judgement:
Appeal No. 822 of 1963 Appeal by special leave from the judgment and decree dated April, 7, 1961 of the Punjab High Court in Regular First Appeal No. 32 of 1957.
Bishan Narain and B. P. Maheshwari, for the appellants Nos.
1 3 and 5 10.
M. V. Goswami, for appellant No. 4.
Bhawani Lal, E C. Agarwala, Ganpat Rai and P.C. Agarwala, for respondent Nos.
1(i) 1(vi).
864 The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave from the decree of the Punjab High Court in a suit brought by the plaintiffs respondents for pre emption.
The appellants are vendees to the sale which was preempted.
The facts found by the courts below are these.
The property in suit consisted of agricultural land as well as some baras in village Jalalpur.
Punnu Singh and Mansha Singh who were also parties to the suit as defendants sold the property in suit on January 15,1955 to the appellants.
Thereafter consolidation proceedings took place in this village and came to an end before the present suit was filed on January 14, 1956.
Of the vendees, six had no share in the village from before while four already had some share in the village.
As a result of the consolidation proceedings, six of the vendees who had no share in the village from before were allotted other land in place of the land which they had purchased under the sale deed.
The other four vendees who had some share in the village from before were allotted land in two blocks in lieu of the land they had in the village from before as well as the land which they had purchased by the sale deed in question.
The plaintiffs respondents instituted the suit on the basis of their being collaterals and co sharers and wanted that they should be given out of the land allotted to the vendees in consolidation proceedings such land as they would be entitled to after pre emption of the sale in question.
The suit was resisted by the appellants on a number of grounds.
The main ground of defence with which we are concerned in the present appeal was whether the suit was maintainable with respect to the land which had been obtained by the vendees during consolidation proceedings in lieu of the land which was the subject matter of the sale deed.
The trial court held in favour of the plaintiffs respondents and granted a decree for pre emption.
On ,appeal to the High Court by the vendees, the High Court held on the basis of section 24 of the Patiala and East Punjab States Union Holdings (Consolidation and Prevention of Fragmentation) Act, No. 5 of 2007 Bk.
(hereinafter referred to as the Act), that it was open to the pre emptor to follow the land which had been given to the vendees in consolidation proceedings in lieu of the land which was the subject matter of the sale deed.
Further in the High Court another point was raised on behalf of four of the appellants who had land from before in the village and it was urged that in their case it was not possible to distinguish which land had been allotted to them in place of the land sold and therefore no pre emption decree should be granted.
This argument was also rejected by the High Court, and the appeal was dismissed.
The High Court having refused the certificate, the appellants applied and obtained ,special leave from this Court; and that is how the matter has come before us.
86 5 The main question that has been argued before us is that the suit is not maintainable as it is not open to the pre emptor to follow the land which might have been obtained by the vendees in lieu of the land actually sold to them.
The answer to this question depends upon the interpretation of section 24 of the Act in the background of the law of pre emption.
In Shri Audh Behari Singh vs Gajadhar Jaipuria,(1) this Court held that "The correct legal position seems to be that the law of preemption imposes a limitation or disability upon the ownership of a property to the "extent that it restricts the owner 's unfettered right of sale and compels him to sell the property to his co sharer or neighbour as the case may be The crux of the whole thing is that the benefit as well as the burden of the right of preemption run with the land and can be enforced by or against the owner of the land for the time being although the right of the preemptor does not amount to an interest in the land itself The right of preemption is an incident of property and attaches to the land itself. . . . ." This Court had occasion to consider the matter again in Bishan Singh vs Khazan Singh(2) and pointed out that the right of preemption is not a right to the thing sold but a right to the offer of a thing about to be sold, this being the primary or inherent right, and that the preemptor has a secondary right or a remedial right to follow the thing sold.
Reliance is placed on behalf of the appellants on this later decision and it is stressed that the preemptor 's remedial right is merely to follow the thing sold, namely, the very property which is the subject matter of the sale deed under preemption.
