judgement:
Appeal Nos.
2621 22 of 1977.
From the Judgment and Order dated 9.11.1976 of the Calcutta High Court in Civil Rule Nos.
1817 and 1818 of 1972.
P.S. Poti and Rathin Das for the Appellant Dr. Shankar Ghosh for the Respondent.
The Judgment of the Court was delivered by SAWANT, J.
On 18th December, 1970, the Assistant Settlement Officer, Diamond Harbour, initiated proceedings under Section 44 [2a] of the West Bengal Estate Acquisition Act, 1953 [the 'Act '] for revising the finally published record of rights in respect of Khatians Nos. 10, 11 of Mouza Haradhanpore and Khatians Nos 6,7,13,15 and 24 of Mouza Kailpara within his jurisdiction.
According to him, incorrect entries were made in favour of the respondent in the record of rights in respect of the said Khatians based on the purchases made by the respondent in auction sales of the Khatians in execution of the decrees for arrears of rent.
Two different cases Case No. 156/70 and No. 22/70 were respectively initiated in regard to the two properties.
In both these cases, in the record of rights, the name of the respondent auction purchaser was entered as raiyat on the basis of the said sales.
These sales were effected on 6th November, 1954 and 3rd December, 1954 respectively.
The sales were admittedly of the rights of the raiyats, and hence the Assistant Settlement Officer took proceedings for revision of the record of rights taking the view that such rent execution sales effected after 1st June, 1954 would be invalid under Section 5B of the Act.
By his orders dated 8th January, 1971 and 27th January, 1971 respectively passed in the two cases, he directed the correction of the record of rights by substituting the names of the original raiyats for the auction purchaser.
The auction purchaser preferred appeals before the Tribunal appointed for the purpose under Section 44[3] of the Act being E.A. Nos. 86 and 87 of 1971.
The Tribunal allowed the appeals and set aside the orders of the Assistant Settlement Officer holding that Section 5B of the Act had no application to raiyati interest.
Against the decision of the appellate authority, the appellant State of West Bengal approached the High Court by way of a writ petition under Article 227 of the Constitution.
The Division Bench before which the matters came, referred them to a Special Bench since questions of public importance relating to the interpretation of the provisions of Section 5B of the Act were involved.
The Special Bench 348 held, that (i) the effective date in section 5B in respect of sales of raiyati and underraiyati holdings under the relevant statutes mentioned therein is 1st June, 1954 as provided therein; [ii] Section 5B does not operate as a bar to the execution of decree for arrears of rent as money decree against raiyati or under raiyati interests and Section 168A [1] of the Bengal Tenancy Act is impliedly repealed by the vesting of the interests of the intermediary which include raiyats and under raiyats] in the State.
In this view of the provisions of the Act, the High Court held that the initiation of the proceedings by the Assistant Settlement Officer Under Section 44 [2a] was without jurisdiction, and confirmed the order of the appellate authority.
It is this order which is questioned before us.
In order to appreciate the answer to the question raised before us, it is necessary to have a brief glance at the relevant provisions of the Act.
As its preamble shows, the Act has been placed on the statute book to provide for the acquisition of estates, of the rights of intermediaries therein and also certain rights of raiyats and under raiyats and of the rights of certain other persons in the lands comprised in the estates.
Section 2 (i) of the Act defines "intermidiary" as follows: "intermediary" means a proprietor, tenure holder, under tenureholder or any other intermediary above a raiyat or a non agricultural tenant and includes a service tenure holder and, in relation to mines and minerals, includes a lessee and a sub lessee".
By virtue of Section 2 (p), the "tenure holder" and "raiyat" as defined under the Bengal Tenancy Act, 1885 [hereinafter referred to as to the Tenancy Act '] are to be read in the present Act.
They are defined under Section 5 (1) & (2) of the Tenancy Act as follows: "5.
Meaning of Tenure holder and Raiyat.
(1) "Tenure holder" means primarily a person who has acquired from a proprietor or from another tenure holder a right to hold land for the purpose of collecting rents or bringing it under cultivation by establishing tenants on it, and includes also the successors in interest of persons who have acquired such a right.
(2) "Raiyat" means primarily a person who has acquired a right to hold land for the purpose cultivating it by himself, or by members of his family or by servants or labourers or with the aid of partners, 349 and includes also the successors in interest of persons who have acquired such a right.
Explanation Coming back to the present Act, Chapter II of the Act deals with the ,.acquisition of estates and of the rights of intermediaries therein" and consists of Sections 4 to 13.
For our purpose, the relevant sections are Sections 4,5,5A and 5B. Sub sections (1) and (2) of Section 4 read as follows: "4.
Notification vesting estates and rights of intermediaries.
(1) The State Government may from time to time by notification declare that with effect from the date mentioned in the notification, all estates and rights of every intermediary in each such estate situated in any district or part of a district specified in the notification, shall vest in the State free from all incumbrances.
(2) The date mentioned in every such Notification shall be the commencement of an agricultural year; and the notifications shall be issued so as to ensure that the whole area to which this Act extends, vests in the State on or before the 1st day of Baisakh of the Bengali year 1362.
" Section 5 refers to the effect of notification published under Section 4 and states that on or from the date of vesting, among other things, the estates and the rights of intermediaries in the estates to which the declaration applies, shall vest in the State free from all incumbrances.
It further states that in particular and without prejudice to the generality of the provisions, everyone of the following rights which may be owned by an intermediary shall vest in the State.
Among the rights so mentioned are the rights in sub soil, in mines and minerals, in hats, bazaars, ferries etc.
Clause (c) of Sub section (1) of the said section then states as follows: "5.
Effect of notification.
(1) Upon the due publication of a notification under section 4, on and from the date of vesting [a] [b] 350 (c) Subject to the provisions of sub section (3) of section 6, every non agricultural tenant holding any land under an intermediary, and until the provisions of Chapter VI are given effect to, every raiyat holding any land under an intermediary, shall hold the same directly under the State, as if the State had been the intermediary, and on the same terms and conditions as immediately before the date of vesting: x x x x x x XI ' Section 5A places restrictions on certain transfers.
Sub sections (1) and (2) thereof read as follows: "5A. Restrictions on certain transfers.
(1) The State Government may after the date of vesting enquire into any case of transfer of any land by an intermediary made between the 5th day of May, 1953 and the date of vesting, if in its opinion there are primafacie reasons for believing that such transfer was not bonafide.
(2) If after such enquiry the State Government finds that such transfer was not bonafide, it shall make an order to that effect and thereupon the transfer shall stand cancelled as from the date on which it was made or purported to have been made;" Then comes Section 5B which without its proviso with which we are not concerned, reads as follows: "5B. Estate or tenure not liable to be sold under Act XI of 1859, Cooch Behar Act V of 1897, Bengal Regulation VIII of 1819 and Act VIII of 1885.
On and from the 1st day of June, 1954, no estate, tenure or under tenure shall be liable to be sold under the Bengal Land Revenue Sales Act, 1859 or the Cooch Behar Revenue Sales Act, 1897 or the Bengal Patni Taluks Regulation, 1819 or the Bengal Tenancy Act, 1885, as the case may be, and any sale which took place on or after that day under any of those acts or that Regulation shall be deemed to have been void and of no effect:" We are not concerned in the present case with Chapter IIl which deals with "assessment and payment of compensation" for the estates of the intermediaries acquired; Chapter IV which relates to "mines and minerals" and which has overriding effect over other provisions of the Act and Chapter V which relates to 351 the "preparation of the record of rights".
Chapter VI deals with the "acquisition of rights of raiyats and under raiyats".
As it stood at the relevant time, it consisted of Sections 49 and 52, which were newly inserted in place of the old Sections 49 and 52 retrospectively by the Amending Act 35 of 1955.
The same amending Act deleted Sections 50 and 5 1.
Section 49 reads as follows: "49.
When this Chapter is to come into force.
The provisions of this Chapter shall come into force on such date and in such district or part of a district as the State Government may, by notification in the Official Gazette, appoint and for this purpose different dates may be appointed for different districts or parts of districts".
Section 52 without its proviso, is as follows: "52.
Application of Chapters 11, III, V and VII to raiyats and underraiyats.
On the issue of a notification under section 49 the provision of Chapters 11, III, V and VII shall, with such modifications as may be necessary, apply mutatis mutandis to raiyats and under raiyats as if such raiyats and under raiyats were intermediaries and the land held by them were estates and a person holding under a raiyat or an under raiyat were a raiyat foe the purposes of clauses (c) and (d) of section 5:" It is on record that by notification No. 6804 L. Ref dated 9th April, 1956 published in Calcutta Gazette Extraordinary of the same day, Part , Chapter VI came into force in all the districts of West Bengal with effect from the 10th April, 1956.
