judgement:
Civil Appeal No. 1385 of 1979.
Appeal by Special Leave from the judgment and Order dated 10 7 1969 of the Assam & Nagaland High Court in Civil Rule No. 249 of 1967.
B. Datta for the Appellant.
A. R. Barthakur, section K. Nandy and P. Bharthakur for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by special leave is directed against a judgment and order dated 10th JULY 1969 of the High Court of Assam and Nagaland.
The facts giving rise to the appeal lie within a very narrow compass.
The respondent, Dr. Md. section Iskender Ali, was appointed on a purely temporary basis to the post of a medical officer in the Oil and Natural Gas Commission.
Under the terms and conditions of his service, he was to remain on probation for a period of 605 One year which could be extended at the discretion of the appointing authority.
The respondent was appointed on October 15, 1965 and the order of his appointment may be extracted thus: "No. 52/35/65 ENT Dated the 15th October 1965 MEMORANDUM With reference to his interview on the 18th August 1965 held at Sibsagar, Shri Dr. Md. section Iskender Ali is hereby informed that he/she has been selected for a temporary post of Medical officer in the Oil & Natural Gas Commission on an initial pay of Rs. 325/ p.m. in the scale of pay of Rs. 325 25 500 31 EB 30 800 (plus non practising allowance @ 25% of basic pay subject to minimum of Rs. 150/ ).
He will be entitled to draw dearness and other allowances at such rates and subject to such conditions as may be laid down in the rules and orders governing the grant of such allowances from time to time.
" The order of appointment was accompanied by conditions regulating his appointment and two of them may be extracted below, as they appear to be very relevant for the purpose of deciding the question at issue : "(ii) The appointment may be terminated at any time by one month 's notice to be given by either side, viz., the appointee or the appointing authority, without assigning any reasons.
The appointing authority, however, reserves the right of terminating the services or the appointee without notice or before expiration of the stipulated period of notice by making payment to him of a sum equivalent to the pay and allowances for the period of notice or the unexpired portion thereof; (iii) He will be on probation for a period of one year from the date of appointment.
This period may be extended at the discretion of the appointing authority, if necessary.
During the period of probation, the services are liable to be terminated at any time without notice, and/or assigning any reasons whatsoever.
" It appears that during the period of his probation there were some reports against the respondent as a result of which a departmental enquiry was held against him but which does not appear to have been proceeded with nor was any punishment imposed on him.
After he 606 had completed the period of one year on 15 10 1966 his probation was extended for another six months and before his services were terminated, there was no express order either confirming him or extending the period of probation.
Ultimately, by an order dated 28th July 1967 the services of the respondent were terminated with effect from 28th July 1967.
The order of termination runs thus: "No. 57/191/67 ENT Dated July 28, 1967 OFFICE ORDER Under para 2(iii) of offer of appointment No. 52/35/65 ENT dated October 16, 1965 the service of Dr. Md. Iskender Ali, Medical officer (still on probation), is hereby terminated with effect from the date of the service of this order on him.
" The respondent felt aggrieved by the termination of his services and filed a writ petition in the High Court on the ground that the order terminating his services was mala fide and was in fact passed by way of penalty entailing evil consequences.
The plea taken by the respondent found favour with the High Court which allowed the petition and quashed the order of the appellant terminating the services of the respondent.
The appellant obtained special leave to appeal from this Court: hence the appeal has now been posted before us for hearing.
The only point raised before us by the appellants was that as the respondent was a mere Probationer and the order terminating his services was all order of termination simpliciter without involving any stigma or penalty, the High Court was in error in quashing the order or termination and directing the reinstatement of the respondent.
The counsel for the appellants submitted that reading the order per se there is nothing to indicate that it was passed by way of punishment.
As the respondent was a temporary employee on probation, it was open to the employer to terminate his services at any time before he was confirmed.
If the employer was satisfied that he was not suitable for being retained in service.
The counsel for the respondent.
On the other hand, submitted that the order, though per se innocuous? was really a cloak to conceal the real mischief which the order purported to perpetuate as the order of termination was preceded by a full fledged departmental inquiry and a regular charge sheet was submitted against the respondent, it was because the respondent was found guilty that he was punished by way of dismissal from service.
In other words, the argument of the respondent was that the order of termination of the 607 services passed by the appellant was an order which amounted to A. dismissal from service involving a clear stigma and would, therefore, attract the provisions of article 311 of the Constitution and was rightly quashed by the High Court Before examining the respective contentions of the parties it may be necessary to mention a few admitted facts (1) It is not disputed that the respondent was appointed in a temporary post of Medical Officer and on probation of one year.
(2) Being a probationer, the respondent had no right to the service.
(3) Under the terms of his appointment particularly clauses (ii) and (iii), extracted above, the appointing authority could terminate the services without assigning any reasons.
(4) Under clause (iii) of the conditions of appointment, the appointing authority had a discretion to extend the period of probation and to terminate the services of the respondent without any notice and without giving any reasons whatsoever.
(5) After the respondent had put in one year 's probation, his period of probation was extended for a further period of six months which is a clear pointer to the fact that the appointing authority was not convinced that the respondent had satisfactorily completed the period of his probation.
