appeal against it lay to the Deputy Commissioner.
The passage upon which reliance is placed is no authority for the proposition that the provisions of section 58 of the Act become unreasonable because there is no provision for an appeal against the orders of the Majlis.
The powers of the Majlis to alter or modify the budget prepared by the mutawalli are not unrestricted.
Sub section (6) of section 58 expressly provides that nothing contained in the section shall be deemed to authorize the Majlis to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the waqif, so far as such wishes can be ascertained, or the provisions of the Act.
In our opinion, nothing contained in sub sections
(2), (3) and (4) of section 58 amount to unreasonable restrictions on the exercise of the duties of the mutawalli as a person administering a waqf.
Even if it were to be assumed that the said provisions amounted to an unreasonable restriction, sub sections
(2), (3) and (4) are clearly severable from sub sections
(1), (5) and (6) of section 58.
Even if sub sections
(2), (3) and 4 were struck down, the mutawalli would still be under a legal obligation under sub section
(1) to prepare a budget and submit a copy thereof to the Majlis within a specified time and his failure to do so would make him liable to punishment under section 65(1).
It was urged that the Sessions Judge erred in placing the onus on the appellant under section 65(1) to prove that he had submitted the copy of the budget within time.
1039 This objection, however, does not require a detailed consideration because the Sessions Judge clearly stated in his judgment that apart from the onus, he was satisfied that the prosecution had fully established on the evidence that the appellant had failed to send a copy of the budget as required by law.
It was also pointed out that section 65 does not provide for any imprisonment in default of payment of fine, but the appellant was sentenced to 15 days simple imprisonment in default of payment of fine.
Section 33 of the Code of Criminal Procedure read with sections 40 and 67 of the Indian Penal Code appears to us to be a clear answer to this contention.
It was also pointed out that under section 65 of the Act a sentence of fine extending upto five hundred rupees could be imposed for a second or for a subsequent offence.
We need not, however, consider that matter in the present appeal as it was conceded on behalf of the appellant that the sentence of fine imposed upon him in the present case was for a first offence.
The appeal is accordingly dismissed.
Appeal dismissed.
| The appellant failed to prepare a budget of the Waqf Estate of which he was the mutawalli, for the year 1952 53 and send a copy of it to the Majlis before January 15, 1952, as he was bound to do under section 58(1) of the Bihar Waqfs Act, 1947, and was convicted by the 'Magistrate under section 65(1) of the Act and sentenced to pay a fine of Rs. 100, in default to undergo fifteen days simple imprisonment.
It was contended for him that the conviction and sentence were not valid because (1) section 58 of the Act contravened article 19(1) (g) of the Constitution of India, as it gave unrestricted power to the Majlis to alter or modify the budget prepared by the mutawalli without a right of appeal against the action of the Majlis and so imposed an unreasonable restriction on the mutawalli in carrying on his occupation as such, and (2) section 65 Of the Act did not provide for any imprisonment in default of payment of fine.
Held, that having regard to the fact that a mutawalli occupies the position of a manager or custodian and the supervision over him by the Majlis with respect to due administration of the waqf property is necessary and that the powers of the Majlis to alter or modify the budget prepared by the mutawalli are controlled by sub section
(6) Of section 58 of the Act, the restrictions imposed by section 58 Of the Act on the exercise of his powers 1033 by a mutawalli are reasonable.
Accordingly, the provisions Of section 58 'of the Act do not offend article 19 (i) (g) of the Constitution.
Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindya Thirtha Swamiar of Sri Shirur Mutt, ; , relied on.
The order of the Magistrate providing for imprisonment in default of payment of fine is not invalid in view Of section 33 of the Code of Criminal Procedure read with sections 4o and 67 of the Indian Penal Code.
|
: Criminal Appeal No. 8 18 of 1979.
From the Judgment & Order dated the 27.10.1979 of the Madras High Court in Crl.
A. No. 4 of 1977.
A.S. Nambiar and K.R. Nambiar for the Appellant.
V. Krishnamurthy for the Respondent.
The Judgment of the Court was delivered by FATHIMA BEEVI, J.
This appeal is directed against the judgment dated 27.10.1979 of the High Court of Madras con firming the conviction of the appellant under section 161, I .P.C. and under section 336 5(2) read with section 5(1)(d) of the Prevention of Corrup tion Act.
The appellant had been sentenced to undergo R.I. for 15 months under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act with no separate sen tence under section 161 I.P.C.
The brief facts of the case are as under.
The appellant, Sunderamoorthy was an Accountant cum Headclerk in the Tamil Nadu Forest Training School at Vaigai Dam.
He took charge of the office on 6.10.1975 and had been residing in a house opposite the training school.
PW 3, the Principal of the training school issued exhibit P 2 show cause notice to the PW 1, Venkataswamy, the canteen contractor, as to why his licence for running the canteen should not be cancelled.
This was on the basis of a complaint made by the appellant that the food served in the canteen was substand ard.
The appellant had taken food in the canteen for two days and being dissatisfied discontinued the practice before the notice was issued.
The prosecution case is that the accused thereafter sent for PW 1, informed him that he would help him in restoring the licence and demanded a bribe of Rs. 100.
On 21.10.1975, the appellant is stated to have pressed the demand to PW 1.
The latter made a complaint to PW 6 who thereupon arranged a trap.
As instructed, PW 1 was ready with ten rupees currency notes.
PW 6 after drawing up a mahazar in the presence of PW 2, Jaganathan, Assistant of the Office of the Special Tehsildar, Usilampatti directed PW 1 to give the notes to the appellant.
PW 1 handed over the money to the appellant who received the same.
When PW 1 emerged, PW 6 along with PW 2 confronted the appellant.
The appellant produced the currency notes.
PW 6 conducted the phenolphthalein test with reference to the fingers of the appellant.
The test was positive, the currency notes were seized and the appellant arrested.
PW 3, the Principal produced the concerned file relating to show cause notice, from the house of the appellant on the same day.
Finally, the appellant was chargesheeted.
At the trial, the prosecution witnesses supported the case.
PW 1 affirmed the fact that the appellant made the demand and had also received the amount on 22.10.
The recovery of the currency notes from the appellant was not challenged.
The plea of the appellant was that PW 1 had returned the amount due to him and there had been no demand for a bribe as there had been no occasion for doing so.
The Trial Court accepted the prosecution evidence, rejected the plea of the appellant and recorded the conviction.
Before the High Court, the .contentions of the appellant were that there was no independent evidence regarding the demand, the messenger who had contacted PW 1 at the 337 behest of the appellant had not been examined, the solitary evidence of PW 1 is insufficient, the explanation offered by the appellant was probable and there is no conclusive evi dence to hold that the appellant.
was guilty.
It was also urged that the appellant being new in the office could exert little influence on the Principal and the whole story is, therefore improbable.
These contentions did not find favour with the High Court.
It took the view that the evidence of PW 1 find corroboration in the testimony of PW 2 and 6 and the contemporary records.
The recovery of the currency notes from the appellant proves the guilty conduct of the appel lant in view of the presumption arising under section 4(1) of the Prevention of Corruption Act which has not been rebutted.
The decisions of the Court in State of Rajasthan vs Mohamed Habeeb, ; C.I. Ernden vs State of Uttar Pradesh; , and Lohana Kantilal vs State, AIR 1954 Saurashtra 12 1 were referred to.
