judgement:
ivil Appeal No. 2111 of 1969.
(Appeal by Special Leave from the Judgment and Order dated 26 9 1968 of the Madhya Pradesh High COurt in Civil Revision No. 711/66).
V.S. Desai, P. C. Bhartari and D. N. Misra for the Appel lants.
B.N. Lokur and Rameshwar Nath for the Respondents.
1018 The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave is directed against the judgment of the Madhya Pradesh High Court dated September 26, 1968 setting aside the appellate order or the Second Additional District Judge, Indore, dated Octo ber 29, 1966 and remitting the matter to the Municipal Commissioner for a fresh determination of the annual value of the building.
The building in question is known as "Viram Lodge", on Ravindra Nath Tagore Marg, Indore.
It belongs to the respondent and has been used by them as a hotel.
The annual gross rental value of the building was determined at Rs. 6600/in 1956.
It was revised by the Assessment Officer on June 3, 1965 and was raised to Rs. 43,405.20.
The respondents filed objections to the valuation, but the Municipal Commissioner fixed the annual value at Rs. 43,405.20.
He held that, in view of the "non obstante" clause in section 138(b) of the Madhya Pradesh Municipal Corporation Act, 1956, hereinafter referred to as the Act, there was no justification for the .argument that the rental value of the premises could not be fixed at a rate higher than the standard rent under section 7 of the Madhya Pradesh Accommodation Control Act, 1961.
An appeal was taken to the Second Additional District Judge, but without suc cess.
The respondents then filed an application for revi sion, which was allowed by the impugned judgment of the High Court dated September 26, 1968.
This is how the present appeal has arisen at the instance of the Municipal Corporation and its officers.
Section 138 of the Act prescribes the mode for determin ing the annual value of any land or building for purposes of assessing it to property tax.
Clause (a) of the section deals with the annual value of land, and it is not the case of the parties that it has any bearing on the controversy.
Clause (b) prescribes the mode of determining the annual value of a building and reads as follows, "(b) the annual value of any building shall notwithstanding anything contained in any other law for the time being in force be deemed to be the gross annual rent at which such building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith might reasonably at the time of assessment be expected to be let from year to year, less an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent.
" There are two explanations to the clause.
It is nobody 's case that they have any bearing on the short point in con troversy before us.
Clause (c) of the section prescribes that if the gross annual rent of a building cannot be deter mined under clause (b), the annual value of the building shall be determined according to that clause.
If is 1019 not in controversy before us that the Viram Lodge was never let on rent, and is being run as a hotel by its owners, the present respondents, so that the .question of fixing its standard rent under section 7 of the Madhya Pradesh Accommodation Control Act, 1961, has not arisen.
It has argued that, even so, the reasonable rent contemplated by section 138(b) of the Act cannot exceed the standard rent to be fixed under the aforesaid section 7.
It has thus been 'urged that it was incumbent for the Municipal Commissioner to determine the annual value of the building on the same basis on which its standard rent was required to be fixed under section 7.
Reliance in this connection has been placed on the deci sions of this Court in The Car oration of Calcutta vs Smt.
Padma Debi and others,(1) Corporation of Calcutta vs Life Insurance Corporation of India(2) Guntur Municipal Council vs Guntur Town Rate Payers 'Assiciation(3) New Delhi Munici pal Committee vs M.N. Soi and another.(4) As has been stated, clause (b) of section 138 of the Act provides that the annual value of any.
building shall "notwithstanding anything contained in any other law for the time being in force" be deemed to be the gross annual rent for which the building might "reasonably at the time of the assessment be expected to be let from year to year.
" While therefore the requirement of the law is that the reasonable letting value should determine the annual value of the building, it has also been specifically provided that this would be so "notwithstanding anything contained in any other law for the time being in force".
It appears to us that it .would be a proper interpretation of the provisions of clause (b) of section 138 of the Act to hold that in a case where the standard rent of a building has been fixed under section 7 of the Madhya Pradesh Accommodation Control Act, and there is nothing to show that there has been fraud or collusion, that would be its reasonable letting value, hit, where this is not so, and the building has never been let out and is being used in a manner where the question of fixing its standard rent does not arise, it would be permis sible to fix its reasonable rent without regard to the provisions of the Madhya Pradesh Accommodation Control Act, 1961.
This view will, in our opinion, give proper effect to the non obstante clause in clause (b with due regard to its Other provision that the letting value should be "rea sonable".
We have gone through the decision in Padma Debi 's case (supra).
There the premises were on rent and section 127(a) of Calcutta Municipal Corporation Act, 1923, did not con tain a non obstante clause.
That the section provided, inter alia, was that the annual value shall be deemed to be the gross annual rent at which the land or building might at the time of assessment "reasonably be expected to let from year to year." This Court examined the significance of the word "reasonable" and held that it would be incongruous to . (1) ; (2) [1971] 1 .C.R. 248.
(3) ; (4) ; 15 1338SC1/76 1020 consider fixation of rent beyond the limits fixed by penal legislation as reasonable.
That view was taken with refer ence to the provisions of the Rent Control Act which pena lised the taking of a higher rent, and also ' made it irrecoverable.
While, therefore, we are in agreement with the view taken in Padma Debi 's case (supra) that it would not be reasonable to consider fixation of rent beyond the limits fixed by the Rent Control Act as reasonable, it would not be a proper interpretation of section 138(b) of 'the Act to ignore the significance of its non obstante clause altogether.
That is why we have taken the view that it would be a fair and reasonable interpretation of section 138(b) to hold that as no standard rent has been fixed so far in respect of the Viram Lodge, the Municipal Commis sioner was justified in adopting another suitable criterion for determining the annual value of the building.
There is in fact nothing in the Act to.
make it obligatory for the Commissioner to follow the provisions of the Madhya Pradesh Accommodation Control Act in spite of the non obstante clause and to limit the annual value to any standard rent that the building might fetch under that Act.
We have also gone through Corporation of Calcutta vs Life Insurance,Corporation of India (supra).
That was also a case where the premises had been let out on rent.
The standard rent had also been fixed, and that was why Padma Debi 's case (supra) was held to be applicable.
So also, Guntur Municipal Council vs Guntur Town Rate Payers ' Association (supra) was a case where the premises.were on rent and there also Padma Debi 's case was held to be applicable even though the standard rent had not been fixed, because it was held that there was nothing to prevent the authorities concerned from ascertaining the fair rent by keeping in view the principles which had been laid down for its determination under the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960.
Section 82(2) of the Madras District Municipalities Act, which governed that case, did not contain a non obstante clause.
Much the same was the position in M.N. Soi 's case which related to a house in New Delhi, of which rate had to be assessed under the provisions of the Punjab Municipal Act, 1911.
The High Court did not properly appreciate the differ ence between the wordings of section 127 of the Calcutta Municipal Corporation Act, 1923, and section 138(c) of the Act, and committed an error in thinking that this was virtu ally similar to Padma Debi 's case.
We find that the High Court has taken the view that a full hearing was not given to the respondents at the time of fixing the annual value of the Viram Lodge and that the valuation was based on "no principle".
Here again, the High Court was clearly in error because we find from the judgment of the Second Additional District Judge, dated October 29, 1966, that the counsel for the respondents 1021 was given "ample opportunity" by the Municipal Commissioner to represent his case before him.
He has also stated that the Assessment Officer paid due regard to all the relevant circumstances which had a bearing on the determination of the reasonable letting value of the building.
Counsel for the respondents has in fact not found it worth his while to argue either that such a hearing was not given, or that all the relevant factors were not taken into consideration in determining the annual letting value of the premises.
In the result, the appeal is allowed and the impugned judgment of the High Court dated September 26, 1968, is Set aside.
The appellants will however pay the costs of the respondents as stipulated in the order of this Court grant ing the special leave.
P.H.P. Appeal al lowed.

summary:
The respondents are the owner of a building known as Viram Lodge.
They run a hotel in the said building.
The annual gross rental value of the.
building was determined at Rs. 6,600/ in 1956.
It was revised to Rs. 43,405/ by the Assessment Officer in 1965.
Section 138(b) of the Madhya Pradesh Municipal Corporation Act, 1956, provides that notwithstanding anything contained in any ,other law for the time being in force, the annual value of any building shall be deemed to be the gross annual rent at which such building might be reasonably at the time of assessment be expected to let from year to year at the time of the less an allowance of 10 per cent for repairs etc.
The respondent challenged the valuation on the ground that the rental value of the premises could not be fixed at a rate higher than the stand ard rent under section 7 of the Madhya Pradesh Accommoda tion Control Act, 1961.
The Municipal Commissioner negatived the respondents ' contention.
An appeal filed by the respondents to the Additional District Judge also failed.
The High Court however allowed the Revision filed by the respondents.
Allowing the appeal by Special Leave held: 1.
In the.
present case the building in ques tion was never let on rent and is being used by the owners as a hotel.
[1019 A] 2.
On a proper construction of section 138(b) where the standard rent of a building has been fixed under section 7 of the Accommodation Control Act, and there is nothing to show that there has been fraud or collusion that would be its reasonable letting value but where the building has never been let out the question of fixation standard rent does not arise.
In that case it would be permissible to fix its reasonable rent without regard to the provi sions of Madhya Pradesh Accommodation Control Act.
This view gives proper effect to the nonobstante clause in section 138(b).
[1019 D F] The Corporation of Calcutta vs Smt.
