judgement:
Civil Appeal No. 218 of 1970.
Appeal by special leave from the judgment and order dated the 10th September, 1968 of the Assam and Nagaland High Court in Civil Rule No. 56 of 1967.
S.K Nandy for the Appellant.
S.N. Chowdhary for the Respondent.
The Judgment of the Court was delivered by DESAI, J.
This appeal by special leave arises out of a writ petition filed by the respondent Bishwanath Tea Co. Ltd., in the Assam and Nagaland High Court questioning the action of the appellant, the Divisional Forest Officer, Darrang Division, of recovering Rs. 7069.37 p. as royalty for cutting and felling trees from Tezalpatty grant No. 1 held under lease dated September 27, 1932, and for a mandamus directing the appellant to issue permits without insisting upon payment of royalty for the trees cut and felled from the area under lease.
Respondent Bishwanath Tea Co. Ltd. ( 'Company ' for short) took on lease land admeasuring 1107.26 acres from the Government.
The lease was executed between the Company and the Secretary of the State for India.
The lease in the first instance was for a period of 15 years commencing from April 1, 1932.
The lease was to be exploited for cultivation and raising tea garden.
The lease was subject to conditions set out therein and generally to Assam Land and Revenue Regulation and the rules made thereunder.
On February 15, 1966, manager of the Company approached the appellant seeking permission to cut 7000 cubic feet of timber from Grant N.C. Tezalpatty No. 1 of Nagshankar Mouza, for utilising the same for building of staff and labourer 's houses.
By the reply dated April 4, 1966, the appellant noted that the timber was to be 665 cut for constructing houses in Partabghur and Dekorai Tea Estates and that it was necessary to ascertain whether any of the aforementioned two Tea estates was situated within the grant evidenced by lease of N.C. Tezalpatty No. 1.
It was made clear that if it was not so, full royalty will be payable by the company for cutting, felling and removing timber.
The manager by his letter dated April 23, 1966, informed the appellant that as the lessee is Bishwanath Tea Co. Ltd, it can cut and fell timber from any of its leased area to be utilised for its purposes in any other division.
Therefore, the manager suggested that the permit must be issued without insisting on payment of royalty.
The appellant by his letter dated May 12, 1966, informed the manager that as the timber was required for use in Partabghur and Dekorai tea estates which were not within N.C. Tezalpatty Grant No. 1 of Nagshankar Mouza from which timber was to be felled and cut, full royalty will be payable on timber so cut and removed because it was to be utilised for the purpose unconnected with the grant.
For this assertion the appellant relied upon a portion of clause (2) of Part IV of the lease deed dated September 27, 1932.
Correspondence further ensued between the parties and ultimately the respondent company paid an amount of Rs. 7069.37 p. as and by way of royalty under protest and then filed a petition under Article 226 of the Constitution in the High Court alleging that upon a true construction of the relevant clause of the grant as also proviso to Rule 37 of the Settlement Rules as the timber was required for the purpose connected with the exploitation of the grant, the company as lessee was entitled to cut and remove timber without payment of royalty and, therefore, the recovery of royalty being unsupported by law, the appellant was liable to refund the same.
The company also prayed for a mandamus directing the present appellant who was respondent in the High Court for issuing permits without insisting on payment of royalty whenever timber was to be cut from the leased area for the purposes connected with the exploitation of the grant.
The appellant filed his return to the rule issued by the High Court.
A preliminary objection was raised that the right claimed by the respondent flowed from the contract of lease and such contractual rights and obligations can only be enforced in civil court.
It was contended that apart from the fact that interpretation of the contract of lease is generally not undertaken by the High Court in exercise of its extraordinary jurisdiction under Article 226, it was further contended that even if interpretation of the relevant clause of the lease as alleged on behalf the respondent finds favour with 666 the court, yet facts will have to be investigated before any refund could be ordered or a blanket injunction could be granted for all times to come against the appellant from performing his duty, namely, of granting permit and recovering royalty.
The High Court overruled the preliminary objection observing that the court was not called upon to decide any complicated question of fact and the question for decision before the Court was whether the company was entitled to enforcement of its legal right under the proviso to rule 37 of Settlement Rules.
The Court further observed that even though part of the proviso to rule 37 of the Settlement Rules was incorporated in the lease itself, nonetheless what the Court had to consider was the interpretation of a statutory rule and that is the function of the Court under Article 226.
On merits the High Court held that as the grant N.C. Tezalpatty No. I was in favour of M/s.
Bishwanath Tea Co. Ltd., the company was entitled to cut and fell timber from N.C. Tezalpatty grant area for its use in other tea gardens, namely, Partabghur and Dekorai and even if the latter two gardens were outside N.C. Tezalpatty Grant No. 1, yet they being under the ownership and management of the company, felling of trees from the area of one grant for utilisation at other places would fall within the second part of the proviso to rule 37 in that the felling and removal of timber was for use not unconnected with the exploitation of the grant and, therefore, the company was entitled to fell and remove timber in the aforesaid situation without payment of royalty.
In accordance with this finding the High Court made the rule absolute, directed refund of the amount paid under protest and issued a mandamus directing the appellant to issue permits to the respondent company without payment of royalty for removal of timber from Tezalpatty Grant No. 1 for use in tea garden of Dekorai division for exploitation of tea plantation.
Hence this appeal by special leave.
Unquestionably, the rights and obligations between the parties to this appeal are governed by the terms of the lease dated September 27, 1932.
Specifically the respondent who was a petitioner in the High Court claimed the right to relief under Clause 2 of Part IV of the indenture of lease which reads as under: "2.
The lessee shall pay to the lessor as provided by rules for the time being in force under the Assam Land and Revenue Regulation for all timber (if any) on the 667 demised lands cut down, removed or utilised by the lessee during the period of the lease.
Timber valuation at reduced rates estimated at Rs. 12472.7 (Rupees Twelve thousand four hundred and seventy two and annas seven only) was credited into the treasury by Challan Nos.
