judgement:
Civil Appeal No. 38 of 1954.
Appeal from the Judgment and Decree dated the 14th day of March 1951 of the High Court of Judicature at Patna in M.J.C. No. 230 of 1949.
Mahabir Prasad, Advocate General for the State of Bihar (R. J. Bahadur and section P. Varma, with him '), for the appellant.
C. K. Daphtary, Solicitor General for India (Porus A. Mehta and P.O. Gokhale, with him), for the respondent.
April 18.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal by the assessee on leave granted under section 66 A of the Indian Income Tax Act.
The assessee by name Chatturam Horilram Ltd., who is the appellant before us, is a private limited company carrying on in Chota Nagpur the business of exporting mica for sale to foreign countries.
The assessment in question is for the year 1939 40 and the accounting year is the calendar year 1938.
These proceedings were initiated on a notice issued to the assessee under section 34 of the Indian Income tax Act, 1922, (Act XI of 1922) (hereinafter referred to as the Act).
It is the applicability of this section to the facts of this case that is the sole matter for consideration in this appeal.
The circumstances under which the above mentioned notice under section 34 was issued are as follows.
The appellant had previously been assessed to tax on an income of Rs. 1,09,200 for the same year 1939 40.
by an order dated the 22nd December, 1939, which was reduced on appeal by Rs. 31,315.
That assessment was set aside by the Income Tax Appellate Tribunal on the 28th March, 1942, on the ground that the Indian Finance Act of 1939 was not in force during 292 the assessment year 1939 40 in Chota Nagpur, which was a partially excluded area.
On a reference by the Tribunal at the instance of the Income tax authorities, the High Court of Patna agreed with this view and pronounced on the 30th September, 1943, its judgment confirming the setting aside of the assessment.
Meanwhile, the Governor of Bihar promulgated Bihar Regulation IV of 1942, Which was assented to by the Governor General on the 30th June, 1942.
By this Regulation, the Indian Finance Act of 1939 (along with Finance Acts of other years with which we are not concerned) was brought into force in Chota Nagpur retrospectively as from the 30th March 1939.
The relevant portion of the Regulation was in the following terms.
"The Indian Finance Act, 1939, shall be deemed to have come into force in the area to which this Regulation extends on the 30th day of March, 1939".
On the 8th February, 1944, the Income tax Officer passed an order as follows: "Due to recent judgment of the High Court the assessment under section 23(3) stands cancelled and with it the notice under section 34 issued in this case becomes ineffective and is withdrawn.
Assessee derives income from mica mining and dealing, moneylending, mining rents and non agricultural sources of zamindary, and this has escaped assessment in its entirety.
Issue notice under section 22(2) read with section 34 again to file a return of income in the prescribed form and within the prescribed time, and inform the assessee that the original notice under section 34 has been cancelled".
It may be mentioned, in passing, that the notice under section 34 which is referred to in the above order as having become ineffective and as, therefore, withdrawn was a prior one which was issued on the 8th July, 1941, i.e., during the pendency of the assessee 's appeal relating to the earlier assessment before the Income tax Appellate Tribunal.
It is not quite clear from the record in what circumstances 'that notice came to be issued.
But it looks probable that it relates to certain items appearing in the accounts as 293 cash credits to the tune of four lakhs which, as will appear presently, were treated in the later proceedings as concealed income in the absence of any proper explanation by the assessee.
This prior notice under section 34, having been withdrawn, has no bearing on the question at issue before us in this appeal and has not been relied on by either side.
In pursuance of the order dated the 8th February, 1944, quoted above, a fresh notice under section 34 of the Act was issued to the appellant on the, 12th February, 1944.
The income of the assessee company was thereupon determined at a sum of Rs. 4,86,351, which on appeal to the Assistant Commissioner, was reduced by Rs. 11,187.
Out of this amount a sum of Rs. 4,04,618 related to two items of cash credits appearing in the name of the partners of the Company which in the absence of any satisfactory explanation, was treated by the Income tax authorities as secreted profits of the Company.
Before the Income tax Appellate Tribunal two points were raised.
(1) Whether the notice dated the 12th February, 1944, under section 34 of the Act was validly issued.
(2) Whether the Income tax authorities were right in holding that the cash credit items were secret profits.
Both the points were decided against the assessee.
On the assessee 's application to refer both the points for the decision of the High Court, the Tribunal declined to make a reference as regards the second point but referred the first for the opinion of the Court in the following terms: "Whether in the circumstances of the case, the notice issued on 12 2 1944 under section 34 of the Indian Income tax Act was validly issued for the assessment year 1939 40?" The question was answered against the assessee by the High Court and hence this appeal before us.
The assessee attempted to reopen the second question relating to secret profits before the High Court but the learned Judges declined to allow it to be canvassed, since the Tribunal did not refer the question to them.
We are, therefore, concerned in this appeal only with the question relating to the validity of the notice 294 issued on the 12th February, 1944, under section 34 of the Act.
It is obvious that if this notice is found to be invalid the assessee would get relief for the entire amount including the amount of secret profits.
The answer to the question which arises for consideration in this appeal depends on a correct appreciation of the requirements of section 34 of the Act.
Now, it has to be mentioned that section 34 of the Act as it originally stood in the Act of 1922, was amended by Act VII of 1939 and this was in turn amended by Act XLVIII of 1948.
At the relevant date, i.e., for the assessment year 1939 40, section 34 (1) as amended by Act VII of 1939 (and before its amendment in 1948) was in force.
It was as follows: "If in consequence of definite information which has come into his possession the Income tax Officer discovers that income, profits or gains chargeable to income tax have escaped assessment in any year, (or have been under assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act) the Income tax Officer may, (in any case in which be has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years and) in any other case at any time within four years of the end,of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, 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 and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section".
Omitting from the above sub section those portions which are inapplicable to the facts of the present case marked out within brackets it may be seen that the facts which require to be established for the validity of the notice under this sub section are (I ' the income, profits or gains sought to be assessed should be chargeable to income tax and have escaped assess 295 ment in any year, and (2) the Income tax Officer should have discovered it in consequence of definite information which has come into his possession.
The contention of the learned counsel for the appellant is that, with reference to the facts of this case, none of these conditions can be said to have been satisfied.
It is urged that the income sought to be assessed under these proceedings was not, as a fact, chargeable to income tax during the assessment year 1939 40.
It is said that in any case there can be no question of the income having escaped assessment because, as a fact, the income tax authorities did proceed to assess the income and that what happened is that the proceedings became infructuous by reason of the High Court having pronounced them to be void.
It is also contended that there is no question of discovery of any relevant fact or information, because the non assessment of the income of the assessee for the period in question was in spite of all the information relating to the income of the assessee having been previously furnished and being in the possession of the Income tax Officer as would appear from the order of the Officer dated the 22nd December, 1939.
It is convenient to deal with this last objection in the first instance.
It may be true that all the information relating to the relevant income of the assessee which is now sought to be taxed was in the possession of the Income tax Officer in the year 1939 itself when the return was submitted in compliance with the notice under section 22(2) of the Act then issued.