The confidential roll reflecting the assessment of the work of the respondent during the period 31 12 1965 to 30 12 1966 clearly shows that the officer was careless and lacking in sense of responsibility.
The report also shows that the reporting officer recommended that the period of probation should be extended.
In accordance with the recommendation, the period of probation was further extended by six months.
The learned counsel for the respondent submitted that the remarks made in the assessment roll went to show that the intention of the appointing authority was to proceed against the respondent by way of punishment.
We are, However, unable to agree with this submission.
It is obvious that a temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained.
The remarks, in the assessment roll, merely indicate the nature of the performance put in by the officer 608 for the limited purpose of determining whether or not his probation should be extended.
These remarks were not intended to cast any stigma.
In the case of R. L. Butail vs Union of India & Ors this Court while indicating the nature of assessment made by the reporting officer observed as follows: "These rules abundantly show that a confidential report is intended to be a general assessment of work performed by a Government servant subordinate to the reporting authority, that such reports are maintained for the purpose of serving as data of comperative merit when questions of promotion, confirmation, etc., arise.
" It was then vehemently contended by the respondent that as the appointing authority chose to institute a departmental inquiry against the respondent for dereliction of duty and negligence in not attending to a baby who died due to his carelessness, the enquiry should have been carried to its logical end and charge sheet having been framed, the provisions of article 311 of the Constitution were clearly attracted and therefore it was not open to the appellants to have terminated the services by giving the order a cover of termination simpliciter.
In other words, the contention was that the real motive behind the termination of the service of the respondent was to inflict a punishment on him and as the appellants did not comply with the requirements of article 311 of the Constitution, the order impugned was illegal.
We are, however, unable to agree with this argument.
In the first place, it has been clearly pleaded by the Government in its counter affidavit that although an enquiry was held yet it was not continued and no punishment was imposed on the respondent.
In this connection, relevant portion of paragraph 11 of the counter affidavit before the High Court may be extracted: "A preliminary enquiry was made before the charge was framed and on the enquiry report a prima facie case having been found against the petitioner due charge was framed against him.
No punishment under Regulation 28 of oil and Natural Gas Commission (Conduct, Discipline and Appeal) Regulation was inflicted on the petitioner.
" In these circumstances, therefore, it is obvious that as the respondent was merely a probationer, the appointing authority did not consider it necessary to continue the enquiry but decided to terminate the services of the respondent as he was not found suitable for the job.
It is well settled by a long course of decisions of this Court that 609 in the case of a probationer or a temporary employee, who has no right to the post, such a termination of his services is valid and does not attract the provisions of article 311 of the Constitution.
In the case of Shamsher Singh & Anr.
vs State of Punjab, the matter was considered in all its aspects by a Constitution Bench comprising seven Judges of this Court and the Court adumbrated the following pro positions: "Before a probationer is confirmed the authority concerned is under an obligation to consider whether the work of the probationer is satisfactory or whether he is suitable for the post.
In the absence of any Rules governing a probationer in this respect the authority may come to the conclusion that on account of inadequacy for the job or for any temperamental or other object not involving moral turpitude the probationer is unsuitable for the job and hence must be discharged.
No punishment is involved in this.
The fact of holding an inquiry is not always conclusive.
What is decisive is whether the order is really by way of punishment.
A probationer whose terms of service provided that it could be terminated without any notice and without any cause being assigned could hot claim the protection of Article 311 (2) .
An order terminating the services of a temporary servant or probationer under the Rules of Employment and without anything more will not attract Article 311.
Where a departmental enquiry is contemplated and if an enquiry is not in Act proceeded with Article 311 will not be attracted unless it can he shown that the order though unexceptionable in form is made following a report based on misconduct.
" Similarly, the matter was previously considered in Parshotam Lal Dhingra vs Union of India where the following observations were "Shortly put, the principle is that when a servant has right to a post or to a rank either under the terms of the contract of employment, express or implied, or under the rules governing the conditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment, for it operates as a forfeiture of his right to hold that post or that rank and to 610 get the emoluments and other benefits attached thereto.
But if the servant has no right to the post, as where he is appointed to a post, permanent or temporary either on probation or on an officiating basis and whose temporary service has not ripened into a quasi permanent service as defined in the Temporary Service Rules, the termination of his employment does not deprive him of any right and can not, therefore, by itself be a punishment.
One test for deter mining whether the termination of the service of a Govern men servant is by way of punishment is to ascertain whether the servant, but for such termination, had the right to hold the post.
If he had a right to the post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and he will be entitled to the protection of Article 311.
In other words and broadly speaking article 311(2) will apply to those cases where the Government servant, had he been employed by a private employer, will be entitled to maintain an action for wrongful dismissal, removal or reduction in rank.
To put it in another way, if the Government has, by contract, express or implied, or, under the rules, the right to terminate the employment at any time, then such termination in the manner provided by the contract or the rules, is, prima facie and per se, not a punishment and does not attract the provisions of article 311.
" All these decisions were reviewed in the case of State of U.P. vs Ram Chandra Trivedi where this Court observed as follows: "Keeping in view the principles extracted above, the respondent 's suit could not be decreed in his favour.