It is clear from the aforesaid provisions of the Act that when notifications are issued under Section 4, all estates and rights of every intermediary in each such estate, vest in the State, free from all incumbrances.
The notifications under that Section have to be issued so as to ensure that the whole area to which the Act extends vests in the State on or before 15th April, 1955 which corresponds to the 1st day of the Baisakh to the Bengali year 1362 mentioned therein.
When Chapter VI of the Act comes into force by virtue of the notification issued under Section 49, Section 52 which falls under that Chapter makes the provisions of Chapter II, among others, applicable also to the raiyats and the under raiyats as if such raiyat and under raiyat were intermediaries and the lands held by them were estates.
In other words, Sections 4, 5, 5A and 5B, among others, of Chapter II become applicable to the raiyati and the under raiyati interests on the issuance of such 352 notification.
In the present case, as stated above, the notification under Section 49 was brought into force w.e.f.
10th April, 1956.
It was not given retrospective effect from 15th April, 1955.
The effect of this notification was that by virtue of Section 4 the intermediary interests stood vested in the State at the latest from 15th April, 1955 while the raiyati and the under raiyati interests stood vested in the State with effect from 10th April, 1956.
The restriction on transfer of the said interests, however, came into effect retrospectively on or from 1st June, 1954 by virtue of Section 5B, since that date is mentioned in the Section itself.
Hence there cannot be any dispute that no estate, tenure or under tenure including raiyati and under raiyati interests could be sold under the statutes mentioned in section 5B including the Tenancy Act with which we are concerned, on and after 1st June, J954 and a sale after that date under any of those statutes would be void and have no effect under that Section.
Admittedly, the present auction sales were held in execution of the decrees for the arrears of rent under the Tenancy Act and took place on 6th November and 3rd December, 1954 respectively.
What came to be sold under the said sales were the raiyati interests of the judgment debtors, and the respondents were entered in the record of rights as raiyats in place of the original raiyats on the basis of the said sales.
The High Court has rightly held that the effective date in Section 5B for prohibition of the sales of raiyati and under raiyati holdings under the statutes mentioned therein, is 1st January, 1954 as is provided therein.
This conclusion of the High Court is not challenged before us.
However, the High Court has further held that Section 5B does not operate as a bar against the sale of raiyati or underraiyati interests if the execution of the rent decree is treated as an execution of money decree under the Code of Civil Procedure [hereinafter referred to as the 'Code '.
According to the High Court, the sale made pursuant to the execution of the money decree under the Code even though for rent, and of the raiyati or underraiyati interest holder, would not be a sale under the statutes mentioned in Section 5B including the Tenancy Act.
It is this conclusion of the High Court which is under challenge before us.
In order to arrive at the said conclusion, the High Court has reasoned that Section 5B only declares void, sales of tenures of holdings under the statutes mentioned therein but does not prohibit the sales under the Code.
According to the High Court, the Section has no concern with other sales since the tenure or holding was transferable and inheritable under the provisions of the Tenancy Act and other connected regulations till the estates vested in the State w.e.f. 15th April, 1955 by notification issued under Section 49 of the Act.
353 6.
We are afraid that the interpretation placed by the High Court ignores some obvious provisions of law.
In the first place, it, is not correct to say that the sale or transfer of the holding or tenure, was permissible till the estates vested in the State.
Section 5A of the Act applies to the case of transfer of any land by an intermediary, made between the 5th May, 1953 and the date of vesting.
Under that section, the legislature has given power to the.
State Government to make an inquiry into the question whether such a transfer was bonafide or not, and if the State Government came to the conclusion that the transfer was not bonafide, consequences stated in the said section followed.
It cannot be suggested that the voluntary transfers of the tenure or under tenures or raiyati or under raiyati interests in the estates, the sale of which is prohibited under the relevant statutes mentioned in Section 5B, is not covered by Section 5A of the Act.
Secondly, the Tenancy Act is a piece of legislation which amends and consolidates certain enactments relating to the law of landlord and tenant.
Under section 3 [6] of that Act "landlord" is defined as "a person immediately under whom a tenant holds, and includes the Government" while under Section 3 [17] of that Act "tenant" is defined as "a person who holds land under another person, and is, or but for a special contract would be, liable to pay rent for that land to that person".
The classes of tenants mentioned under Section 4 of that Act include [i] tenure holders, including under tenure holders, [ii] raiyats, and [iii] under raiyats.
The said Act further exclusively governs the relations between the landlord and the tenant as is evident from the provisions of that Act.
It 'is not necessary to refer to all the said provisions.
Suffice it to say that the matters relating to the fixation, payment and enhancement of rent, the grounds of ejectment of the tenant and the procedure for their ejectment, transfer and surrender of tenancies, improvements on land, record of rights, the occupancy and non occupancy rights, the judicial procedure to be followed in suits between landlord and tenant, the sale of interests in land for arrears under a decree, the restrictions on the exclusion of the provisions of the Act by agreement between the landlord and the tenant, the limitation for suits to be filed under the Act, the penalties for illegal interference with the produce of the land, damages, for denial of landlord 's title, and even matters relating to the agents and representatives of landlords are all subjects regulated by the said Act.
We are concerned in the present case with regard to the suit for the arrears of rent and with the execution of the decree obtained in such suit.
Chapter XIII which contains Sections 143 to 158 relates to the "judicial procedure" to be followed in suits between the landlord and the tenant.
Section 143 gives power to the High Court to make rules from time to time with the approval of the State Government consistent with the said act declaring that any portion of the Code shall not apply to suits between landlord and tenant as such or to any specified classes of such suits, or shall apply to them subject to modifications specified in the rules made 354 by the High Court.
Subject to any rules so made and subject also to the other provisions of the said Act, the Code applies to all suits between the landlord and the tenant.
Section 144 confers jurisdiction on the suits under the Act on the civil courts which would have jurisdiction to entertain a suit for the possession of the tenure or holding in connection with which the suit is brought.
The section also makes clear that no suit between landlord and tenant under the Act shall be instituted in any court other than such court.
Section 145 specifies the persons who can be recognised agents of the landlord, and the manner in which they are to be authorised by the landlord to be his agents, and notwithstanding anything contained in the said Act, every such agent is empowered to verify the pleadings on behalf of the landlord without the permission of the Court.
Section 146 ordains that the particulars of the suits between the landlord and the tenant should be entered in a special register to be kept by each civil court in such form as the State Government may prescribe in this behalf instead of in the register of civil suits prescribed by the court.
Section 146A makes a special provision for joint and several liability for rent of co sharer tenants notwithstanding anything contained in the Contract Act.
Section 146B likewise lays down a special procedure in rent suits against co sharer tenants notwithstanding anything contained in the Limitation Act.
Section 147 prevents a landlord from instituting successive rent suits against a raiyat except under circumstances mentioned therein.
Section 147A prevents the Court from wholly or partly adjusting by agreement or compromise, any suit between landlord and tenant unless the agreement can be enforced under the said Act, viz., the Tenancy Act.
This provision again is made notwithstanding anything contained in this behalf under the Code.
Section 148 then lays down a special procedure to be followed in rent suits.
It states in clause [a] thereof that Sections 68 to 72 of the Civil Procedure Code and rules 1 to 13 of Order XI, rule 83 of Order XXI and Rule 2 of Order XLVIII in Schedule 1 of the said Code and Schedule III thereof shall not apply to such suit.
Clause [b] thereof states that the plaint in such suit shall contain in addition to the particulars specified in the code, certain additional particulars which are mentioned therein.
Clauses [c] and [d] require further particulars in such plaints in certain situations mentioned therein.
Clause [e] thereof states that the summons shall be for the final disposal of the suit unless the court is of opinion that it should be for the settlement of issues only.
Clause [f] lays down a special mode of service of summons if the High Court by rule so directs and also permits the Court to presume service of summons in certain circumstances.
Clauses [g] and [h] similarly relate to the special procedure of summons in such suits.
Clause [i] requires leave of the Court to file a written statement.
Clause [i] makes the rules for recording the evidence of witnesses contained in rule 13 of Order XVIII in Schedule 1 to the Civil Procedure Code applicable in the trial of such suits, whether 355 an appeal is allowed or not.
Sub clause (j) of Clause [k] permits a Court to issue a special summons under certain circumstances notwithstanding anything contained in the Code and Sub clause (ia) thereof, and also provides for the procedure for effecting the service of the special summons and Sub clause (ii) provides for the consequences for the non appearance of the defendants in answer to such special summon.
Clause [m] permits the Court to order execution of oral application of the decree holder unless the decree is for ejectment for arrears.
Clause [n] requires the Court not to insist on a fresh vakalatnama or to file a copy of the decree for the purpose of executing the decree notwithstanding any thing contained in the Code.
Likewise, notwithstanding anything contained in the Code.
Clause [o] prohibits an application for the execution of a decree for arrears by an assignee of the decree unless the landlord 's interest in the land is vested in such assignee.