But what was required under section 34(1) was not merely fresh information as to the income that escaped assessment but information as to the fact of escapement from assessment of the chargeable income.
In the present case the income tax authorities proceeded to assess the appellant in the normal way during the assessment year 1939 40 itself.
Those proceedings became infructuous, by virtue of the decision of the Income tax Appellate Tribunal and the decision of the High Court confirming it, which disclosed that the Indian Finance Act of 1939 was not in operation in 296 the relevant area at the relevant period and that in the absence thereof no valid assessment could be made.
The fact, therefore, that the income of the appellant for the relevant year remained without any valid assessment emerged only on the High Court finally giving its decision that the assessment proceedings previously taken were invalid.
If, in the circumstances, there was "escapement of chargeable income from assessment" a question to be dealt with presently there can be no doubt that this fact can be reasonably said to have been discovered by the Income tax Officer only when he got definite information as to (1) the passing of the Bihar Regulation IV of 1942 applying the Indian Finance Act of 1939 retrospectively for the relevant accounting period, and (2) the judgment of the High Court pronouncing prior proceedings to be invalid It is knowledge of both these facts, together, that would, with reference to the circumstances of the present case, constitute the discovery of the relevant fact in consequence of definite information received by the Income tax Officer.
The information as to both these facts taken together could only be after the decision of the High Court on the 30th September, 1943.
As already stated, the notice under section 34(1) , whose validity is in question, was based on the order of the Income tax Officer dated the 8th February, 1944, after the judgment of the High Court was pronounced.
That order which has been extracted above, shows clearly that it was in consequence of the judgment of the High Court in the back ground of the promulgation of Regulation IV of 1942 that fresh action under section 34 (1) was being initiated.
A number of cases (C.I. T. Bombay vs Sir Mahomed Yusuf Ismail(1); Fazal Dhala vs C.I. T., B.& 0.
Raghavalu Naidu & Sons vs C.I. T., Madras(3); and Raja Benoy Kumar Sahas Roy vs C. I. T., West Bengal(,) have been cited before us to show how the phrase "definite information" and the word "discovery" used in this section have been interpreted by the various (1) [1944] 12 I.T.R. section (3) (2) (4) 297 High Courts.
It is unnecessary to deal with these cases at any length.
There is here no question as to any new subjective facts such as change of opinion consequent on a correct appreciation of law by the very same, or another, or higher officer, that is pressed into service as bringing about "definite information " and "discovery".
We are quite clear that the promulgation of the Regulation and the decision of the High Court are objective facts, information regarding which became available to the Income tax Officer when he passed the order dated the 8th February, 1944, and it is only when these facts came to his knowledge, that the Income tax Officer can be said to have discovered that chargeable income escaped assessment in the relevant year.
The main question that requires consideration in this case is whether, on the facts, it can be said that "income chargeable to income tax has escaped assessment in the relevant year".
The contention of the learned counsel for the appellant is that during the relevant year 1939 40 the income was not chargeable to tax as a fact and that the retrospective operation of the Finance Act for the relevant year by virtue of a later legislation does not make a difference for this purpose.
To decide this question it is necessary to have a clear idea of the scheme of the Income tax Act and its correlation to the Finance Act of each year.
The Income tax Act is a standing piece of legislation which provides the entire machinery for the levy of income tax.
The Finance Act of each year imposes the obligation for the payment of a determinate sum for each such year calculated with reference to that machinery.
As has been pointed out by the Federal Court in Chatturam vs C.I. T., Bihar(1) (quoting from the judgment of Lord Dunedin in Whitney vs Commissioners of Inland Revenue (2).
"there are three stages in the imposition of a tax.
There is the declaration of liability, that is the part of the statute which deter mines what persons in respect of what property are (1) at 126.
(2) 38 298 liable.
Next, there is the assessment.
Liability does not depend on assessment.
That, ex hypothesi, has already been fixed.
But assessment particularises the exact sum which a person liable has to pay.
Lastly, come the methods of recovery if the person taxed does not voluntarily pay".
The same idea has been expressed in slightly different language by Lord Romer in the judgment of the Privy Council reported in C.I.T., Bombay & Aden vs Khemchand Ramdas(1).
Chapter III of the Income tax Act headed "Taxable Income" contains the various provisions with reference to which taxable income is determined.
The tax is leviable under section 3 and is in respect of the total income of an assessee in the previous year.
The total income is defined in section 2, sub section (15).
The application of the Act to the total income in the hands of an assessee is governed by sections 4, 4 A and 4 B and is determined with reference to concepts relating to residence, receipt and accrual, as indicated therein.
Section 3, under which the actual charge of income tax arises, is as follows: "Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually".
It is by virtue of this section that the actual levy of the tax and the rates at which the tax has to be computed is determined each year by the annual Finance Acts.
Thus, under the scheme of the Income tax Act, the income of an assessee attracts the quality of taxability with reference to the standing provisions of the Act but the payability and the quantification of the tax depend on the passing and application of the annual Finance Act.
Thus, income is chargeable to tax independent of the passing of the (1) at 428.
299 Finance Act but until the Finance Act is passed no tax can be actually levied.
A comparison of sections 3 and 6 of the Act shows that the Act recognises the distinction between chargeability and the actual operation of the charge.
Section 6 says "save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income tax in the manner hereinafter appearing, etc.
" while section 3, as already quoted above, says that "where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates,, shall be charged for that year, etc." Though, no doubt, sections 3 and 4 are the charging sections in the Act as pointed out in Chatturam vs C.I.T., Bihar(1) at page 125, the wording of section 3 assumes the pre existence of chargeable income as indicated in section 6.
Hence, according to the scheme of the Act the quality of chargeability of any income is independent of the passing of the Finance Act.
In this view, therefore, though, as a fact, on account of the Finance Act not having been extended to the relevant area during the year 1939 40, legal authority was then lacking for the quantification of the tax and imposition of the liability therefor, the income of the assessee for the relevant year was nonetheless chargeable to tax at the time, in the sense explained above.
Indeed, it can also be said that the very fact of Regulation IV of 1942, having brought the Finance Act of 1939 into operation retrospectively, in this area, has factually brought about, in any case, the chargeability of the tax during that very year.
The relevant portion of the Regulation says that "the Indian Finance Act of 1939 shall be deemed to have come into force in the area to which this Regulation extends on the 30th day of March, 1939".
By virtue of this deeming provision the Indian Finance Act of 1939 must be assumed even factually to have come into operation on the date specified and the tax must be taken to have become chargeable in that very year, though the actual liability for payment could not arise until proper and (1) 300 valid steps 'are taken for quantification of the tax.
The contention, therefore, of the appellant that the income was not chargeable to tax in the year 1939 40 cannot be accepted.
The next question that arises is whether the income, though chargeable to tax in the year, can be said to have escaped assessment in the relevant year.