43 dated the 24.2.32 The lessee shall be liable to pay timber valuation at full rates on all timber sold or removed for sale and on all timber removed for use unconnected with exploitation of the grant during the period of his lease or renewed lease." According to the respondent, it would be entitled to remove timber cut and felled from the leased area without liability to pay royalty for its own use irrespective of the fact whether such timber was to be used outside the leased area, because such use would be in connection with the exploitation of the grant and there is such a reservation in the grant evidenced by the lease.
True it is that if the timber is felled and removed for purpose connected with the exploitation of the grant, there would be no liability to pay the royalty.
Such a positive right is claimed from a negative covenant in the lease.
Clause 2 provides that the lessee had paid timber valuation at the reduced rate at Rs. 12472.7 on 24 2 32 The lessee according to the respondent would be liable to pay timber valuation at full rates on all timber sold or removed for sale on all timber removed for use unconnected with exploitation of the grant during the period of the lease or renewed lease.
The implication of the negative covenant would be that if timber is removed from the leased area connected with the exploitation of grant, there would be no liability to pay royalty on such timber.
The respondent claimed to remove timber without the liability to pay royalty in exercise of the right reserved under Cl. 2 thus interpreted.
In para 5 of the Writ Petition filed by the respondent in the High Court, a reference has been made to the aforementioned term in the lease deed.
It was further stated that the respondent paid the royalty under protest which it was not liable to pay as the timber was urgently required for the purpose of the business of the Company in connection with the grant.
These averments in the petition would show that the respondent claimed the right to remove timber without the obligation to pay royalty as flowing from the grant evidenced by the lease.
Anticipating a possible contention about the jurisdiction of the High Court to entertain 668 a writ petition for enforcement of contractual obligation, the respondent contended that the levy of royalty had no authority of law and that this was an unreasonable restriction on the fundamental right of the respondent to carry on its trade.
This camouflage of contending that the levy of royalty was not supported by law and that this was an unreasonable restriction on the fundamental right to carry on trade successfully persuaded the High Court to entertain the petition.
Shorn of all embellishment the relief claimed by the respondent was referable to nothing else but the term of the lease viz. Cl.
2 Part IV.
Maybe, that this term is a mere reproduction of proviso to Rule 37 of Assam and and Revenue and Local Rates Regulations, but that by itself is not sufficient to contend that what the respondent was doing was enforcing a statutory provision.
Proviso to Rule 37 is an enabling provision.
The relevant portion of the proviso reads as under: "Provided that if any person taking up land for special cultivation is unwilling to pay the full royalty valuation of the timber as estimated, he shall have the option of paying a reduced valuation representing only the profit which is likely to derive from the use of the timber for the purposes connected with the exploitation of the grant.
If he exercises such option, he shall be liable to pay royalty at full rates on all timber sold, bartered, mortgaged, given or otherwise, transferred or removed for transfer and on all timber removed for use unconnected with the exploitation of the grant during the period of his lease or renewed lease.
" A bare perusal of clause 2 of Part IV of the indenture of lease extracted hereinbefore and the proviso to Rule 37 would at a glance show that the proviso enables a grantee to take benefit of it by fulfilling certain conditions namely by paying a reduced valuation representing only the profit which it is likely to derive from the use of timber for purposes connected with the exploitation of the grant.
It is thus an enabling provision and the grantor of the lease may permit this option to be enjoyed by the grantee.
But whether that has been done or not is always a question of fact.
If the precondition is satisfied, the benefit can be taken.
That again is a matter to be worked out by the parties to the indenture of lease.
In fact, clause 2 of the indenture of lease would show that the respon 669 dent grantee paid Rs. 124727/ being timber valuation at reduced rates.
The respondent having made the payment, whereupon the grantor of the lease agreed that the grantee will have to pay timber valuation at full rates on all timber sold or removed for sale and on all timber removed for use unconnected with exploitation of the grant during the period of his lease or renewed lease but the grantee will not have to pay royalty for timber felled and removed for purpose connected with the grant.
It thus can be demonstrably established that the respondent was trying to enforce through the writ petition the right to remove timber without the liability to pay royalty not under the proviso to Rule 37 which was merely an enabling provision, but the specific term of lease agreed to between the parties.
Proviso to Rule 37 may not be incorporated in an indenture of lease.
If incorporated after fulfilling pre condition it becomes a term of lease.
The High Court, in our opinion, therefore, was in error in posing a question to itself as to whether the applicant (respondent herein) was entitled to the enforcement of legal right under the proviso to Rule 37 of the Settlement Rules.
The camouflage successfully worked, but once this cloak is removed, it unmistakably, transpires that the respondent was trying to claim benefit of clause 2 of the lease having fulfilled its pre condition and obtaining the inclusion of its latter part in the contract of lease.
The question, therefore, really is whether such contractual obligation can be enforced by the writ jurisdiction? How dangerous it is, can be demonstrably established in this case.
But we would first address ourselves to the question of law.
article 226 confers extraordinary jurisdiction on the High Court to issue high prerogative writs for enforcement of the fundamental rights or for any other purpose.
Undoubtedly, the respondent contended that its fundamental right under article 19(1) (g) to carry on trade has been violated.
The High Court overlooked the well settled legal position that a juristic person such as a Corporation is not entitled to any of the freedoms guaranteed by article 19.
The respondent was the sole petitioner in the High Court.
It is a company incorporated under the Companies Act.
The fundamental right claimed under article 19 (1) (g) is to practise any profession or carry on any occupation, trade or business.
The respondent (company) contended that it had a right to carry on its trade or business of cultivating and raising a tea garden and as part of it to cut timber and remove the same from the leased area without the payment of royalty and that insistence upon payment of royalty unsupported by law is an unreasonable restriction denying the fundamental right guaranteed to the respondent.
article 670 19 (1) (g) guarantees the fundamental freedom to a citizen.