Padma Debi and others ; , Corporation of Calcutta vs Life Insurance Corporation of India , Guntur Municipal Council vs Guntur Town Rate Payers ' Association ; and New Delhi Municipal Committee vs M.N. Soi and another ; , distinguished.


judgement:
ivil Appeal Nos.
446 449 of 1976.
Appeals by Special Leave from the judgment and Orders dated.
14 1338SCI/76 1004 7 4 1969 and 25 1 1972 of the Bombay High Court (Nagpur Bench) In S.T.R. Nos.
17 to 20 of 1964 and CIVIL APPEAL NOS.
450453 OF 1976.
V. p. Raman, Addl.
General for India, S.B. Wad and M. N Shroff for Appellants in CAs.
450 to 453/76.
G.L. Sanghi, A. section Bobde, M.L. Vaidya, V.A. Bobde, A. G. Meneses, J.B. Dadachanji, K.J. John, O.C. Mathur and Ravind er Narain for the Respondents in CAs.
446 449/76 and Appel lants in (2.
450 453/76 The Judgment of the Court was delivered by BEG, J.
The eight appeals before us by special leave arise out of four Sale "Tax References, under Section 23(1) of the Central Provinces and Berar Sales Tax Act, 1947, (hereinafter referred to as 'the Act ').
Five of these were decided by a Division Bench of the Bombay High Court.
As it answered the main question determining liabili ty to pay the sales tax under the Act against the State, there are four appeals against it by the State.
The sixth question, which was one of law only, was referred by the Division Bench to a Full Bench, and, this was determined in favour of the State.
There are, therefore, four appeals by the assessee against the Full Bench decision.
M/s. Central Provinces Manganese Ore Co. Ltd., the assessee, has its Head Office in London.
It carries on business on an extensive scale.
It owns 22 manganese ore mines in Madhya Pradesh from where manganese ore, after being excavated, is sent mostly abroad through different ports.
The Company is a registered dealer under the Act.
It used to enter into contracts at places outside Madhya Pradesh for the despatch of what came to be known, in the special parlance of this company 's business, as "Oriental Mixture" But the contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures.
The term "Oriental Mixture" was evidently employed by the Company itself to describe a particular type of conglomerate which the unloading at one place of Various types of manganese ore produced.
The required average consistency or strength of manganese ore specified in the contracts, which did not contain a reference to any "Oriental Mixture", was said to be obtained in the course of this mechanical process of transportation when various grades of manganese ore were heaped together.
These grades of manganese ore were trans ported, in railway wagons, from one or more mines, and, it appears that the order in which trucks were.loaded in goods trains and unloaded was also so,arranged that the mixture came into existence, as described above, in the mere process of unloading at the port.
1005 But, this procedure did not seem to involve a process of "Manufacture", as that term is ordinarily understood, to which the assessee could be said to have subjected its manganese ore.
The case of the assessee company was that the "Oriental Mixture" as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that it could not be taxed as "goods in exist ence" in Madhya Pradesh at the time when ,contracts relating to these goods were made.
Other questions ,appear to be subsidiary.
Nevertheless; we have to consider them 'before coming to the crucial question which is: Is the process described above one of "manufacture" so that a new kind of goods, known as "Oriental Mixture", came into existence at the port where manganese ore trucks were unloaded? As the High Court pointed out, the periods involved in the four references before it were not governed by the provisions of the Constitution.
Reference No. 17 of 1964 for the period 1st January, 1947 30th September, 1947.
Reference No. 18 of 1964 for the period 1st October, 1947 to 31st December, 1948.
Reference No. 19 of 1964 for the period 1st January, 1949 to 31st December, 1949.
Reference No. 20 of 1964 for the period 1st January, 1950 to 25th January, 1950.
We, therefore, agree with the High Court 's view that Article 286 of the Constitution, which is not retrospective in operation, could not help the assessee merely because it was there at the time of assessment.
The next question to be considered, which was referred to the Full Bench, flows from Explanation (II) to Section 2(g) of the Act which was amended by the C.P. & Berar Sale Tax (Amendment) Act No. XVI of 1949, came into force on 11th April, 1949.
Hence, the law, as found after the amending Act, could apply, .if valid, only to the last two refer ences.
But, the question which arose, on the assumption that the amendment was ineffective, was whether the unamended law could be applied at all after the purported amendment.
Section 2(g) of the Act, with its two explanations, before it was amended, may be reproduced here in toto.
It reads as follows: "2(g) 'sale ' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable considera tion, including a transfer of property in goods made in course of the execution of a contract, but does not,include a mortgage, hypothecation, charge or pledge: Explanation (I): A transfer of goods on hire purchase or other installment system of pay ment ' shall, notwithstanding 1006 that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale; Explanation (11): Notwithstanding anything to the contrary in the Indian , the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as define in that Act in respect thereof is made, shall wherever the. said contract of sale is made, be deemed for the purpose of this Act to have taken place in the Central Provinces and Berar".
Section 2 of the Amending Act of 1949 provid ed: 2.
In section 2 of the Central Provinces and Berar Sales Tax Act 1947 (hereinafter referred to as the said Act), (a) in clause (g) for Explanation (I1) the following shall be substituted : Explanation (I1) : Notwithstanding anything to the contrary in the Indian , the sale or purchase of any goods shall be deemed for the purposes of this Act, to have taken place in this province, wherever the contract of sale or purchase might have been made "(a) if the goods were actually in this province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by descrip tion, then, if the goods are actually produced or found in this Province at any time after the contract of sale or purchase in respect thereof was made".
The submission made on behalf of the assessee, which was accepted by the High Court was that, as the amendment did not receive the assent of the Governor General under Section 107 of the Govt.
of India Act, it was void.
It was, howev er, also urged, on behalf of the assessee, that a repeal of the previously existing section did not require the assent of the Governor General at all.
The argument was that the original provision was validly repealed, but, as no substi tution of the new provision could take place, because the assent of the Governor General was not obtained, only the repeal survived.
The result of accepting such a submission would be that the substitution will have to be split up into two distinct enactments; firstly, a repeal of the original section 2(g) of the Act; and, secondly, the substitution of the new provision for the repealed one.
The assessee 's argument was that two processes, one of repeal and another of substitution, are necessarily implied in such an amend ment as the one before us.
It was urged that both had received the assent of the Governor, but, since the substi tuted provision alone required the assent of the Governor General, which was not obtained, a repeal, which was assent ed to by the Governor, stood on its own separate footing.
Thus, the result was said to be a repeal simpliciter without the enactment of the fresh provision meant to replace it.
1007 It was submitted that the High Court, after finding the substituted provisions of section 2(g) of the Act to be invalid, had erred in holding that the repeal was also ineffective.
It was contended that such a view resulted in attributing to the legislature an intention contrary to that which it had unmistakably expressed by repealing the una mended provision.
It was urged that the repeal, which was clearly intended, must be held to be valid.
assessment periods.
Of course, this argument assumes that the repeal and the new ' enactment are separate.
In Shriram Gulabdas vs Board of Revenue, Madhya Pradesh & Ant.
the province, is not ultra vires the Provision Legislature.
We must make it clear that our answer to this question is in the affirmative, free from considerations arising under Article 286.
We have shown that the necessary power to make the unamended Explanation did exist in the State Legisla ture; but we have also made it clear that by virtue ' of Article 286 the Explanation can no longer be enforced because under the present Constitution the sales tax can only be col lected at the market and where the goods are delivered for consumption.
We may also state that the amended Explanation II is not validly enacted because it makes drastic changes in the rules as found in the without obtaining the ' assent of the Governor General.
The effect of the amended Explanation going out would be to rehabilitate the old Explanation as it existed because the amendment being unconstitutional will fail to work any change in the law (See the opinion given by one of us, Hidayatullah, J., in Laxmibai vs The State (I.L.R. , 608, 610 (F.B.)".
No question relating to the enforcement of the Sales tax by any collection to be made after the Constitution came into force was raised the cases before us.
This was held to be the correct position in the case of Shriram Gulabdas (Supra).
It was also clearly held there that the 'result of the invalidity of the amended explana tion was to leave the law unaltered as it stood before the amendment.
We approve of this pronouncement made long ago on this very question.
It was urged on behalf of the assessee that the case of Shriram Gulabdas (supra) contained what was merely an obser vation with regard the "rehabilitation" of the preexisting law as that question was no directly under consideration there
It was also submitted that this observation must be deemed to have been over ruled by subsequent pronouncements of this Court.
(1) (1952) 3 S.T.C. 343.
1008 The passage cited above by us occurs in answering the fifth question considered there which was framed as follows: "(v) Whether Explanation II to clause (g) of Section 2, which makes an agreement of sale taxable even though the sale may have taken placed outside the Province, ultra vires of the Provincial Legislature ?" Other questions framed indicate that it was not only the validity of the provision, both before and after its amend ment, which was directly considered and pronounced upon, but the application of the concept of sale under the unamended law and its effects were also under consideration.
We think that the view that the unamended law was in operation was not a mere obiter dictum.
It was necessary to decide that question before other questions could be determined.
We give out own reasons below for accepting the correctness of the view taken then.
The following passage was also cited from Koteswar Vittal Kamath V.K. Rangappa Baliga & Co. (at p. 509): "Learned counsel for the respondent, however, urged that the Prohibition Order of 1119 cannot, in any case, be held to have continued after 8th March, 1950, if the prin ciple laid down by this Court in Firm A.T.B. Mehtab Majid & Co. vs State of Madras, (1963) Supp.