The argument of the learned counsel for the appellant is that since assessment proceedings had in fact been taken during the year 1939 40 by an order of assessment dated the 22nd December, 1939, it cannot be said that the income "escaped" assessment.
He urges that what happened was that, in spite of assessment having been made, the assessment proceedings became infructuous on account of the decision of the Income tax Appellate Tribunal setting aside the same and High Court agreeing with it.
He contends that, in the circumstances, this is no more than a failure of the assessment proceedings but that it is not an escapement from assessment.
He relied upon the Privy Council case in Sir Rajendranath Mukherjee vs C.I. P., Bengal(1), where their Lordships say that "the expression 'has escaped assessment ' cannot be read as equivalent to 'has not been assessed" ' and that "such a reading gives too narrow a meaning to the word 'assessment ' and too wide a meaning to the word 'escaped" '.
Learned counsel for the respondent relies on a number of subsequent 'cases of the various High Courts (Madan Mohan Lal vs C.I.T., Punjab(1); C.I. T., Bombay vs Pirojbai N. Contractor(3); and Kunwar Bishwanath Singh vs C.I. T., C.P.(4) ) which have explained.
this decision of the Privy Council and pointed out that the particular passage in that judgment which is relied upon bad reference to the, facts of that case, viz., the proceedings by way of initial assessment being still pending.
While no doubt the Privy Council case is thus distinguishable, the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to (1) at 77.
(3) (2) (4) 301 non assessment simpliciter is not without force.
Here again, it is unnecessary to lay down what exactly constitutes "escapement from assessment".
For the purpose of the present case it appears to us sufficient to say that, where earlier assessment proceedings had in fact been taken but failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities, notwithstanding the chargeability of income to the tax, it would be a case of chargeable income escaping assessment and not a case of mere non assessment of income tax.
The proceedings for assessment in the present case have failed to result in a valid assessment by virtue of a legal lacuna, viz., the fact of the Indian Finance Act of 1939 not having been extended to the relevant area for the relevant assessment year.
Learned counsel for the appellant suggests that the failure of the assessment proceedings in this case must be taken to have been due to the lapse of the income tax authorities.
It is said that inasmuch as Regulation IV of 1942 was actually passed during the pendency of the reference in the High Court in respect of the prior proceedings, the result would have been different, if the Regulation had been brought to the notice of the High Court.
There is, however, no reason to think so.
The High Court 's jurisdiction was only to answer the particular question that was referred to it by the Income tax Appellate Tribunal and it is extremely doubtful whether they could have taken notice of a subsequent legislation and answered a different question.
Learned counsel for the appellant also urged that in any case the deeming provision enacted in Regulation IV of 1942, may be taken to have validated the assessment proceedings previously taken in the year 1939 and at best to have restored the assessment order passed by the Income tax Officer on the 22nd December, 1939, and confirmed by the Assistant Commissioner.
But this overlooks the fact that the order had in fact been set aside by the Income tax Appellate Tribunal and that the setting aside was confirmed by the High Court on the reference made to it.
Admittedly the Regulation was passed after the decision of the 302 Income tax Appellate Tribunal.
Notwithstanding that the Regulation IV of 1942 purported to be retrospective) it cannot have the effect of effacing the result brought about by the decision of the Income tax Appellate Tribunal and the High Court on reference, unless there are clear and express words to that effect.
It might have been quite a different matter, if by the date of the Regulation the assessment pro ceedings themselves were still pending as in fact happened with reference to assessment proceedings in this area, in respect of a number of assessees for the subsequent assessment year, 1940 41, which were pending by the date of the relevant Regulation and were continued up to their termination.
They were held to be valid both by the High Court and by the Federal Court when challenged by the assessees.
(See Raja Bahadur Kamakshya Narain Singh vs C.I.T., B. & O.(1); Chatturam vs C.I. T., B. & O.(1); as also Chatturam vs C.I.T., Bihar(1).
It follows, therefore, that, in our view, the income of the assessee 'Chargeable to income tax escaped assessment in the relevant year 1939 40.
The High Court was, therefore, right in answering as it did the question referred to it.
The appeal accordingly fails and is dismissed with costs.
(1) (1946) 14 I.T R. (2) (a) at 126.

summary:
The appellant in this appeal had been assessed to Income Tax which was reduced on appeal but that assessment was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was not in force during the assessment year in Chota Nagpur.
On a reference by the Tribunal the High Court con firmed the setting aside of this assessment.
By the promulgation of Bihar Regulation IV of 1942 by the Governor of Bihar (which was assented to by the Governor General) the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from the 30th March 1939.
On the 8th February 1944 the Income Tax Officer passed an order in pursuance of which a fresh notice was issued under section 34 which resulted in the assessment of the appellant to income tax.
The question for determination in this appeal was whether the notice under section 34 was validly issued.
Held (i) that for the purposes of section 34 of the Act the income, profits or gains sought to be assessed were chargeable to income tax according to the scheme of the Act and the provisions of sections 3 and 4 of the Act; (ii) that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax because the earlier assessment proceedings in the present case had in fact been taken but failed to result in a valid assessment owing to some lacuna which was not attributable to the assessing authorities.
C.I.T., Bombay vs Sir Mahomed Yusuf Ismail ([1944] , Fazal Dhala vs C.I.T., B. & O. ([1944] 12 I.T.R. 341), Baghavalu Naidu & Sons vs C.I.T., Madras ([1945] , Raja Benoy Kumar Sahas Boy vs C.I.T., West Bengal ([1953] , Chatturam vs C.I.T., Bihar ([1947] F.C.R. 116), Whitney vs Commissioners of Inland Revenue ([1926] A.C. 37), C.I.T. Bombay & Aden vs Khemchand Ramdas ([1938] at 428), Sir Rajendranath Mukherjee vs C.I.T., Bengal ([1934] , Madan Mohan Lal vs C.I.T., Punjab ([1935] , C.I.T., Bombay vs Pirojbai N. Contractor ([1937] , Kunwar 291 Bishwanath Singh vs C.I.T., C.P. ([1942] , Raja Bahadur Kamakshya Narain Singh vs C.I.T. B. & 0.
([1946] and Chatturam vs C.I.T., B. & 0.
([1946] , referred to.


judgement:
Civil Appeal No. 748 of 1968.
637 (Fazal Ali, J.) Appeal by Special Leave from the Judgment and Decree dated the 14th February, 1967 of he Bombay High Court in Civil First Appeal No. 888 of 1959.
F. section Nariman and I. N. Shroff for the appellant.
K. section Ramamurthi and K. Rajendra Choudhury, for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by special leave against the judgment dated February 14, 1967, of the High Court of Bombay turns upon the interpretation of clause 3 of the agreement Ext.
39 executed between the parties containing the terms and conditions for which the plaintiff appellant was to supply electricity to the defendant the Jalgaon Borough Municipality.
What appears to us to have been a short and simple case has been rendered cumbersome and complicated by somewhat complex and involved process of reasoning adopted by the High Court in interpreting the various clauses of the agreement Ext.