He was a temporary hand and had no right to post.
It is also not denied that both under the contract of service and the service rules governing the respondent, the State had a right to terminate his services by giving him one month 's notice.
The order to which exception is taken is ex facie an order of termination of service simpliciter.
It does not cast any stigma on the respondent nor does it visit him with evil consequences, nor is it founded on misconduct.
In the circumstances, the respondent could not invite the Court to go into the motive behind the order and claim the protection of Article 311(2) of the Constitution.
We, therefore, agree with the submission made on be half of the appellant that the High Court was in error in arriv 611 ing at the finding that the impugned order was passed by way of punishment by probing into the departmental correspondence that passed between the superiors of the respondent overlooking the observations made by this Court in I. N. Saksena vs State of Madhya Pradesh ; that when there are no express words in the impugned order itself which throw a stigma on the Government servant, the Court would not delve into Secretariat files to discover whether some kind of stigma could be inferred on such research.
" The facts of the present case appear to be on all fours with those of the aforesaid decision.
From the undisputed facts detailed by us in an earlier part of the judgment, it is manifest that even if misconduct, negligence, inefficiency may be the motive or the inducing factor which influences the employer to terminate the services of the employee, a power which the appellants undoubtedly possessed, even so as under the terms of appointment of the respondent such a power flowed from the contract of service it could not be termed as penalty or punishment.
The matter was again considered at great length by a recent decision of this Court in the case of State of Maharashtra vs Veerappa R. Saboji & Anr., where Untwalia, J., observed thus: "Ordinarily and generally the rule laid down in most of the cases by this Court is that you have to look to the order on the face of it and find whether it casts any stigma on the Government servant.
In such a case there is no presumption that the order is arbitrary or mala fide unless a very strong case is made out and proved by the Government servant who challenges such an order.
" Applying the principles enunciated by this Court in various cases to the facts of the present case, the position is that the order impugned is prima facie an order of termination simpliciter without involving any stigma.
The order does not in any way involve any evil consequences and is an order of discharge simpliciter of the respondent who was a probationer and had no right to the service.
The respondent has not been able to make out any strong case for this Court to delve into the documents, materials in order to determine a case of victimisation or one of punishment.
612 Reliance was, however, placed by the respondent on a decision of this Court in the case of The State of Bihar vs Gopi Kishore Prasad, where it was held that although termination of the service of a person holding the post on probation cannot be said to deprive him of any right to the post and is no punishment but where instead of terminating a person 's service the employer choose to hold an enquiry into his alleged misconduct and proceeds by way of a punishment, such a course involves a stigma and an order of termination is bad.
Such, however, is not the case here.
The short history of the service of the respondent clearly shows that his work had never been satisfactory and he was not found suitable for being retained in service and that is why even e though some sort of an enquiry was started, it was not proceeded with and no punishment was inflicted on him.
In these circumstances, therefore, if the appointing authority considered it expedient to terminate the services of the respondent a probationer it cannot be said that the order of termination attracted the provisions of article 311 of the Constitution.
Thus, if the appellant found that the respondent was not suitable for being retained in service that will not vitiate the order impugned as held and observed by this Court in the cases cited above.
For these reasons, therefore, we are satisfied that the order terminating the services of the respondent was valid and did not involve any stigma and was fully justified in the facts and circumstances of the present case.
The High Court, therefore, erred in law in quashing the.
impugned order.
For these reasons, we allow this appeal, set aside the.
judgment and decree of the High Court and hold that the order terminating the services of the respondent was valid in law.
In the circumstances of the case, there will be no order as to costs.
S.R. Appeal allowed.

summary:
The respondent was appointed on a purely temporary basis to the post of a medical Officer in the Oil and Natural Gas Commission.
Under the terms and conditions of service, he was to remain on probation for a period of one year which could be extended that the discretion of the appointing authority He was appointed on October 15, 1965.
During the period of his probation, on a report against him for negligence and dereliction of duty, a departmental enquiry was held against him but that was not proceeded with, nor was any punishment imposed on him.
His period of probation was extended for six months from 15 10 1966 and before his services were terminated, there was no express order either confirming him or extending the period of probation.
His services were terminated with effect from 28th July 1967.
The respondent filed a writ petition in the High court on the ground that the order terminating his services was malafide and was in fact passed by way of penalty entailing evil consequences The plea taken by the respondent found favour with the High Court which allowed the petition and quashed the order of the appellant terminating the services of the respondent.
Hence the appeal by special leave by the State.
Allowing the appeal the Court ^ HELD: l.
A temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained.
The remarks, the assessment roll merely indicate the nature of the performance put in by the officer for the limited purpose of determining whether or not his probation should be extended.
These remarks were not intended to cast any stigma.
[607G H. 608A] R. L. Butail vs Union of India followed 2.
The contention that the real motive behind the termination of the service of the respondent was to inflict a punishment on him and as the appellants did not comply with the requirements of Article 311 of the Constitution, the order impugned was illegal is not correct.
In the first place, it was clearly pleaded by the Government in its counter affidavit that although an enquiry was held it was not continued and no punishment was imposed on the respondent.