2 SCR 435 (AIR 1963 SC 928) is applied.
In that case, rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, was impugned.
The Court held that the ' new Rule 16(2) was invalid because the provisions of that.
rule contra vened the provisions of Article 304(a) of the Constitution.
Thereupon, it was urged before the Court that, if the impugned rule be held to be invalid, the old Rule 16 gets revived, so that the tax assessed on the basis of that rule will ' be good.
The Court rejected this submission by holding that : 'Once the old rule has been substituted by the new rule, it ceases to exist and it does not automatically get revived when the new rule is held to be invalid '.
On that analogy, it was argued that, if we hold that the Prohibition Order of 1950 was invalid, the previous Prohibition Order of 1119 cannot be held to be revived.
This argument ignores the distinction between supersession of a rule, and substitution of a rule.
In the case of (1963) Supp. 2 SCR 435 (AIR (supra), the new Rule 16 was substituted for the old Rule 16.
The process of substitution consists of two steps.
First, the old rule is made to cease to exist, and, next, the new rule is brought into existence in its place.
Even if the new rule be in valid, the first step of the (1) ; 509: ; 47.1009 old rule ceasing to exist comes into effect and it was for this reason that the Court held that, on declaration of the new rule as in valid, the old rule could not be held to be revived".
In the above mentioned passage, this Court merely explained the argument which was ac cepted in the case of firm A.T.B. Mehtab Majid & Co. vs State of Madras(1).
After doing so, it distinguished the facts in Koteswar 's case (supra), relating to an alleged substitution of one Prohibition Order by a subsequent order which was found to be invalid.
It recorded its conclusion as follows (at p. 509): "In the case before us, there was no substitution of the Prohibition Order of 1950 for the Prohibition Order of 1119.
The Prohibition Order of 1950 was promulgated independ ently of the Prohibition Order of 1119, and because the provisions of law it would have had the effect of making the Prohibition Order of 1119 inoperative if it had been a valid order.
If the Prohibition Order of 1950 is found to be void ab initio, it could never make the Prohibition Order of 1119 inopera tive".
The argument before us is that since the word "substi tuted" is used in the amending Act of 1949, it necessarily follows that the process embraces two steps.
One of repeal and another of the new enactment.
But, this argument is basically different from the argument which prevailed in Koteswar 's case (supra) where a distinction was drawn be tween a "substitution" and "supersession".
It is true that, as the term substitution was not used there, the old rule was not held to have been repealed.
Nevertheless, the real basis of that decision was that what was called supersession was void ab initio so that the law remained what it would have been if no such legislative process had taken place at all.
It was held that the void and inoperative legislative process did not affect the validity of the pre existing rule.
And, this is precisely what is contended or by the State before us.
In the case before us although the word "substitution" is used in the amending Act, yet the whole legislative process termed substitution was itself abortive.
of India Act, was lacking.
Such ineffectiveness was the very reason why, in the case of Sriram Gulabdas (supra), it was held that the previous law stood unaffected by the attempted legislation called substitution.
Moreover, the case of Shriram Gulabdas (supra) is a direct authority on the very provisions now before us.
Other cases cited are on very different legislative provisions.
We do not think that the word substitution necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps.
Indeed, the natural meaning of the word "substitution" is to indicate that the process cannot be split up into two pieces like this.
If the process de scribed as substitution fails, it is totally ineffective so as to leave intact what was sought (1) [1963] Suppl.
2 S.C.R. 435. 1010 to be displaced.
That seems to us to be the ordinary and natural meaning of the words "shall be substituted".
This part could not become effective without the assent of the Governor General.
The State Governor 's assent was insuffi cient.
It could not be inferred that, what was intended was that, in case the substitution failed or proved ineffective, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter.
Pri marily, the question is one of gathering the intent from the use of words in the enacting provision seen in the light of the procedure gone through.
Here, no intention to reveal, without a substitution, is deducible.
In other words, there ' could be no repeal if substitution failed.
The two were a part and parcel of a single indivisible process and not bits of a disjointed operation.
It could not be said that what the Legislature intended.
or what the Governor had assented to consisted of a separate repeal and a fresh enactment.
The two results were to follow from one and the same effective Legislative process.
The process had, therefore, to be so viewed and interpreted.
Some help was sought to be derived by the citation of B.N. Tewari vs Union of India & Ors.,(1) and the case of Firm A.T.B. Mehtab Majid & Co vs State of Madras (supra).
Tewari 's case (supra) related to the substitution of what was described as the "carry forward" rule contained in the departmental instruction which was sought to be substituted by a modified instruction declared invalid by the Court
It was held that when the rule contained in the modified in struction of 1955 was struck down the rule contained in a displaced instruction did not survive.
Indeed, one of the arguments there was that the original "carry forward" rule of 1952 was itself void for the very reason for which the "carry forward" rule, contained in the modified instructions of 1955, had been struck down.
Such a doctrine applies in a case where a judgment of a Subordinate Court merges in the judgment of the Appellate Court or an order reviewed merges in the order by which the review is granted.
Its application to a legislative process may be possible only in cases of valid substitution.
The legislative intent and its effect is gathered, inter alia, from the nature of the action of the authority which func tions.
It is easier to impute an intention to an executive rule making authority to repeal altogether in any event what is sought to be displaced by another rule.
The cases cited were of executive instructions.
The procedure for enactment is far more elaborate and formal.
A repeal and a displacement of a Legislative provision by a fresh enactment can only take place after that elaborate procedure has been followed in toto.
In the case of any rule contained in an executive instruction.
(1) ; 1011 on the other hand, the repeal as well as displacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject.
In Mehtab Majid & Co 's case (supra) a statutory role was held not to have revived after it was sought to be substi tuted by another held to be invalid.
This was also a case in which no elaborate legislative procedure was prescribed for a repeal as it is in the case of statutory enactment of statutes by legislatures.
In every case, it is a question of intention to be gathered from the language as well as the acts of the rulemaking or legislating authority in.the context in which these occur.
A principle of construction contained now in a statutory provision made in England since 1850 has been: "Where an Act passed after 1850 repeals wholly or partially any former enactment and substitutes provision for the enactment repealed, the repealed enactment remains in force until the substituted provisions come into operation".
(See: Halsbury 's Laws of England, Third Edn.
; Craies on "Statute Law", 6th Edn. p.386).
Although, there is no corresponding provision in our General Clauses Acts, yet, it shows that the mere use of words denoting a substitution does not ipso facto or automatically repeal a provision until the provision which is to take its place becomes legally effective.
We have, as explained above reached the same conclusion by considering the ordi nary and natural meaning of the term "substitution" when it occurs.
without anything else in the language used or in the context of it or in the surrounding facts and circumstances to lead to another inference.
It means, ordinarily, that unless the substituted provision is there to take its place, in law and in effect, the pre existing provision continues.
There is no question of a "revival".
This question of interpretation was referred separately to the Full Bench of the Bombay High Court which drew a distinction between the two meanings of the word "substitut ed"; firstly, where it involved a direction as to what would have to be removed or repealed simultaneously with another as to what was to be substituted, so as to involve two directions and secondly where the "substitution" merely carried one direction to modify .
It is difficult to see how a single direction to one direction to modify.
It is difficult to see how a single direction to substitute would be effective without implying in it another to remove 'what was to be displaced.
Perhaps more simply and correct ly stated, the difference between two meanings of the word "substituted" is one 'where it stands for two separable legislative process and another where it stands for one total or completed legislative procedure, including the assent of the Governor General, which would be covered by the words "shall be substituted".
The Full Bench came to the conclusion that, in the context in which the words directing substitution occur, they do not imply that in the event of the failure of the amendment, taken as a whole a repeal would survive.
To be able to "Survive" a repeal 1012 had first to come into existence.
In the situation before us no repeal came into legal existence.
The real question for determination is always one of the meaning of words used in a purported enactment in a particu lar context.
We think that the Full Bench of the High Court correctly held that there was no repeal of the existing provision when "substitution", by means of an amendment, failed to be effective.
It had also rightly distinguished some of the cases cited before it on the ground that, in those cases, the process for substitution was interpreted to necessarily imply both a repeal and re enactment out of which only the repeal which took place had survived when the re enactment proved abortive.
On the question whether the particular goods existed in Madhya Pradesh at all at the time of the contracts, so that the contract could be said to be referable to them, the High Court had observed: " . the question was whether Oriental Mixture was present in the former State of Madhya Pradesh when the contracts of sale in respect of Oriental Mixture were made by the applicant company.
On this point, which was purely a question of fact, the decision of the second appellate authority was final and that decision was that Oriental Mixture in the form in which the contracts to sell that commodity were made was present in the State of Madhya Pradesh at the time when those contracts were made.
Therefore, that point was not open for decision before the Tribunal and it is not necessary to dilate on the facts relating to that question".
It also said: "In Commissioner of Sales Tax, Eastern Division, Nagpur vs Hesenali Adamji & Co. (1959) (10 STC 297), there was no evidence that at the date when the agreement for sale was made, the particular logs delivered there under were in Central Provinces in the shape of logs at all, and a standing tree which was in existence at the date of the agreement of sale and out of which the logs were later on prepared cannot be said to be the form of the commodity in respect of which the agree ment of sale was made.