The plaintiff/appellant 's case was based mainly on clause 3 of the agreement but the High Court instead of concentrating its attention on the interpretation of the scope and ambit of this particular clause appears to have entered upon a covering inquiry and a detailed determination of the history of the case, the various clauses of the agreement executed, the licence taken by the appellant, and so on, which, in our opinion, were not at all germane for the decision of the simple issue which arose in this appeal.
The facts of the case lie within a very narrow compass.
The plaintiff/appellant entered into an agreement to supply electrical energy to the Jalgaon Borough Municipality as far back as 1944.
The energy was to be supplied on the basis of the agreement executed between the parties in the year 1944.
This agreement expired to wards the end of January 1951 and a fresh agreement which is dated May 29, 1951, Ext.
39, which was to commence from February 1, 1951, was executed between the parties.
This agreement was to ensure for a period of five years.
In the present appeal we are concerned with the terms and recitals of this agreement, particularly clause 3 thereof.
The plaintiff averred inter alia that under the agreement the defendant was bound to consume electrical energy for 16 hours a day and pay the minimum charges even if no actual consumption was made.
This claim was put forward by the plaintiff in December 1953 on the basis of clause 3 of the agreement.
Consequent upon its claim the plaintiff sent a number of bills to the defendant which it refused to pay and hence the present suit was instituted on February 27, 1956.
Before the Trial Court the defendant Municipality denied the allegations of the plaintiff and averred that under the terms of is the agreement the Municipality was not bound to pay to the plaintiff Company any minimum charges even if the electrical energy was not consumed.
It was also alleged that even if there was any such clause 638 in the agreement it was void under section 23 of the 197.
A number of other defences were also taken with which we are not concerned.
The Trial Court of the Civil Judge, Senior Division, Jalgaon accepted the defendant 's plea and dismissed the suit of the plaintiff/appellant.
The plaintiff thereupon preferred an appeal to the High Court of Bombay which upheld the decree of the Trial Court and dismissed the appeal negativing the plea put forward by the plaintiff.
Counsel for both the parties agreed before us that the fate of the entire case depended upon the interpretation of clause 3 of the agreement Ext.
39 which appears on pp.
275 277 of the printed Paper Book.
Mr. F. section Nariman for the appellant submitted that the interpretation put by the High Court was absolutely wrong, whereas Mr. K. section Ramamurthi strenuously supported the judgment of the High Court.
The High Court on consideration of clauses 2 and 3 of the agreement appears to have lost sight of the essential stipulation contained in clause 3 and found that minimum charges were given only in clause 2 or the agreement and clause 3 could be of no assistance to the appellant.
The High Court also considered lot of other circumstances which were not at all relevant for the purpose of construing clause 3 of the agreement.
In order to interpret the document, it may be necessary to extract clauses 2 and 3 of the said agreement: "2.
The Company shall supply to the Municipality and the Municipality shall take from the company for a period of five years, the period commencing from 1st February 1951, electrical energy for running the electric motors to work water pumps at the Girna Pumping Station at the following rates.
1.5 annas per unit for the first 50 units per month per B.H.P. installed and the lest at 0.5 anna per unit plus an additional charge at 0.01 anna per unit per rupee rise in the fuel oil rate over Rs. 68/ per ton viz. the rate ex Power house ruling prior to war, with a minimum of 50 units per month per B.H.P. installed, first 50 units per B.H.P. shall mean and include units given by both the electric Motors and Pumps at the Girna Pumping Station.
The additional charge is to apply to all units.
The hours of supply of electrical energy for running the said electric motors shall be according to the quota of diesel oil sanctioned by the Government.
In normal times, i.e. when diesel oil becomes available in any required quantity and without any restriction, the Municipality shall take supply of electrical energy for a minimum period of 16 hours a day and the Company shall supply electricity for a maximum period of 20 hours a day i.e. excluding the four hours from 6 P.M. to 10 P.M.
An analysis of clauses 2 and 3 of the agreement clearly shows that these two clauses are independent and separate provisions dealing with 639 (Fazal Ali, J.) different contingencies.
If there is any link between the two it is only that the reason for making concession in clause a for charging rate of 0.5 annas per unit over first 50 units is the fact that the plain tiff company was guaranteed payment for electrical energy to be sup plied during fixed period whether or not it is consumed by the Municipality.
Clause 3 first of all stipulated that in normal times the Municipality was bound to take supply of electrical energy for a" minimum period of 16 hours a day and in view of this minimum guarantee the Company would supply electricity for a maximum period of 20 hours a day.
In doing this, however, four hours, namely from 6 P.M. to 10 P.M. , would be excluded, because these being the peak hours the Company would be at liberty to supply electricity to other consumers.
The terms of clause 3 appear to us to be absolutely clear and unambiguous and it was not at all necessary for the High Court to have gone into a plethora of extraneous circumstances when the terms of that document do not admit of any ambiguity.
The High Court seems to have completely overlooked the fact that clause 3 of the agreement embodied what is known in common parlance as the doctrine of minimum guarantee i.e. the Company was assured of a minimum consumption of electrical energy by the Municipality and or the payment of the same whether it was consumed or not.
That was the reason why the Company was prepared to charge a minimum rate of 0.5 anna per unit over and above the first 50 units.
The minimum charge of 0.5 anna per unit, therefore, was actually the consideration for the minimum guarantee allowed to the plaintiff under clause 3 of the agreement.
Moreover clauses 2 and 3 of the agreement seem to us to be in consonance with the spirit and letter of the proviso to section 22 of the which runs thus: "Provided that no person shall be entitled to demand or to continue to receive from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.
" A bale reading of clause 3 is sufficient to indicate that this particular term of the contract was in direct compliance with the provisions of the proviso to section 22 of the Act which ensures a provision for minimum guarantee for the supply of electricity.
Moreover it is obvious that if the plaintiff company was to give bulk supply of electricity at a concessional rate of 0.5 anna per unit it had to lay down lines and to keep the power ready for being supplied as and when required.
The consumers could put their switches on whenever they liked and therefore the plaintiff had to keep every thing ready so that power is supplied the moment the switch was put on.
in these circumstances, it was absolutely essential that the plain 640 tiff should have been ensured the payment of the minimum charges for the supply of electrical energy whether consumed or not so that it may be able to meet the bare maintenance expenses.
For these reasons, therefore, we are satisfied that the interpretation put by the Courts below on the agreement Ext.
39. was legally erroneous and cannot be accepted.
The next question that falls to be considered is about the question of quantum of interest to be allowed to the appellant Company.
Mr. F. section Nariman, learned counsel for the appellant, fairly conceded that he would not be in a position to press his claim for interest prior to the date of the suit and would be satisfied if he is awarded interest at the rate of 4 per cent.
per annum from the date of the suit.
The result is that the appeal is allowed, the judgments of the Trial Court and the High Court are set aside, the plaintiff 's suit is decreed with interest at the rate of 4% per annum from the date of the suit till payment.
In the peculiar circumstances of the case, we leave the parties to bear their own costs throughout.