The later decision on which reliance is placed does not in any manner affect the earlier decision where it was held that the right of preemption is an incident of property and attaches to the land.
It is true, as held in the later decision, that ordinarily the right of the preemptor is to follow the property which is the subject matter of the sale deed.
The question which, however arises in the present case is whether s.24 of the Act makes any difference to this ordinary position of the law of preemption.
That section reads as follows: "A land owner or a tenant at will shall have the same right in the land allotted to him in pursuance of the scheme of consolidati on as he had in his original holding or tenancy as the case may be." Clearly the effect of this provision is to give to the land owner or a tenant at will the same right in the land which he acquires under the scheme of consolidation in lieu of that land which he had before the consolidation proceedings.
He cannot get more (1) [1955]1 S.C.R 70, (2) ; 866 rights than he had before nor can be get any less rights.
It is urged that section only preserves the rights and has nothing to do with obligations to which the land may be subject.
We are of opinion that this is not so.
When the section lays down that the land owner or a tenant at will shall have the same right in the land allotted to him in pursuance of the scheme of consolidation as he had in his original holding or tenancy, it clearly implies that obligations would also remain the same.
If that were not so and if his obligations were to disappear he would acquire more right in the land allotted to him than he had in the original holding or tenancy.
For example, if the land owner had only a life interest in the original holding he would get the same life interest in the land allotted to him and could not claim to be absolute owner of the land allotted in consolidation proceedings.
Thus the obligation which attached to his ownership of his original holding (namely, that it was subject to all the disabilities of a limited owner) would also apply to the land allotted to him in consolidation proceedings.
Therefore when section 24 speaks of the landowner or the tanant at will having the same right in the land allotted as he had in the original holding or tenancy, it brings in all the rights and obligations which were attached to his ownership or tenancy of the land originally held.
It is in this background that the nature of the right of preemption as held in Audh Behari Singh 's case (1) assumes importance.
In that case it was held that the law of pre emption imposes a limitation or disability upon the ownership of a property and that the benefit as well as the burden of the right of preemption run with the land.
Therefore if the original holding of the landowner was subject to the disability of preemption the land allotted in lieu thereof will be equally subject to the same disability.
This will however always be subject to the law of pre emption itself, and to the well settled principle of pre emption, namely, that the preemptor must have a right of preemption at the date of the sale, at the date of the suit and finally at the date of the decree.
Section 24 when it says that the landowner or the tenant at will shall have the same right in the land allotted to him as he a in his original holding or tenancy, clearly preserves the obligation that may be on the land in the nature of a disability.
The consequence therefore is that the ordinary law of preemption under which the preemptor has the right to follow the land which is the subject matter of the sale deed becomes expanded and the land allotted to the land owner or tenant at will in lieu of the land which may have been subject to preemption also becomes subject to preemption in the same way as the original holding or tenancy.
So it follows that if the land allotted in lieu of the original holding or tenancy is preemptible under the law of pre emption and the right of preemption still exists on the three dates to which we have (1)[1955] 1 section C.R, 70.
867 already referred, the pre emptor would by virtue of s.24 be able to enforce his rights against land which may have been allotted to the vendee in lieu of the land which was actually the subject matter of sale.
We are therefore of the opinion that the construction of section 24 by the High Court is correct and the plaintiffs respondents have a right by virtue of section 24 of the Act to preempt the land which was allotted to the appellants in lieu of the land which was the subject matter of the sale deed.
It is however urged that section 25 of the Act specifically provides for rights with respect to a lease, mortgage or other encumbrance to attach to the land allotted in place of the original holdings, and that shows that no other rights were intended to survive.
We are of opinion that there is no force in this argument.
It was necessary to enact section 25 when dealing with leases, mortgages and encumbrances for without such a specific provision, a lease, mortgage or encumbrance which was on one piece of land could not in law attach to another piece of land.
This however is very different from an incident of ownership of land e.g. liability to preemption which attaches to the land itself and continues to attach to the land allotted in lieu of the original holding or tenancy by section 24.