The Tribunal relied on the observations in the Judgment of the Su preme Court at page 310 which are to the effect that the goods must, at the date of the contract, be there in the taxing State in the form in which they are agreed to be sold.
In that case, the agreement of sale can be said to be in respect of those goods.
Here, as found by the second appellate authority, ore in the form of Oriental Mixture was present in the taxing State when contracts of sale in re spect of Oriental Mixture were made by the Head Office of the applicant company".
After giving the findings set out above, on the question whether the. goods existed in the State of Madhya Pradesh when they were sold and, whether the contracts were refera ble to these goods, the High Court 1013 proceeded to consider the question whether "Oriental Mix ture" itself had come into existence in Madhya Pradesh or at the port where the goods forming the "Oriental Mixture" became mixed up in the process of unloading and transporta tion.
Apparently, what the High Court had meant by its earlier findings was not that the "Oriental Mixture" was in existence in Madhya Pradesh, but that the ingredients which went into its composition existed in Madhya Pradesh at the time when the contracts were made.
It had finally reached the conclusion that the Mixture itself was formed at the port where the ingredients were unloaded.
We are unable to accept the High Court 's reasoning that, while the goods which went into the composition of the "Oriental Mixture" existed in Madhya Pradesh when the contracts were made, yet, they were not taxable in Madhya Pradesh because ' the "Oriental Mixture" came into existence at the port.
In other words, it held that a mere mixture of goods, even if it occurs in the process of unloading, converts the goods, which existed in Madhya Pradesh and were transported to the port, into separately identifiable commercial commodity Known as "Oriental Mixture".
As already mentioned above, this term is not used in the contracts but is a term employed by the firm itself to indicate the specifications contained in the contracts of goods ordered.
It is difficult to see what process of manufacture is gone through so as to bring a new category or genus of commercial goods into existence at the port.
The High Court had relied on cases where raw tobacco subjected to various processes, such as sprinkling of jag gery juice or water on it and allowing it to ferment for some time before cutting it up and packing it, was held to become a new commodity.
These cases were: The State of Madras vs Bell Mark Tobacco Co. C); The State of Madras vs Swasthik Tobacco Factory(2); Anwarkhan Mehboob Co. vs The State of Bombay (Now Maharashtra) & Ors.
Reliance was also placed on behalf of the assessee on Shaw Wallace & Co. Ltd. vs The State of Tamil Nadu(4), where it was held that goods were actually subjected to a process of manufacturing when chemical fertilisers and fillers like "China clay", "gypsum", and other ingredients, were mixed at a "mixing works" of a company, by means of shovels, so as to conform to a particular formula.
It was held there by this Court that the resulting product was a commercially distinct commodity.
Several cases of manure mixtures are referred to in the case.
Now, ' in the case of manure mixtures, made out of different ingredients, at a "mixing works", it can per haps be said that a chemical process is gone through.
In any case, the product which came into existence was known and sold as a separate commercial commodity in the mar ket.
It required a process to be gone through at what were known as mixing works of the company to convert it into that commodity.
On the other hand, in the case before us, it seems to us that what has been "manufactured" by the asses see is the same "Oriental Mixture" (1) (1967) 19 S.T.C. 129.
(2) (1966) 17 S.T.C. 316.
(3) (1960) 11 S.T.C. 698.
(4) (1976) 3 S.T.C. 522.
1014 only if the term "manufacture" can be employed at all to anything done by the assessee.
What is to be determined is whether there has been the manufacture of a new product which has a separate commercially current name in the mar ket.
The mere giving of a new name by the seller to what is really the same product is not the "manufacture" of a new product.
There is, it appears to us, no new process of the manufacture of goods at all by the assessee before us.
Again, cases in which logs of wood were cut in order to convert them into planks [e.g.
Shaw Bros & Co. vs The State of West Bengal(1)] could be of no assistance in the case before us.
That too could be a process of "manufacture".
The High Court had also made a passing reference to Nil giri Ceylon Tea Supplying Co. vs The State of Bombay(2), a case decided by the Bombay High Court, where different brands of tea, purchased in bulk and "without application of any mechanical or chemical process", were mixed so as to conform to a particular mixing formula, but this mixture was held not to constitute a fresh commodity as neither process ing nor alteration of the ingredients of the tea in any manner had taken place.
We think that the similarity of the process to which goods sold were subjected in this case seems to make the reasoning adopted in this case more prop erly applicable to the cases before us than any other found in other cases mentioned above.
The ingredients were not even shown to have got so mixed up as to become inseparable.
As already mentioned above, this is a case in which the term "Oriental Mixture" was nothing more than a name given by the appellant company itself to the goods which were in the State of Madhya Pradesh at the relevant time and sent from there specially in order to satisfy the specifications given in the contracts.
The goods get mixed up in the process of unloading.
The mere fact that the specifications in the contracts are satisfied when they get mixed up is not a good enough ground for holding that a new product has been manufactured.
They could no more constitute a new commodity than parts of some machinery sent by its manufacturer to a purchaser outside a State, so that the buyer has to just fit in the various parts together, becomes a new commodity when the parts are fitted in.
The mere fitting up of parts or a mixture of goods, without employing any mechanical or chemical process of manufacture, could not, we think, result in a new commod ity.
We, therefore, answer the following six questions before the High Court as follows: Q. 1.
Was the Tribunal right in holding that, although the assessment order was made after the Constitution of India came into force, Article 286 was thereby not contravened, because such order related to a period prior to 26.1.1950? (1) (1963) 14 S.T.C. 878.
(2) (1959) 10 S.T.C. 500. 1015 Ans.
Yes, The provisions of Article 286 were not contravened.
Was the Tribunal right in holding that Explanation (II) to Section 2(g) as was origi nally embodied in the Sales Tax Act, 1947, got restored on the Statute book because of the unconstitutionality of the substituted Expla nation enacted in the Sales Tax (Amendment) Act, 1949 ? Ans.
There is no question of restoration of unamended explanation (II) to Section 2(g) as the purported amendment itself did not take effect.
Hence, the unamended provision stood as it was before the attempted amendment.
The question framed rests on a misconception that there was something to be restored.
As nothing was taken away, nothing was there to be restored.
And, there was nothing added or substituted.
Does the Tribunal 's decision not contra dict the true meaning of the language "sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made", as occuring in Explanation (II) to section 2(g) of the Sales Tax Act, with reference to "in respect thereof" is reference to "specified or ear marked" goods which are actually present in the taxing State when the contracts are made ? Ans.
This is a question of fact as to what contracts specify and whether those goods were taxed, on which the finding already recorded are enough to dispose it off against the assessee.
In any case, was the Tribunal right in its interpretation, application and use of the provisions of original Explanation (II) to section 2(g) of the Sales Tax Act even as they were ? Ans.
Was the Tribunal right in assuming the law to be that the existence of ingredients of ores in the taxing State in question, which were sufficient if and when mixed in the due proportion for yielding different varieties of standard mixtures contracted for by the over seas buyers, was in law enough to attract the tax ? Ans.
There is no question of assuming any thing.
It was only manganese ore of different grades which was unloaded at the port and gives the name of "Oriental Mixture" because the ingredients got mixed up automati cally in transportation and satisfied certain specifications.
No new commodity was produced in this process.
Was the Tribunal right in holding that the Sales Tax Authorities had found as a fact that the goods consisting of oriental mixture 1016 were in the Madhya Pradesh State when the contracts in respect of these goods were made ? Ans.
Before we part with the case we may observe that the questions could have been much more lucidly and simply and less culmsily stated.
The appeals of the assessee company against the decisions of the Full Bench are dismissed.
The appeals of the State of Maharashtra against the judgment of the Division Bench are allowed.
Parties will hear their own costs.
V.P.S. Appeals dismissed.

dataset_name: IN-Abs

summary:
Section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947 defines 'sale ' and Explanation II to the sub section provides that notwithstanding anything to the contrary in the Indian , the sale of any goods which are actually in the State at the time when the contract of sale, as defined in that Act in respect thereof is made, shall, wherever the contract of sale is made, be deemed for the purpose of this Act to have taken place in the State.
The Amending Act of 1949 substituted for this Explanation another Explanation but as the amend ment did not receive the assent of the Governor General under section 107 of the Government of India Act, 1935, it was void.
The assessee owned manganese ore mines in the State and was entering into contracts at places outside the State for the despatch abroad of manganese ore through different ports.
The contracts contained specifications of strengths of manganese ore to be supplied with permissible percentages of other ingredients an admixtures.
The assessee arranged for the transport of various grades of menganese ore in railway wagons from one or more of the mines, and the order in which trucks were loaded and unloaded was so arranged that the required average consistency or strength of manganese ore specified in the contracts was obtained in the course of such unloading.
The assessee described the par ticular type of conglomerate as 'Oriental mixture. ' The assessee contended (1) that the original Explanation II was validly repealed by the Amending Act and since no sub stitution of the new provision had taken place, only the repeal survived, and that, therefore neither the old una mended provision nor its replacement were in operation, with the result that the Sales after the date of amendment were.
not subject to sales tax, and (2) even assuming that the unamended provision was in force, 'Oriental Mixture ', as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that, its sale could not be taxed as 'goods which are actu ally in the State ', at the time when contracts: were entered into.
The High Court on a reference held the first contention against the assessee and the second in favour of the asses see.