Section 148A permits a co sharer landlord to sue for rent in respect of his share in the tenure.
Section 149 requires the defendant to deposit the amount in Court once he admits that money is due from him even though he pleads that it is not due to the plaintiff but to a third person.
Section 150 likewise requires the defendant to deposit the admitted amount due to the landlord notwithstanding the defendant 's plea that the plaintiff s claim is in excess of the amount due.
Section 153 then provides for appeals in rent suits and while doing so, lays down conditions under which the appeal will lie and will not lie.
Section 153A lays down special conditions under which an application to set aside decree, or for review of the judgment won Id lie.
Section 154 provides for the dates from which the decree for enhancement of rent would take effect.
Then comes Section 155 which provides for relief against forfeiture under certain circumstances and Section 156 lays down the rights of ejected raiyats and under raiyats in respect of crops and land prepared for sowing.
Section 157 lays down special power of the Court to fix fair rent as alternative to ejectment.
Section 158 gives power to the Court to determine incidence of tenancy on the application either of the landlord or tenant.
Chapter XIV of the Act provides for "Sale for arrears under Decree".
We are directly concerned with the said Chapter.
Section 159 thereof details "general powers of purchaser as to avoidance of incumbrances".
Section 160 mentions the "protected in terests" within the meaning of the said Chapter.
Section 161 gives a special meaning of "incumbrance" and "registered and notified incumbrance" for the purpose of the said Chapter.
Section 162 gives the particulars of the statement which a decree holder has to produce when he makes an application for attachment and sale of the tenure or 356 holding in execution of the decree.
Section 163 makes special provision for a combined order of attachment and proclamation of sale to be issued notwithstanding anything contained in the code on the subject.
Section 164 provides for the sale of tenure or holding subject to "registered and notified incumbrance" and the effect thereof.
Section 165 is another special provision which provides for sale of tenure or holding with power to avoid all incumbrances and states the effect thereof.
Likewise, Section 166 makes provision for sale of occupancy holdings with power to avoid all incumbrances and for the effect thereof.
Section 167 gives procedure for annulling incumbrances under Sections 164, 165 or 166.
Section 168A with which we are directly concerned in the present case then states as follows: "168A. Attachment and sale of tenure or holding for arrears of rent due thereon, and liability of purchasers thereof.
[1] Notwithstanding anything contained elsewhere in this Act, or in any other law, or in any contract [a] decree for arrears of rent due in respect of a tenure or holding, whether having the effect of a rent decree or money decree,or a certificate for such arrears signed under the Bengal Public Demands Recovery Act, 1913, shall not be executed by the attachment and sale of any movable or immovable property other than the entire tenure or holding to which the decree or certificate relates: Provided that the provisions of this clause shall not apply if, in any manner other than by surrender of the tenure or holding, the term of the tenancy expires before an application is made for the execution of such a decree or certificate; [b] The purchaser at a sale referred to in clause (a) shall be liable to pay to the decree holder or certificate holder the deficiency, if any, between the purchase price and the amount due under the decree or certificate together with the costs incurred in bringing the tenure or holding to sale and any rent which may have become payable to the decree holder between the date of the institution of the suit and the date of the confirmation of the sale.
[2] In any proceeding pending on the date of the commencement of the Bengal Tenancy (Amendment) Act, 1940, in execution of a decree or certificate to which the provisions of sub section (1) apply, if there has been attached any immovable property of the 357 judgment debtor other than the entire tenure or holding to which the decree or certificate relates, and if the property so attached has not been sold, the Court or Certificate officer as the case may be shall, on the application of the judgment debtor, direct that, on payment by the judgment debtor, of the costs of the attachment, the property so attached shall be released.
[3] A sale referred to in clause (a) of sub section (1) shall not be confirmed until the purchaser has deposited with the Court or Certificate officer, as the case may be, the sum referred to in clause (b) of that sub section.
" We will revert to this section soon.
Section 169 provides for special rules for disposal of the sale proceeds instead of the rules contained in the Code.
Similarly, Section 170 provides for circumstances under which tenancy of holding is to be released from attachment notwithstanding the provisions of the Code in that behalf.
Section 173 enables a decree holder to bid for the purchase of the tenure or holding in an auction sale without the permission of the Court which is against the provisions of the Code.
Section 174 provides for application to set aside the sale and makes the relevant provisions of the Code inapplicable in certain circumstances.
Section 174A provides for the circumstances under which sale shall become absolute or shall be set aside and purchase money will be returned.
It is also necessary to refer to Section 178 in Chapter XV of the Act which expressly provides for restrictions on the exclusion of the Act by agreement between the parties.
Sub section [c], in particular of that section, states that nothing in any contract between a landlord and a tenant made before or after the passing of the said Act shall entitle a landlord to eject a tenant otherwise than in accordance with the provisions of the said Act.
Section 184 provides for special limitation in suits, appeals and applications filed under that Act and Section 185 makes certain provisions of the Limitation Act inapplicable to such suits.
Section 186 provides for penalties for illegal interference with produce.
Section 186A provides for damages for denial of landlord 's title.
Section 187 gives landlord power to act through agents.
These are all the provisions which are necessary for us to notice.
It will be apparent from the said provisions that the Act is a self contained Code governing the relations between the landlord and the tenant, for resolution of their disputes, for the suits to be filed by them, for the procedure to be followed in such suits and the conditions on which decrees may be passed in such suits, for the execution and 358 satisfaction of the said decrees.
The Act incorporates certain provisions of the Code in toto while others with modification.
At the same time, it makes still other provisions inapplicable to the proceedings in the suit filed under it.
The Act by implication prevents any suit between landlord and tenant to be filed otherwise than under its provisions.
Thus all proceedings in the suit filed under the Act from its inception to the satisfaction of the decree are to be governed by its provisions and the provisions of the Code are applicable to such proceedings only to the extent and subject to the conditions stated therein.
The Code as such is not applicable to the proceedings or to any part of it and hence no part of the proceedings can be prosecuted under the Code.
It is thus clear that even if simple money decree is obtained for the arrears of rent, no interest of the tenant can be brought to sale in execution of such decree except under the provisions of the Act.
In other words, no such interest can be sold under the Code an independently of the Act.
Secondly, if any doubt in that behalf was left, it is removed by the provisions of Section 168A.
The said section which is reproduced above begins with the non obstante clause which excludes all other provisions of the Tenancy Act itself as well as of any other law and the provisions of any contract as well.
Clause [a] of that section states that a decree for arrears of rent whether having the effect of a rent decree or a money decree or even a certificate for such arrears under the Bengal Public Demands Recovery Act, 1930 shall not be executed by the attachment and sale of any movable or immovable property other than the entire tenure or holding to which the decree or certificate relates.
That provision will not apply only if the term of the tenure has expired before an application is made for the execution of such decree or certificate.
What is further, when the entire tenure or holding is purchased in execution of a decree for arrears of rent in respect thereof, Clause [b] of sub section [1] of that section provides that the purchaser shall pay to the decree holder or certificate holder, as the case may be, the deficiency, if any, between the purchase price and the amount due under the decree or the certificate, together with the cost incurred for the auction sale and also the rent which may have become due between the date of the institution of the suit and the date of the confirmation of the sale.
This provision is inconsistent with the provisions of the Code.
The High Court has held that the said Section 168A [1] stands impliedly repealed by the vesting in the State of the interests of the intermediary which include raiyati and under raiyati interests and attract the proviso thereunder leaving the decree holder free to execute his decree as money decree in view of Section 5B of the Act, against any other property of the judgment debtor, tenureholder or tenant.
There is no doubt that after the intermediary interests vest in the State, they cannot be brought to sale and the remedy of the decree holder is to proceed against other property of the judgment debtor, if any.
In that event, Section 168A would not come in the picture.
359 However, the High Court has gone further and observed as follows: "In Bithika Maity 's case, it was correctly decided that the effective date in section 5B in respect of raiyati and under raiyati holdings is also the first day of June 1954.
The decision however failed to take notice that the impugned sale therein held on September 10, 1954 could be treated a,,; a sale under the Code of Civil Procedure as a sale in execution of a money decree.
This aspect of the case was not taken in consideration possibly because the case was heard exparte.
We are accordingly unable to approve the decision that all sales between the first day of June 1954 to the vesting of raiyati interest are to be deemed as being under the Statutes mentioned therein and hence to be declared void as was summarily held by it.
On the contrary, such sales though deemed as invalid and of no effect under the aforesaid acts, are to be treated and will have the effect of sales under the Code of Civil Procedure in execution of money decrees, if otherwise valid.
Accordingly accepting Mr. Mitra 's contention, we hold that the name of the opposite party being auction purchaser of the right, title and interest of the judgment debtor was validly recorded as raiyat in respect of the disputed holdings in the finally published record of rights in place and stead of defaulting judgment debtors who held the sake [sic] holdings.