The High Court thought that though the conviction under section 161 I.P.C. and section 5(2) of the Prevention of Corruption Act is to be maintained, no separate sentence need be award ed under section 161 I.P.C.
The appellant has reiterated the contentions before us.
The learned counsel appearing for the appellant, however, maintained that the appellant had a consistent case even from the earliest opportunity that the currency notes found in his possession was the money returned by PW 1, the cir cumstances of the case would probabalise this case of the appellant and the presumption, if any, arising under section 4 is rebutted and the conviction cannot therefore be sus tained.
PW 6 has stated at the time of the seizure the explanation offered by the appellant was that PW 1 had returned the loan and that he had given the money for the Dipawali.
The case that has been developed in the course of the trial is not that of a loan transaction but payment of an advance of Rs. 125 in the canteen when the appellant started to take food there.
The case of Dipawali gift or return of a loan given to PW 1 has not been even suggested.
It cannot, therefore, be said that there had been consistent explanation for the appellant.
PW 3, the Principal has averred in unequivocal terms that Ex.
P 2 memo had been issued on the basis of the complaint received from the appellant that on getting the explanation from PW 1 he on 18.10.1975 itself passed orders and closed the file.
The order made was not disclosed to PW 1 and till 22.10.1975, the file itself was kept by the appellant in his personal custody.
He had thereafter received the amount of Rs. 100 from PW 1.
This conduct of the appellant is clearly incon sistent with the transaction of loan or return of money by PW 1. 338 This Court observed in Dhanvantrai Balwantrai Desai vs State of Maharashtra, AIR 1964 SC 575 as under: "Where any gratification (other than legal gratification) or any valuable thing is proved to have been received by an accused person the court is required to draw a presumption that the person received that thing as a motive of reward such as is mentioned in section 161, I.P.C. Therefore, the Court has no choice in the matter, once it is established that the accused person has received a sum of money which was not due to him as a legal remuneration.
Of course, it is open to that person to show that though that money was not due to him as legal remuneration it was legally due to him in some other manner or that he had received it under a transaction or an arrangement which was lawful.
The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under section 114 of Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable.
it must further be shown that the explanation is a true one.
The words 'unless the contrary is proved ' which occur in this provision make it clear that the presumption has to be rebutted by 'proof ' and not by a bare explanation which is merely plausible.
A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists.
Unless, there fore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted.
" On a careful consideration of the facts and circum stances, we are not satisfied that the appellant had even by preponderance of probability succeeded in rebutting the presumption.
The argument that clause (d) of section 5(1) of the Prevention of Corruption Act is not attracted on the proved facts is also not impressive.
We find no merit in the appeal.
It is accordingly dismissed.
N.V.K. Appeal dismissed.
| The appellant was an Accountant cum Headclerk in the Forest Training School, PW 3 the Principal of the training school, and PW I the canteen contractor.
The prosecution alleged that on the basis of a complaint made by the appel lant that the food served in the canteen was substandard, PW 3 issued a show cause notice to PW I, as to why the licence for the canteen should not be cancelled and that thereafter the appellant sent for PW I and demanded a bribe of Rs. I00.
As the appellant pressed the demand from PW 1, the latter made a complaint to PW 6, the inspector, who arranged a trap.
The trap was arranged.
PW I handed over the money to the appellant, who received the same.
PW 6 conducted the phe nolphthalein test with reference to the fingers of the appellant.
The test was positive.
The currency notes were seized, and the appellant arrested chargesheeted.
The Trial Judge accepted the prosecution evidence, rejected the pleas of the appellant that PW 1 had returned the amount of Rs. 100 due to him, that there had been no demand for a bribe as there had been no occasion for doing so, and recorded conviction.
The appellant appealed to the High Court and contended that there was no independent evidence regarding the demand, the messenger who had contacted PW 1 at the behest of the appellant had not been examined, the solitary evidence of PW I is insufficient and that the explanation offered by the appellant was probable and that there is no conclusive evidence to hold that the appellant was guilty.
The High Court took the view that the recovery of the currency notes from the appellant prove his guilty conduct, in view of the presumption arising under section 4(1) 01 ' the Prevention of Corruption Act and that the same has not been rebutted and held that though the conviction under 335 section 161 I.P.C. and section 5(2) of the Prevention of Corruption Act, 1947 is to be maintained, no separate sen tence need be awarded under section 161 I.P.C. It, accord ingly, confirmed the conviction of the appellant and sen tenced him to undergo rigorous imprisonment for 15 months.
In the appeal to this court, it was contended that the appellant had a consistent case even from the earliest opportunity, that the currency notes found in his possession was the money returned by PW I, and that the presumption, if any, arising under section 4 was rebutted, and the convic tion cannot therefore be sustained.
Dismissing the appeal, this Court HELD: 1.
The appellant has not even by preponderance of probability succeeded in rebutting the presumption under section 4(1) of the Prevention of Corruption Act.
[338C] 2.
The Court has no choice once it is established that the accused person has received a sum of money which was not due to him as a legal remuneration, but to draw a presump tion that the person received the money as a motive of reward.
However, it is open to that person to show that though that money was not due to him as legal remuneration, it was legally due to him in some other manner or that he received it under a transaction or an arrangement which was lawful.
The explanation offered by the person should be a true one and not one which is merely plausible.
[339B C; F] Dhanvantrai Balwantrai Desai vs State of Maharashtra, AIR 1964 SC 575, referred to.
|
Appeals Nos.
484 to 489 of 1958.
Appeals by special leave from the judgement and order dated August 6, 1954, of the U.P. Board of Revenue, Allahabad, in petitions Nos.
203 to 208 of 1947 48.
G. C. Mathur, for the appellants.
M. L.Agarwala, for the respondents (in.
C. As.
484 &485 of 1958) and respondent No.3 (In C.A No. 488.
of 1958).
August 31.
The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.
These appeals, by special leave, against the orders of the Board of Revenue, Utter Pradesh, arise in the following circumstances : The appellants presented applications against each set of the respondents in these six appeals under s.175, U.P. Tenancy Act, 1939 U.P. XVII of 1939, hereinafter called the Act, for ejectment stating that they were the sir bolders of the land occupied by the respondents as non occupancy tenants and that the period of five years during which the respondents were entitled to retain possession under s.20 of the Act had expired.
The respondents contested the notice of ejectment alleging that the land in suit was not air, that the appellants were not sir holders, that appellants paid local rate exceeding Rs. 25/ in the United Provinces, Agra and Oudh, and held more than 50 acres of sir land.
They claimed to be hereditary tenants of the land in dispute, in accordance with sections 14, 15 and 16 of the Act.
The paper were thereafter forwarded by the Tehsilder to the Assistant Collector in charge of the sub division, in accordance with the provisions of section 179 of the Act 907 The applications which were presented for the ejectment of the respondents were deemed to be plaints and the proceedings continued as suits, in view of sub section
(2) of a. 179 of the Act.
The Court called upon the appellants to file necessary extracts of papers and to join all tenants of air as parties.
The sub Divisional Officer did not accept the contention of the respondents and decreed the suits on February 28, 1946, holding that the land in suit was air, that the appellants were air holders, that each of them did not pay a local rate exceeding Rs. 25/ either in 1938 or in 1940, that he did not hold more than fifty acres of air land or more than fifty acres of air and khudkasht land which had not been sublet in 1317 F., corresponding to the period from July 1, 1939 to June 30,1940.