Both sides appealed to this Court.
Dismissing the appeals of the assessee and allowing the appeals of the State.
HELD: (1) As the period involved is preconstitution period, article 286 of Constitution, which is not retrospective in operation would not help the assessee even though the as sessment was after the Constitution came into force.
[1007 F] (2) There was no repeal of the existing Explanation when 'substitution ' by means of the amending Act failed to be effective and so the sale could be taxed under it.
[1012 A B] (a) The question is one of gathering the intent from the use of words in the enacting provisions seen in the light of the procedure gone through, and from the nature of the action of the authority which functions, [1010 B] 1003 (b) The word 'substitution ' does not necessarily or 'always connote two severable steps, one of repeal and another of a fresh enactment, even if it implies two steps.
The natural meaning of the word 'substitution ' is to indicate that the process cannot be so split up.
If the process described as substitution fails, it is totally ineffective so as to leave in tact what was sought to be displaced.
It could not be inferred that; what was intended was that in case the substitution failed or proved ineffec tive, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter.
The term 'substitution ' when it occurs without anything else in the language used or in the context of it or in the sur rounding facts and circumstances, means, ordinarily, that unless the substituted provision is there to take its place, in law and in effect, the preexisting provision continues.
[1009 H, 1010 A G] (c) In the present case, the whole legislative process termed substitution was abortive.
because, it did not take effect for want of the assent of the GovernorGeneral.
Considering the actual procedure, even if the Governor had assented the substitution, yet the amendment would have been effective as a piece of valid legislation only when the assent of the Governor General had also been accorded to it.
It could not be said that what the Legislature intended or what the Government had assented to consisted of a separate repeal and a fresh enactment.
The two results were to follow from one and the same effective legislative process.
[1010 CD] (d) It is easier to impute an intention to an executive rule making authority to repeal altogether, in any event, what is sought to be displaced by another rule, because the repeal as we11 as replacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject.
In the case of a legislative provision sought to be amended by a fresh enactment, the procedure for enact ment is far more elaborate and formal.
A repeal and a replacement of a legislative provision by a fresh enactment can only take place after such elaborate procedure has been followed in toto.
Even the analogy of a merger of an order into another which was meant to be its substitute could only where there is a valid substitute.
[1011 C F, 1012 A B] Koteswar Vittal Kamath vs
K. Rangappa Balica & Co. AIR 1969 SC & 509 ; @ 47 Firm .A.T.B.
Mehtab Majid & Co. vs State Madras [1963] Suppl.
2, SCR 435 and B.N. Tewari vs Union of India & Ors. ; explained.
Shriram Gulabdas vs Board of Revenue, Madhya Pradesh & Anr.
(1952) 3 STC 343 @ 367 approved.
The present case is not one of mixing various ingre dients at a 'mixing works ', and the product which comes into existence being sold as a separate commercial commodity in the market.
The goods got mixed up in the process of un loading without employing any mechanical or chemical process of manufacture.
The mere fact that the specifications in the conrtacts were satisfied when they got so mixed up is not a good enough ground for holding that a new product has been manufactured.
The mere giving of the new name 'Orien tal mixture by the assessee to.
what is really the same product is not the manufacture of a new product.
[1013 A D, G H, 1014 A B] The Stale of Madras vs Bell Mark Tobacco Co. (1967) 19 STC 129, The State of Madras vs Swasthik Tobacco Factory (1966) 17 STC 316 and Anwarkhan Mchboob Co. vs The State of Bombay (Now Maharashtra) & Ors.
(1960) 11 STC 698 and Shaw Bros & Co. vs The State of West Bengal (1963) 14 STC 878 referred to.
Shaw Wallace & Co. Ltd. vs The State of Tamil Nadu (1976) 37 STC 522 explained.
Nilciri Ceylon Tea Supplying Co. vs The State of Bombay (1959) 10 STC 500 approved.


judgement:
Appeal No. 1528 of 1971.
(Appeal by Special Leave from the Judgment and Order dated 23 11 1970 of the Madras High Court in Tax case No. 398/7C (Revision No. 260/70) S.T. Desai and T.A. Ramachandran, for the ,Appellant.
V.P. Raman, .Addl.
Solicitor General for India.
A.V. Rangan and Miss A. Subhashini, for the Respondent.
The, Judgment of the Court was delivered by KHANNA, J.
This appeal by special leave is against the judgment of the Madras High Court Whereby.
the High Court dismissed the petition flied by the appellant under section 38 of the Tamil Nadu General Sales Tax Act, 1959 (hereinaf ter referred to as the State Act).
The matter relates to the assessment year 1960 61.
The appellant firm is a dealer in cotton yarn.
The appellant bought yarn from local dealers and manufacturers and, in turn, sold that yarn by way of inter State sale.
Sales tax under the State Act on the yarn purchased by the appellant had been paid by those manufacturers and dealers.
The inter State sales of yarn made by the appellant were as sessed to tax under the (hereinafter referred to as the Central Act) in the hands of the appel lant.
The appellant claimed refund of the tax amounting to Rs. 16,769.96 paid under the State Act in respect of the yarn sold by it in the course of inter State trade in ac cordance with section 15(b) of the Central Act and the proviso to section 4 of the State Act read with rule 23 of the Tamil Nadu General Sales Tax Rules, as these provisions stood at the relevant time.
The Additional Commercial Taxation Officer admitted the claim of the appellant for refund of the tax only in respect of the sum of Rs. 5,562.59 and rejected the claim in respect of the balance On appeal the Additional Appellate Assistant Commissioner allowed refund of a further sum of Rs. 3,204.73 and rejected the claim regarding the balance of Rs. 8,002.64.
On second appeal the 952 Appellate Tribunal relying upon the decision of the Madras High Court in M.A. Khader & Co. vs Deputy Commercial Taxa tion Officer(1), rejected the claim of the appellant for the balance of Rs. 8,002.64.
At the instance of the State representative, the Tribunal further held that the appellant was not entitled to get refund of the amount of Rs. 5,562.59 and Rs. 3,240.73 in respect of which relief had been granted by the Appellate Assistant Commissioner.
The appellant thereafter preferred revision petition to the Madras High Court under section 38 of the State Act.
The High Court dismissed the said petition after observing that the princi ple laid down in the case of M.A. Khader & Co. (supra) would apply to the facts of this case.
The appellant hereafter came up in appeal to this Court by special leave.
Before dealing with the point of controversy, it may be apposite to refer to the material provisions of law, 'as they stood at the relevant time.
A number of goods have been declared under section 14 of the Central Act to be of special importance.
in inter State trade or commerce.
Cotton yarn is one of those goods.
Section 15 of the cen tral Act at the relevant time read as under: "15.
Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.
Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely : (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed two per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.
" Section 4 of the State Act reads as under: "4.
Tax in respect of declared goods.
Notwithstanding anything contained in section 3, the tax under this Act shall be payable by a dealer on the sale or purchase inside the State of declared goods at the rate and only at the point specified against each in .the
Second Schedule on the turnover in such goods in each year, whatever be the quantum of turnover in that year: Provided that where a tax has been levied under this section in respect of the sale or purchase of declared goods and such goods are sold in the course of inter State trade (1) 25 section
T.c. 104.
953 or commerce the tax so levied shall be refund ed to such person in such manner and subject to such conditions as may be prescribed.
" According to the Second Schedule to the Stale Act, the tax on cotton yarn but excluding cotton yarn waste shall be one per cent at the point of the first sale in the State.
Clauses (1) to (3) of rule 23 of the Madras General Sales Tax Rules, 1959 read as under: "23.
(1) The tax levied under section 4 in respect of the sale or purchase inside the State of any goods specified therein shall, if such goods are sold in the course of inter State trade or commerce, be refunded in the manner and subject to the conditions pre scribed in this rule to the dealer who has made the inter State sale and has paid the tax under the , in respect of such sale.
(2) Every ;such dealer who claims a refund under this rule shall within the time allowed in sub rule (3) submit to the assess ing authority a statement in Form A 4.
(3) The statement referred to in sub rule (4) shall be submitted to the assessing authority not later than three months.
from the date on which the dealer paid the Central sales tax due on the transaction in respect of which he claims refund of the State sales tax: Provided that the assessing authority may condone delays up to a period of fourteen days in the submission of the statement, if he is satisfied that the dealer had sufficient cause for not submitting the statement within the said period.
" In appeal before us, Mr. Desai on behalf of the appel lant has assailed the judgment of the High Court and has urged that in accordance with clause (b) of section 15 of the Central Act, the proviso to section 4 of the State Act and rule 23 of the Madras General Sales Tax Rules, the sales tax under the State Act in respect of yarn which was the subject matter of inter State sale, should have been paid to the appellant.
The High Court, according to the learned counsel, was in error in holding to the contrary.
As against that learned Additional Solicitor General has can vassed for the correctness of the view taken by the High Court.
There is in our opinion considerable force in the contention advanced by Mr. Desai.
Section 15 of the Central Act, as it existed at the relevant time, contemplates that every State law in so far as it imposes or authorises the imposition of tax on sale or purchase of declared goods, would be subject to the re striction and condition that the tax payable under that law in respect of any sale of purchase of such goods inside the State shall not exceed two per cent of the sale or purchase price thereof and such tax shall not be levied at more than one stage.
954 Clause (b) of that section has a direct bearing, and accord ing to that clause, where tax has been levied under the State law in respect of sale or purchase of declared goods which are subsequently sold in the course of inter State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed in any law in force in that State.