The respondent not being a citizen was not entitled to complain of breach or violation of fundamental right under article 19 (1) (g).
[See State Trading Corporation of India Ltd. vs The Commercial Tax Officer, Vishakhapatnam and Tata Engineering and Locomotive Co. vs State of Bihar .] However, the shareholders of a company can complain of infringement of their fundamental rights [See Bennett Coleman & Co. and others vs Union of India and others].
Such is not the case pleaded.
Therefore the writ petition on the allegation of infringement of fundamental right under article 19 (1) (g) at the instance of respondent company alone was not maintainable.
It is undoubtedly true that High Court can entertain in its extraordinary jurisdiction a petition to issue any of the prerogative writs for any other purpose.
But such writ can be issued where there is executive action unsupported by law or even in respect of a Corporation where there is a denial of equality before law or equal protection of law.
The Corporation can also file a writ petition for enforcement of a right under a statute.
As pointed out earlier, the respondent (Company) was merely trying to enforce a contractual obligation.
To clear the ground let it be stated that obligation to pay royalty for timber cut and felled and removed is prescribed by the relevant regulations.
The validity of regulations is not challenged.
Therefore, the demand for royalty is unsupported by law.
What the respondent claims is an exception that in view of a certain term in the indenture of lease, to wit, Clause 2, the appellant is not entitled to demand and collect royalty from the respondent.
This is nothing but enforcement of a term of a contract of lease.
Hence, the question whether such contractual obligation can be enforced by the High Court in its writ jurisdiction.
Ordinarily, where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed, or the party may sue for damages.
Such a suit would ordinarily be cognizable by the Civil Court.
The High Court in its extraordinary jurisdiction would not entertain a petition either for specific performance of contract or for recovering damages.
A right to relief flowing from a contract has to be claimed in a civil court where a suit for specific performance of contract or for damages could be 671 filed.
This is so well settled that no authority is needed.
However, we may refer to a recent decision bearing on the subject.
In Har Shankar and Ors.
vs The Deputy Excise and Taxation Commissioner and Ors., the petitioners offered their bids in the auctions held for granting licences for the sale of liquor.
Subsequently, the petitioners moved to invalidate the auctions challenging the power of the Financial Commissioner to grant liquor licence.
Rejecting this contention, Chandrachud J., as he than was speaking for the Constitution Bench at page 263 observed as under: "Those who contract with open eyes must accept the burdens of the contract along with its benefits.
The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim.
Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract.
By such a test no contract could ever have a binding force.
" Again at page 265 there is a pertinent observation which may be extracted.
Analysing the situation here, a concluded contract must be held to have come into existence between the parties.
The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations.
" This apart, it also appears that in a later decision, the Assam High Court itself took an exactly opposite view in almost identical circumstances.
In Woodcrafts Assam vs Chief Conservator of Forests, Assam, a writ petition was filed challenging the revision of rates of royalty for two different periods.
Rejecting this petition as not maintainable, a Division Bench of the High Court held that the complaint of the petitioner is that there is violation of his rights under the contract and that such violation of contractual obligation cannot be remedied by a writ petition.
That exactly is the position in the case before us.
Therefore, the High Court was in error in entertaining the writ petition and it should have been dismissed at the threshold.
672 In substance, this was a suit for refund of a royalty alleged to be unauthorisedly recovered and that could hardly be entertained in exercise of the writ jurisdiction of the High Court.
As the High Court has also disposed of the case on merits after overruling the preliminary objection, it is but meet that we may examine the case on merits and that itself would demonstrably show the dangerous course adopted by the High Court in examining rights and obligations claimed under the contract without proper or adequate material or evidence to reach a conclusion, more so when the petition raised disputed questions of facts which needed investigation.
Respondent No. 1 had entered into a lease dated September 27, 1932 with the Secretary of State for India.
Part II of the lease describes the land leased to the respondent.
The description is as under; N. C. Tengalbasti Village in Sootea Mauza in the Tezpur Sadar Sub Division of Darrang District.
Block No. 1 Field No. 2 1804 B. 4 K 12L, Block No.2 Field No. 3 1544 B. 2 K 13L. Total 1107.26 Acres on 3349 B. 2K 5L This land was taken on lease for cultivation and raising tea garden.
Under the relevant Clause 2 above, the lessee was to pay timber valuation on full rate for all timber sold or removed for sale and on all timber removed for use unconnected with exploitation of the grant during the period of lease or renewed lease.
From this negative covenant in the indenture of lease, the respondent says that where timber is cut and felled and removed for a purpose or use connected with the exploitation of grant during the period of lease or renewed lease, royalty shall not be payable.
Assuming the respondent is right in its construction of Clause 2 of the indenture of lease, in order to obtain relief, namely, to cut and remove timber from the leased area for purpose connected with the exploitation of the grant, it must show that the timber is being felled and cut from an area covered by the lease in which Clause 2 finds its place and that such timber is being removed for a purpose connected with the exploitation of the grant.
To be more specific, following facts will have to proved for obtaining relief: (i) The area covered by the grant.
673 (ii) Felling of the trees from the area covered by the grant.
(iii)Use to which the felled timber was to be put to.
(iv) Such use will have to be one connected with the exploitation of the grant.
(v) What is meant by the exploitation of the grant ? Could these facts be assumed without evidence ? Was the High Court justified in observing that it was called upon to decide complicated questions of facts ? Some averments in the petition were disputed.
The appellant contended that Clause 2 of the indenture of lease only means that if there is some use of timber which is being felled and removed from the area covered by the grant for the purpose connected with the exploitation of that very grant, then and only then the relief can be claimed under Clause 2.
The High Court found as a fact that the timber was sought to be removed for the purpose of constructing quarters for the workmen employed in Partabghur Garden situated in Dekorai Division.
Admittedly, this Partabghur Garden is not situated in Tezalpatty Village.