As the respondent was merely a probationer the appointing, authority did not consider it necessary to continue the enquiry but decided to terminate the services of the respondent as he was not found suitable for the job.
In the case of n probationer or a temporary employee.
who has no right to the post, such a termina 604 tion of his service is valid and does not attract the provisions of Article 311 of the Constitution [608C E, G H, 609A] Even if misconduct, negligence, inefficiency may be the motive or the inducing factor which influences the employer to terminate the services of the employee, a power which the appellants undoubtedly possessed, even so as under the terms of appointment of the respondent such power flowed from the R contract of service it could not be termed as penalty or Punishment.
[611C D] Shamsher Singh and Anr.
vs State of Punjab ; ; Purshottam Lal Dhingra vs Union of India ; ; State of U.P. vs Ram Chand Trivedi ; ; State of Maharashtra vs Veerappa R. Saboji and Anr. ; , followed.
The order impugned is prima facie an order of termination simpliciter without involving any stigma.
The order does not in any way involve any evil consequences and is an order of discharge simpliciter of the respondent who was a probationer and had no right to the service.
The respondent has not been able to make out any strong case for this Court to delve into the documents, materials in order to determine a case of victimisation or one of punishment The short history of the service of the respondent clearly showed that his work had never been satisfactory and he was not found suitable for being retained in service and that is why even though some sort of an enquiry was started, it was not proceeded with and no punishment was inflicted on him.
In these circumstances therefore, if the appointing authority considered it expedient to terminate the services of the respondent a probationer it cannot be said that the order of termination attracted the provisions of article 311 of the Constitution.
Thus, if the appellant found that the respondent was not suitable for being retained in service that will not vitiate the order impugned.
[611G H, 612B D] State of Bihar vs Gopi Kishore Parsad A.I.R. 1960, 689; distinguished.


judgement:
Civil Appeal No. 1085 of 1970.
Appeal by Special Leave from the Judgment and Order dated 17.
3. 1969 of the Delhi High Court in SAD No. 2/69.
P. R. Mridul and O. P. Sharma for the Appellant.
section K. Bisaria for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI,J.
This appeal by special leave is directed against a judgment of the Delhi Court and arises out of an application filed by Respondent No. 1 who claimed to be the tenant of the appellant, recalling the warrant of possession issued by the Controller in pursuance of a decree dated 31 7 1961 passed against the 1st respondent.
The case had a rather chequered career having passed through several phases.
To begin with the landlord appellant executed a lease in respect of the disputed premises in favour of Respondent No. 2 for three years as far back as 1.4.1942.
In 1948, a suit was brought by the appellant for eviction of the tenant for non payment of rent on the ground of conversion of the user of the premises.
The suit for possession was however dismissed but a decree dated 31.
1948 for arrears of rent was passed and it was held that Laxmi Bank was the real tenant.
Subsequently, the Bombay High Court ordered the 446 Bank to be wound up and in the winding up proceedings, the said High Court appointed an Official Liquidator who on 16.
2. 1961 sold the tenancy rights to Respondent No. 1 section N. Jain.
This sale was confirmed by the High Court on the same date and as a result there of respondent No. 1 took possession of the premises on 24.2.1961.
On 5. 4.
1961, the land lord appellant filed an application under the Delhi Rent Control Act for eviction of Laxmi Bank.
On 31. 7. 1961, a decree for eviction was passed in favour of the landlord appellant.
On 23 1 1963.
Respondent No. 1 filed a suit for a declaration that he was a tenant of the landlord appellant.
This suit was dismissed for non prosecution on 5.5.1964 and an application to set aside the ex parte decree was also dismissed and the appeal against that order also failed.
Thereafter Respondent No. 1 filed an application under section 25 of Delhi Rent Control Act (hereinafter referred to as the Act) for recalling the warrant of possession issued by the Court in pursuance of the decree dated 31.7.1961 in favour of the landlord.
The present appeal arises out of these proceedings.
The Rent Controller allowed the application and recalled the warrant of possession by its Order dated 20.
12. 1966.
The matter was then taken up by the landlord in appeal to the Rent Control Tribunal which by its Order dated 25.
1968 reversed the order of the Rent Controller and dismissed the tenant 's application.
A second appeal against the order of Tribunal was then filed by the tenant to the High Court which reversed the order of the Rent Control Tribunal and restored the order of the Rent Controller, hence this appeal by special leave.
Mr. Mridul appearing for the appellant challenged before us the findings of the High Court on point nos.
1 & 3 which are formulated at page 91 of the judgment of the Delhi High Court.
These points may be extracted thus: "(1) The application made by the appellant before the High Court under section 25 was not barred by reason of the dismissal of the appellants suit for default of appearance under Order IX Rule 9, C.P.C. (3) The transfer to the appellant by the Official Liquidator of the tenancy rights being voluntary did not come within the mischief of section 14(1)(b) of the Act.
In the first place it was argued that so far as point No. 1 is concerned, the High Court was wrong in holding that the application of Respondent No. 1 was not barred by the reason of the dismissal of the appellant 's suit for setting aside the ex parte decree by the principle of Res Judicata or Order IX Rule 9 C.P.C.