The respondents appealed against the decree to the Additional Commissioner, Benaras, and repeated their contentions which had not found favour in the Trial Court.
They also contended that the appellants had not complied with the requirements of s, 19 of the Act as amended by the U.P. Tenancy (Amendment) Act, 1947 (U.P. X of 1947) which came in to force on June 14.
1947 after the appeals had been instituted.
The Additional Commissioner confirmed the findings of the Sub Divisional Officer and further hold that there had been substantial compliance with the spiritof the law as laid down in the amended a. 19 of the Act.
He accordingly dismissed the appeals.
The respondents then instituted second appeals in the Board of Revenue.
The Board of Revenue did not agree with the additional Commissioner about there having been sufficient compliance with the provisions of amended a. 19 of 908 the Act and of the rules framed thereunder.
It therefore set aside the decree against the respondents and remanded the cases for fresh disposal in accordance with law and further directed the Trial Court to decide the further contention raised by the respondents before the Board to the effect that they had acquired adivasi rights in the land in suit after the coming into force of the U. P. Zamindari Abolition and Land Reforms Act, 1950 (U. P. 1 of 1951).
It is against these orders of the Board of Revenue that these six appeals have been filed after obtaining special leave from this Court.
It appears that there was no particular procedure laid down for the progress of the proceedings in the suit before the Sub Divisional Officer after the papers had been sent to him in accordance with the provisions of section 179 of the Act.
The ordinary procedure for the conduct of suits was followed.
The Sub Divisional Officer therefore called upon the appellants to file necessary extracts of documents.
Naturally evidence had to be led, documentary or oral, to substantiate the allegations made by the parties and, especially by the appellants, who bad to prove their right to eject the respondents.
They had to prove that the land in suit was sir and that they were sir holders.
Section 6 of the Act defines `sir '.
This section reads: "Sir" means (a) land which immediately before the commencement of this Act was air under the provisions of the Agra Tenancy Act, 1926, or the Oudh Rent Act, 1886: Provided that if at the commencement of this Act, the sir holder is assessed in the United Provinces to a local rate of more than 909 twenty five rupees, land which was sir, under the provisions of clause (d) or clause (e) of Section 4 of the Agra Tenancy Act, 1926, or of clause (c) or clause (d) of sub Section (17) of Section 3 of the Oudh Rent Act, 1886, ,shall on this Act coming into force cease to be sir unless it was (i)before the first day of July, 1938, received otherwise than in accordance with the provisions of Section 122 of the United Provinces Land Revenue Act, 1901, or (ii)before the commencement of this Act, received in accordance with the provisions of that section, in exchange for land which was sir under the provisions of clause (a) or clause (b) or clause (c) of Section 4 of the Agra Tenancy Act, 1926, or of clause (a) or clause (b) of sub Section (17) of Section 3 of the Oudh Rent Act, 1886.
Provided further that the provisions of the first proviso shall apply to a sir holder who was not at the commencement of this Act assessed in the United Provinces to a local rate of more than twenty five rupees if be or his predecessor in interest was so assessed on the 30th June, 1938 unless the local rate assessed on him has been decreased by resettlement or by revision of settlement or unless since that day he obtained his sir rights by succession or survivorship Provided also that if the land to which the provisions of the first proviso apply was joint air of several air holders and all, such joint air holders are not air holders to whom such provisions apply, such land shall not 910 cease to be sir at the commencement of this Act, but shall remain sir until that portion of it which is the sir of those joint holders to whom such provisions apply is demarcated under the provisions of this Act; (b) land which was khudkasht and which is demarcated as sir under the provisions of this Act.
Explanation If any portion of the land revenue assessed on the sir holder 's land has been remitted owing to a fall in the price of agricultural produce, the local rate payable by him shall, for the purposes of this section, be deemed to have been reduced in the same proportion.
" It follows from these provisions that the appellants bad to establish the following facts : (i) The land in suit was `sir ' on January 1, 1940, when the Act came into force.
(ii) Each sir holder was not assessed in the United Provinces to a local rate of more than Rs. 25/ .
(iii) The sir holder or his predecessor in interest was not assessed to a local rate exceeding Rs. 25/ on June 30, 1938.
The appellants proved these facts and the trial Court held that the land in suit did not cease to be 'sir '.
Further, if the finding had been that the first proviso to section 6 applied, section 16 would have come into play and it would have been necessary for the Court to determine whether each of the sir holders possessed more than fifty acres of sir or of sir and khudkasht land which had not been let.
On this point too, the finding of the Trial Court, however, is that each sir holder bad less than fifty acres of sir and khudkasht land.
Section 19 of the Act, before its amendment, in 1947, provided that if a sir bolder could apply under the provisions of B. 15 or 16 of the Act, the 911 Court was to take action under those sections.
The amended section also repeated these provisions in its sub section
Its sub sections
(1) and (2) were, however new and read as follows. "(1) In a suit or proceeding for the ejectment of a tenant of sir the sir holder shall before the first date fixed for recording evidence,furnish to the court such particulars as the Board may by rule made in this behalf prescribe for ascertaining ' (a) whether the sir holder is a person to whom the provisions of the first proviso to clause (a) of Section 6 apply; and (b) the total area and nature of the sir holder 's air and.
khudkasht: Provided that if the sir holder satisfied the Court that he had sufficient cause for not filing the particulars before the date fixed, it way, subject to the payment of costs to the opposite party, extend the time.
(2)If the.
sir holder does not file the particulars mentioned in sub Section (1) within the time fixed thereunder, or deliberately furnishes inaccurate particulars, the Court shall dismiss the suit or proceeding, as the case may be, and shall declareare the tenant to be hereditary tenant.
" It is tobe noticed I that sub section
(1) requires a air holder tofurnish particulars prescribed by the Board and ' that the purpose of furnishing those particulars 'is to assist the Court in ascertaining whether the provisions of the first proviso to clause (a) of section 6 apply to the sir holder and what is the total area and nature of the sir holder 's sir and khudkasht.
Section 19 ' therefore, did not bring 912 about any real change in the substantive law affecting the question whether certain land is `sir ' or not, according to the definition of 'sir ' in section 6 of the Act.
After the amendment, a sir holder, in order to succeed in his suit, had to establish the same facts which he had to establish prior to the amendment, What proof he had to lead to support his case, he has to give even after the amendment.
The only difference brought about by the amendment is in the procedural conduct of the suit and is that prior to the amendment the sir holder had simply to lead evidence to prove his case, without informing the Court before hand about the material on which he would rely to establish that the provisions of the proviso (a) of section 6 did not apply to him and in case they applied how effect would be given to the provisions of s 16.
The amended Section made it incumbent on the sir bolder to furnish such information to the Court and thereby to the tenant before the parties proceeded to lead evidence.
Such information has to be furnished according to sub section
(1) of amended section 19, before the first date fixed for recording evidence.
The time for furnishing such information can be extended under the proviso to that sub section.
Great importance however, has been attached to the new provision as sub section
(2) of amended s.19 provides that the consequences of not filing those particulars, or filing those particulars inaccurately, would be that the Court shall dismiss the suit or proceeding and also declare the tenant to be a hereditary tenant.
Now, it is contended for the appellants, that the provisions of amended s.19 do not apply to the facts of this case as the amended section was enacted long after the first date of recording evidence and that therefore it could not have been possible for the appellant to furnish the necessary particulars in accordance with its provisions and that if its provisions apply to the facts of this case 913 the appellants have substantially complied with those provisions inasmuch as they had actually filed in Court documents which gave the necessary particulars required under rr.