At any rate, Partabghur Garden where the houses for the workmen were to be constructed was situated outside the area covered by the grant, as also outside the Revenue Division in which the leased area is located.
The High Court got over this difficulty by observing that the grant being in favour of an incorporated company, it can cut and remove timber from leased area for use at any place which is owned, managed or controlled by the company and it is immaterial whether one is directly connected with the other or not.
If the timber is being felled from the area of one grant to be used at some other place where the Company is carrying on its operation, the benefit of the removal of timber without payment of royalty would be available to the Company anywhere in the world.
To stretch this logic a little further, it would mean that if the respondent (Company) is to set up a tea garden outside India, it can as well cut and remove timber from N.C. Tezalpatty, Grant No. 1 in Assam to the place outside India without the obligation to pay royalty.
The fallacy underlying the approach of the High Court becomes self evident.
It is immaterial that the grantee was the Company.
The specific provision is that the grant is for a purpose of cultivation and raising tea garden and that from the area covered by the grant, if timber is felled for purpose connected with the grant itself, namely, cultivation and raising tea garden in that area then alone benefit of removal of timber without payment of royalty can be 674 availed of.
It is admitted that Partabghur Tea Garden is outside the area covered by the grant, in fact in an altogether different division.
In such a situation upon a true construction of Clause 2, Part IV of indenture of lease, the respondent Company was not entitled to remove timber without payment of royalty.
Therefore, even on merits, the High Court was in error in granting relief.
Accordingly, this appeal is allowed and the judgment of the High Court is quashed and set aside and the writ petition filed by the respondent in the High Court is dismissed with costs throughout.
S.R. Appeal allowed.

summary:
Respondent Tea Company took on lease land N.C. Tezalpatty No. 1 from the then Government.
The lease was to be exploited for cultivation and raising tea garden, and was subject to conditions set out therein and generally to Assam Land and Revenue Regulation and the rules made thereunder.
The respondent company sought permission from the appellant to cut 7,000 cubic feet of timber from Grant N.C. Tezalpatty No. 1 for utilising the same for building of staff and labourers ' house as per clause 2 of Part IV of the lease dated 27 9 1932 and Rule 37 of the Assam Land and Revenue Regulations.
Since the timber was required by the company for use in Partabghur and Dekorai tea estates which were outside Tezalpatty No. 1.
the appellant demanded full royalty on timber cut, felled and removed.
The company paid an amount of Rs. 7069.37 Paise under protest and later filed a petition under Article 226 of the Constitution in the Assam High Court, praying for refund of the amount and for a mandamus directing the appellant for issuing permits without insisting on payment of royalty whenever timber was to be cut from the leased area for the purposes connected with the exploitation of the grant.
The preliminary objection raised by the appellant that since the right claimed by the respondent flowed from the contract of lease such contractual right can only be enforced in civil court and therefore cannot be gone into under Article 226 was rejected by the Assam High Court.
On merits, the High Court further held that as the grant of N.C. Tezalpatty No. 1 was in favour of the respondent, the company was entitled to cut, fell and remove timber from that grant area for its use covered either by the same area or in other tea gardens which are outside the grant.
The High Court made the rule nisi absolute and hence the appeal by special leave.
Allowing the appeal, the Court ^ HELD: 1.
The Writ Petition on the allegation of infringement of fundamental right under Article 19(1)(g) of the Constitution, at the instance of respondent company alone was not maintainable for the reasons that: (a) a juristic person such as a corporation is not entitled to any of the freedoms guaranteed by Article 19 and here the respondent is a company incorporated under the Companies Act; (b) Article 19(1)(g) guaranteed the fundamental freedom to a 663 citizen and the respondent being a company is not a citizen and (c) the shareholders of a company alone can complain of infringement of their fundamental rights.
[669 E H, 670 A C] Tata Engineering and Locomotive Co. vs State of Bihar, ; , State Trading Corporation of India Ltd. vs The Commercial Tax Officer, Vishakhapatnam, [1964] 4 S.C.R. 99 and Benuott Coleman and Co. and other vs Union of India and others; , , followed.
2:1.It is undoubtedly true that the High Court can entertain in its extraordinary jurisdiction a petition to issue any of the prerogative writs for any other purpose.
But such writ can be issued where there is executive action unsupported by law or even in respect of a Corporation where there is a denial of equality before law or equal protection of law.
The Corporation can also file a writ petition for enforcement of a right under a statute.
Here, the relief claimed by the respondent was referable to nothing else but the terms of lease, namely, clause 2 Part IV.
The fact that this term is a mere reproduction of proviso to Rule 37 of Assam Land and Revenue Local Rate Regulation but that by itself is not sufficient to contend that what the respondent was doing was enforcing a statutory provision.
The validity of regulations is not challenged.
Therefore, the demand for royalty is supported by law.
[670 C F] 2:2.
Ordinarily, where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, if the contract is capable of being specifically performed, or the party may sue for damages.
Such a suit would ordinarily be cognizable by the Civil Court.
The High Court in its extraordinary jurisdiction would not ordinarily entertain a petition either for specific performance or for recovering damages.
A right to relief flowing from a contract has to be claimed in a civil court where a suit for specific performance of contract or for damages could be filed.
Here, this was a suit for refund of a royalty alleged to be unauthorisedly recovered and that could hardly be entertained in exercise of the writ jurisdiction of the High Court.
[670 F G, 671 A G, 672 A] Har Shankar and Ors.
vs The Deputy Excise and Taxation Commissioner and ors.
; , , applied.
Woodcrafts Assam vs Chief Conservator of Forests, Assam, AIR 1971 Assam p. 92, approved.
Upon a true construction of clause 2 Part IV of indenture of lease, the respondent company was not entitled to remove timber without payment of royalty.
The specific provision is that the grant is for a purpose of cultivation and raising tea garden and that from the area covered by the grant, if timber is felled for purpose connected with the grant itself, namely, cultivation and raising tea garden in that area, then alone the benefit of removal of timber without payment of royalty can be availed of.