It was contended that 447 even if the previous suit filed by respondent No. 1 for declaration of his status as a tenant was dismissed for default but as the application for setting aside the decree also failed, there was an adjudication against the then plaintiff respondent No. 1 and therefore the present suit was clearly barred by the principles of Res Judicata or Order IX Rule 9.
At any rate there can be no escape from the position that the application of respondent No. 1 would be clearly barred by the principle contained in Order IX Rule 9, C.P.C.
In case of Suraj Ratan Thirani & Ors.
vs The Azamabad Tea Co. & Ors.(1) this Court held thus: "We are not however impressed by the argument that the ban imposed by O. IX, r. 9 creates merely a personal bar or estoppel against the particular plaintiff suing on the same cause of action and leaves the matter at large for those claiming under him.
Beyond the absence in O. IX, r. 9 of the words referring "to those claiming under the plaintiff" there is nothing to warrant this argument.
It has neither principle, nor logic to commend it .
The rule would obviously have no value and the bar imposed by it would be rendered meaningless if the plaintiff whose suit was dismissed for de fault had only to transfer the property to another and the latter was able to agitate rights which his vendor was precluded by law from putting forward.
" In the instant case it was appellant who brought the previous suit which resulted in a decree for eviction of the tenant on 31 7 1961 a date when the 1st respondent had already taken possession of the premises by virtue of transfer made by the Official Liquidator.
Thus the identity of the subject matter being substantially the same, this case clearly falls within the ambit of the ratio in the case supra.
On this ground alone therefore the appellant is entitled to succeed because the High Court with due respect does not appear to have properly construed the scope of Order IX Rule 9 C.P.C.
There is however nothing to show that respondent No.1 was tenant within the meaning of Rent Control Act so as to maintain an application under section 25 of the Act when in fact he was an unlawful sub lessee.
As regards point No. 3, the High Court relying on a decision of Calcutta High Court in Krishna Das Nandy vs Bidhan Chandra Roy(2) has found that as the transfer in favour of respondent No. 1 by the Official Liquidator was confirmed by the Court, the status of the tenant by respondent No. 1 was acquired by operation of law and therefore the transfer 448 was an involuntary transfer and the provisions of Rent Control Act would not be attracted.
After careful perusal of Calcutta case, in the first place it appears that the section concerned has not been extracted and we are not in a position to know what was the actual language of the section of the Bengal Act.
Secondly, in our opinion, the official liquidator had merely stepped into the shoes of Laxmi Bank which was the original tenant and even if the official liquidator had transferred the tenancy interest to respondent No. 1 under the orders of the Court, it was on behalf of the original tenant.
It was undoubtedly a voluntary sale which clearly fell within the mischief of s.14(1)(b) of the Delhi Rent Control Act.
Assuming that the sale by the official Liquidator was an involuntary sale, then it undoubtedly became an assignment as provided for by section 14(b) of Delhi Rent Control Act.
section 14(b) runs thus: "14(b) that the tenant has, on or after the 9th day of June, 1952, sublet, assigned or otherwise parted with the possession of the whole or any part of the premises with out obtaining the consent in writing of the landlord.
" The language of section 14(b) is wide enough not only to include any sub lease but even an assignment or any other mode by which possession of the tenanted premises is parted.
In view of the wide amplitude of s.14(b) we are clearly of the opinion that it does not exclude even an involuntary sale.
Fore these reasons therefore we are unable to agree with the view taken by the High Court.
The appeal is accordingly allowed, the judgment and decree of the High Court are set aside and the plaintiff 's application under section 25 of the Delhi Rent Control Act is dismissed.
Mr. Bisaria, learned counsel appearing for the respondent submitted that as the tenant has been in the premises for a period of 19 years and is conducting business therein, he may be permitted sufficient time to make alternative arrangements.
Mr. Mridul appearing for the appellant fairly conceded that he would have no objection if one year 's time is allowed to the respondent provided he gives an undertaking for handing over peaceful and vacant possession at the expiry of the time.
We therefore allow time to the respondent to vacate the premises on or before 15th April, 1981 on the condition that he files an undertaking within two weeks to the effect (1) that he shall hand over vacant and peaceful possession to the landlord on or before 15th April, 1981; (2) that he shall not induct any per son on the premises; (3) that he shall go on paying the compensation for wrongful use of premises equivalent to the rent.
449 The undertaking must be filed supported by an affidavit within two weeks from today failing which the order granting time shall stand revoked.
There will be no order as to costs.
S.R. Appeal allowed.

dataset_name: IN-Abs

summary:
The appellant landlord executed a lease in respect of the disputed premises in favour of respondent 2 for three years as far back as 1 4 1942.
In 1948, a suit was brought by the appellant for eviction of the tenant for non payment of rent on the ground of conversion of the user of the premises.
The suit for possession was however dismissed but a decree dated 31 11 1948 for arrears of rent was passed and it was held that Laxmi Bank was the real tenant.
Subsequently, the Bombay High Court ordered the Bank to be wound up and in the winding up proceedings, the High Court appointed an Official Liquidator who on 16 2 1961 sold the tenancy rights to respondent No. 1.
The sale was confirmed by the High Court on the same date and as a result thereof respondent No. 1 took possession the premises on 24 2 1961.