239A and 239B made by the Boara of Revenue under s 19.
The contention for the respondents is that amended section 19 is retrospective in view of the provisions of section 31 of the Amendment Act of 197 and that the appellants had not complied with requirements of section 19 (1) and rules framed thereunder.
The aforesaid section 31 reads : "Disposal of pending suits and appeals (1)All proceedings, suits; appeals and revisions pending under the said Act on the date of the commencement of this Act and all appeals and revisions filed after that date against orders or decrees passed under that Act and all decrees and 'orders passed there under which have not been satisfied in full, shall be decided or executed, as the case may be, and where necessary such decrees and orders shall be amended, in accordance with the provisions of the said Act as amended by this Act: Provided firstly that if such a decree or order cannot be so amended, or the execution of or the appeal or revision from such an amended decree or order cannot be proceeded with, it shall be quashed.
In such a case the aggrieved party shall, notwithstanding any law of limitation be entitled to claim, within six months from the date on which such decree or order is quashed such rights and remedies as he had on the date of the institution of the suit or proceedings in which such decree or order was passed, except in so far as such rights or remedies are, inconsistent with 914 the provisions of the said Act as amended by this Act: Provided secondly that the proceedings under Section 53 between a landlord and his tenant and all proceedings under section 54 shall be quashed: Provided thirdly that appeals and revisions arising out of the proceedings under Section 53 between a landholder and his tenant or out of those under section 54 shall be so decided as to place the parties in the same position in which th ey were immediately before the institution of such proceedings Provided fourthly that all suits, appeals and revisions pending under Section 180 of the said Act, on the date of the commencement of this Act for the ejectment of any person who was recorded as an occupant on or after the first day of January, 1938, in a record revised under Chapter IV of the United Provinces Land Revenue Act, 1901, or corrected by an officer specialty appointed for the correction of annual registers in any tract shall be dismissed, and all decrees and orders for the ejectment of such persons, which have not been satisfied in full on the date of the commencement of this Act shall be quashed .
Provided fifthly that nothing in this subsection shall affect the forum of appeal or revision from a decree or order passed by a Civil Court under the said Act.
(2)In counting the period of limitation in respect of an application for the execution of a decree or order which was passed under the said Act and the execution of which was 915 stayed pending the enactment of this Act, the period during which execution was so stayed shall be excluded.
" In view of this section, the appeals which.
were pending before the additional Commissioner when the amendment Act came into force bad to be decided in accordance with the provisions of the Act as amended.
It has been stated above that no change in the substantive law affecting the rights of the parties has been brought about by the Amendment Act.
The only provision which could affect the rights of the parties is contained in sub s.(2) of amended s.19 and provides the consequences of the failure of the sir holder to furnish the necessary particulars.
It follows therefore that if the necessary particulars had been furnished in this case even prior to the Amendment Act coming into force, there could be no difficulty in deciding the appeals by the Additional Commissioner in accordance with the provisions of the Act as amended by the Amending Act.
This is exactly what the Additional Commissioner did.
He held that subs tantial compliance has been made with the provisions of the amended section and the rules framed thereunder.
The Board of Revenue is itself of the opinion that if substantial compliance bad been made of those provisions that would have been sufficient.
It however did riot agree with the Additional Commissioner 's view that the appellants had sufficiently complied with the provisions of amended s.19 aid the rules framed thereunder.
We are of opinion that in this the Board of Revenue was wrong.
Rules 239A and 239B framed by the Board are: "239A.
In a suit or proceeding for the ejectment of a tenant of sir, the sir holder shall before the first date fixed for recording 916 evidence, furnish to the Court the following particulars: (1)The amount of local rate to which the sir holder was assessed on 1st January, 1940, in the United Provinces.
(2) If the amount shown under the preceding subclause (1) is Rs. 25, or less, then (a) the amount of local rate to which the sir holder or his predecessor in interest was assessed on June 30, 1938.
(b)Whether the local rate assessed on 30th June, 1938, was decreased before 1st January, 1940, as a result of resettlement or revision 'of settlement, and if so, the amount by which it was decreased; (c)Whether the sir holder obtained his sir rights by succession or survivorship between 30th June, 1938, and 1st January, 1940.
(1)The area and khasra numbers of the plots, if any, held by him in severally or jointly with others, on 31st December, 1939, as sir in the United Provinces under the provisions of clause (d) or clause (e) of section 4 of the Agra Tenancy Act 1926, or of clause (c) or clause (d) of sub section (17) of section 3 of the Avadh Rent Act, 1886.
(2) Such of the plots, if any shown under the preceding sub clause (1) along with their areas, as were received by him in exchange for the land which was his sir under the provi sions of clause (a) or clause (b) or 917 clause (c) of Section 4 of the Agra Tenancy Act, 1926, or clause (a) or clause (b) of, subsection (17) of the Avadh Rent Act, 1886 (a) before the first day of July 1938 otherwise than in accordance with the provisions of Section 122 of the United Provinces Land Revenue Act, 1901, or (b) before the first day of January, 1940, in accordance with the provisions of that section.
(3) The area and: khasra numbers of the plots, if any, held by him in severally or jointly with others and khudkasht in the United Provinces, along with the period of cultivation and nature of khudkasht of each such plot.
(4) The extent of his share in the joint air and khudkasht, if any shown under the preceding sub clauses (1) and (3).
The particulars furnished in accordance with rule 239A shall be accompanied by the following documents: (1) If the local rate payable by the sir holder in the United Provinces is claimed to be Rs.25 or less, copies of the khewat khatas of 1345 Fasli and of 1347 Fasli, in which he was recorded as a co sharer; 918 (2) a certified copy of the khatauni khatas of his air and khudkasht; (3) a certified copy of the khewat to which such sir or khudkasht appertains, unless such copy is filed under sub rule (1); (4) a list giving the amount of local rate to which each co sharer of the sir holder in the joint sir and khudkasht, if any, is assessed; (5) in the case of sir or khudkasht of a joint Hindu family, a genealogical table and a list showing the share of each living member of the family having an interest in such sir or khudkasht and the share of local rate which each member would be liable to pay on ratable distribution.
" The documents filed by the appellants in the Trial Court consisted of (1) khewats of the various villages for the years 1345, 1346 and 1347 Fasli, i.e. for the periods between July 1, 1937 to June 30, 1940 (2) khatauni jamabandis of the various villages for the years 1345 and 1347 Fasli, corresponding to July 1, 1937 to June 30, 1938 and July 1, 1939 to June 30, 1940, respectively; (3) (a) a statement showing the shares of the appellants as recorded in the khewats and khataunis of 1347 Fasli, this statement showed the total of the air area held by the appellants to be 152.33 acres, their khudkasht area to be 19.93 acres and the total of the local rate payable by them to be Rs. 75.5.11; (b) a statement showing the air, khudkasht and local rate of each plain in 1317 Fasli.
This shows that none of them held sir or sir and khudkasht in excess of 50 919 acres, or was assessed to local rate exceeding Rs. 25/ (4) Copy of the pedigree.
These documents clearly furnish the particulars required by the rules as the periods covered by these documents include June 30, 1938, December 31, 1939 and January 1, 1940.