" It is difficult to appreciate these observations which are self contradictory.
There is a conflict of view on the question as to when the raiyati and the underraiyati interests vested in the State, viz., whether on 15th April, 1955 when Section 4 became applicable to them by virtue of the retrospective operation of Sections 49 and 52 or on 10th April 1956 when the notification under Section 49 was issued.
It is not necessary for us to go into that question on the facts of the present case nor was the question debated before us.
Hence we would refrain from expressing any opinion on the point there is, however, no dispute before us that the sales even of raiyati and under raiyati interests effected after 1st June, 1954 were invalid under Section 5B of the Act.
Hence, the sales of the raiyati interest in the present case effected on 6th November, 1954 and 3rd December, 1954 were obviously invalid.
After 15th April, 1955 or 10th April, 1956, as the case may be, (according to the conflicting views of the High Court), when the raiyati and under raiyati interests came to be vested in the State, no sale could have been held of those interests, and the decree holder would have been required to proceed against the other properties of the judgment debtor.
However, admittedly in the present case it is the raiyati interests of the judgment debtor in the land in question which were sold.
Hence, the sales were void.
The High Court has reasoned that the sales can be treated as 360 being pursuant to a money decree and, therefore, under the Code and independently of the Tenancy Act.
The High Court unfortunately missed the vital fact that whether, it is a money decree or a rent decree, the entire raiyati interests of the judgement debtor in the land in question had to be sold under the said Section 168A, but could not be sold in view of the bar imposed by Section 5B of the Act.
The bar cannot be overcome by treating the sale under the Code to circumvent the provisions of the Tenancy Act and in particular of Section 168A of that Act.
We have already pointed out that the decree pursuant to the suit under the Tenancy Act cannot be executed except under the provisions of that Act.
There cannot, therefore, be a sale of the property in question pursuant to such decree under the provisions of the Code.
What is further, the intention of the legislature in enacting Section 5B was to prevent sales of the intermediary interests after 1.6.1954.
In view of the provisions of the Tenancy Act, the said interests could be sold only under and in accordance with the provisions of that Act.
The sale of such interests in the land pursuant to a decree for arrears of rent in respect of that land could not therefore be made under the Code.
Admittedly in the present case, the raiyati interests were sold after 1.6.1954 in execution of the decree for arrears of rent in respect of the land in question.
Hence the proceedings initiated by the Assistant Settlement Officer to revise the entries in the record of rights made in favour of the auction purchaser and the orders passed by him on January 8 and 27, 1971 recording the name of the former raiyats as raiyats with possession of the lands and deleting the names of the auction purchaser, were valid.
We, therefore, set aside the impugned decision of the High Court and restore that of the Assistant Settlement Officer.
The appeals are allowed accordingly.
In the circumstances of the case, there will be no order as to costs.
RP Appeals allowed.

dataset_name: IN-Abs

summary:
The name of the respondent auction purchaser was entered as raiyat in respect of certain lands on the basis of auction sales dated 6.11.1954 and 3 12 1954 in execution of the decree for arrears of rent in respect thereof.
In 1970 the Assistant Settlement Officer initiated proceedings under section 44(2a) of the West Bengal Estate Acquisition Act, 1953 for revision of the record of rights in respect of the lands, taking the view that the rent execution sales being effected after 1.6.1954 were invalid under section 5B of the Act.
Accordingly, he ordered correction of the record of rights by substituting the names of the original raiyats for the auction purchaser.
The respondent filed appeals which were allowed by the appellate authority holding that section 5B of the Act had no application to raiyati interests.
The State filed writ petition under Article 227 of the Constitution before the 344 High Court.
The Special Bench of the High Court, confirming the decision of the appellate authority, held that the effective date in section 5B of the Act in respect of sale of raiyati and under raiyati holdings under the relevant statutes mentioned therein was 1.6.1954; that section 5B did not operate as a bar to execution of decree for arrears of rent as a money decree against raiyati or under raiyati interests, and section 168A (1) of the Bengal Tenancy Act, 1885 was impliedly repealed by the vesting of the interests of the intermediary including raiyats and under raiyats in the State; and that the initiation of the proceedings unders.
44(2a)of the Act was without jurisdiction.
The State filled the appeals by special leave.
The State challenged the judgment of the High Court on the ground that the High Court was not right in holding thats.
5B of the Act would not operate as a bar against the sale of raiyati or under raiyati interests if the execution of the rent decree is treated as an execution of money decree under the Code of Civil Procedure; and that the sale made pursuant to the execution of the money decree under the Code even though for rent, and of the raiyati or under raiyati interest holder, would not he a sale under the statutes men tioned in section 5B including the Tenancy Act.
Allowing the appeals, this Court, HELD:1.1 The proceedings initiated by the Assistant Settlement Officer to revise the entries in the record of rights made in favour of the respondent auction purchaser and the orders passed by him recording the names of the former raiyats as raiyats with possession of the lands and deleting the name of the auction purchaser, were valid as the raiyati interests were sold after 1.6.
1954 in execution of the decree for arrears of rent in respect of the lands in question.
(360 C E) 1.2By virtue of the notification issued under section 49, section 52 makes the provisions of sections 4, 5, 5A and 5B, among others, of Chapter 11 of the Act applicable to the raiyati and the under raiyati interests on the issuance of such notification.
(351 H) 1.3In the instant case the Notification No. 680 dated 9.4.1956 issued under section 49 was brought into force with effect from 10.4.1956.
It was not given retrospective effect from 15.4.1955.
The effect of this notification was that by 345 virtue of section 4 the intermediary interests stood vested in the State at the latest from 15.4.1955 while the raiyati and under raiyati interests stood vested in the State with effect from 10.4.1956.
The restriction on transfer of the said interests, however, came into effect retrospectively on or from 1.6.1954 by virtue of section 5B, since that date is mentioned in the section itself.
(352 AB) 1.4.
In view of section 5B of the Act, no estate, tenure or under tenure including raiyati and under raiyati interests could be sold under the statutes mentioned in s 5B including the Tenancy Act on and after 1.6.1954 and a sale after that date under any of those statutes would he void and have no effect under that section.
(352 C) 1.5 The present auction sales being of raiyati interests and effected on 6.11.1954and 3.12.1954 in execution of the decrees for the arrears of rent under the Tenancy Act were obviously invalid.
(352 D) 2.1 The decree pursuant to the suit under the Tenancy Act cannot he executed except under the provisions of that Act.
There cannot, therefore, be sale of the property in question pursuant to such decree under the provisions of the Code of Civil Procedure.
(358 B) 2.2 The intention of the legislature in enacting section 5B was to prevent sales of the intermediary interests after 1.6.1954.
In view of the provisions of the Tenancy Act, the said interests could be sold only under and in accordance with the provisions of that Act.
The sale of such interests in the land pursuant to a decree for arrears of rent in respect of that land could not therefore, he made under the Code of Civil Procedure.
(360 D) 2.3 The Bengal Tenancy Act, 1885 is a self contained code governing the relations between the landlord and the tenant and for resolution of their disputes.
The Act incorporates certain provisions of the Code of Civil Procedure in toto while others with modification.
The Tenancy Act by implication prevents any suit between landlord and tenant to be filed otherwise than under its provisions.
All proceedings in the suit filed under the Bengal Tenancy Act from its inception to the satisfaction of the decree are to be governed by its provisions and the provisions of the Code are applicable to such proceedings only to the extent and subject to the conditions stated therein.
The Code as such is not applicable to the proceedings or to any part of it and hence no part of the proceedings can be prosecuted under the Code.
Even if simple money decree is obtained for the arrears of rent, no interest of 346 the tenant can he brought to sale in execution of such decree except under Abe provisions of the Tenancy Act.
In other words, no such interest can be sold under the Code and independently of the Tenancy Act.
(357 H, 358 A C) 2.4 Besides, Section 168A of the Tenancy Act removes the doubt, if any, and provides the procedure for attachment and sale of tenure or holding for arrears of rent due thereon, and liability of purchasers thereof.
The nonobstante clause of the Section excludes all other provisions of the Tenancy Act itself as well as of any other law and the provisions of any contract as well.
Clause (a) of the Section states that a decree for arrears of rent whether having the effect of a rent decree or a money decree or even a certificate for such arrears under the Bengal public Demands Recovery Act, 1930 shall not be executed by the attachment and sale of any movable or immovable property other than the entire tenure or holding to which the decree or certificate relates.
That provision will not apply only if the term of the tenure has expired before an application is made for the execution of such decree or certificate.
When the entire tenure or holding is purchased in execution of a decree for arrears of rent in respect thereof, clause (b) of section 168A (1) provides that the purchaser shall pay to the decree holder the deficiency, if any, between the purchase price and the amount due under the decree together with the cost incurred for the auction sale and also the rent which may have become due between the date of the institution of the suit and the date of confirmation of the sale.