On 5 1 1961, the landlord appellant filed an application under the Delhi Rent Control Act for eviction of Laxmi Bank.
On 31 7 1961, a decree for eviction was passed in favour of the appellant.
On 22 1 1963, respondent No. 1 filed a suit for declaration that he was a tenant of the landlord appellant.
The suit was dismissed for non prosecution on 5 5 1964 and an application to set aside the ex parte order was also dismissed and the appeal against that order also failed.
Thereafter respondent No. 1 filed an application under Section 25 of the Delhi Rent Control Act for recalling the warrant of possession issued by the Court in pursuance of the decree dated 31 7 1961 in favour of the appellant.
The Rent Controller allowed it on 20 12 1966.
An appeal to the Rent Controller Tribunal was ordered by order dated 25 11 1968 in favour of the appellant.
A second appeal filed by respondent No. 1 to the High Court was allowed in his favour and the Rent Controller 's order allowing recalling of the warrant of possession was restored.
Hence the appeal by special leave by the landlord.
Allowing the appeal, the Court ^ HELD: 1.
The application of respondent No. 1 under Section 25 of the Delhi Rent Control Act is clearly barred by the principle contained in order IX Rule 9 Civil Procedure Code.
It was the appellant who brought the previous suit which resulted in a decree for eviction of the tenant on 31 7 1961 a date when the Ist respondent had already taken possession of the premises by virtue of transfer made by the Official Liquidator.
There is nothing to show that respondent No. 1 was a tenant within the meaning of Delhi Rent Control 445 Act so as to maintain an application under section 25 of the Act, when in fact he was an unlawful sub lessee.
[447A, E, F G] Suraj Ratan Thirani and Ors.
vs Azamabad Tea Co. and Ors. ; ; applied.
The language of section 14(b) of the Delhi Rent Control Act is wide enough not only to include any sub lease but even an assignment or any other mode by which possession of the tenanted premises is parted.
In view of the wide amplitude of section 14 (b), it does not exclude even in involuntary sale.
[448D E] In the instant case, the official Liquidator had merely stepped into the shoes of Laxmi Bank which was the original tenant and even if the official liquidator had transferred the tenancy interest to respondent No. 1 under the order of the Court, it was on behalf of the original tenant.
It was undoubtedly a voluntary sale which clearly fell within the mischief of section 14 (1) (b) of the Delhi Rent Control Act.
Assuming that the sale by the Official Liquidator was an involuntary sale, then it undoubtedly became an assignment as provided for by section 14 (b) of Delhi Rent Control Act.
[448A C] Krishna Das Nandy vs Bidhan Chandra Roy, A.I.R. 1959 Cal.
181 Overruled.


judgement:
Civil Appeal No. 2592 of 1972.
Appeal by Special Leave from the Judgment and Order dated 9 11 1971 of the Andhra Pradesh High Court in Case Referred No. 4 of 1970.
section T. Desai, T. A. Ramachandran, Mrs. J. Ramachandran and M. N. Tandon for the Appellant.
section C. Manchanda, Miss A. Subashini and D. B. Ahuja for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
This appeal, by special leave, is directed against a judgment of the Andhra Pradesh High Court, concerning the scope of section 271(1)(c) of the Income Tax Act, 1961.
The assessee is an Abkari contractor.
It filed a return of its income for the assessment year 1959 60, disclosing a total turnover of Rs. 10,92,132 and an income of Rs. 7,704.
The Income Tax Officer did not accept the correctness of the return.
He found that on 12th December, 1957 and 16th January 1958 the excess of expenditure over the disclosed available cash as Rs. 17,720 and Rs. 650,66 respectively.
He also noticed several deposits, totaling Rs. 28,200, entered in the names of certain Sendhi shop keepers.
The assesee 's explanation that the excess expenditure was met from amounts deposited with him by some shop keepers but not entered in his books was not accepted.
The alternative explanation that expenditure incurred earlier had possibly been recorded later was also rejected.
In regard to the cash deposits of Rs. 28,200 the assessee explained that they represented amounts deposited with it as security.
That explanation was rejected insofar as deposits totalling Rs. 21,000 were concerned.
The Income Tax Officer rejected the account books of the assessee and estimated the assessee 's income on an overall figure of Rs. 5,00,018.
In appeal before the Appellate Assistant Commissioner and thereafter before the Income Tax 621 Appellate Tribunal, the assessee succeeded in getting the assessed income reduced to Rs. 1,30,000 in addition to the book profits.
Penalty proceeding were taken against the assessee and the case was referred to the Inspecting Assistant Commissioner.
The assessee reiterated the explanation which it had offered in the assessment proceedings.
Predictably, the Inspecting Assistant Commissioner rejected the explanation and held that the items of cash deficit and cash deposits represented concealed income resulting from the suppressed yield and low selling rates mentioned in the books.
He observed that the assessee had concealed the particulars of his income and furnished inaccurate of it, and therefore imposed a penalty of Rs. 75,000 under s.271(1)(c) of the Income Tax Act, 1961.
On appeal by the assessee, the Appellate Tribunal held that there was no positive material to establish that the cash deposits represented concealed income.