Rule 239AI required particulars regarding the amount of local rates on June 30, 1938 and January 1, 1940 and also about sir holders ' obtaining sir rights by succession or survivorship during the period.
The particulars required under sub rules (3) and (4) of rule 239AII were available from these documents.
Rule 239B required copies of the khewat khatas of 1345 Fasli and of 1347 Fasli; certified copies of khatauni khatas of sir and khudkasht; certified copies of the khewats to which that sir or khudkasht appertained; a list giving the amount of local rate to which each co sharer of the sir holder was assessed and a genealogical table in the case of sir or khudkasht of a joint Hindu family showing the share of each living member of the family.
The only particulars which can possibly be not had directly from the documents on record are those required by sub rules (1) and (2) of rule 239AII.
These require particulars about such sir which was the sir of the appellants under the provisions of cls.
(d) and (e) of s.4 of the Agra Tenancy Act, 1926 i.e., land which became sir on account of the landlord 's cultivation at the commencement of that Act, i.e., on September 7, 1926, and had been recorded as khudkasht in the previous agricultural year, i.e, in 1333 Fasli, or land which became air on account of the landlord 's continuously cultivating it for a period of ten years subsequent to the enforcement of the Agra Tenancy Act.
It is clear from the findings of the Trial Court that the land in suit had been sir from the time of 920 the settlement, presumably, the first settlement, which took place in the Nineties of the last Century.
This seems to be based on the fact that khatauni jamabandhis of 1345 and 1347 Fasli did not record a period of cultivation against the sir entry, indicating thereby that the sir is not of the kind mentioned in cls.
(d) and (e) of s.4 of the Agra Tenancy Act, 1926.
The Trial Court could and did record findings on all the facts which had to be proved by the appellants to establish their case.
The first Appellate Court confirmed them.
The particulars required by sub section
(1) of amended section 19 of the Act and the rules framed thereunder, were for the purpose of ascertaining those facts.
In the circumstances it is reasonable to hold that there had been substantial compliance with the provisions of amended section 19 and the rules framed thereunder.
The Board of Revenue was therefore in error in stating that the appellants had not given the amount of local rate to which they were assessed in U.P. on January 1, 1940, and that compliance did not appear to have been made of rule 239AII of the Revenue Court Manual and that there had not been sufficient compliance with the mandatory provisions of rules 239A and 239B.
From the judgment of the Board it is clear that its attention was not drawn to the several relevant documents filed by the appellants in the trial Court.
We have no doubt that if the Board had considered the said document it would not have held that section 19 had not been substantially complied with.
We therefore hold that the Board of Revenue was in error in setting aside the decree of the Additional Commissioner and remanding the case for fresh trial on the ground that there had not been compliance with the provisions of amended section 19 of the Act and the rules framed thereunder.
921 We accordingly allow the appeals, set aside the order of the Board of Revenue and remand the cases to it for decision in accordance with law.
We further direct it to decide itself the contention raised by the respondents about their having acquired adivasi rights under the U.P. Zamindari Abolition and Reforms Act.
In case the Board takes the view that for deciding the said issue any finding of fact is necessary, it.
may call for the said finding from the Trial Court and, on receiving it, proceed to deal with the appeals on the merits.
In the circumstances of these cases, we direct that the parties on either side bear their own costs.
Appeals allowed.
| The appellants filed suit under the U.P Tenancy Act, 1939.
for the ejectment of the respondents who were tenants of sir.
The appellants filed the necessary extracts of papers in support of their case.
The trial court decreed the suits 905 holding the land in suit was sir, that the appellants were sirholders, that each of them did not pay a local rate exceeding Rs 25, that he did not hold more then 50 acres of sir land or more than 50 acres of sir and khudkast land which had not been sublet and that the respondents had not become hereditary tenants.
The respondents preferred appeals before the Commissioner.
During the pendency of the appeals the U.P Tenancy (Amendment) Act.1947, amended s.19 of the Act Amended section 19 provided that in suits for ejectment of tenants of sir the sir holder shall, before the first day fixed for recording evidence, furnish such particulars as may be prescribed and further provided that for failure to file such particulars the suit shall be dismissed.
Section 31 of the Amending Act provided that its provision shall apply to pending suits, appeals etc.
The respondents contended that the appellants had failed to comply with the provisions of amended section 19 and that the suits should be dismissed.
The Commissioner confirmed all the findings of the trial court and held that there had been sufficient compliance with the provisions of amended section 19 and according dismissed the appeals.
The respondents preferred second appeals before the Board of Revenue.
The Board held that the provisions of amended section 19 and of the rules framed thereunder had not been complied with and remanded the case to the trial court for compliance therewith and retrial.
Held, that there had been sufficient compliance with the provisions of amended section 19 and the rules framed thereunder and that the Board was riot justified in remanding the cases for retrial.
Section 19 did not bring about any real change in the substantive law affecting the question whether land was sir or not.
Even after the amendment, a sir holder, in order to succeed in his suit, had to establish the same facts which he had to establish prior to the amendment.
The only difference brought about by the amendment was in procedure and whereas prior to the amendment a sir holder could lead his evidence without informing the Court before hand about the material he would produce, after the amendment it was incumbent upon him to furnish such information to the Court before the date fixed for recording evidence, The necessary particulars had been furnished even prior to the amendment and the Commissioner could decide the appeals in accordance with the provisions of the Act as amended by the amending Act.
The attention of the Board was not drawn to the relevant documents filed by the appellants and it erred in stating that there had been no substantial compliance with the provisions of amended section 19 and of the rules framed thereunder.
|
Appeal No. 188 of 1961.
Appeal by special leave from the judgment and order dated September 11,1959, of the Industrial Tribunal, Punjab, Patiala in Reference No. 30 of 1957.
G.S. Pathak, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants.
Bawa Shivcharan Singh and Janardan Slwrma for the respondents.
February 8.
The Judgment of the Court was delivered by VENKITARAMA AIYAR, J.
This is an appeal by special leave against the Order of the Industrial Tribunal, Punjab, dated September 11, 1959, in Reference No. 30 of 1957, overruling certain preliminary objections raised by the appellant to the 91 jurisdiction of the Tribunal to hear the reference.
The facts are that on February 14,,1955, the Government of Punjab referred under section 10(1)(c) of the , hereinafter referred to as "the Act", certain disputes between the appellant and the respondents to the Industrial Tribunal Punjab, Jullundur, for adjudication. ' That was numbered as Reference No. 3 of 1955.
This Tribunal had been constituted on August 29, 1953, by a Notification issued by the Government of Punjab, which is as follows "In exercise of the powers conferred under section 7 of the (Act XIV of 1947), the Governor of Punjab, in consultation with the Punjab High Court, is pleased to appoint Shri Avtar Narain Gujral 'Advocate, as Industrial Tribunal 'for Punjab.
" The main contention pressed before us on %behalf of the appellant is that Shri A.N. Gujral was 'not qualified under section 7(3)(c) of the Act under which the Notification was issued to be appointed as Tribunal on August 29, 1953, as he was very sixty years of age on that date, having been born on June 4, 1 892, and that there was therefore no Tribunal validly constituted in existence, and that in consequence the reference, to that so called Tribunal on February 14, 55, was wholly inoperative.
While Reference No. 3 of 1955 was pending before the Tribunal, the provisions of the , were amended by the Industrial Dispute (Amendment and Miscellaneous Provisions) Act, 1956 (Act No. 36 of 1956), which came into force on March 10, 1957.