This provision in inconsistent with the provisions of the Code.
(358 C F) 2.5 The High Court was not right in holding that the sales can be treated as being pursuant to a money decree and, therefore, under the Code and independently of the Tenancy Act.
The High Court unfortunately missed the vital fact that whether it is a money decree or rent decree, the entire raiyati interests of the judgement debtor in the land in question had to be sold under Section 168A of the Tenant Act but could not be sold in view of the bar imposed by Section 5B of the Act.
The bar cannot be over come by treating the sale under the Code to circumvent the provisions of the Tenancy Act and in particular of Section 168A of that Act.
(359 H, 360 A B) 2.6 After the intermediary interests vest in the State, they cannot be brought to sale and the remedy of the decree holder is to proceed against other property of the judgment debtor if any.
In that event, Section 168A would not come in the picture.
(358 G H)


judgement:
Appeal No. 3908 (NT)/ 1983.
From the Judgment and Order dated 20.11.1979 of the Madras High Court in Tax Case No. 330 of 1976.
A. Raghuvir and Ms. A. Subhashini for the Appellant.
T.A. Ramachandran and Mrs. Janaki Ramachandran for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
This appeal is preferred against the Judgment of the Madras High Court answering the question referred to it in the affirmative i.e., in favour of the assessee and against the Revenue.
The question referred under section 256 (1) of the Income tax Act reads as follows: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the total sum of Rs. 22.000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax?" The assessment year concerned is 1974 75.
The assessee, G.R. Karthikeyan, assessed as an individual, was having income from various sources including salary and business income.
During the accounting year relevant to the said assessment year, he participated in the All India Highway Motor Rally.
He was awarded the first prize of Rs. 20,000 by the Indian Oil Corporation and another Sum of Rs. 2,000 by the All India Highway Motor Rally.
The Rally was organised jointly by the Automobile Association of Eastern India and the Indian Oil Corporation and was supported by several Regional Automobile Associations as well as Federation of Indian Motor Sports Clubs and the Federation of Indian Automobile Associations.
The rally was restricted to private motorcars, the length of the rally route was approximately 6,956 kms.
One could start either from Delhi, Calcutta, Madras or Bombay, proceed anti clock wise and arrive at the starting point.
The rally was designed to test endurance driving and the reliability of the 331 automobiles.
One had to drive his vehicle observing the traffic regulations at different places as also the regulations prescribed by the Rally Committee.
Prizes were awarded on the basis of overall classification.
The method of ascertaining the first prize was based on a system of penalty points for various violations.
The competitor with the least penalty points was adjudged the first prize winner.
On the above basis, the assessee won the first prize and received a total sum of Rs. 22,000.
The Income Tax Officer included the same in the income of the respon dent assessee relying upon the definition of 'income ' in clause (24) of section 2.
On appeal, the Appellate Assistant Commissioner held that inasmuch as the rally was not a race, the amount received cannot be treated as income within the meaning of section 2 (24) (ix).
An appeal preferred by the Revenue was dismissed by the Tribunal.
The Tribunal recorded the following findings: (a)That the said rally was not a race.
It was predominantly a test of skill and endurance as well as of reliability of the vehicle.
(b) That the rally was also not a 'game ' within the meaning of section 2(24) (ix).
(c) That the receipt in question was casual in nature.
It was nevertheless not an income receipt and hence fell outside the provisions of section 10 (3) of the Act.
At the instance of the Revenue, the question aforementioned was stated for the opinion of the Madras High Court.
The High Court held in favour of the assessee on the following reasoning: (a) The expression 'winnings ' occuring at the inception of sub clause (ix) in section 2(24) is distinct and different from the expression 'winning '.
The expression 'winnings ' has acquired a connotation of its own.
It means money won by gambling or betting.
The expression 'winnings ' controls the meaning of several expressions occurring in the sub clause.
In this view of the matter, the sub clause cannot take in the receipt concerned herein which was received by the assessee by participating in a race which involved skill in driving the vehicle.
The rally was not a race.
In other words the said receipt does not represent 'winnings '.
(b) A perusal of the memorandum explaining the provisions of the Finance Bill,.
1 972, which inserted the said sub clause in section 2(24), also shows that the idea behind the sub clause was to rope in windfalls from lotteries, races and card games etc.
332 (c) Section 74 (A) which too was introduced by the Finance Act, 1972 supports the said view.
Section 74 (A) provides that any loss resulting from any of the sources mentioned therein can be set off against the income received from that source alone.
The sources referred to in the said section are the very same sources mentioned in sub clause (ix) of section 2(24) namely lotteries, crossword puzzles, races including horse races, card games etc.
The correctness of the view taken by the High Court is questioned herein.
The definition of 'income ' in section 2(24) is an inclusive definition.
The Parliament has been adding to the definition by adding sub clause (s) from time to time.
Sub clause (ix) which was inserted by the Finance Act, 1972 reads as follows: "(ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever;" We may notice at this stage a provision in section IO.
Section 10 occurs in chapter HI which carries the heading "Incomes which do not form part of total income".
Section 10 in so far as is relevant reads thus: " 10, Incomes not included in total income: In computing the total income of a previous year of any person, any income failing within any of the following clauses shall not be included: (d) any receipts which are of a casual and non recurring nature, not being winnings from lotteries, to the extent such receipts do not exceed one thousand rupees in the aggregate".
(The clause has been amended by Finance Act, 1986 but we are not concerned with it.
Similarly it is not necessary to notice the proviso to the said clause.) It is not easy to define income.
The definition in the Act is an inclusive one.
As said by Lord Wright in Kamakshya Narayan Singh vs C.I.T. P. C. "income. . . is a word difficult and perhaps impossible to define in any precise general formula.
It is a word of the broadest connotation".
In Gopal Saran Narain Singh vs Commissioner of Income Tax 3.I.T.R. 237 P.C., the Privy Council pointed out that "anything than can properly be described as income is taxable under the Act unless expressly exempted." This Court had to deal with the ambit of the expression 'income 'in Navin Chandra Mafatlal vs C.I T.Bombay 26 I.T.R. (S.C.) 333 The Indian Income tax and Excess Profits Tax (Amendment) Act, 1947 had inserted section 12 (B) in the Indian Income tax Act, 1922.
Section 12(B) imposed a tax on capital gains.
The validity of the said Amendment was questioned on the ground that tax on capital gains is not a tax on 'income 'within the meaning of entry 54 of list 1, nor is it a tax on the capital value of the assets of individuals and companies within the meaning of entry 55, of list 1 of the seventh schedule to the Government of India Act, 1935.
The Bombay High Court repelled the attack.
The matter was brought to this Court.
After rejecting the argument on behalf of the assessee that the word 'income ' has acquired, by legislative practice, a restricted meaning and after affirming that the entries in the seventh schedule should receive the most liberal construction the Court observed thus: "What.
then, is the ordinary, natural and grammatical meaning of the word "income"? According to the dictionary it means "a thing that comes in." (See Oxford Dictionary, Vol.
V,p. 162; Stroud, vol.
II, pp.
14 16).
In the United States of America and, in Australia both of which also are English speaking countries the word "income is understood in a wide sense so as to include a capital gain.
Reference may be made to 'Eisner vs Macomber '; , ; 'Merchants ' Loan and Trust Co. vs 'Smietanka '[1920] ; ( L) and 'United States of America vs Stewart ', ; and 'Resch vs Federal Commissioner of Taxation '; , In each of these cases very wide meaning was ascribed to the word "income" as its natural meaning.
The relevant observations of learned Judges deciding those cases which have been quoted in the judgment of Tendolkar J. quite clearly indicate that such wide meaning was put upon the word "income" not because of any particular legislative practice either in the United States or in the Commonwealth of Australia but because such was the normal concept and connotation of the ordinary English word "income".
Its natural meaning embraces any profit or gain which is actually received.
This is in consonance with the observations of Lord Wright to which reference has already been made.
The argument founded on an assumed legislative practice being thus out of the way, there can be no difficulty in applying its natural and grammatical meaning to the ordinary English word "income '.
As already observed, the word should be given its widest connota 334 tion in view of the fact that it occurs in a legislative head conferring legislative power.
Since the definition of income in section 2(24) is an inclusive one, its ambit, in our opinion, should be the same as that of the word income occurring in entry 82 of list 1 of the Seventh Schedule to the Constitution (corresponding to entry 54 of list 1 of the Seventh Schedule to the Government of India Act).
In Bhagwandas Jain vs Union of India S.C. The challenge was to the validity of section 23(2) of the Act which provided that where the property consists of house in the occupation of the owner for the purpose of his own residence, the annual value of such house shall first be determined in the same manner as if the property had been let and further be reduced by one half of the amount so determined or Rs. 1,800 whichever is less.