In regard to the cash deficits, the Appellate Tribunal noticed that for the assessment year 1957 58 an addition of Rs. 2,00,000 had been made to the book profits and it observed that some part of that amount could have been ploughed back into the business.
It held that an amount of Rs. 90,000 representing unledgerised cash credits of that year could be said to have been introduced in this year.
Allowing the appeal, the Appellate Tribunal set aside the penalty order made by the Inspecting Assistant Commissioner.
At the instance of the Commissioner of Income Tax, the following question was referred to the High Court: "Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that no penalty is leviable ?" The High Court held that the Appellate Tribunal was not justified in holding that no penalty was leviable.
In this appeal, it is urged by learned counsel for the assessee that the High Court erred in interfering with a finding of fact, that the penalty proceedings being quasi criminal the burden of proof lay on the Revenue to establish that a penalty was attracted and that the intangible addition of Rs. 2,00,000 represented real income and the Appellate Tribunal was right in considering that an amount of Rs. 90,000 was available to cover the cash deficits.
Section 271(1)(c) of the Income Tax Act, 1961 provides: "271(1).
If the Income Tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act is satisfied that any person (a) * * * * 622 (b) * * * * (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income he may direct that such person shall pay by way of penalty. . . . " This is the provision as it stood at the relevant time.
It is now settled law that an order imposing a penalty is the result of quasi criminal proceeding and that the burden lies on the Revenue to establish that the disputed amount represents income and that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars.
Commissioner of Income Tax, West Bengal and Another vs Anwar Ali.
It is for the Revenue to prove those ingredients before a penalty can be imposed.
Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding.
In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the Revenue, to ascertain whether a particular amount is a revenue receipt.
No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding, That is how the law has been understood by this Court in Anwar Ali (supra), and we believed that to be the law still.
It was also laid down that before a penalty can be imposed the entirety of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has consciously concealed particulars of his income or deliberately furnished inaccurate particulars.
The mere falsity of the explanation given by the assessee, it was observed, was insufficient without there being in addition cogent material of evidence from which the necessary conclusion attracting a penalty could be drawn.
These principles were reiterated by this Court in Commissioner of Income Tax, Madras vs Khoday Eswarsa and sons.
In the present case, the Appellate Tribunal has relied entirely on the basic that an intangible addition of Rs. 2,00,000 had been made to the book profits of the assessee for the assessment year 1957 58 623 and it inferred that an amount of Rs. 90,000 was available for being put to use in the year with which we are concerned.
Now it can hardly be denied that when an "intangible" addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee That income, although commonly described as "intangible", is as much a part of his real income as that disclosed by his account books.
It has the same concrete existence.
It could by available to the assessee as the book profits could be.
In Lagadapati Subha Ramiah vs Commissioner of Income tax, Madras the Andhra Pradesh High Court adverted to this aspect of secret profits and their actual availability for application by the assessee.
That view was affirmed by the Madras High Court in section Kuppuswami Mudliar vs Commissioner of Income Tax, Madras.
There can be no escape from the proposition that the secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw sufficient for meeting expenditure or introducing amounts in his account books.
But it is quite another thing to say that any part of that fund must necessarily be regarded as the source of unexplained expenditure incurred or of cash credits regarded during a subsequent assessment year.
The mere availability of such a fund cannot, in all cases, imply that the assessee has not earned further secret profits during the relevant assessment year.
Neither law nor human experiences guarantees that an assessee who has been dishonest in one assessment year is bound to be honest in a subsequent assessment year.
It is a matter for consideration by the taxing authority in each case whether the unexplained cash deficits and the cash credits can be reasonably attributed to a pre existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year.
In each case the true nature of the cash deficit and the cash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case.
Evidence may exist to show that reliance cannot be placed completely on the availability of a previously earned undisclosed income.
A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration.
It is open to the Revenue to rely on all the circumstances pointing to 624 that conclusion.
What those several circumstances can be is difficult to enumerate and indeed, from the nature of the enquiry, it is almost impossible to do so.
In the end, they must be such as can lead to the firm conclusion that the assessee has concealed the particulars of his income or has deliberately furnished inaccurate particulars.
It is needless to reiterate that in a penalty proceeding the burden remains on the Revenue of proving the existing of material leading to that conclusion.
The Appellate Tribunal erred in law in confining itself to the fact that an intangible addition had been added to the assessee 's book profits two years before and that a part of that amount remained available to the assessee thereafter, the High Court is right in departing from that limited approach and in insisting on a consideration of all the relevant facts and circumstances of the case relied on by the Revenue for purpose of determining whether the Revenue has succeeded in discharging its burden.
But while considering the legal principles involved in the application of section 271(1)(c) the High Court, in our opinion, has erred in entering into the facts of the case and determining in point of fact that the assessee earned income during the relevant previous year and that he was guilty of concealing such income or furnishing inaccurate particulars of it.
Having found that the legal basis underlying the order of the Appellate Tribunal was not sustainable, the High Court should have limited itself to answering the question raised by the reference in the negative, leaving it to the Appellate Tribunal to take up the appeal again and redetermine it in the light of the law laid down by the High Court.