V.M.K. Appeal allowed.

dataset_name: IN-Abs

summary:
The plaintiff appellant entered into an agreement with the respondent to supply electrical energy to the respondent in 1944.
This agreement expired towards the end of January 1951, and which was to commence from February 1951, was executed between the parties.
This agreements was to ensure for a period of five years.
Clause 3 of the agreement first of ' all stipulated that in normal times, the Municipality was bound to take supply.
Of electrical energy for a minimum period of 16 hours a day and in view of this minimum guarantee Company would supply electricity for a maximum period of 20 hours a day.
In doing, this, however four hours, namely, from 6 p.m. to 10 p.m would be excluded.
The plaintiff averred that under the agreement the agreement was bound to consume electrical energy for 16 hours a day and pay the minimum charges even if no actual consumption was made. 'This claim was put forward by the plaintiff in December.
1953 on the basis of` clause 3 of the agreement Consequent upon its claim the plaintiff.
sent a number of bills to the defendant which it refused to pay and hence the present in was instituted on February ' ',.
Before the Trial Court the defendant Municipality denied the allegations of ' the plaintiff and averred that under.
the terms of the agreement the.
Municipality was not bound to pay to the plaintiff Company any minimum charges even if the electrical energy was not consumed.
It was also alleged the even if there was any such clause in the agreement it was void under section 23 of the .
The Trial Court accepted the defendant 's plea and dismissed the suit.
The plaintiff thereupon preferred an appeal to the High Court of Bombay. 'the high Court dismissed the appeal holding that the minimum charges were given only in clause 2 of the agreement and that clause 3 could be of ' no assistance to the appellant.
Allowing the appeal by special leave.
^ HELD: (i) An analysis of clauses 2 and 3 of the agreement clearly shows that these clauses are independent and separate provisions dealing with different contingencies.
The terms of clause 3 are absolutely clear and unambiguous and it was not at all necessary for the High Court to halve gone into 1 a plethora of extraneous circumstances when the terms of that document do not admit of any ambiguity.
The High Court seems to have completely overlooked the fact that clause 3 of the agreement embodied what is known in common parlance as the doctrine of minimum guarantee i.e. the Company was assured of a minimum consumption of electrical energy by the Municipality and for the payment of the same whether it was consumed or not.
That was the reason why the Company was prepared to charge a minimum rate of 0.5 anna per unit over and above the first 50 units.
The minimum charge of 0.5 anna per unit, therefore.
was actually the consideration for the minimum guarantee allowed to the plaintiff under clause 3 of the agreement.
[638 H. 639 C D] (ii) Clauses 2 and 3 of the agreement are in consonance with the spirit and letter of the proviso to s.22 of the .
A bare reading of clause 3 is sufficient to which ensures a provision for minimum guarantee for the supply of electricity.
[639 & G]


judgement:
Civil Appeal No. 496 of 1974.
Appeal by Special Leave from the Judgment and order dated the 2nd May, 1973 of the Punjab and Haryana High Court in R.S.A. No 1469 of 1969.
O. P. Sharma for the appellant.
R. N. Dikshit for Respondent No. 1.
The Judgment of the Court was delivered by RAY, C.J.
This appeal is by special leave from the judgment dated 2 May, 1973 of the Punjab and Haryana High Court.
The appellants are venders of the land in suit.
The vendors sold the land to the appellants for Rs. 43,000/ on 26 August, 1965.
The transaction was by registered deed of sale.
The respondents filed this suit for possession by pre emption of the land in payment of Rs. 30,000/ on allegations that the respondents were on the date of sale tenants of the land under the vendors.
The respondents alleged that their right of pre emotion was superior to that of the vendees.
They also alleged that the sale took place for Rs. 30,000/ only and the remaining was fictitiously mentioned in the deed of sale.
The suit was dismissed on the ground that one suit on behalf of the four plaintiffs, who were tenants of different parts of the land, was not maintainable.
On appeal the suit was remanded for re trial.
At the trial on remand, two plaintiffs withdrew from the suit.
The trial court directed the remaining two plaintiffs respondents Sohan Lal and Nathi to deposit Rs. 6,300/ and Rs. 5,670, ' respectively on or before 1 April, 1969 less 1/5th of the pre emotion amount already deposited by them.
The Trial Court gave the respondent Sohan Lal a decree for possession by pre emotion in respect of Killa Nos.
17 and 18/1 of Rectangle 37.
The plaintiffs respondents aggrieved by the order.
filed an appeal alleging that the respondent Sohan Lal was a tenant of Killa No. 24 under the vendors and the decree should have been passed in their favor for the whole of the land and that decree should have been passed in favour of Sohan Lal in respect of Killa No. 24 of Rectangle 37.
The other ground in the appeal was that the decree should have been passed in favour of the plaintiffs respondents for whole of the land.
The Additional District Judge on 29 July, 1969 passed a decree for.
possession by pre emotion in favour of respondent Sohan Lal on payment of Rs. 9,100 and he was directed to deposit this amount in Court on or before 20 August, 1969.
The Addition District Judge passed a decree for possession by pre emption in favour of respondent Sohan Lal of Killa No. 24 of Rectangle 37.
The decree in favour the respondent Nathi was maintained without change.
Thereafter, the appellants preferred an appeal in the High Court alleging that the decision that plaintiff respondent Sohan Lal was also a 600 tenant of Killa No. 24 was incorrect and should be set aside and the decree of the Trial Court should be restored.
The appellants also prayed that the decree in favour of the two plaintiffs respondents Sohan Lal and Nathi were liable to be set aside.
The appellants contended before the High Court that respondents Sohan Lal and Nathi did not deposit the decretal amount by 1 April, 1969 as directed by the Trial Court and, therefore, the suit was liable to be dismissed under the provisions contained in order 20 Rule 14 of the Code of Civil Procedure.
The other contention of the appellants before the High Court was that the plaintiff respondent Sohan Lal should not have been granted pre emption rights in respect of Killa No. 24.
The High Court on 2 May, 1973 accepted the appeal of the appellants against the plaintiff: Nathi and dismissed the appeal against the plaintiff respondent Sohan Lal.
The High Court said that since the lower appellate court granted Mohan Lal decree for one more Killa and directed that the amount would be Rs. 9,100/ , the respondent was to comply with the appellate decree and not the decree of the Trial Court.
The appellants contended that neither Sohan Lal nor Nathi deposited the amount in accordance with the decree of the Trial Court on or before l April, 1969 and the suit should have been dismissed on that ground alone and the appeal should have been allowed.
The appellants contended that the lower appellate court had no power and jurisdiction to give further time to Sohan Lal to deposit the preemption amount by an extended date.
This Court in Naguba Appa vs Namdev(1) held that the directions given by the Trial Court are mandatory under the provisions contained in order 20 Rule 14 of the Code of Civil Procedure.
This Court in Naguba Appa 's case (supra) said that "mere filing of an appeal does not suspend the decree of the Trial Court and unless that decree is altered in any manner by the Court of Appeal, the pre emptor is bound to comply with that direction '`.