The special provisions, therefore in section 25 do not negative the inference that obligations which attach to the right of ownership of the original holding or tenancy would continue to attach to the land allotted in lieu thereof in consolidation proceedings.
This brings us to the subsidiary contention which was raised in the High Court, namely, that four of the vendees were allotted land in lieu both of what they owned from before and what they got under the sale deed in question.
The High Court has held and we think rightly that there should be no difficulty in finding out how much of the land allotted pertains to the land which was the subject matter of the sale deed.
Land is always valued for purposes of allotment during consolidation proceedings and it would not therefore be difficult to find out how much land was allotted Io these four vendees in place of the land which they got by the sale deed.
Lastly it is urged that the form of the decree is incorrect.
This submission is made on the basis of the following sentences in the judgment of the trial court: "It does not mean that the land is not distinguishable.
It can be considered during execution at the time of delivering the possession of the land.
" We have not permitted learned counsel to raise this point for the first time before us, as it was not raised in the High Court.
We therefore reject this contention.
The appeal fails and is hereby dismissed.
Costs as per order dated 8 9 65.
Appeal dismissed.

dataset_name: IN-Abs

summary:
The appellants purchased certain lands in the State of Punjab and the respondents filed a suit claiming a right of preemption thereon.
Under a scheme of consolidation, however, the appellants had before the filing of the suit, been allotted some other lands in lieu of the lands purchased by them, and they contended that the right of pre emption claimed by the respondents did not extend to these lands.
The trial court and the High Court decreed the respondents ' suit holding on the oasis of section 24 of the Patiala and East Punjab States Union Holdings (Consolidation and Prevention of Fragmentation) Act 5 of 2007 BK that it was open to pre emptor to follow the land which had been given to the vendees in consolidation proceedings in lieu of the land which was the subject matter of the sale deed.
The appellants came to this Court by special leave.
HELD : Section 24 when it says that the landowner or the tenant at will shall have the same right in the land allotted to him as he bad in his original holding or tenancy clearly preserves the obligation that may be on the land in the nature of a disability.
The consequence therefore is that the ordinary law of pre emption under which the pre emptor his the right to follow the land which is the subject matter of the sale deed becomes expanded and the land allotted to the landlord and tenant at will in lieu of the land which may have been subject to pre emption also becomes subject to pre emption in the same way as the original holding or the tenancy.
This inference is not negatived by the special provisions of section 25 in respect of leases and mortgages or other encumbrances.
[866 G; 867 D E] Shri Audh Behari Singh vs Gajadhar Jaipuria, [1955] 1 S.C.R. 70, Bishan Singh vs Khazan Singh, ; relied on.


judgement:
Appeal No. 891 of 1964 Appeal by special leave from the judgment and decree dated October 30, 1961 of the Allahabad High Court in Letters Patent Appeal No. 83 of 1951.
N. C. Chatterjee, B. C. Mishra, B. R. G. K. Achar and M. V Goswami, for the appellant.
Chaman Lal Pandhi and section L. Pandhi, for the respondents.
The Judgment of the Court was delivered by Wanchoo, J.
This is an appeal by special leave against the judgment and decree of tie Allahabad High Court.
The appellant is a registered partnership carrying on business at Kanpur.
It entered into an agreement in December 1948 with the VijiaLakshmi Sugar Mills Limited, Doiwala, District Dehra Dun (hereinafter referred to as the Mills) and was appointed sole selling agent of the Mills.
According to the terms of the agreement, the appellant ,deposited a sum of Rs. 50,000/ as security for due performance of the contract, and this amount was to carry interest at the rate of Rs. 6/ per cent per annum to be paid by the Mills.
In November 1949 an order was passed.
winding up the Mills and this happened before the period of agency can* to an end.
Consequent on the winding up of the Mills, the appellant made an application in September 1950 by which it prayed for refund of security deposit along with interest.
It was also prayed that the Mills held the amount of deposit as trustee and in consequence the appellant was ,entitled to priority with respect to the amount of Rs. 50,000/ .