It is the Appellate Tribunal which has been entrusted with the authority to find facts.
A High Court is confined to deciding the question of law referred to it on facts found by the Appellate Tribunal.
That is the kind of order we now propose to make.
Because the finding of the Appellate Tribunal that no penalty leviable rests on an erroneous legal basis, we endorse the opinion of the High Court that the question referred must be answered in the negative.
But as the High Court should not have rendered findings of fact, we vacate the finding of fact reached by the High Court, without expressing any opinion on their correctness, leaving it to the Appellate Tribunal in exercise of its duty under section 260(1) of the Income Tax Act to take up the appeal and to redetermine it conformably to this judgment and in the light of the principle laid down in it.
The appeal is disposed of accordingly.
There is no order as to costs.
S.R. Case remitted to Tribunal.

summary:
The appellant, assessee in an Abkari contractor.
It filed a return of its income for the assessment year 1959 60, disclosing a total turnover of Rs. 10,92,132/ and an income of Rs. 7,704/ .
The Income Tax Officer did not accept the correctness of the return.
He found that on 12th December, 1957 and 16th January, 1958 the excess of expenditure over the disclosed available cash was Rs. 17,726/ and Rs. 65,066 respectively.
He also noticed several deposits, totalling Rs. 28,200, entered in the names of certain Sendhi shopkeepers.
The Income Tax Officer rejected the account books of the assessee and his explanations for the discrepancies thereof and estimated the assessee 's income on an overall figure of Rs. 5,00,018.
In appeal before the Appellate Assistant Commissioner and thereafter before the Income Tax Appellate Tribunal the assessee succeeded in getting the assessed income reduced to Rs. 1,30,000 in addition to the books profits.
Penalty proceedings were taken against the assessee and the case was referred to the Inspecting Assistant Commissioner, who imposed a penalty of Rs. 75,000 under section 271(1)(c) of the Income Tax Act, 1961.
On appeal by the assessee, the Appellate Tribunal held that there was no positive material to establish that the cash deposits represented concealed income.
In regard to the cash deficits, the Appellate Tribunal noticed that for the assessment year 1957 58 an addition of Rs. 2,00,000 had been made to the book profits, and it observed that some part of that amount could have been ploughed back into the business.
It held that an amount of Rs. 90,000 representing unledgerised cash credits of that year could be said to have been introduced in that year.
Allowing the appeal, the Appellate Tribunal set aside the penalty order made by the Inspecting Assistant Commissioner.
On a reference to the High Court, at the instance of the Commissioner of Income Tax, the High Court held that the Appellate Tribunal was not justified in holding that no penalty was leviable.
Hence the appeal by special leave.
Directing the Appellate Tribunal to take up the appeal under section 260(1) of the Income Tax Act, the Court ^ HELD: An order imposing a penalty is the result of quasi criminal proceedings.
The burden of proof lies on the Revenue to establish that the disputed amount represents income and that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars.
It is for the Revenue to prove these ingredients before a penalty can be imposed.
[622B C] 619 Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceedings a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding.
In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the Revenue, to ascertain whether a particular amount is a revenue receipt.
No doubt, the fact that the assessment order contained a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding.
Before a penalty can be imposed the entirety of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has consciously concealed particulars of his income or deliberately furnished inaccurate particulars.
The mere falsity of the explanation given by the assessee is insufficient without there being in addition cogent material or evidence from which the necessary conclusion attracting a penalty could be drawn.
[622C G] Commissioner of Income Tax, West Bengal and Anr.
vs Anwar Ali ; Commissioner of Income Tax, Madras vs Khoday Eswara and Sons, ; applied.
When an 'intangible ' addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee.
That income although commonly described as 'intangible ', is as much a part of his real income as that disclosed by his account books.
It has the same concrete existence.
It could be available to the assessee as the book profits could be.
[623A B] 3.
Secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure or introducing amounts in his account books.
Any part of that fund need not necessarily be regarded as the source of unexplained expenditure incurred or of cash credits recorded during a subsequent assessment year.
The mere availability of such a fund cannot, in all cases, imply that the assessee has not earned further secret profits during the relevant assessment year It is a matter for consideration by the taxing authority, in each case, whether the unexplained cash deficits and the cash credits can be reasonably attributed to a pre existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year.
In each case the true nature of the cash deficit and the cash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case.
Evidence may exist to show that reliance cannot be placed completely on the availability of a previously earned undisclosed.
income.
A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration.
It is open to the Revenue to rely on all the circumstances pointing to that conclusion.
What those several circumstances can be is difficult to enumerate and indeed, from the nature of the enquiry, it is almost impossible to do so.
However, they must be such as can lead to the firm conclusion that 620 the assessee has concealed the particulars of his income or has deliberately furnished inaccurate particulars.
[623C H, 624A] Lagadapti Subha Ramiah vs Commissioner of Income Tax, Madras, ; section Kuppuswami Mudaliar vs Commissioner of Income Tax, Madras, ; approved.
In an income tax reference, a High Court should confine itself to deciding the question of law referred to it on facts found by the Appellate Tribunal.
It is the Appellate Tribunal which has been entrusted with the authority to find facts.
[624D E]