In Dattaraya s/o Keshav Tawalay vs Shaikh Mahboob Shaikh Ali & Anr.(2) this Court said that a decree in terms of order 20 Rule 14, imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance by the other.
To illustrate, if the defendants by obtaining the stay order from the High Court relieve themselves of the obligation to deliver possession of the properties the plaintiff decree holder must also be deemed thereby to be relieved of the necessity of depositing the money so long as the stay order continues.
In the present case, the lower appellate court did not grant any stay to the plaintiffs respondents.
In view of the fact that the plaintiffs respondents did not deposit the amount as directed by the Trial Court (1) A.I.R. 1954 S.C. 50.
(2) ; 601 on or before 1 April, 1969, it became mandatory on the lower appellate court by reason of the ruling of this Court in Naguba Appa 's case (supra) to dismiss the suit.
The observations of this Court in Naguba Appa 's case (supra) that the pre emptor is bound to comply with the directions of the Trial Judge unless that decree is altered in any manner by a Court of Appeal do not mean that where the deposit is not made in accordance with the directions of the Trial Court, the appellate court can extend the time for payment.
Thereafter, the lower appellate court was in error in extending the time for payment till 2 .
August, 1969.
In Naguba Appa 's case the pre emption money was not deposited within the time fixed in the decree.
The pre emptor made an application to the Court for making the deposit without disclosing that the time fixed by the decree had elapsed.
The application was allowed The defendant, when apprised of the situation, made an application to the Court to the effect that the plaintiff 's suit stood dismissed on account of his failure in making the deposit in time.
The Trial Judge held that the pre emption money not having been paid within the time fixed in the decree the suit stood dismissed.
On appeal the decision was set aside.
On second appeal it was restored and it was held that the suit stood dismissed under order 20, Rule 14 Civil Procedure Code.
An appeal was preferred against the judgment of the High Court this Court Held that the High Court was right in holding that the pre emptor 's suit stood dismissed by reason of his default in not depositing the pre emption price within the time fixed in the Trial Court 's decree.
The contention of the appellants that the lower appellate court was wrong in extending the time for payment is correct because the failure of the plaintiffs respondents to deposit the amount in terms of the Trial Court 's decree would result in pre emptor 's ' suit standing dismissed by reason of their default in not depositing the pre emption price.
The contention of the appellants that the High Court was wrong in not setting aside the order of extension of time passes by the lower appellate court is correct.
It is only if the plaintiffs respondents had paid the decretal amount within the time granted by the Trial Court or if the plaintiffs respondents had obtained another order from the lower appellate Court granting any order of stay that the lower appellate court might have considered the passing of appropriate order in favour of pre emptors.
The High Court should have allowed the appellant s ' appeal and not made any distinction in dismissing plaintiff respondent Nathi 's suit and allowing plaintiff respondent Sohan Lal any extension of time to make the payment.
Further, it appears that the plaintiff respondent Sohan Lal did not pay the amount.
For these reasons the appeal is accepted.
Suit of the plaintiffs respondents is dismissed.
The appellants are entitled to costs.
V.M.K.Appeal allowed.

summary:
The vendors sold the suit land,to the appellants (vendees) by a registered deed of sale for Rs. 43,000/ .
The ' respondents filed the suit for possession by pre emption of the land in payment of Rs. 30,000/ on the allegations that the respondents were on the date of sale tenants of the land under the vendors.
I They also alleged that the sale took place for Rs. 30,000/ only and the re maining amount was fictitiously mentioned in the deed of sale.
The suit was ' dismissed on the ground that one suit on behalf of the four plaintiffs who were tenants of different parts of the land, was not maintainable.
On appeal the suit was remanded for re trial.
At the trial on remand, two plaintiffs withdrew from the suit.
The trial court directed the remaining two plaintiffs respondents Sohan Lal and Nathi to deposit Rs. 6,300/_ and Rs. 5.670/ respectively on or before 1 April, 1969 less 1/5th of the pre emption amount already deposited by them.
The Trial Court gave the respondent Sohan Lal a decree for possession by pre emption in respect of Killa Nos.
14/1 .
17 and 18/1 of Rectangle 37.
The plaintiffs respondents, aggrieved by the order filed an appeal alleging that the decree should have been Passed for the whole of the land because the respondent Sohan Lal was also a tenant of Killa , No.
24 of Rectangle 37 under the vendors.
On 29 July 1969.
the Additional District Judge passed a decree for possession by pre emption in favour of respondent Sohan Lal of Killa No. 24 of Rectangle 37 on payment of Rs. 9,100/ and he was also directed to deposit this amount on or before 20 August, 1969.
The decree in favour of Nathi was maintained without charge.
The appellants filed an appeal before the High Court and it was contended before the High Court that respondents did not deposit the decretal amount by l April, 1969 as directed by the Trial Court and, therefore, the suit was liable to be dismissed under order 20 Rule 14 of the Code of Civil Procedure.
The High Court accepted the appeal of the appellants against the plaintiff Nathi and dismissed the appeal against the plaintiff respondent Sohan Lal.
The High Court said that since the lower appellate court granted Sohan Lal decree for one more Killa and directed that the amount would be Rs. 9,100/ .
the respondent was to comply with the appellate decree and not the decree of the Trial Court.
Allowing the appeal by special leave, ^ HELD: (1) The directions given by the Trial Court are mandatory under the provisions contained in order 20 Rule 14 of the Code of Civil Procedure.
A decree in terms of order 20 Rule 14, imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance bt the other.
[600E F, G].
Naguba Appa vs Namdey reported in A.I.R. l 954 S.C. 50 and Dattaraya S/o Keshav Tawalay vs Shaikh Ali and Anr.[1969] 2 S.C.R. 514 relied on.
(ii) It is only if the plaintiffs respondents had obtained another order from the lower appellate Court granting any order of stay that the lower appellate court might have considered the passing of appropriate order in favour of pre emptors.
The High Court should have allowed the appellants ' appeal and not made any distinction in dismissing plaintiffs respondent Nathi 's suit and allowing Plaintiff respondent Sohan Lal any extension of time to make the payment.
[601F G] 599


judgement:
Civil Appeal No. 1800 of 1969.
Appeal by special leave from the Judgment and order dated the 25th January., 1967 of the Rajasthan High Court in D.B. Civil Writ Petition No. 406 of l 966.
section M. Jain, for the appellant.
The Judgment of the Court was delivered by UNTWALIA, J.
The hearing of this appeal filed by the State of Rajasthan and another by special leave proceeded ex parte against the respondents.
After examining all the pros and cons of the dispute involved in this appeal with the assistance of the learned counsel for the appellants we have come to the conclusion that the appeal should be allowed.
From time to time the Government of Rajasthan fixed or revised the minimum rates of wages for employees in the Mica Mines throughout the State of Rajasthan under section 5(2) of the Minimum Wages Act, 1948 Central Act 11 of 1948 hereinafter.
called the Act.