The contention of the assessee was that he was not deriving any monetary benefit by residing in his own house and, therefore, no tax can be levied on him on the ground that he is deriving income from that house.
It was contended that the word income means realisation of monetary benefit and that in the absence of any such realisation by the assessee, the conclusion of any amount by way of notional income under section 23(2) of the Act in the chargeable income was impermissible and outside the scope of entry 82 of list 1 of the Seventh Schedule to the Constitution.
The said contention was rejected affirming that the expression income is of the widest amplitude and that it includes not merely what is received or what comes in by exploiting the use of the property but also that which can be converted into income.
Sub clause (ix) of section 2(24) refers to lotteries, crossword puzzles, races including horse races, card games, other games of any sort and gambling or ' betting of any form or nature whatsoever.
All crossword puzzles are not of a gambling nature.
Some are; some are not.
See State of Bombay vs R.M.D. Chamarbaugwala A.I.R. 1957 S.C.699.Even in card games there are some games which are games of skill without an element of gamble (See State of Andhra Pradesh vs
K. Satyanarayan[1968] 2 S.C.R. 515.
The words other games of any sort" are of wide amplitude.
Their meaning is not confined to games of a gambling nature alone.
It thus appears that sub clause (ix) is not confined to mere gambling or betting activities.
But, says the High Court, the meaning of all.
the aforesaid words is controlled by the word 'winnings ' occurring at the inception of the subclause.
The High Court says, relying upon certain material, that the expression winnings ' has come to acquire a particular meaning viz, receipts from activities of a gambling or betting nature alone.
Assuming that the High Court is right in its interpretation of the expression 'winnings ', does it follow that merely because 335 winnings from gambling/betting activities are included within the ambit of income,the monies received from non gambling and non betting activities are not so included? What is the implication flowing from insertion of clause (ix)? If the monies which are not earned in the true sense of the word constitute income why do moneies earned by skill and toil not constitute income? Would it not look odd.
if one is to say that monies received from games and races of gambling nature represent income but not those received from games and races of non gambling nature? The rally in question was a contest, if not a race.
The respondent assessee entered the contest to win it and to win the first prize.
What he got was a return ' for his skill and endurance.
Then why is it not income which expression must be construed in its widest sense.
Further, even if a receipt does not fall within subclause (ix), or for that matter, any of the sub clauses in section 2(24), it may yet constitute income.
To say otherwise, would mean reading the several clauses in section 2(24) as exhaustive of the meaning of 'income ' when the Statute expressly says that it is inclusive.
It would be a wrong approach to try to place a given receipt under one or the other sub clauses in section 2(24) and if it does not fall under any of the sub clauses, to say that it does not constitute income.
Even if a receipt does not fall within the ambit of any of the sub clauses in section 2(24), it may still be income if it partakes of the nature of the income.
The idea behind providing inclusive definition in section 2(24) is not to limit its meaning but to widen its net.
This Court has repeatedly said that the word 'income ' is of widest amplitude, and that it must be given its natural and grammatical meaning.
Judging from the above standpoint, the receipt concerned herein is also income.
May be it is causal in nature but it is income nevertheless.
That even the casual income is 'income ' is evident from section 10 (3).
Section 10 seeks to exempt certain 'incomes ' from being included in the total income '.
A casual receipt which should mean, in the context, casual income is liable to be included in the total income if it is in excess of Rs. 1,000, by virtue of clause (3) of section 10.
Even though it is a clause exempting a particular receipt/income to a limited extent, it is yet relevant on the meaning of the expression 'income '.
In our respectful opinion, the High Court, having found that the receipt in question does not fall within sub clause (ix) of section 2(24), erred in concluding that it does not constitute income.
The High Court has read the several sub clauses in section 2(24) as exhaustive of the definition of income when in fact it is not so.
In this connection it is relevant to notice the finding of the Tribunal.
It found that the receipt in question was casual in nature but it opined it was nevertheless not an income receipt and fell outside the provision of section 10 (3) of the Act.
We have found it difficult to follow the logic behind the argument.
For the above reasons we hold that the receipt in question herein does 336 constitute 'income ' as defined in clause (24) of section 2 of the Act.
The appeal is accordingly allowed and the question referred by the Tribunal under section 256(1) of the Act is answered in the negative i.e., in favour of the Revenue and against the assessee.
There shall be no order as to costs.
Appeal allowed.

summary:
The assessee participated in an All India Highway Motor Car Rally and on being declared a winner, received an amount of Rs. 22,000 as prize money.
The Income tax officer included the prize money in his income for the relevant assessment year relying upon the definition of 'income 'in clause (24) of Section 2 of Income Tax Act.
On an appeal preferred by the respondent assessee the Appellate Assistant Commissioner held that as the Rally was not a race, the prize money cannot be treated as income within the meaning of section 2(24) (ix).
The Tribunal on an appeal by the Revenue, held that the Rally was not a race and as it was a test of skill and endurance, it was not a 'game ' within the meaning of Sec. 2 (24) (ix).
As the prize money received was casual in nature it fell outside Sec.
10(3) of the Act.
The High Court on a reference at the instance of the Revenue,upholding the findings of the Tribunal,observed that the expression 'winnings ' cannotes money won by betting or gambling and therefore the prize money not represent 'winnings '.
Inasmuch as the amount in question was obtained by participating in a rally which involved skill in driving the vehicle, it held, it cannot he included in the assessee 's income, also because it fell outside the preview of s.10 (3).
Allowing the Appeal, the Court, HELD:1.
The expression 'income ' must be construed in its widest sense.
The definition of 'income ' is an inclusive one.
Even if a receipt does not fall within sub clause (ix) or any of the sub clauses of Sec.2(24) of the Act it may yet constitute income.
Hence the prize money received by the respondent 329 assessee constitutes 'income ' as defined in clause (24) of Section 2 of the Act.
(335 C) 2.The High Court erred in reading several sub clauses in Sec.
2(24) as exhaustive when the statute expressly says that the definition is inclusive.
Even if a receipt does not fall within the ambit of any of the sub clauses in Sec.
2(24) it may still he income if it partakes of the nature of income.
The idea behind providing inclusive definition in Sec.
2(24) is not to limit its meaning but to widen its net.
This Court has repeatedly said that the word 'income ' is of widest amplitude and that it must he given its natural and grammatical meaning.
(335 D) Kamakshya Narayan Singh vs C.LT P.C., Navin Chandra Mafatlal vs C.I.T, Bombay 26 ITR (SC)and Bhagwan Das Jain vs Union of India SC, followed.
Gopal SaranNarain Singh vs Commissioner of Income Tax, 3ITR237 P.C., referred to.
3.If the monies which are not earned in the true sense of the word Constitute income, it is difficult to appreciate why do monies earned by skill and to not constitute income? The Rally was a contest, if not a race.
The Respondent assessee entered the contest to win it.
The Prize money which he got in return for winning the contest was a reward for his skill and endurance.
It does constitute his income which expression must be construed in its widest sense.
(335 B) 4.The sub clause (ix) of Sec.
2(24), is not confined to games of gambling nature alone.
Some of them are games of skill.
State of Bombay vs R.M. D. Chamarbaugwala ; ; and Stale of Andhra Pradesh vs K. Satyanarayan ; , followed.
5.As the definition of income in Sec.
2(24) is an inclusive one, its ambit should be the same as that of the word 'income ' occurring in Entry 82 of list 1 of the Seventh Schedule of the Constitution of India.
(334 B) 6.Even casual income is 'income 'as is evident from Sec.
10(3).
A casual receipt which should mean in the context, casual income is liable to be included in the total income, if it is in excess of Rs. 1,000 by virtue of clause (3) 330 of Sec. 10.
The Tribunal erred in its finding that the prize money fell outside the purview of Sec.
10 (3) inspite of holding that the receipt in question was casual in nature.
(335 E)


judgement:
ial Leave Petition (C) Nos.
4304 06 of 1993.
From the Judgment and Order dated 18.12.1992 of the Calcutta High Court in Appeal from Original Order Nos.
and 106 of 1991.
Panchugopal Bose in person for the Petitioner.
D.P. Gupta, Solicitor General, A.K Sil and G. joshi for the Respondent.
The Judgment of Court was delivered by K. RAMASWAMY.
J.: These three Special Leave Petitions arise out of Arbitration Agreement said to be executed by the petitioner on May 27, 1978 which provided that the petitioner had to execute the work within 9 months.
It is 363 his claim that while executing the work he sent the bills on July 12, 1979 but payment was not made.
For the first time he sent notice on Nov. 28, 1989 to the respondent for reference to the arbitration.
On receipt thereof, the respondent filed an arbitration suits in the Calcutta High Court under sections 5, 12 and 33 of the for short the Act.