This Amendment Act repealed section 7 of the principal Act, and replace it by sections 7A, 7B and 7C. Section 30 of the Amendment Act contains a saving as regards proceedings in relation to any industrial dispute which had been pending before a Tribunal constituted under the principal Act.
Acting under this section, the 92 Punjab Government issued on April 19, 1957, the following Notification : "No. 4194 0.
Lab 57/652 RA In continuation of Punjab Government Memorandum No. 3078 C Lab 57/4224, dated the 1st/llth March, 1957, and in exercise of the powers conferred by section 7 of the , as in force before the commencement of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, read with Section 30 of the latter Act and all other powers enabling him in this behalf the Governor of Punjab is pleased to extend (a)the period for which the Industrial Tribunal, Punjab, Jullundur, is constituted, and (b)the term of appointment of the Role Member thereof.
up to the last day of October, 1957, or such date as the proceedings in relation to industrial disputes pending in the said Tribunal immediately before the 10th March, 1957, are disposed of, whichever is earlier." To put it briefly, this Notification extended the life of the Tribunal constituted under the repealed section 7, for the period specified therein, and it also continued the term of Shri A,N. Gujral, as a Member thereof, for the said period.
The contention of the appellant with reference to this Notification is that section 30 of Act 36 of 1956 does not authorise the appointment of a Member to the Tribunal constituted under section 7, and that the Notification in so far as it continued Sbri A.N. Gujral.
as a Member of the Tribunal after his term of office had expired on Mach 10, 1957, was unauthorised and void.
93 On the same date on which the above Notification was issued, that is on April 19, 1957, the Government of Punjab issued a Notification under section 7A of the Act of which the relevant portion is as follows : "No. 4194 C Lab 57/66t RA In exercise of the powers conferred by Section 7A of the Industrial Disputes Act, 1917, as inserted by section 4 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act , 1956, (No. 36 of 1956), and all other powers enabling him in this behalf, the Governor of Punjab is pleased to constitute an Industrial Tribunal with Headquarters at Jullundur and to appoint Shri Avtar Narain Gujral, B.A., LL.B., as its Presiding Officer with effect from the date of the publication of this notification in the Official Gazette up to 3rd June, 1957.
" It will be noticed that this Notification firstly constituted a now Tribunal being the Industrial Tribunal, Jullundur, and secondly it appointed Shri A. N. Gujral as its Presiding Officer 'up to June 3, 1957.
The significance of that date is that, under section 7C (b) enacted by the Amendment Act, 1956, the age of retirement for members was fixed at sixty five, and under that provision, Shri A.N. Gujral would have to retire on June 3, 1957.
The Punjab Legislature intervened at this stage and enacted two statutes which are material for the present dispute.
One of them was the Industrial Disputes (Punjab Amendment) Act 8 of.
Section 3 of this Act amended section 7C (b) of the principal Act by substituting for the words "he has attained the age of sixty five years", the words "he has attained the the age of sixty seven years".
Thus the age of retirement was raised to sixty seven years.
By the operation of this Act, the tenure of Shri A. N. Gujral could be extended from 94 June 3, 1957 to June 3, 1959, and that in fact was done by a number of Notifications issued from time to time.
The appellant contends that this legislation was intended to benefit a single individual Shri A.N. Gujral, and is therefore void as offending article 14 of the Constitution.
The result, according to the appellant, is that after June 3, 1957, there was no one validly holding the office of Member of the Industrial Tribunal.
The second statute enacted by the Punjab Government is the Industrial Disputes (Amendment and Miscellaneous Provisions) (Punjab Amendment) Act 9 of 1957.
It introduced in section 30 of the Amendment Act, 1956, a new sub section (2) conferring on the ,State Government authority to re constitute Tribunal established under the , where those Tribunals had come to an end and there were matters pending before them for adjudication.
Going back to the Tribunal which was constituted under the repealed section 7 of the Act it will be remembered that a Notification had been issued on April 19, 1957, under section 30 of the Amendment Act, 1956, keeping it alive until the pending matters were dis posed of or until October 31, 1957, whichever was earlier.
The expectation that the proceedings before that Tribunal would be completed by that date was however, not realised and therefore acting under section, 33B (1) of the Act, and section 30 of the Amendment Act 1956, as further amended by Punjab Act, 9 of 1957.
the Government of Punjab issued on October 31, 1957 a Notification transferring the matters pending before the old Tribunal constituted under section 7 to the new Tribunal constituted on April 19, 1957, under section 7A.
In accordance with this Notification, Reference No. 3 of 1955 was transferred to the new Tribunal and was renumbered as 30 of 1957.
The contentions urged by the appellant against this order of transfer are, firstly, that the Tribunal to which the transfer had been made was not, for the reasons already given, validly constituted and had no legal existence, and, 95 secondly, that the new provision introduced by the Punjab Act 9 of 1957 has no retrospective operation and that, in consequence, the proceedings which had been pending before the old Tribunal on March 10, 1957, could not be transferred to the new Tribunal under this section.
The present reference 30 of 1957 was pending till June 3, 1959, when Sbri A.N. Gujral retired.
The Punjab Government then issued a Notification appointing Sri Kesho Ram Passey, retired Judge of the Punjab High Court as the Presiding Officer of the Industrial Tribunal, Jullundur.
Before him, the present appellant filed an application on September 4, 1959, raising a number of preliminary objections to the hearing of the reference.
By its Order dated September 11, 1959, the Tribunal overruled these objections and posted the. matter for hearing on the merits.
It is the correctness of this Order that is DOW challenged before us in this Appeal.
Though a number of objections were raised to the bearing of the rieference be,.fore the Tribunal, the contentions advanced before us for the appellant are the following : (1) Shri A. N. Gujral was riot qualified to be appointedto the Tribunal under section 7(3)(c) of the Act that, in consequence, the reference to him dated February 14, 1955, was incompetent; (2)that the Notification.
of the Punjab Government dated April 19, 1957 appointing Shri A. N. Gujral as a Member of the Industrial Tribunal, Juilundur, and the subsequent Notifications extending bis tenures of office are unauthorised and inoperative; (3)that the Notification of the Punjab Government dated Ootober 31, 1957, transferring the proccedings.
pending before the old Tribunal to the new Tribunal was inoperative, because (i) the Punjab Act 8 of 1957 is void being repugnant to article 14 of the, Constitution and the appointment of Shri A. N. Gujral as Member under that Act is also void; 96 and (ii) section 30(2) enacted by Punjab Act 9 of 1957 under which the transfer was made, did not authorise transfer of proceedings, which had been pending on or before March 10, 1957.
(1) Taking up first the, contention that Shri A. N. Gujral was not qualified to be appointed to the Tribunal on August 29, 1953, by reason of the fact that he was over sixty years of age, the question is one of interpretation of the language of section 7(3)(c) of the Act.
Section 7, in so far As it is material for the present purpose, is as follows: "7.
Industrial Tribunals. (1) The appropriate Government may constitute, one or more Industrial Tribunals for the, adjudication o f industrial disputes in accordance with the provisions of this Act.
(2)A Tribunal shall consist of such number of independent members as the appropriate Government may think fit to appoint,, and where the Tribunal consists of two or more members, one of them shall be appointed as the Chairman thereof.