Section 4 of the State Act has been cnacted in conformity with section 15 of the Central Act.
The proviso to that section deals with the refund of the sales tax levied under the State Act in respect of declared goods when such goods arc sold in the course of inter State trade or commerce.
According to that proviso, where a tax has been levied under section 4 in respect of the sale or purchase of declared goods and such goods are sold in the course of inter State trade or commerce, the amount of tax shall bc re funded to such person in such manner and subject to such conditions as may be prescribed.
In pursuance of this provi so, the State Government has framed rule 23 of the Madras General Sales Tax Rules, 1959.
According to clause (1) of that rule, the refund of the sales tax has to be made to the dealer who makes the inter State sale and who has paid the sales tax under the Central Act in respect of such sale.
Clause (3) of the rule provides that statement shall be submitted to the assessing authority by the aforesaid dealt not later than three months from the date on which the dealer pays the tax under the Central Act.
It may be stated that the Madras General Sales Tax Rules, 1959 had to be placed on the table of both the Houses of the State, legislature under sub section (5) of section 53 of the State Act.
In the face of clause (b) of section 15 of the Central Act, the proviso to section 4 of the State Act and rule 23 of the Madras General Sales Tax Rules, we have no doubt in our mind that it is the appellant who is entitled to get the refund of the sales tax levied under the State, Act in respect of the goods in question because it was the appel lant who sold the goods in the course of inter State trade and paid the sales tax under the Central Act on that ac count.
The High Court in turning down the claim of the appellant relied upon its earlier decision in the case of M. A. Khader & Co. (supra).
Perusal of the facts of that case would show that the assessee therein sought a writ of certi orari to quash the assessment made under the Central Act in respect of transactions which were admittedly interState sales.
The question of asking for the refund of the sales tax paid under the State Act did not arise directly in that case.
There were no doubt some observations in the course of that judgment, according to which refund of the sales tax can be claimed only by the person who himself has earlier paid that tax, and not by a person who has not himself paid such tax.
So far as those observations are concerned, we are of the opinion that the emphasis in the word "re funded" as used in clause (b) of section 15 of the Central Act and the proviso to section 4 of the State Act is on repayment of the amount.
A word can have many meanings.
To find out the exact connotation of a word in a statute, we must look to the context in which it is used.
The context would quite often provide the .key to meaning of the word and the sense it should carry.
Its setting would give colour to it and provide cue to the intention of the legislature 955 in using it.
A word, as said by Holmes, is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used.
The context in which the word "refunded" is used shows that such repayment need not be to the person who initially paid the tax.
It is indeed for the State legislature to specify the person to whom such amount is to be repaid either in the statute enacted by it or to make a provision for that pur pose in the rules.
The State legislature has made it Clear in the proviso to section 4 of the statute that provision in this respect would be made in the rules.
The rules which have been framed leave no doubt that the amount has to be paid to the dealer who sells the goods in the course of inter State trade and who has paid the tax under the Central Act in respect of such sale.
There is also no anomaly in paying the amount of the sales tax under the State 'Act to a dealer who sells de clared goods in the course of inter State trade, even though he did not himself pay the tax under the State Act in re spect of those goods.
The reason for that is that the price charged from such dealer by the person from whom he pur chases the goods would normally take into account the sales tax paid by the seller.
Assuming that there was some ambiguity in the languages of clause (b) of section 15, as it existed at the relevant time, the matter is made clear by the amendment made in the Central Act by the Central Sales Tax (Amendment) Act, 1972 (Act No. 61 of 1972).
As a result of the amendment, clause (b) of section 15 of the Central Act reads as under: "(b) Where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State." The amended provision makes it plain beyond any pale of controversy that the tax levied under the State Act in respect of declared goods has to be reimbursed to the person making sale of those goods in the course of inter State trade or commerce in such manner and subject to such condi tions as may be provided in the law in force in that State.
According to the notes explaining the different clauses appended to the statement of objects and reasons of the Bill which emerged as the amending Act, the amendment made in clause (b) makes it Clear that local sales tax would be reimbursed to the person making the sale in the course of inter State trade and commerce.
The amendment made in clause (b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision.
We are not impressed by the argument of the learned Additional Solicitor General 11 13 3 85CI/76 956 that the amendment made in clause (b) was intended to mark a departure from the position in law as it existed before the amendment.
The fact that the amendment of clause (b) of section 15 was not like some other provisions given retro spective effect, would not materially affect the position.
As already mentioned above, the legislature as a result of the amendment, Clarified what was implicit in the provisions as they existed earlier.
An amendment which, is by way of clarification of an earlier ambiguous provision can be useful aid in construing the earlier provision, even though such amendment is not given retrospective effect.
We may refer in this context to observations on page 147 of Craies on Statute Law (Sixth Ed.) which read as under: " . in Cape Brandy Syndicate vs I.R.C.(1) Lord Sterndale M.R. said: 'I think it is clearly established in Att.
Gen. vs Clarkson, supra, that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous.
I quite agree that subsequent legislation if it pro ceeded on an erroneous construction of previ ous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier '.
" Looking to all the facts, we are of the view that the appel lant firm is entitled to be paid the amount of sales tax levied under the State Act in respect of the goods sold by it in the course of inter State trade provided the appellant has paid the sales tax under the Central Act in respect of those sales.
We accordingly accept the appeal, set aside the judgment of the High Court and order that the appellant firm be paid the amount of sales tax levied under the State Act in respect of the goods sold by it in the course of inter State trade provided the appellant has paid the sales tax under the Central Act in respect of those sales.
The appellant shall be entitled to recover its costs both in this Court as well as in the High Court from the respondent.
P.B.R. Appeal al lowed.
(1) at P. 156.

summary:
Section 15(a) of the as it existed at the rele ant time enacted that tax in respect of any sale or purchase of declared goods inside the State shall not be levied at more than one stage.
According to cl.
(b) if these goods were subsequently sold, in the course of inter state trade, the tax to levied shall be refunded to such person as prescribed in the State law.
The proviso to section 4 of the Tamil Nadu General Sales Tax Act and r. 23 of the Rules provide for the refund of the sales tax in the type of cases mentioned in section 15(b).
The appellant bought cotton yarn from local dealers and sold it by way of inter_state sale.
It paid the State sales tax and claimed refund under section 15 (b)of the Central Act.
It succeeded in part at each of the different stages; but on second appeal for the balance, the Appellate Tribunal re jected the appellant 's claim and held that it was not enti tled to any refund including the relief granted by the Appellate Assistant Commissioner.
The High Court rejected its revision petition.
Allowing the appeal, HELD: (1) The appellant firm is entitled to be paid the amount of sales tax levied under the State Act in respect of the goods sold by it in the course of inter State trade provided the appellant has paid the sales tax tinder the central Act in respect of those sales.
[956 E] (2) The proviso to section 4 of the State Act read with the rules leaves no doubt that the amount has to be paid to the dealer who sells the goods in the course of inter State trade and who has paid the tax under the Central Act in respect of such sale.
[955 B] (3)(a) There is no anomaly in paying the amount of the sales tax under the State Act to a dealer who sells declared goods in the course of inter State trade even though he did not himself pay the tax under the State Act in respect of those goods.
The reason for that is the price charged from such dealer by the person from whom he purchased the goods would normally take into account the sales tax paid by the seller.
[955 C] (b) The case of M. A. Khader & Co. vs Deputy Commer cial Taxation officer 25 S.T.C. 104 followed by the High Court is distinguishable on facts.
The question of asking for refund of the sales tax paid under the State Act did not arise directly in that case.
The emphasis in the word 'refunded ' as used in section 15(b) of the Central Act and the proviso to section 4 of the State Act.
on repayment of the amount.
[954 G] (4) (a) A word can have many meanings.
To find out the exact connotaon of a word in a statute, one should look to the context in which it is used.
The context would quite often provide the key to meaning of the word and the sense it should carry.
Its setting would give.
colour to it and provide due to the intention of the legislature in using it.
In the instant case the context in which the word "refund ed" is used shows that such repayment need not be to the person who initially paid the tax.
[954 H] 951 (b) The amended provision makes it plain beyond doubt that the tax levied under the State Act in respect of declared goods has to be reimbursed to the person making sale of those goods in the course of inter State trade or commerce in such manner and subject to such conditions as may be provided in the law in force in that State.
Accord ing to the notes on clauses appended to the statement of objects and reasons of the Bill the amendment made in cl.
(b) makes it clear that local sales tax would be reimbursed to the person making the sale in the course of inter State trade and commerce.
The amendment made in cl.
(b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision.
[955 G] (c) The fact that the amendment of cl.
(b) of section 15 was not like some other provisions given retrospective effect, would not materially affect the position.
The legislature as a result of the amendment clarified what was implicit in the provisions as they existed earlier.
An amendment which is by way of clarification of an earlier ambiguous provision can be useful aid in construing the earlier provi sion even though such amendment is not given retrospective effect.
[956 B]


judgement:
Appeal No. 1830 of 1975.
Appeal by Special Leave from the Judgment and Order dated 10 9 75 of the Delhi High Court in Civil Writ Petition No. 475/75.
Soli Sorabjee, Ravinder Narain, Talat Ansari and Shri Narain, for the Appellants.