[673 G H., 674 A] 3:2.
In order to obtain relief, namely to cut and remove timber from lease area for purpose connected with exploitation, of the grant the company must show that the timber is being felled and cut from an area covered by the lease in 664 which clause 2 finds its place and that such timber is being removed for a purpose connected with the exploitation of grant.
To be more specific, following facts will have to be proved for obtaining relief: (i) the area covered by the grant; (ii) felling of the trees from the area covered by the grant; (iii) use to which the felled timber was to be put to; (iv) such use will have to be one connected with the exploitation of the grant and (v) meaning of the exploitation of the grant, when controverted these aspects will have to be proved by relevance.
And that was the situation when return was filed by the present appellant in the High Court.
[672 G H, 673 A D]


judgement:
N: Criminal Appeal No. 277 of 1976.
Appeal by special leave from the judgment and order dated the 9th April, 1975 of the Bombay High Court (Nagpur Bench), Nagpur in Criminal Appeal No. 134 of 1971.
M.C. Bhandare and R.N. Poddar for the Appellant.
P. Govindan Nair, K. Ramavtar and K.R. Choudhury for the Respondent.
The Judgment of the Court was delivered by SEN, J.
The State Government of Maharashtra has preferred this appeal, by special leave, against the judgment of the 678 Bombay High Court, reversing the judgment and sentence of the Special Judge, Chandrapur and acquitting the respondent of an offence under section 5(2) read with section 5(1)(e) of the Prevention of Corruption Act, 1947 (hereinafter called 'the Act ').
The respondent, Wasudeo Ramchandra Kaidalwar, was a Range Forest Officer, drawing a salary of Rs. 515 per month.
On September 21, 1969, PW 71, Patwardhan, Inspector, Anti Corruption Bureau under authorisation from the Director, Anti Corruption Bureau, Bombay, carried out search and seizure at the residential house of the respondent.
The Inspector made a recovery of Rs. 26,870 in cash from an almirah, savings bank accounts in the names of the respondent, his wife and children totalling to Rs. 12,588.35, national savings certificates worth Rs. 510, postal savings certificates worth Rs. 184.25 in the name of his daughter, Nandini, savings bank deposits with the State Bank of India and the postal savings certificates in the name of his brother in law, Narayan, amounting to Rs. 2,279.05, gold and silver ornaments, household effects etc.
of the value of Rs. 8,602.50, two sale deeds in respect of two plots bearing Khasra Nos.
28/1K and 28/1Dh in Chandrapur purchased (1) in the name of his wife, Smt.
Sushila for Rs. 5,250 and (2) in the joint names of his wife, Smt.
Sushila and his brother in law, Narayan for an amount of Rs. 21,210, papers relating to the building of a house at village Gondpipri built in the year 1965 at a cost of Rs. 10,000.
The petitioner was accordingly put on trial for having committed an offence punishable under section 5(2) read with section 5(1)(e) of the Act, being found in possession of assets disproportionate to his income.
The respondent abjured his guilt and denied the commission of the offence.
He pleaded that he was leading frugal life and all the property found during the search of his residential house belonged to his father in law, Hanumanthu, pairokar of Raja Dharmarao, Zamindar of Aheri Estate.
He alleged that two of the sisters of his father in law were the kept mistresses of Raja Dharmarao and enjoyed special favours from the late Zamindar who bestowed on them large amounts of cash, ornaments etc.
They used to visit the house of his father in law, Hanumanthu, once or twice a month, and used to keep all their cash, gold and silver ornaments.
Hanumanthu owned a grocery shop.
He and his father had a liquor shop besides forest contracts.
Hanumanthu used to deal in money lending business.
The respondent alleged that his father in law deposited an amount of Rs. 30,000 in April 1957, Rs. 10,000/ in August 1957 and Rs. 35,000 in cash and Rs. 1,000 in coins and also 23 tolas of gold in September, 1957 with his wife, Smt.
Sushila.
679 He pleaded that his father in law died on March 10, 1958 at his house leaving behind his son, Narayan and two daughters, Smt.
Shakuntala, who on her marriage with the respondent was re named as Smt.
Sushila, and Smt.
Sushila, his sister in law, minor at that time.
He instructed him to divide the property into three equal shares among his three children.
The respondent maintained that he was holding the property merely as a custodian and was not the owner thereof.
The Special Judge, Chandrapur, by his judgment dated 7.6.1971, convicted the respondent for having committed an offence punishable under s.5(2) read with s.(5)(1)(e) of the Act inasmuch as he was found in possession of property worth Rs. 79,574.70 as against his only known source of income, namely, his total salary in government service amounting to Rs. 44,000.
He held that the respondent had failed to account for cash of Rs. 26,870, sale deeds of the two plots purchased for Rs. 5,250 and Rs. 21,210 in the name of his wife Smt.
Sushila and the other jointly in the name of his wife and brother in law, Narayan and for the house built at village Gondpipri at a cost of Rs. 10,000 He held that the acquisition of these immovable properties was not reasonably attributable to the property left by his father in law, Hanumanthu.
He also rejected the respondent 's plea that he was leading a frugal life and, therefore, was able to make a saving of Rs. 15,000 out of his salary income.
He accordingly sentenced him to undergo rigorous imprisonment for two years and to pay a fine of Rs. 26,870.
He further directed that the two plots at Chandrapur and the house at village Gondpipri be sold and the sale proceeds be forfeited.
On appeal, a learned Single Judge of the High Court set aside the judgment and sentence passed by the learned Special Judge and acquitted the respondent.
The order of acquittal was based principally on two grounds: (1) The prosecution having failed to discharge the burden of disproving all possible sources of income i.e. failed to account for the properties left by the respondent 's father in law, Haumanthu, he could not be convicted under section 5(2) read with section 5 (1)(e) of the Act, and (2) it was not possible to exclude the probability that the property found in the respondent 's house could be the property left by his father in law, Hanumanthu.