(3)Where a Tribunal consists of one member only, that member, and where it consists of two or more members, the Chairman of the Tribunal, shall be a person who (a)is or has been a Judge of a High Court; or (b) is or has been a District Judge or (c) is qualified for appointment as a Judge of a High Court: Provided that no appointment under this subsection to a Tribunal shall be made of any person Dot qualified under clause (a) or (b) except with the approval of the High Court of 97 the State in which the Tribunal has, or is intended to have its usual seat." Shri A. N. Gujral was appointed under section 7(3)(c) being an Advocate.
The question is, whether he was then qualified for appointment as a Judge of a High Court under that clause.
The Constitutional provision hearing on this point is article 217, which in so far as it is material is as follows : "217.
(1) Every Judge of a High Court shall be appointed by the President by warrant under his hand and seal after consultation with the Chief Justice of India, the Governor of the State, and, in the case of appointment of a Judge other than the Chief Justice, the Chief Justice of the High Court, and shall hold office in the case of an additional or acting Judge, as provided in article 224, and in any other case until he attains the age of sixty years; Provided that. . . (2)A person shall not be qualified for appointment as a Judge of a High Court unless he is citizen of India and (a) has for at least ten years held an Judicialoffice in the territory of India, or (b) has for at least ten years been a advocate of a High Court or of two or more such Courts in succession.
Explanation. .
While article 217 (2) prescribes the qualifications for appointment as a Judge, article 217(1) lays down that the Judge shall hold office until he attains the age of sixty years.
The whole of the controversy before us is as to the inter relation between these two clauses.
The contention of Mr. Pathak, learned counsel for the appellant, is that though article 217 (1) refers, in terms, to the termination of the office of Judge, in substance, it lays down a 98 qualification for appointment, because the appointment of a person over sixty as a Judge would clearly be repugnant to article 217(1) even though he might satisfy all the requirements of article 217(2).
It is accordingly argued that it is an implied qualification for appointment as a Judge under article 217 that the person should not have attained the age of sixty at the time of the appointment.
We agree that there is implicit in article 217(1) a prohibition against appointment as a Judge of a person who has attained the age of sixty years.
But in our view, that is in the nature of a condition governing the appointment to the office not a qualification with reference to a person who is to be appointed thereto.
There is manifest on the terms and on the scheme of the article a clear distinction between requirements as to the age of a person who could be appointed as a Judge and his fitness based on experience and ability to fill the office.
article 217(1) deals with the former, and, in form, it has reference to the termination of the office and can therefore be properly read only as imposing, by implication a restriction on making the appointment.
In strong contrast to this is article 217(2) which expressly refers to the qualifications of the person to be appointed such as his having held a judicial post or having been an Advocate for a period of not less than ten years.
We think that on a true construction of the article the prescription as to age is a condition attached to the duration of the office and not a qualification for appointment to it.
Mr. Pathak also relied on articles 224 and 376 as lending support to his contention that age is to be regarded as an implied qualification under article 217.
article 224 relates to the appointment of additional and acting Judges and it is provided in els.
(1) and (2) that the person to be appointed as additional or acting Judge by the President should be a duly qualified person.
There is nothing about the age of the person to be appointed in these clauses.
99 That is provided in article 224(3) when enacts that no person appointed as an additional or acting Judge of a High Court shall hold office after attaining the age of sixty years.
" This article is also framed on the same lines as article 217 and does not carry the matter further.
Nor is there anything in article 376 which throws any further light on this point.
It has reference to persons who were Judges in the High Courts of the States specified in part of the First Schedule at the time when the Constitution came into force, and provides that they shall become Judges of the High Courts in those States under the Constitution, and then enacts a special provision that they "shall notwithstanding anything in clauses (1) and (2) of article 217 but subject to the proviso to clause (1) of, that article, continue to hold office until the expiration of such period as the President may by order determine.
" We see nothing in the terms of this article which lends any support to the contention that age is to be regarded as a qualification.
More to the point under consideration is article 165 (1) that the ",Governor of each State shall appoint a person who is qualified to be appointed as a Judge of a High Court to be Advocate General for the State.
" The question has been discussed whether on the terms of this article" a person who has attained the age of sixty could be appointed as an Advocate General.
If the age of a person is to be regarded as one of his qualifications, then he could not be.
The point arose for decision in G. D. Karkare vs T. L. Shevde (1), where a Judge who had retired at the age of sixty had been appointed as Advocate General.
The validity of the appointment was challenged on the ground that he was disqualified by reason of his age.
The learned Judges of the Nagpur High Court held that cl.
(1) of article 217 of the Constitution prescribed only the duration of the appointment of a Judge of the High Court and could not be construed (1) I. L.R. [1952] Nas.
409. 100 as prescribing a qualification for his appointment.
It is argued for the appellant that the appointment of an Advocate General under article 165 might stand on a different footing from that of a Judge under article 217.
because of the special provision in article 165(3) that the Advocate General is to hold office, at pleasure, whereas a Judge holds office during good behavior.
But this difference bears only on the power of the appropriate authority to terminate the appointment and not on the qualification of the person to be appointed to the office.
In our view, the interpretation put upon article 217 in G. D. Karkare 's case (1) is correct.
Though the true meaning of article 217 has figured largely in the argument before us, it is to be noted that we are primarily concerned in this appeal with the interpretation of section 7(3)(c) of the Act, and that must ultimately turn on its own context.
Section 7(3)(a) provides for the appoint ment of a High Court Judge, sitting or retired, as a Member of the Tribunal.
Age is clearly not a qualification under this sub clause, as the age for retirement for a Judge of the High Court is sixty.
Likewise, el.
(b) provides for the appointment of a District Judge, setting or retired, as a Member.
A retired District Judge who is aged over sixty will be eligible for appointment under this subclause.
Thus the age of a person does not enter into his qualifications under sub cls.
(a) and (b).
It would therefore be legitimate to construe sub el.
(c) as not importing any qualification on the ground of age.
But it is said that sub cls.
(a) and (b) form a distinct group having reference to judicial officers, whereas, cl.
(c) is confined to Advocates, who form a distinct category by themselves, and that in view of this difference, considerations as to age applicable to cl.
(a) and (b) need not be applicable to el.
There is undoubtedly a distinction (1) I. L. R.[1952] Nag. 409. 101 between cls.
(a) and (b) on the one hand and c1.
(c) on the other.
But the question is whether this has any reasonable relation to the difference which is sought to be made between the two classes with reference to the age of appointment.
If a retired Judge of the age of sixty can fittingly fill the office of a Member of the Tribunal under section 7, an Advocate of that age can likewise do so.
In our view, there is no ground for importing in section 7(3)(c) an implied qualification as to age, which is not applicable to el.
7(3)(a) and (b).
This question was considered by a Bench of the Punjab High Court in Prabhudayal vs State of Punjab (1).
There the validity of the appointment of Shri A. N. Gujral under the notification dated August 29, 1953, which is the very point now under debate, was challenged on the ground that as he was over sixty on that date, he was not qualified to be appointed under section 1 (3)(c).
The Court held approving of the decision in G. D. Karkare 's case (2), that the prescription as to age in article 217 (1) was not a qualification to the office of a Judge under article 217(2), and that a person who was more than sixty was qualified for appointment under section 7(3)(c).
Reliance is placed for the appellant on the terms of section 7C which was substituted by the Amendment Act 36 of 1956 in the place of section 7 as supporting the contention that age is a qualification for appointment under section 7(3) (c).