The employment in the Mica Mines is a scheduled employment within the meaning of section 2(g) of the Act.
Eventually the minimum rates of wages were fixed by the Government by a notification dated the 31 July, 1965, the validity of which was challenged in the Rajasthan High Court by several employers in the Mica Mines in Civil Writ No. 406/1966 and 15 other writs.
Several proceedings initiated on the basis of the impugned notification were also challenged by the employers.
A Bench of the Rajasthan High Court allowed the writ applications, quashed the impugned notification and the proceedings taken in pursuance thereof.
This appeal arises out of Civil Writ No. 406/1966 in which the employer is respondent No. 1.
The notification dated 31 7 1965 was challenged on several rounds and we will be concerned with some of them in this appeal.
The relevant facts arc these.
For the purpose of revising the minimum wages fixed by the earlier notification dated the 24th April, 1959, The State Government in the first instance appointed a Committee consisting of five members on the 17th May. 1962.
The constitution of the 643 Committee was, however, revised by notification dated the 26th November, 1962.
This committee consisted of five members, two representatives of the employers, two representatives of the employees and one Professor K. section Mathur, Head of the Department of Economics Degree College, Ajmer.
The last was taken as an independent member of the committee.
It submitted its report to the Government.
The matter was referred by the Government to the Advisory Board constituted under section 9 of the Act.
It appears that a Sub committed as appointed by the Advisory Board to go into the matter further and to consider the report of the Wage Committee appointed earlier by the government on the 26th November, 1962 '.
In the Sub committee were taken some persons who were not members of the Advisory Board.
The Sub committee also submitted is report to the Advisory Board which consisted of 21 members, 8 employers ' representatives, a employees ' representatives and S Government officers appointed in the category of independent members.
The proceedings of the Board dated the 7th May, 1965 showed that it considered the recommendations of the Wage Committee and the Sub committee and then submitted its report containing its recommendations of the wage structure suggesting an alternative scale of minimum wages according as the linking of Dearness Allowance with the consumer price indices.
The State Government accepted the wage structure recommended by the Board but with slight variation in the matter of the linking basis with Dearness Allowance and made it all inclusive rates of minimum wages per month.
The learned Acting Chief Justice of the Rajasthan High Court who delivered the leading judgment in the case, on a consideration of the various divergent decisions of the High Courts came to the conclusion that the constitution of the Wage Committee was not valid as the Professor of the Government College was not an independent member.
Similarly the constitution of the Advisory Board was also bad as the five Government officers on the Board could not be said to be independent members.
He was also of the view that the Board had exceeded to power in appointing a Sub committee add committed an illegality in taking into consideration its report while making recommendations to the Government.
The other learned Judge with some amount of reservation and diffidence agreed to the order proposed by the learned Acting Chief Justice.
It may be stated here that the fixation of the minimum ware ill the notification dated the 31st July, 1965 was also challenged before the High Court on certain grounds relating to the merits of the fixation but the High Court has over ruled such objections.
Section 5 of the Act provides the procedure for fixing and revising minimum wages in respect of any scheduled employment.
There are two types of procedure indicated in clauses (a) and (b) of sub section (1).
Obviously in the present case the procedure followed was the one provided in clause (a).
We shall now read sub section (2) of section 5 with the proviso appended thereto: "After considering the advice of the committee or committees appointed under clause (a) of sub section (1), or as the case may be, all representations received by it before the 644 date specified in the notification under clause (b) of that sub section, the appropriate Government shall, by notification in the official Gazette, fix, or, as the case may be, revise the minimum rates of wages in respect of each scheduled employment, and unless such notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue: Provided that where the appropriate Government proposes to revise the minimum rates of wages by the mode specified in clause (b) of sub section (1), the appropriate Government shall consult the Advisory Board also " It would be noticed that the power to fix the minimum wages is the Government.
Under clause (e) of sub section (1) the Government can appoint as many committees and sub committees do it considers necessary to hold enquiries and advise it in respect of such fixation or revision of minimum wares.
Section 7 of the Act says: "For the purpose of co ordinating the work of committees and sub committees appointed under section 5 and advising the appropriate Government generally in the matter of fixing and revising minimum rates of wages, the appropriate Government shall appoint an Advisory Board.
" If the procedure provided in clause (a) is followed, consolation with the Advisory Board is not required in terms but is resorted to while it is mandatory in case of procedure (b).
Section 9 provides: "Each of the committees, sub committees and the Advisory Board shall consist of persons to be nominated by the appropriate Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons not exceeding one third of its total number of members; one of such independent persons shall be appointed the Chairman by the appropriate Government." The question as to whether a Government officer could be appointed on Committee.
, Sub committee to or the Advisory Board as an independent person came up for consideration before the various High Courts.
Majority of them took the view that it could be so.
A few High Court, however took a contrary view.
In the judgment under appeal the High Court or Rajasthan has fallen in the line of the minority.
But recently be point has been set at rest by a decision of this Court in The State of Andhra Pradesh vs Narayana Velur Beedi Manufacturing Factory and others (1) .
We consider it appropriate to quote the whole of graph 10 or that judgment: "In our judgment the view which has prevailed with the Majority of the High Courts must be sustained.
The committee or the advisory board can only tender advice which is not binding on the government While fixing the minimum wages (1) [1973] 1 Labour Law Journal 476 645 or revising the same as the case may be of course, the Government is expected, particularly in the present democratic set up, to take that advice seriously into consideration and act on it but it is not bound to do so.
The language of section 9 does not contain any indication whatsoever that persons in the employment of the Government would be excluded from the category of independent persons.
These words have essentially been employed in contradistinction to representatives of employers and employees.
In other words, apart from the representatives of employers and employees there should be persons who should be independent of them.
It does not follow that persons in the service an employee of the Government were meant to be excluded and they cannot be regarded as independent persons vis a vis the representatives of the employers and employees.
Apart from this the presence of high Government officials who may have actual working knowledge about the problems of employers and employee can afford a good deal of guidance and assistance in formulating the advice which is to be tendered under section 9 to the appropriate Government.
It may be that in certain circumstances such per sons who are in the service of the Government may cease to have an independent character if the question arise of fixation of minimum wages in a scheduled employment in which the appropriate Government is directly interested.
It would, therefore, depend upon the facts of each particular case whether the persons who have been appointed from out of the class of independent persons can be regarded as independent or not.
But the mere fact that they happen to be Government officials or Government servants will not divest them of the character of independent persons.
We are not impressed with the reasoning adopted that a Government official will have a bias or that he may favour the policy which the appropriate Government may be inclined to adopt because when he is a member of an advisory committee or board he is expected to give an impartial and independent advice and not merely carry out what the Government may be inclined to do.
Government officials are responsible persons and it cannot be said that they are not capable of taking a detached and impartial view.
The learned Acting Chief Justice of the High Court considered many of such decisions of the High Courts in his judgment and posed a question "Suppose, the Government is an employer in the particular scheduled employment for which wages are sought to be fixed under the Act.
employment for be postulated in such a case that an officer of the Government can property appointed as an `independent ' person on any of the statutory bodies in question?" An answer in the negative was given.