In coming to the conclusion that it did, the High Court was of the view that the changes brought about by the Anti Corruption Laws (Amendment) Act, 1964 had the effect of limiting the presumption of guilt arising under s.4(1) of the Act to offences of criminal misconduct 680 specified in ss.5(1)(a) and (b) and not to that in s.5(1)(e).
It therefore held that mere possession of disproportionate assets by a public servant to his known sources of income for which he has failed to account would not be sufficient to bring home the guilt under s.5(1) (e), unless the prosecution further excludes all possible sources of income.
The construction placed by the High Court on the provisions contained in s.5(1)(e) of the Act is obviously wrong.
It completely overlooks the fact that the burden is cast on the accused by the use of the words "for which the public servant cannot satisfactorily account".
It is also wrong in distorting the meaning of the expression "known sources of income" occurring in section 5(1)(e), which has a definite legal connotation and which, in the context, must mean "sources known to the prosecution".
It is distressing to find that the High Court has involved itself into a process of evolution of a new theory of law, instead of confining itself to a re appraisal of the evidence on record which it was entitled to do sitting as a court of appeal against the judgment of conviction.
The order of acquittal recorded by the High Court could still be maintained on a proper evaluation of the facts, as, on the proved circumstances, there was a preponderance of probability that the property found in the respondent 's house could be the property left by his father in law, Hanumanthu.
The legislature deleted s.5(3) of Act which embodied a rule of evidence by s.6 of the Anti Corruption Laws (Amendment) Act, 1964 and instead, inserted s.5(1)(e) making, possession of disproportionate assets by a public servant, a substantive offence.
Section 5(1)(e) of the Act reads: 5.(1) A public servant is said to commit the offence of criminal misconduct (e) if he or any person on his behalf is in possession or has, at any time during the period of his office, been in possession, for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.
Old s.5(3) of the Act was in these terms: 5.(3) In any trial of an offence punishable under subsection(2) the fact that the accused person or any other person on his behalf is in possession, for which the accused 681 person cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income may be proved, and on such proof the Court shall presume, unless the contrary is proved, that the accused person if guilty of criminal misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption.
Three questions arise for our consideration in this appeal, namely: (1) Whether a public servant charged with having disproportionate assets in his possession, for which he cannot satisfactorily account, cannot be convicted of an offence under section 5(2) read with s.5(1)(e) of the Act unless the prosecution disproves all possible sources of his income (2) If the prosecution establishes that a public servant is in possession of pecuniary resources or property disproportionate to his known sources of income, whether the burden to disprove the charge shifts to the accused to satisfactorily account for the source of acquisition of such resources or property.
and if so, the nature and extent of such burden on the accused.
(3) Whether, on the facts and circumstances of the present case, having regard to the fact that the respondent 's father in law, Hanumanthu was pairokar of Raja Dharmarao, Zamindar of Aheri Estate and left substantial properties, it was not improbable that the properties found in possession of the respondent belonged to his father in law.
It is clear both on authority and principle that s.5(3) which now stands deleted did not create an offence separate from the one created by s.5(1), but intended only to lay down a rule of evidence to raise a presumption of guilt in certain circumstances.
Section 5(1) defines different species of criminal misconduct which can be committed by a public servant and section 5(2) provides that any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less than one year, but which may extend to seven years and also shall be liable to fine.
Under the old s.5(3), a presumption of criminal misconduct could be drawn if such a public servant or any person on his behalf was found to be in possession of pecuniary resources or property disproportionate to his known sources of income for which the public servant could not satisfactorily account.
Once the prosecution proved that the accused person was possessed of disproportionate assets, the burden was shifted to the accused to prove the source of acquisition of such assets.
682 The provisions of s.5(3) have been subject of judicial interpretation.
First the expression "known sources of income" in the context of s.5(3) meant "sources known to the prosecution".
The other principle is equally well settled.
The onus placed on the accused under s.5(3) was however, not to prove his innocence beyond reasonable doubt, but only to establish a preponderance of probability.
These are well settled principles: C.S.D. Swamy vs The State Sajjan Singh vs State of Punjab and V.D. Jhagan vs State of U.P.
The legislature thought it fit to dispense with the rule of evidence under section 5(3) and make the possession of disproportionate assets by a public servant as one of the species of the offence of criminal misconduct by inserting section 5(1)(e) due to widespread corruption in public services.
The terms and expressions appearing in section 5(1)(e) of the Act are the same as those used in the old Section 5(3).
Although the two provisions operate in two different fields, the meaning to be assigned to them must be the same.
The expression "known sources of income" means "sources known to the prosecution".
So also the same meaning must be given to the words "for which the public servant is unable to satisfactorily account" occurring in section 5(1)(e).
No doubt, section 4(1) provides for presumption of guilt in cases falling under sections 5(1)(a) and (b), but there was, in our opinion, no need to mention section 5(1)(a) therein.
For, the reason is obvious.
The provision contained in s.5(1)(e) of the Act is a self contained provision.
The first part of the Section casts a burden on the prosecution and the second on the accused.
When section 5(1)(e) uses the words "for which the public servant is unable to satisfactorily account", it is implied that the burden is on such public servant to account for the sources for the acquisition of disproportionate assets.
The High Court, therefore, was in error in holding that a public servant charged for having disproportionate assets in his possession for which he cannot satisfactorily account, cannot be convicted of an offence under section 5(2) read with s.5(1)(e) of the Act unless the prosecution disproves all possible sources of income.
That takes us to the difficult question as to the nature and extent of the burden of proof under section 5 (1) (e) of the Act.
The expression 'burden of proof ' has two distinct meanings (1) the legal burden.
i.e. the burden of establishing the guilt, and (2) the 683 evidential burden, i.e. the burden of leading evidence.