V.P. Raman, Addl.
for India, S.K. Mehta and Girish Chandra, for the Respondent.
The Judgment of the Court was delivered by RAY, C.J.
This appeal is by special leave from the judgment dated 10 September 1975 of the Delhi High Court.
984 The appellant is a manufacturer of dry battery cells.
In October 1969 the appellant received a consignment of ten metric tons of manganese dioxide.
The Assistant Collector levied duty on the consignment under Tariff Item 28.
The appellant preferred an appeal.
The Appellate Collector confirmed the order of the Assistant Collector.
The appel lant thereafter made an application to the Revisional Au thority.
The Revisional Authority held that the goods should be assessed under Tariff Item 26 and ordered refund of duty.
The appellant asked for refund and sent reminders to Customs Authorities for refund.
On 3 October 1974 the appellant gave a notice under section 80 of the Civil Procedure Code for institution of a suit for recovery of refund.
On 10 February 1975 a notice under Section 131(3) of the referred to as the Act was.
given to the appellant for revision of the order of refund.
The appellant impeached the aforesaid notice dated 10 February 1975.
The notice inter alia stated that "since the goods 'were processed ore, not meant for extraction of metallic manganese they ceased to qualify as an 'ore ' within the normally accepted sense of the term as in item 26 Indian Customs Tariff.
The notice thereafter said "It, therefore, appears to the Government that the appellate order does not appear to be sustainable.
Therefore, in exercise of the powers under section 131(3) of the the Government of India proposes to annul the order in Appeal No. 590 593/1972 passed by the Appellate Collector of Cus toms, Calcutta".
The appellant made an application under Article 226 and moved the Delhi High Court.
The appellant in the applica tion asked for a writ in the nature of prohibition restrain ing the "Opposite party" thereto from taking any proceeding pursuant to the impugned notice.
The appellant also asked for a writ of certiorari to quash the notice.
The appellant also asked for a writ of mandamus not to withhold the excess duty paid by the petitioner and ordered to be refund ed.
The contention of the appellant was that the power of suo motu revision under section 131(3) of the Act in so far as it relates to a case of non levy or short levy of duty must be exercised within the period of limitation prescribed in section 131(5) of the Act.
In short, the appellant 's contention is that the power of suo motu revision contained in section 131(3) of the Act is subject to the provisions contained in section 131(5) of the Act.
The provisions contained in section 131(3) of the Act at3 as follows: "The Central Government may of its own motion annual or modify any order passed under section 128 or section 130.
" 985 The provisions contained in section 131(5) of the Act are as follows : "Where the Central Government is of opinion that any duty or customs has not been levied or has been short levied, no order levying or enhancing the duty shall be made under this section, unless the person affected by the proposed order is given notice to show cause against it within the timelimit speci fied in section.
" Section 28 of the Act provides for notice for payment of duties not levied, short levied or erroneously refunded.
Under section 28 when any duty has not been levied or has been short levied or erroneously refunded, the proper offi cer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or which has been short levied or to whom the refund has erroneously been made, requiring him to show cause why he should not pay ' the amount specified in the notice.
Counsel for the appellant extracted the provisions contained in sections 28 and 131 (3) and 131 (5) of the Act in support of the contention that any notice for suo motu revision by the Central Government in so far as it relates to a case of non levy or short levy of duty must be given within the period of six months from the date of levy.
Counsel for the appellant further contended that if the Government wanted to revise orders for refund on the ground that there should not be any refund, it would also be a case of short levy, and, therefore, the limitation of six months as provided in section 28 of the Act should apply.
Broadly stated Counsel for the appellant submitted that section 28 of the Act is a substantive provision relating to notice for non levy or short levy and section 131(3) of the Act is a procedural section and power under section 131(3) of the Act cannot be exercised in such a manner as to render section 28 of the Act nugatory.
The alternative contention of Counsel for the appellant is that power under section 131(3) of the Act is to be exercised within a reasonable time and the periods mentioned in section 131 of the Act supply the yard stick or give an indication of what is reasonable time.
The Delhi High Court held that all the objections which the petitioner wishes to raise to the notice, including the objections raised in the writ petition, should be raised before the Central Government.
The Delhi High Court, there fore, directed the Government to give a hearing to the appellant and further held that the Government should con sider all the objections.
The Delhi High Court went on to say that the decision of the Government should be taken within three months unless the appellant himself took ad journment and caused delay in the disposal of the case.
The Delhi High Court also said that if any money was to be refunded, .it should be refunded within two months from the date of the decision.
The provisions contained in section 28 of the Act speak of non levy, short levy and erroneous refund.
The provi sions state that notice 986 of non levy, short levy or erroneous refund should be given within six months from the relevant date.
Section 28(3) states what the "relevant date" means.
In the case of duty not levied, the "relevant date" is the date on which the proper officer makes an order for the clearance of the goods.
In a case where duty is provisionally assessed under section 18 of the Act, the relevant date is the date of adjustment of duty after the final assessment.
In a case where duty has been 'erroneously refunded, the relevant date is the date of refund.
any other case, the relevant date is the date of payment of duty.
The Additional Solicitor General contended that the provisions in section 28 of the Act indicated that any notice with regard to non levy, short levy or erroneous refund, require the person to show cause why he should not pay the amount specified in the notice.
This being the case of erroneous refund, the Additional Solicitor General con tended that the limitation would be six months from the date of actual refund.
The order dated 20 April 1972, which is described as the order of refund, was as follows : "I, therefore, allow the appeals and direct that the goods be re assessed under Item 26 of the Indian Customs Tariff and the consequential refund of duty granted.
" It may be stated here that Tariff Item 26 speaks of duty on metallic ore and Tariff Item 28 speaks of duty on Chemi cal and Pharmaceutical products.
The appellant succeeded in appeal in obtaining an order of refund.
It is an admitted feature of the case that refund has not in fact been made.
Counsel for the appellant contended that even if refund has not been made, the date of refund will be the relevant date and six months.
would be calculated from 20 April 1972, when refund was ordered and, therefore, the notice dated 10 February 1975 will be hit by the provision of limitation of six months from the relevant date.
The contention of the appellant is wrong.
It is only where refund has in fact been made and money has been paid, the relevant date will be six months from the date of actual payment for refund.
The contention of the appellant that refund will also be a case of short levy is not correct.
Section 28 speaks of three kinds of errors in regard to duties.
One is non levy, the second is short levy and the third is erroneous refund.
Levy is linked to assessment.
Section 17th of the Act speaks of assessment order.
In the process of assessment two kinds of errors may occur.
One is non levy and the other is short levy.
Refund is dealt with in section 27 of the Act.
The expression "erroneously refunded" means re funded by means of an order which is erroneously made.
These are three categories of errors in regard to duties.
The notice under section 28 of the Act speaks of demand for money to pay back and the notice is required to be given within six months from the relevant date.
In the case of erroneous refund, it would be six months from the date of actual refund.
If no refund has in fact been made, limita tion cannot be said to arise inasmuch as the relevant date under section 28 in the ease of erroneous refund 987 speaks of the date of refund.
The order dated 20 April 1972 granted refund.
Grant of refund is not actual refund.
Chapter XV contains sections 128 to 131 Of the Act.
Chapter XV speaks of Appeals and Revision.
Section 128 relates to appears, Section 130 deals with powers of revi sion of Board.
Section 131 speaks of revision by Central Government.
Revision can be asked for by the persons aggrieved by any order passed under section 128, or any order passed under section 130.
Section 131(2) provides limitation of six months for an application made under section 131(1) of the Act.
Once the provisions contained in section 131(3) are attracted, the Central Government may of its own motion annul or modify any order passed under section 128 or section 130.
This provision is the power of Central Government to annul or modify any order.
This power is exercised by the Central Government suo motu.
Of course the power is to be exercised on giving notice to the person concerned.
The provisions contained in section 131(5) of the Act speak limitation only with regard to non levy or short levy.
It is significant that section 131(5) does not speak of any limitation in regard to revision by the Central Government of its own motion to annul or modify any order of erroneous refund of duty.
The provisions contained in section 131(5) with regard to non levy or short levy cannot be equated with erroneous refund inasmuch as the three categories of errors in the levy are dealt with separately.
The appellants prayers for writs of Certiorari and mandamus are misconceived.
There is no order either judicial or quasi Judicial which can attract certiorari.
No mandamus can go because there is nothing which is required to be done or for borne under the Act.
The issue of the notice in the present case requires the parties to represent their case.
There is no scope for mandamus to do any duty or act under the statute.
A writ of prohibition cannot be issued for the obvious reason that the Central Government has jurisdiction to revise.
For the foregoing reasons, the appeal is dismissed.
The Central Government will hear the appeal on merits.
In view of our conclusion that there is no bar of limitation in the present case it will not be open to the parties to take any plea of limitation.
The Central Government will hear the matter as expeditiously as possible.
In case the Cen tral Government will hold that the order of refund is valid, the Central Government will pay the amount.
We specify the period of two months from the date of the order as the period during which payment will be made.
The parties will pay and bear their own costs.
S.R. Appeal dismissed.

summary:
The appellant succeeded before the revisional authority and obtained the orders of refund of duty levied and col lected on the consignment of ten metric tonnes of Manganese dioxide.
As no action was taken, the appellant gave a notice on October 3, 1974 u/s 80 C.P.C. for institution of a suit for recovery of refund.