The learned Single Judge held that the claim was hopelessly barred by limitations There was no proof that the petitioner had sent any claim in July, 1979.
Since the Claim was made long after 10 years the arbitration cannot be proceeded with.
Accordingly finding that it to be an exceptional case for interference, the learned Single Judge cancelled the arbitration clause 68 of the contract in matter Nos. 1326, 1364 and 1365/90 dated November 23. 1990.
On further appeals the division bench by its order dated December 18, 1992 in Appeal Nos 104/90 etc.
dismissed the appeals.
Thus these special leave petitions.
The contention of the petitioner appearing in person is that Clause 68 of the Contract provides for appointment of an arbitrator and when the petitioner has legally invoked clause 68 and issued notice to the respondent, the respondent is duty bound to appoint an arbitrator and on its failure it is open to him to approach the Court for appropriate remedy under section 8 of the Act for appointment of an arbitrator.
The High Court scuttled this procedure in exercising the power under section 5 of the Act which is illegal and ultra vires.
He further contented that Section 5 has no application to the facts of this case.
We have heard also Shri D.P. Gupta, the learned Solicitor General for the respondent.
The question for consideration is whether the High Court was justified in permitting the respondent to rescind the contract of Arbitration provided in Clause 68 of the Contract.
Undoubtedly, Clause 68 provides reference to arbitration of all or any of the disputes or differences enumerated therein that have arisen between the parties, at the instance of either party to the contract.
It empowers either party to issue notice calling upon the Engineer to refer the dispute or difference for arbitration.
In this case, as found by the High Court that though the petitioner was said to have made the claim for payment for the first time in July 12, 1979.
Though there is no proof in that behalf, and the respondent claimed that the petitioner had abandoned the contract, even assuming that any claim was as a fact made in July.
1979 and payment was not made, the petitioner had not taken follow up action thereafter for well over 10 years.
It was open to him to avail Clause 68 of the contract seeking reference to the arbitration.
No such action was taken till November 28, 1989 Immediately on receipt of the notice, the respondent invoked the jurisdiction of the Calcutta High Court under sections 5 and 12 at 330 of the Act.
Section 5 provides thus: 364 "The authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement".
Therefore, Section 5 postulates that there must be an order of appointing an arbitrator or umpire and thereafter the same cannot be revoked except with the leave of the Court, unless a contrary intention is expressed in the agreement.
Exfacie it would appear that appointment of an arbitrator is a condition to avail the remedy under s.5.
Section 12 accords consequential power which postulates that the power of the Court where Arbitrator is removed or his authority revoked.
Subsection (2) says that: "Where the authority of an arbitrator or arbitrators or an umpire is revoked by leave of the Court, or where the Court removes an umpire who has entered on the reference or a sole arbitrator or all the arbitrators, the Court may, on the application of any party to the arbitration agreement, either (b)order that the arbitration agreement shall cease to have effect with respect to the difference referred." Therefore, by a conjoint reading of sections 5 and 12 (2) (b) it is clear that the court has been given power in given circumstances to grant leave to a contracting party to have the arbitrator or umpire removed and the arbitration agreement entered into with other contracting part revoked.
Where the Court grants such authority consequentially arbitration agreement shall cease to have effect with respect to the difference or dispute.
It flows therefrom that there exist implied power vested in the court permitting a party to avail the remedy under sections 5 & 12 to rescind the arbitration agreement.
In all cases it is not a condition precedent that there should in the first instance be an order appointing an arbitrator or he should enter upon reference for adjudication.
In given circumstances and the factual background the court may be justified to exercise the power under ss.5 and 12.
The question then is under what circumstances such power would be exercised.
This Court in M/s Amarch and Lalit Kumar vs Shree Ambica Jute Mills Ltd. ; at 969 held thus: "In exercising its discretion cautiously and sparingly the Court has no doubt (kept) these circumstances in view, and consider that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator 's decision may go against them.
The grounds on which leave to revoke may be given have been put under five heads: 365 1.
Excess or refusal of jurisdiction by arbitrator; 2.
Misconduct of arbitrator; 3.
Disqualification of arbitrator; 4.
Charges of Fraud; and 5.
Exceptional cases.
Thus it could be seen that the Court has the power and jurisdiction under sections 5 and 12 to grant leave to the applicant in exceptional circumstances to revoke the contract of arbitration.
The court should exercise the power sparingly, cautiously and with circumspection to permit a party to the contract of a arbitration voluntarily entered into to relieve the party from dispute or difference and to order that the arbitration agreement shall cease to have effect in respect of the dispute or difference.
In this case we have seen that even assuming that the petitioner had putforward his claim in July, 1979 and the respondent had not acted thereon till November 28, 1989 for long 10 years he did not move his little finger to approach the Engineer and later the Court.
For the first time on November 28, 1989 he issued notice to the respondent to refer the case for arbitration.
Clause 68 of the Contract provides that when any disputes or differences has arisen he should approach the Engineer in the first instance seeking reference of it to an arbitration and if the Engineer refuses to act upon or omits to refer the dispute to the arbitration within 15 days from the date of the receipt of notice, then it is open to him to approach a Civil Court for reference to the arbitration.
On his own showing cause of arbitration has arisen in July, 1979, the petitioner did not take any action from then.
On the other hand when notice was issued in November, 1989 the respondent immediately approached the Court and sought its leave to rescind the agreement explaining the circumstances.
The Court exercised the jurisdiction in permitting the respondent to revoke the arbitration agreement.
The question then is whether it is justified? Section 37 (1) of the Act provides that all the provisions of the Indian Limitation Act, 1908 (since amended Act came into force in 1963) shall apply to arbitrations as they apply to the proceedings in court.
Sub section (2), employing non obstenti clause, says that notwithstanding any term in an arbitration agreement to the effect that no cause of action shall accrue in respect of any matter required by the agreement to be referred until an award is made under the agreement, a cause of action shall, for the purpose of limitation, be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the agreement.
Sub section (3) thereof states that for the purposes of this section and of the Indian Limitation Act, 1908 an arbitration shall be 366 deemed to be commenced when one party to the arbitration agreement serves on the other party thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated.
Sub sections (4) and (5) are omitted as being not material.
It would, therefore, be clear that the provisions of the Limitation Act would apply to arbitrations and notwithstanding any term in the contract to the contrary, cause of arbitration for the purpose of limitation shall be deemed to have accrued to the party in respect of any such matter at the time when it should have accrued but for the. contract.
Cause of arbitration shall be deemed to have commenced when one party serves the notice on the other party requiring the appointment of an arbitrator.
The question is when the cause of arbitration arises in the absence of issuance of a notice or omits to issue for long time or contract to the contrary? It is stated in Robertson 's History that honest men dread arbitration more than they dread law suits.
The arbitrations differ from legal proceedings proper only in the choice of tribunal and all ordinary defences legally permissible are available to the Parties.
Parties to an arbitration may voluntarily determine among themselves the procedure to be followed including the constitution of the arbitral tribunal to adjudicate the dispute or differences arising from the contract including the power of the arbitrator.
They could also contract restricting the limitation for adjudication.
Subject to the above section 37 of the Act regulates the limitation for the arbitration proceedings.
In Ram Dutt Ramkissendass vs Sassoon (E.D) & Co. 1929 (56) Indian Appeals 128, the Privy Council held that although, it is indisputable that, in a modern arbitration, the principles of equity must be applied just as they would now be applied in a court of law, since upon a special case for the opinion of the court under Sec. 7 if the or the Judicature Act, 1925, s.94 (replacing sec.
19 of the ), the court is, and has long been, bound to apply equitable rules and relief.
It is difficult to see how the equitable view of the applicability of Limitation Act, 1908, to a case of debt can be excluded in a legal arbitration.
Although the Limitation Act does not in terms apply to arbitrations, they (their Lordships of the Judicial Committee) think that in mercantile reference of the kind in question it is an implied term of the contract that the arbitrator must decide the dispute according to the existing law of contract, and that every defence which would have been open in a court of law can be equally proponed for the arbitrator 's decision unless the parties have agreed which is not suggested here to exclude that defence.
Were it otherwise, a claim for breach of contract containing a reference cause could be brought at any time, it might be 20 or 30 years after the cause of action had arisen, although the legislature has prescribed a limit of three years for the enforcement of such a claim in any application that 367 might be made to the law courts.
This ratio was approved by House of Lords in Naamlooze Vennootschap Handels En Transport Maatschappij "Vulcaan ' vs A/S J. Ludwig Mowinckels Rederi [1938]2 All E.R. 152, Lord Maugham, L.C. speaking for the unanimous Court held that in considering whether the Limitation Act would apply to arbitration (pre statutory arbitrations), it was held that this seems to be a good reason for holding that there may well be cases where the object of both parties to the arbitration might be to determine whether a sum was due, though possible or certainly not recoverable by legal Proceedings.