In a criminal trial, the burden of proving everything essential to establish the charge against the accused lies upon the prosecution, and that burden never shifts.
Notwithstanding the general rule that the burden of proof lies exclusively upon the prosecution, in the case of certain offences, the burden of proving a particular fact in issue may be laid by law upon the accused.
The burden resting on the accused in such cases is, however, not so onerous as that which lies on the prosecution and is discharged by proof of a balance of probabilities.
The ingredients of the offence of criminal misconduct under section 5(2) read with s.5(1)(e) are the possession of pecuniary resources or property disproportionate to the known sources of income for which the public servant cannot satisfactorily account.
To substantiate the charge, the prosecution must prove the following facts before it can bring a case under section 5(1)(e), namely, (1) it must establish that the accused is a public servant, (2) the nature and extent of the pecuniary resources or property which were found in his possession, (3) it must be proved as to what were his known sources of income i.e. known to the prosecution, and (4) it must prove quite objectively, that such resources or property found in possession of the accused were disproportionate to his known sources of income.
Once these four ingredients are established, the offence of criminal misconduct under section 5(1)(e) is complete, unless the accused is able to account for such resources or property.
The burden then shifts to the accused to satisfactorily account for his possession of disproportionate assets.
The extent and nature of burden of proof resting upon the public servant to be found in possession of disproportionate assets under section 5(1)(e) cannot be higher than the test laid by the Court in Jahgan 's case (supra), i.e. to establish his case by a preponderance of probability.
That test was laid down by the court following the dictum of Viscount Sankey, L.C. in Woolmington vs Director of Public Prosecutions.
The High Court has placed an impossible burden on the prosecution to disprove all possible sources of income which were within the special knowledge of the accused.
As laid down in Swamy 's case (supra), the prosecution cannot, in the very nature of things, be expected to know the affairs of a public servant found in possession of resources or property disproportionate to his known sources of income i.e. his salary.
Those will be matters specially within the knowledge of the public servant within the meaning of s.106 of the Evidence Act, 1872.
Section 106 reads: 684 section 106.
when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.
In this connection, the phrase the burden of proof is clearly used in the secondary sense namely.
the duty of introducing evidence.
The nature and extent of the burden cast on the accused is well settled.
The accused is not bound to prove his innocence beyond all reasonable doubt.
All that he need do is to bring out a preponderance of probability.
Such being the law, the question whether or not the respondent had established a preponderance of probability is a matter relating to appreciation of evidence.
On a consideration of the evidence adduced by the respondent, the High Court has taken the view that it is not possible to exclude the possibility that the property found in possession of the respondent belonged to his father in law, Hanumanthu.
We have been taken through the evidence and we cannot say that the finding reached by the High Court is either manifestly wrong or perverse.
Maybe, this Court, on a reappraisal of the evidence, could have come to a contrary conclusion.
That, however, is hardly a ground for interference with an order of acquittal.
There are no compelling reasons to interfere with the order of acquittal, particularly when there is overwhelming evidence led by the respondent showing that his father in law, Hanumanthu, was a man of affluent circumstances.
There is no denying fact that Hanumantha was the pairokar of Raja Dharmarao Zamindar of Aheri Estate and by his close association with the Zamindar, had amassed considerable wealth.
More so, because two of his sisters were the kept mistresses of the Zamindar and amply provided for.
It appears that after the death of Raja Dharmarao, Hanumanthu took up his residence with his elder daughter, Smt.
Sushila, who was married to the respondent.
To substantiate his plea in defence, the respondent examined as many as 12 witnesses including himself as AW 12, his sister in law, Smt.
Sushila (AW 11), Dr. Chandrasekhar Merekar (AW 6), Shri V.N. Swamy, Advocate, Chandrapur (AW 8).
We cannot brush aside the unimpeachable testimony of Shri V.N. Swamy, AW 8, who was a leading advocate of Chandrapur and Member of Lok Sabha, and Dr. Chandrasekhar Merekar, AW 6, Medical Practitioner of Chandrapur, who attended on Hanumanthu at the time of his death.
Both these witnesses have unequivocally stated that when Hanumanthu died at the respondents leaving his two minor children, Smt.
Sushila and Narayan to the care of the respondent and his wife, Smt.
Sushila, he told them that he 685 was leaving properties worth Rs. 70 to 80 thousand comprising cash ornaments, jewellery etc., and expressed a desire that the same be divided equally among, his three children, the two daughters and son.
Shri Swamy testified to the fact that he was handling all the litigation of Raja Dharamrao, Zamindar of Aheri Estate who had an yearly income of Rs. 6 to 8 lakhs because the Zamindar had rich forests.
He tells us that he knew Hanumanthu well because he was the pairokar of Raja Dharmarao, that Hanumanthu enjoyed great confidence of the Zamindar and had free access to him because his two sisters were the kept mistresses of the Zamindar.
His evidence shows that the ladies were well provided for and whenever they visited Hanumanthu they used to hand over their cash, ornaments and jewellery to him for safe custody.
His evidence also shows that Hanumanthu was a man of affluence and that he and his father had a liquor shop besides forest contracts.
Hanumanthu also used to deal in money lending business.
The respondent has also placed on record documents showing that Hanumanthu was a man of substantial means.
To add to the difficulty of the prosecution, Smt.
Sushila, AW 11, sister in law of the respondent has come and deposed that all the property belonged to her father.
All this evidence is sufficient to create a doubt as to whether the respondent was in possession of disproportionate assets.
There is certainly a preponderance of probability that the property found in the possession of the respondent did not belong to him but belonged to his father in law, Hanumanthu.
The result, therefore, is that the appeal must fail and is accordingly dismissed.
P.B.R. Appeal dismissed.

dataset_name: IN-Abs

summary:
The respondent was a Range Forest Officer on a monthly salary of Rs. 515.