On February 10, 1975 the respondent gave a notice u/s 131(3) of the to the appellant for suo motu revision of the order of the refund.
The Writ Petition filed in the Delhi High Court, impeaching the said order was dismissed directing the appel lant to raise all objections including those raised in the Writ Petition before the Central Government.
Dismissing the appeal by special leave, the Court Held: (1) section 28 of the speaks of three kinds of errors in regard to duties.
One is non levy, the second is short levy, and the third is erroneous refund.
Levy is.
linked to assessment.
In the process of assessment two kinds of errors may occur.
One is non levy and the other is short levy.
The expression "erroneously refunded" means refunded by means of an order which is erroneously made.
[986 F G] (2) section 131 (5) of the does not speak of any limitation in regard to revision by the Central Government of its own motion to annul or modify any order of erroneous refund of duty.
The provisions contained in Section 131(5) with regard to non levy or short levy cannot be equated with erroneous refund in as much as the three categories of errors in the levy are dealt with in section 28.
[987 D E] (3) Notice u/s 28 of the speaks of demand for money to pay back and the notice is required to be given within six months from the relevant date.
In the case of erroneous refund, it would be six months from the date of actual refund.
If no refund has in fact been made limita tion cannot be said to arise inasmuch as the relevant date u/s 28 in the case of erroneous refund speaks of the date of refund.
In the instant case the impugned order dated 20, April 1972 granted refund.
Grant of refund is not actual refund.
[986 G H, 987 A]


judgement:
Appeal No. 508 of 1976.
(Appeal by Special Leave from the Judgment and Order dated 27 10 1975 of the Delhi High Court in Civil Revision No. 115/75).
S.N. Andley, Urea Dutta and T.C. Sharma, for the appellant.
K.C. Agarwala and M.M.L. Srivastava, for the respondent.
The plaintiff respondent ,alleged to be a regis tered partnership firm filed a suit on 25th April, 1974, through Smt.
Pushpa Mittal, shown as one of its partners, for the recovery of Rs. 21,265.28 as principal and Rs. 7655/ , as interest at 12% per annum.
according to law and Mercantile usage, on the strength of a cheque drawn by the defendant on 12th May, 1971, on the State Bank of India, which, on presentation, was dishonoured.
The plaintiff alleged that the cheque 1061 was given as price of goods supplied.
The defendant appel lant firm admitted the issue of the cheque by its Managing partner, but, it denied any privity of contract with the plaintiff firm.
The defendant appellant had its own version as to the reasons and purposes for which the cheque was drawn.
The suit was instituted under the provisions of Order 37 Civil Procedure Code so that the defendant appellant had to apply for leave under Order 37, Rule 2, of the Code to defend.
This leave was granted unconditionally by the Trial Court after a perusal of the cases of the two sides.
Order 37, Rule 3, Civil Procedure Code lays down: "( 1 ) The Court shall, upon application by the defendant give leave to appear and to defend the suit, upon affidavits which dis close such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application.
(2) Leave to defend may be given uncondi tionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit".
A learned Judge of the High Court of Delhi had on a revision application under Section 115 Civil Procedure Code interfered with the order of the Additional District Judge of Delhi granting unconditional leave, after setting out not less than seven questions on which the parties were at issue.
The learned Judge had, after discussing the cases of the two sides and holding that triable issues arose for adjudication, nevertheless, concluded that the defences were not bona fide.
He, therefore, ordered: "For these reasons I would allow the revision petition and set aside the order of the trial Court.
Instead I would grant leave to the defendant on their paying into Court the amount of Rs. 21,265.28 together with interest at the rate of 6 per cent per annum from the date of.
suit till payment and costs of the suit (Only court fee amount at this stage and not the lawyer 's fee).
The amount will be deposited within two months.
There will be no order as to costs of this revision".
The only question which arises before us in this appeal by special leave: Could the High Court interfere, in exercise of its powers under section 115, Civil Procedure Code, with the discretion of the Additional District Judge, in granting unconditional leave to defence to the defendant appellant upon grounds which even a perusal of the order of the High Court shows to be reasonable ? Santosh Kumar vs Bhai Mool Singh(1), was a case where a cheque, the execution of which was admitted by the defend ant, had been dishonoured.
The defendant had set up his defences for refusal to pay.
(1)[1958] SCR 1211 1215.
1062 This Court noticed the case of Jacobs vs Booth 's Distill ery Company(1), where it was held that, whenever a defence raises a really triable issue, leave must be given.
Other cases too were noticed there to show that this leave must be given unconditionally where the defence could not be shown to be dishonest in limine.
This Court observed there (at p. 1215): "The learned Counsel for the plaintiff respondent relied on Gopala Rao vs Subba Rao (AIR , Manohar Lal vs Nanhe Mal (AIR , and Shib Karan Das vs Mohammed Sadiq (AIR 1936 Lah. 584).
All that we need say, about them is that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to.
defend.
We agree with Varadachariar J. in the Madras case that the Court has this third course open to it in a suitable case.
But, it cannot reach the conclusion that the defence is not bona fide arbitrarily.
It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter", On general principles, relating to the exercise of jurisdiction of High Courts under section 115, Civil Proce dure Code, several cases were cited before us by Mr. Andley: M.L. Sethi vs
R.P. Kapur(2); The Managing Director (MIG) Hindustan Aeronautics Ltd. Balanagar, Hyderabad & lint.
vs Ajit Prasad Tarway, Manager, (Purchase & Stores), Hindustan Aeronautics Ltd., Balanagar, Hyderabad(3); D.L.F. Housing & Construction Co. Pvt.
Ltd. New Delhi vs Sarup Singh & Ors.
(4); Milkhiram (India) Pvt. Ltd. & Ors.
vs Chamanlal Bros.(5) We need not dilate on the well established principles repeatedly laid down by this Court which govern jurisdiction of the High Courts under section 115 C.P.C.
We think that these principles were ignored by the learned Judge of the High Court in interfering with the discretionary order after a very detailed discussion of the facts of the case by the learned Judge of the High Court who had differred on a pure question of fact whether the defences could be honest and bona fide.
Any decision on such a question, even before evidence has been led by the two sides, is generally hazard ous.
We do not think that it is fair to pronounce a cate gorical opinion on such a matter before the evidence of the parties is taken so that its effects could be examined.
In the case before us, the defendant had denied, inter alia, liability to pay anything to the plaintiff for an alleged supply of goods.
It is only in cases where the defence is patently dishonest or so unreasonable that it could not reasonably be expected to succeed that the exercise of discretion by the Trial Court to grant leave unconditionally may be, (1) (2) ; (3) (4) ; (5) AIR 1965 SC 1698.
1063 questioned.
In the judgment of the High Court we are unable to find aground of interference covered by Section 115 C.P.C.
In Smt.
Kiranmoyee Dassi & Anr.
vs Dr. J. Chatterjee(1), Das.
J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 17 C.P.C. in the form of the following propositions (at p. 253): "(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the Defendant is entitled to unconditional leave to defend.
(b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.
(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the infer ence that at the trial of the action he may be able to establish a defence to the plaintiff 's claim the Plaintiff is not entitled to judg ment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.
(d) If the Defendant has no defence or the defence set up is illusory or sham or practi cally moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend.
(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plain tiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise se cured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to.
prove a defence".
The case before us certainly does not fall within the class (e) set out above.
It is only in that class of case that an imposition of the condition to deposit an amount in Court before proceeding further is justifiable.
, 253.
1064 Consequently, we set aside the judgment and order of the High Court and restore that of the Additional District Judge.
The parties will bear their own costs.
Appeal allowed.

summary:
The appellant issued the respondent a cheque which was dishonoured.
The respondent alleged that the cheque was the consideration for goods supplied.
The appellant admitted issuing the cheque but denied by privity of contract.
The respondent filed a suit under order 37 C.P.C., and the appellant applied for the required leave to defend, which was granted by the trial Court unconditionally.
On revision under section 115 C.P.C., the High Court held that triable issues arose for adjudication.
, but, it considered the defence to be dishonest.
If allowed the revision petition and gave conditional leave to defend on the ground that the defences were not bona fide.
Allowing the appeal, the Court HELD: It is only in cases where the defence is patently dishonest or so unreasonable that it could not reasonably be expected to succeed that the exercise of discretion by the Trial Court to grant leave unconditionally may be questioned.
In other cases, it is not fair to pronounce a categorical opinion on such a matter before the evidence of the parties is taken so that its effects could be examined.
High Court 's interference under sec.
115 C.P.C. with the correct exercise of its discretion by the trial Court was patently erroneous.
11062 Santosh Kumar vs Bhai Mool Singh ; at 1215, Jacobs vs Booth 's Distillery Co. followed.
Kiranmoyee Dassi and another vs Dr. J. Chatterjee ,at 253) distinguished.
M.L. Sethi vs
R.P. Kapur ; The Managing Director (MIG) Hindustan Aeronautics Ltd. Bulana gar, Hyderabad & A nr.
vs A Ajit Prasad Tarway, Manager (Purchase and Stores).
Hindustan Aeronautics Ltd. Balanagar, Hyderabad (AIR ; D.L.F. Housing & Construction Co. Pvt. Ltd., New Delhi vs Sarup Singh & Ors.
[1970] 2.
S.C.R. 368; and Milkhiram (India) (P) Ltd. and Ors.
vs Chamanlal Bros. (AIR 1965 SC 1998) referred to.