We are, however, here concerned with an arbitration in which legal rights are being advanced or denied If the defence of the statute is to be deemed in admissible, it would seem that the claims of one party or the other might be put forward long after the persons who could give useful evidence had died and the most relevant documents had been destroyed If the legal defence were to be excluded, it was in this agreement that one would expect to find such a provision The matter does not rest cause we have to consider how far the suggested elimination of defences available at law or in equity must logically be held to extent in other arbitrations.
If the party defending may not rely on the Statute of Limitations, can he rely on the Statute of Frauds, or the Act partially replacing it? Could he rely in a commercial arbitration on the Garming Act? A number of like questions might be asked It is indisputable that, in a modem arbitration, the principles of equity must be applied just as they would now be applied in a court of law.
In the concluding findings it is said thus: "In the circumstances of this case as above stated, it is, I think, impossible to come to the conclusion that there was an implied agreement between the parties to exclude any defence under any Statute of Limitations.
In the absence of such an implied agreement, the Limitation Act was open to the respondents, and the consequence must follow that the arbitrator was acting rightly in admitting the defence under the statute".
In Pegler vs Railway Executive 1948 Appeal Cases 332 at 338, House of Lords held that just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not, to be put forward after the expiration of the specified number of years from the date when the claim accrued.
While accepting the interpretation put up by Atkinson, J. as he then was in the judgment under appeal, learned Law Lords accepted the conclusion of Atkinson, in the Language thus: "the cause of arbitration" corresponding to "the cause of action" in litigation "treating a ' cause of arbitration in the same way as a cause of action would be treated if the proceeding were in a court of law.
368 In West Riding of Yorkshirs Country Council vs Huddersfield Corporation , the Queens Bench Division, Lord Goddard, C. J. (as he then was) held that the Limitation Act applies to arbitrations as it applies to actions in the High Court and the making, after a claim has become statute barred, of a submission of it to arbitration, does not prevent the statute of limitation being pleaded.
Russell on Arbitration, 19th Edition, reiterates the above proposition.
At page 4 it was further stated that the parties to an arbitration agreement may provide therein, if they wish, that an arbitration must be commenced within a shorter period than that allowed by statute; but the court then has power to enlarge the time so agreed.
The period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrued, that is to say, from the date when the claimant first acquired either a right of action or a right to require that an arbitration takes place upon the dispute concerned.
Therefore, the period of limitation for the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued.
Just as in the case of civil actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued.
In Russell on Arbitration, at pages 72 and 73 it is stated thus: "Disputes under a contract may also be removed, in effect, from the jurisdiction of the court, by including an arbitration clause in the contract, providing that any arbitration under it must be commenced within a certain time or not at all, and going on to provide that if an arbitration is not so commenced the claim concerned shall be barred.
Such provisions are not necessarily found together.
Thus the contract may limit the time for arbitration without barring the claim depriving a party who is out of time of his right to claim arbitration but leaving open a right of action in the courts.
Or it may make compliance with a time limit a condition of any claim without limiting the operation of the arbitration clause, leaving aparty who is out of time with the right to claim arbitration but so that it is a defence in the arbitration that the claim is out of time and barred.
369 Nor, since the provisions concerned are essentially separate, is there anything to prevent the party relying on the limitation clause waiving his objection to arbitration whilst still relying on the clause as barring the claim.
" At page 80 it is stated thus: "An extension of time is not automatic and it is only granted if "undue hardship" would otherwise be caused.
Not all hardship, however, is "undue hardship," , it may be proper that hardship caused to aparty by his own default should be borne by him and not transferred to the other party by allowing a claim to be reopened after it has become barred.
The mere fact that a claim was barred could not be held to be "undue hardship.
" The Law of Arbitration by Justice Bachawat in Chapter XXXVII at p.549 it is stated that just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date when the claim accrues, as also in the case of arbitrations, the claim is not to be put forward after the expiration of a specified number of years from the date when the claim accrues.
For the purpose of section 37 (1) 'action ' and cause of action ' in the Limitation Act should be construed as arbitration and cause of arbitration.
The cause of arbitration, therefore, arises when the claimant becomes entitled to raise the question, i.e. when the claimant acquires the right to require arbitration.
The limitation would run from the date when cause of arbitration would have accrued, but for the agreement.
Arbitration implies to charter out timous commencement of arbitration availing the arbitral agreement, as soon as difference or dispute has arisen.
Delay defeats justice and equity aid the promptitude and resultant consequences.
Defaulting party should bear the hardship and should not transmit the hardship to the other party, after the claim in the cause of arbitration was allowed to be barred.
The question, therefore, as posed earlier is whether the court would be justified to permit a contracting party to rescind the contract or the court can revoke, the authority to refer the disputes or differences to arbitration.
Justice Bachawat in his Law of Arbitration, at p. 552 stated that "in an appropriate case leave should be given to revoke the authority of the arbitrator '.
It was also stated that an ordinary submission without special stipulation limiting or conditioning the functions of the arbitrator carried with it the implication that the arbitrator should give effect to all legal defences such as that of limitation.
Accordingly the arbitrator was entitled 370 and bound to apply the law of limitation.
Section 3 of the Limitation Act applied by way of analogy to arbitration proceedings, and like interpretation was given to section 14 of the Limitation Act, The Proceedings before the arbitration are like civil proceedings before the court within the meaning of section 14 of the Limitation Act, By consent the parties have substituted the arbitrator for a court of law to arbiter their disputes or differences.
It is, therefore, open to the parties to plead in the proceedings before him of limitation as a defence.
In Mustiu and Boyd 's Commercial Arbitration (1982 Edition) under the heading "Hopeless Claim" in Chapter 31 at page 436 it is stated thus: "There is no undoubtedly jurisdiction to interfere by way of injunction to prevent the respondent from being harassed by claim which can never lead to valid award for example in cases where claim is brought in respect of the alleged Arbitration agreement which does not really exist or which has ceased to exist.
So also where the dispute lies outside the scope of Arbitration agreement".
The case on hand is clearly and undoubtedly hopelessly barred claim as the petitioner by his conduct slept over his right for more than 10 years.
Statutory arbitrations stand apart.
In these circumstances it is an exceptional case and the courts below have justifiably exercised their discretionary power, and jurisdiction under sections 5 and 12(2) (b) to permit the respondent to rescind the arbitration agreement and declared that the arbitration agreement shall cease to have effect with respect to the difference or dispute referred to in the notice of the petitioner and relieved the parties from the arbitration agreement.
The Special Leave Petitions are accordingly dismissed without costs.
U.R Appeal dismissed.

summary:
On May 27, 1978, the petitioner entered into an arbitration agreement under which he had to execute a certain work within 9 months.
He averred that he had sent his bills on July 12, 1979, but payment was not made.
On November 28, 1989, for the first time he sent a notice to the respondent for reference to arbitration.
The respondent approached the High Court under Ss. 5,12 and 33 of the .
A learned Single Judge held that the claim was hopelessly barred by limitation, and cancelled the arbitration agreement.
A Division Bench dismissed the Appeal.
On appeal, this Court addressed itself to 2 questions: Whether the High Court could permit a party to rescind an arbitration agreement; and whether delay can be a ground for rescinding such agreement.
Dismissing the appeal, this Court, HELD:1.
The Court has the power and jurisdiction under Ss. 5 and 12 to grant leave to the applicant in exceptional circumstances to revoke the contract of arbitration.
The Court should exercise the power sparingly, cautiously and with circumspection in permitting a party to rescind an arbitration agreement he had entered into voluntarily.
(365 B) 2.By virtue of section 37 of the , the provisions of the Limitation Act would apply to arbitrations, notwithstanding any term in the contract to the contrary.
(366 B) 3.The period of limitation for the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of 362 action would have accrued, just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued.
(368 D E) Ram Dutt Ramkissen dass vs
Sassoon(E.D.)&Co.(1929)(56)1A 128(PC); Naamlooze Vennootschap Handels En Transport Maatschappij ' Vulcan ' vs A/S J. Ludwig Mowinckels Rederi [1 938] 2 All ER 152; Pegler vs Railway Executive at 338 and; West Riding of Yorkshire Country Council Huddersfield Corporation [1957] 1 AR ER 669 and Russell on Arbitrations; Justice Bachawat Law of Arbitration, applied.
Delay defeats justice: Defaulting party should hear the hardship and should not transmit the hardship to the other party, after the claim in the cause of arbitration was allowed to he barred.
(369 F ) Mustiu and Boyd 's Commercial Arbitration (1982 edn.), referred to.
The claim in the case on hand is undoubtedly hope lessly barred by limitation as the petitioner by his conduct slept over his right for more than 10 years.
The High Court justifiably exercised the discretionary power and jurisdiction under Ss. 5 and 12 (2) (b) in permitting the respondent to rescind the agreement.
(370 E)