In a search conducted by an officer of the Anti Corruption Bureau, Rs. 26 thousand odd in cash, savings bank accounts in the names of himself, his wife and children, national savings certificates, postal saving certificates, gold and silver ornaments, sale deeds of certain properties in the name of his wife, sister in law and brother in law aggregating in all to over Rs. 79 thousand were discovered from his house.
On the allegation that he was found in possession of assets disproportionate to his known sources of income he was charged with offence punishable under section 5(2) read with section 5(1)(e) of the Prevention of Corruption Act, 1947.
The respondent pleaded that he led a frugal life and that secondly much of the property found in his house belonged to his father in law.
He added that his father in law was a pairokar of a Zamindar in the area, that two sisters of his father in law were the kept mistresses of the Zamindar, and the Zamindar gave large amounts of cash and presents most of which were passed on to his father in law.
At the time of his death, his father in law entrusted his minor daughter and son to his care and instructed that his property should be divided among his three children equally and that therefore he was holding the property merely as a custodian.
Rejecting the plea of the respondent a Special Judge convicted and sentenced him under section 5(2) read with section 5(1)(e) of the Act.
On appeal a single Judge of the High Court acquitted him holding that the prosecution had failed to discharge the burden of disproving all possible sources of the respondent 's income, that it was not possible to exclude the probability that the property found in his possession could be the property left by his father in law, and that mere possession of assets disproportionate to his known sources of income would not be sufficient to bring home the guilt under section 5(1)(e) unless the prosecution further excluded all possible sources of income.
The High Court was also of the view that the changes brought about by the Anti 676 Corruption Laws (Amendment) Act, 1964 had the effect of limiting the presumption of guilt arising under section 4(1) of the Act to an offence of criminal misconduct specified in section 5(1)(a) and (b) and not to that in section 5(1)(e).
^ HELD: The construction placed by the High Court on section 5(1)(e) was wrong in that it overlooked the fact that, by the use of the words "for which the public servant cannot satisfactorily acquit", a burden is cast on the accused.
[680 B] Section 5(3) which now stood deleted, did not create an offence separate from the one created by section 5(1) but only raised a presumption of criminal misconduct if he or any person on his behalf was in possession of pecuniary resources or property disproportionate to his known sources of income which he could not satisfactorily account.
Once the prosecution proves this fact the burden shifts on to the accused to prove the source of acquisition of such assets.
[681 F G] The expression "known sources of income" in the context of the section means "sources known to the prosecution".
Secondly, the onus placed on the accused under the section was not to prove his innocence beyond reasonable doubt but only to establish a preponderance of probability.
To eradicate the widespread corruption in public services the legislature dispensed with the rule of evidence under section 5(3) and made possession by a public servant of assets disproportionate to his income as one of the species of offences of criminal misconduct by inserting clause (e) in section 5(1).
[682 A C] The meaning to be assigned to the expression "known sources of income" occurring in section 5(1)(e) must be the same as was given to that expression in section 5(3) before its repeal, that is, "sources known to the prosecution".
So also the same meaning must be given to the words "for which a public servant is unable to satisfactorily account" occurring in section 5(1)(e).
When clause (e) uses the words "if the public servant is unable to satisfactorily account" it is implied that the burden is on such public servant to account for the sources for the acquisition of assets disproportionate to his income.
The High Court was, therefore, in error in holding that a public servant charged for having in his possession assets disproportionate to his income for which he cannot satisfactorily account could not be convicted of an offence under section 5(2) read with section 5(1)(e) unless the prosecution disproves all possible sources of income.
[682 D F] Sajjan Singh vs State of Punjab ; and V.D. Jhagan vs State of U.P. ; , referred to.
The expression "burden of proof" has two distinct meanings: (1) the legal burden, that is, the burden of establishing the guilt and (2) the evidential burden, that is, the burden of leading evidence.
Notwithstanding the general rule that the burden of proof lies exclusively upon the prosecution, in the case of certain offences, the burden of proving a particular fact in issue may be laid by law upon the accused.
This burden is not so onerous as that which lies on the prosecution and is discharged by proof of a balance of probabilities.
To substantiate the charge of criminal misconduct under section 5(2) read with section 5(1)(e) the prosecution must prove (1) that the accused was a public servant; (2) the nature and extent of the pecuniary resources or property in his possession, (3) his known sources of income, i.e. known to the prosecution; (4) that such 677 sources or property were disproportionate to his known sources of income.
Once these are established, the offence of criminal misconduct under section 5(1)(e) would be complete.
The burden then shifts to the accused to substantially account for possession by him of assets disproportionate to his income.
The extent and nature of burden of proof resting upon the public servant cannot be higher than establishing his case by a preponderance of probability.
[683 A E] In the instant case the High Court has placed an impossible burden on the prosecution to disprove all possible sources of income which were within the special knowledge of the accused.
The prosecution cannot in the nature of things be expected to know the affairs of a public servant found in possession of resources or property disproportionate to his known sources of income that is his salary, because these are matters specially within his knowledge, within the meaning of section 106 of the Evidence Act.
The phrase "burden of proof" in section 106 of Evidence Act is clearly used in the secondary sense, namely the duty of introducing evidence.
The nature and extent of the burden cast on the accused is well settled.
The accused is not bound to prove his innocence beyond all reasonable doubt.
All that he need do is to bring out a preponderance of probability.
[684 B] On the proved circumstances there was a preponderance of probability that the property found in the respondent 's house could be the property left by his father in law.
There is overwhelming evidence on record that the respondent 's father in law was a man of affluent circumstances, being a paiorkar of a Zamindar and that he had amassed considerable wealth, more so because his two sisters were the kept mistresses of the Zamindar.
On the death of the Zamindar his father in law stayed with the respondent.
Also, the respondent 's father had a liquor shop besides forest contracts.
The evidence led in the case was sufficient to create a doubt whether the respondent was in possession of assets disproportionate to his known sources of income.
On the other hand there is preponderance of probability that the property in his possession belonged not to him, but to his father in law.
[684 D H]