He then said "I need hardly add in this connection that if the Government be not an employer in any of the scheduled employments, there II would be no objection to the Government officers of the requisite calibre and experience being appointed as independent persons within the meaning of the section".
But thinking that in the list of the scheduled employment are included "employments such as public motor transport.
646 and construction and maintenance of roads and building operations and may be, for aught we know, in certain other employments also" in which the State Government is an employer and the Advisory Board constituted is meant for advising the Government in those employments also he held the constitution of the Advisory Board to be bad.
In the extract which we have given.
above from the decision of this Court a sentence is to be found resembling the line of thinking of the learned Acting Chief Justice.
This Court has said "It may be that in certain 1 circumstances such persons who are in the service of the Government may cease to have an independent character if the question arises of fixation of minimum wages in a scheduled employment in which the appropriate Government is directly interested" The question as to whether in such a situation a Government officer appointed on the Board or a Committee can be said to be independent member or not will have to be cautiously considered when an appropriate occasion arises for the same.
After all, even in such cases the final authority fixing or revising the minimum wages in a scheduled employment is the Government.
(Government officers can undoubtedly come on the Board or the Committee as representatives of the employers.
Whether in such a situation more Government servants can come in the category of the independent members is a question which is open to serious debate and doubt.
But in the instant case on the authority of this Court it is clear that the constitution of either the Wage Committee or the Advisory Board Was not bad, is the Government was not an employer in the Mica Mines in respect of which employment only minimum wages were fixed by revision in the notification dated the 31st July, 1965.
No procedure has been prescribed in the Act as to the method which the Advisory Board is to adopt before making its recommendations to the State Government.
It can devise its own procedure and collect some informations by appointment of a sub committee consisting only of some of its members as was the case in the decision of the Bombay High Court in Gulamhamed Tarasaheb, a Bidi Factory by its proprietors Shamrao and others vs State of Bombay and others(1).
But surely the Advisory Board has no power to appoint a rival sub I. Committee to the one appointed by the Government and take in such subcommittee persons who are not members of the Board, as was done in this case.
There is, therefore, no doubt that the Advisory Board committed an irregularity in taking into consideration the report of the sub committee invalidly appointed by it.
Does it necessarily follow from this that the impugned notification dated 31 7 1965 based upon the report of the Advisory Board which in its turn had taken into consideration not only the report of the Committee appointed by the Government but also that of the sub committee appointed by the Board is bad? on a careful consideration of the matter we give our answer in the negative.
The irregularity, even characterising it as an illegality, committed by the Advisory Board in taking into consideration the report of the sub committee was not such as to nullify its recommendation contained in its report, or, in any event, the final decision of the Government contained in the impugned notification.
It must be remembered that the procedure followed in this case was the one provided in section 5(1) (1) A.I.R. 1962 Bombay 97.
647 (a) in which case it was not mandatory for the Government to take the opinion of the Advisory Board.
After all, the recommendations made by the Board even on consideration of the report of the Sub committee along with that of the Committee was the advice of the Board.
The Government did accept it but accepted it after some modification.
In such a situation we do not think that the notification dated 31 7 1965 deserves invalidation.
It follows as a corollary that the proceedings started pursuant to the notification cannot also be quashed.
In the result we allow this appeal, set aside.
the judgment and order of the High Court and dismiss the connected writ application filed by respondent No. 1.
Since he has not appeared there will be no order as to costs.
V.P.S. Appeal allowed.

summary:
Section 5(1) of the , provides two types of procedure for fixing and revising minimum wages in respect of any scheduled employment.
Section 7 provides for the appointment of an Advisory Board.
If the procedure provided in s.5(1) (a) is followed consultation with the Advisory Board is not u required while it is mandatory in case the procedure in cl.
(b) is followed.
Under cl.
(a), the Government can appoint as many Committees or sub committees as it considers necessary to hold inquiries and advise it in respect of such fixation or revision.
Section 9 requires that every committee, sub committee and the Advisory Board shall consist of representatives of the employers and employees in equal numbers and independent persons, whose number shall not exceed 1/3 of the total number of members.
One of the independent persons shall be appointed Chairman.
[643 G 644 F] In the present case the State Government followed the procedure under cl.
(a) and appointed a committee for revising the wages with respect to employment in Mica Mines which is a scheduled employment under the Act.
The committee consisted of five members, two representative of the employers,.
two of the employes and a Professor of ' Economics of a Government college as an independent member.
It submitted its report to the Government.
The Government referred the matter to the Advisory Board which consisted of 21 members, 8 representatives of the employers.
8 of the employees and 5 government officers as independent members.
The Advisory Board appointed a sub committee to further into matter.
In the sub committee were taken same persons who were, not members of the Advisory Board.
The sub committee made its recommendations and the Advisory Board after considering those recommendations also submitted its report and the State Government accepted it with slight variations and fixed minimum wages by a notification.
The respondent challenged its validity and the High Court struck it down holding that, (i) the constitution of The Wage Committee and the Advisory Board was not valid because the economics professor and the 5 government member were not independent members, (ii) the Board had exceeded its power.
in appointing a sub committee.
(iii) the Board committed an illegality in taking into consideration its recommendations while submitting its report to the Government.
Allowing the appeal to this Court, ^ HELD :(1) It may be that in certain circumstances persons who are in service of ' the Government may cease to have an independent character if the question arises of fixation of minimum wages in a scheduled employment.
the case of fixation of minimum wages in a scheduled employment in which the Government is directly interested, whether Government servants can come in the category of independent members in addition to the Government officer who come on the Board or Committee as representatives of the employers is a matter which has to be considered in an appropriate case.
But in the instant case the constitution of the Wage Committee or the Advisory Board was not bad as Government was not an employer in the Mica Mines in respect of which minimum wages were fixed.
[646 A E] The State of Andhra Pradesh vs Narayana Velur Beedi Manufacturing Factory and others [1973] I Labour Law Journal, 476, followed.
642 (2) The Advisory Board can device its own procedure and collect information by appointment of sub committees consisting only of some of its members.
But the Advisory Board has no power to appoint a rival subcommittee to the one appointed by the Government and take in such subcommittee, persons who are not members of the Board as was done in this case.
Therefore.
the Advisory Board committed an irregularity in appointing the sub committee and taking into consideration its report.
[646 E G] (3) But it does not follow that the impugned notification based upon the report of the Advisory Board was bad even is the irregularity is assumed to be an illegality.
The recommendations made by the Board even on consideration of the report of its sub committee was only that of the Advisor Board.
Since the procedure was under section 5(1)(a) it was not mandatory for Government to take the opinion of the Advisory Board at all.
Therefore, the impugned notification and the proceedings pursuant to it cannot be quashed [646 G 647 B] Gulamahamed Tarasaheb, a Bidi factory by its proprietors Shamrao and other vs State of Bombay and ' others A.I.R. 1962 Bombay 97 referred to.