Section 7C is as follows : "No person shall be appointed to, or continue in, the office of the presiding officer of a Labour Court, Tribunal or National Tribunal, if (a) he is not an independent pet son or (1) A. 1.
R (2) 1.1 R.[1952] Nag.
409. 102 (b) he has attained the age of sixty five years ' " The marginal note to that section which was also relied on is as follows : " Disqualifications for the presiding officers of Labour Courts, Tribunals and National Tribunals.
" The argument of the appellant is that, in prescribing the age as a qualification under section 7C, the Legislature only made explicit what was implicit in a. 7(3)(c), and that therefore the qualification on the basis of age should also be imported in section 7(3)(c).
This inference does not, in our opinion, follow.
The insertion of age qualification in section 7C is more consistent with an intention on the part of the Legislature to add, in the light of the working of the repealed section 7, a new provision prescribing the age of retirement for Members.
We agree with the decision of the Punjab High Court in Prabhudayals case (1) and hold that section 7 (3) (c) does not import any qualification based on the age of the person to be appointed, and that the appointment of Shri A. N. Gujral on August 29, 1953, was valid under a. 7(3)(c).
(2)The next contention advanced for the appellant is that the Notification dated April 19, 1957, appointing Shri A. N. Gujral as a Member of the Tribunal issued under section 30 of the Amendment Act 36 of 1956 was not authorised by the terms of that section and that therefore there was no validly constituted Tribunal from that date.
Section 30 is as follows : "Savings as to proceedings pending before Tribunals : If immediately before the commencement of this Act there is pending any proceeding in relation to an Industrial dispute before a Tribunal constituted (1) A. I. R. [1959] Punj 460.
103 under the (14 of 1947), as in force before such commencement, the dispute may be adjudicated and the proceeding disposed of by that Tribunal after such commencement, as if this Act had not been passed.
" The contention urged before us is that section 7 under ,Which Shri A. N. Gujral had been constituted Tribunal was repealed on March 10, 1957, the notification dated April 19, 1957, appointing him as a Member of the Tribunal is void.
There is no substance in this contention.
Section 30 expressly provides for the life of the Tribunal being extended for the period specified therein, and that necessarily implies a power to continue Shri A. N. Gujral as the Tribunal, and we should add that in view of our decision on point No. 3 this objection is practically of no importance.
(3)Lastly, it is contended that the transfer of the proceedings pending before the old Tribunal to the new Tribunal under the Notification dated October 31, 1957, was invalid and inoperative.
Two grounds were urged in support of this contention.
One is that Shri A.N. Gujral attained the age of sixty five on June 4, 1957, and his term of office would have then expired under s.7C.
Then the Punjab Legislature enacted Act 8 of 1957 raising the age of retirement under s.70(b) from sixty five to sixty seven.
That was with a, view to continue Shri A.N. Gujral in office.
And this legislation came into force only on June 3, 1957.
This Act, it is said offends article 14 as its object was to benefit a particular individual, Shri A.N. Gujral, and reference was made to a decision of this Court in Ameeroonissa vs Mehboob (1) as supporting this contention.
There is no force in this contention.
There the legislation related to the estate of one (1) ; 104 Nawab Waliuddoula, and it provided that the claims of Mahboob Begum and Kadiran Begum, who claimed as heirs stood dismissed thereby and could not be called in question in any court of law.
And this Court held that it was repugnant to article 14, as it singled out individuals and denied them the right which other citizens have of resort to a court of law.
But the impugned Act, 8 of 1957 is of general application, the age being raised to sixty seven with reference to all persons holding the office under that section.
The occasion which inspired the enactment of the statute might be the impending retirement of Shri A. N. Gujral.
But that is not a ground for holding that it is discriminatory and contravenes article 14, when it is, on its terms, of general application.
The second ground of attack against the order of transfer is that it is not competent under s.30(2) of the Amendment Act 36 of 1956 as further amended by the Punjab Act 9 of 1957.
Section 30(2) is as follows : "If immediately before the commencement of this Act there was pending any proceeding in relation to an industrial dispute before a Tribunal constituted under the , as in force before such commencement and such proceeding could riot be disposed of by that Tribunal due to the Tribunal having come to an end on the expiry of the period for which it was constituted, the State Government may reconstitute that Tribunal for adjudicating that dispute and disposing of that proceeding after such commencement as if this Act had not bee n passed, and the proceeding may be continued by that Tribunal from the, stage at which it was left.
" 105 The contention urged before us is that this provision has no retrospective operation and that in consequence the proceedings which had been pending before the old Tribunal on March 10, 1957, could not be transferred to the new Tribunal under this section.
This contention is clearly untenable, because the whole object of s.30(2) is to provide for the hearing of disputes which were pending before the old Tribunal, and its operation is entirely retrospective.
This contention must there.
fore be rejected.
In the result, the repeal fails and is dismissed with costs.
Appeal dismissed.
| On February 14, 1953, the Government of Punjab referred certain disputes between the appellant company and its workmen to the Industrial Tribunal which had been consti tuted on August 29, 1953, by a notification issued under section 7 of the industrial Disputes Act, 1947, by which G, an Advo cate, was appointed as the Industrial Tribunal for Punjab.
When the reference was pending the Act was amended.
The Amendment Act inter alia repealed section 7 of the principal Act and replaced it by sections 7A, 7B and 7C, and by section 30 provided for a saving clause in respect of the proceedings pending before the Tribunal constituted under the principal Act.
On April 19, 1957, the Punjab Government issued a notification under section 7 of the Act and section 30 of the Amendment Act extending the life of the Tribunal constituted under the repealed section 7 and also extending the term of G as the member.
On the same date another Notification was issued under section 7A of the Act constituting a new Tribunal and appointing G as the Presiding Officer up to June 3, 1957.
Under section 70 (b) the age of retirement for members was fixed at sixty five and under that provision G would have to retire by June 3, 1957.
The Punjab Government intervened and passed the Industrial Disputes (Punjab Amendment) Act, 1957, raising the age of retirement of members to sixty seven years.
After G had retired on June 3, 1959, the Punjab Government issued a notification appointing another person as the Presiding Officer of the Industrial Tribunal.
The appellant challenged the legality of the reference on the grounds, inter alia, (1) that G was not qualified to be appointed to the Tribunal under section 7 (3) (c) of the Act, as he was over sixty years and, therefore, the reference to him dated 90 February 14, 1955, was incompetent, and (2) that the Indus trial Disputes (Punjab Amendment) Act, 1937, was passed with a view to benefit a single individual, G, and, therefore, was void as offending article 14 of the Constitution of India.
Held, (1) section 7(3)(c) of the , did not import any qualification based on the age of the person to be appointed, and that the appointment of G on August 29, 1953, was valid under that section.
On the true Construction of article 217 of the Constitution of India, the prescription of age therein is a condition attached to the duration of the office and not a "qualifica tion" for appointment to it.
G.D. Karkare vs T.L. Shevde, I.L.R. and Prabhudayal vs State of Punjab, A. I. R. 1959 Punj.
460, approved.
(2) the Industrial Disputes (Punjab Amendment) Act,1957,not contravene article 14 of the Constitution, because thoughthe occasion which inspired the enactment of the statutemight be to benefit an individual, it was of general application and could not therefore be held to be discriminatory.
Ameerunissa vs Mehboob; , , distinguished.
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Subsets and Splits