In addition, there was a claim of Rs. 24,500/ with respect to commission.
That claim was given up and we are now not concerned with it.
The liquidators admitted that there had been an agreement as alleged by the appellant and that a sum of Rs. 50,000/ had been deposited with the Mills.
But their case was that this amount was an 'Ordinary debt with respect to which the appellant could not claim any preference and thatt the appellant 's contention that the amount deposited was a kin 1 of trust with the Mills was not correct.
The only question that had to be decided therefore was whether the amount of Rs. 50,000/ deposited as security for due performance of the contract of sole selling agency was in the nature of a trust which was entitled to preference.
or was an ordinary, ,debt.
431 The learned Company Judge held on a construction of the agreement that the amount was an ordinary debt.
He referred in this connection to the apparent conflict between the decisions of the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other but was of opinion that this conflict was largely illusory as the question whether the deposit in a particular case was in the nature of a trust or was an ordinary debt depended on the facts and circumstances of each case.
He finally held that the deposit in question was not In the nature of a trust and, was not entitled to any preference on that ground.
The appellant then went in appeal to, a Division Bench.
The Division Bench upheld the view taken by the learned Company Judge and dismissed the appeal.
The High Court having refused to grant a certificate, the appellant applied for an obtained special leave from this Court, and that is how the matter has come before US.
The two main terms of the agreement, viz. Nos. 8 and 9 bet ween the appellant and the Mills which call for consideration in the present case are these: "(8) That the firm has deposited sum of Rs. 50,000/with the said Mill as a security for the due performance of the contract on their part, on which amount the Mill shall pay interest to the said firm at the. rate of 6 per cent per annum. "(9) That the Mill shall refund the said security deposit of Rs. 50,000/ with interest thereon at the rate on termination of the agency.
In case he said amount is not refunded with interest thereon the firm shall be entitled to commission at the rates mentioned above as if agency has not terminated.
In other words as long as security with interest is not refunded and commission due is not paid this agreement will not be terminated.
" It may be mentioned that the agreement was for a period of one year which, as already indicated, had not expired before the winding up order was passed on November 8, 1949.
It will be seen from the terms of the agreement already set out: that there was no stipulation that the amount of Rs. 50,000/ deposited as security would be kept as a separate fund by the Miffs and it would not use it for its own purposes.
On the other hand,, it is clear that interest had to be paid and there was nothing in the agreement to prevent the Mills from using the money as its own so long as it paid interest on it.
It is true that the money was to be re funded along with interest on the,termination of the agency, but cl.
(9) further provided that in case the money was, not refunded after one year, the appellant would be entitled to commission as if 432 the agreement had not terminated.
As the agreement itself puts it, it will remain alive even after the period of one year so long as the security with interest was not refunded and the commission due was not paid.
The last words of cl.
(9) of the agreement put the security deposit and the commission due on the same footing.
It is because of this provision that the learned Company Judge held that as the security deposit and the commission due were put on the same footing and the commission could only be a debt, the security deposit in the circumstances of this agreement could not be treated on a higher footing.
It seems to us that the view taken by the learned Company Judge so far as this agreement is concerned (which was upheld by the Division Bench) is correct.
We may now refer to the apparent conflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other, on this question.
The representative cases on one side are: (i) Re: Alliance Bank. of Simla: Peter Donald Macpherson vs Dugald Mckechnie and others,(1) and (ii) In the matter of Travancore National and Quilon Bank Limited, Official Liquidators and other applicants (2).
On the other side the cases are (i) In re: Manekji Petit Manufacturing Company, Limited(3) and (ii) Maheshwari Brothers vs Official Liquidators(4).
The two Calcutta and Madras cases seem to take the view that where there is a deposit there is creation of some kind of trust even though the deposit may carry interest and the person with whom the deposit is made is entitled to use the money as his own.
It may however be mentioned that the Calcutta case was with respect to provident fund of the employees of a bank which went into liquidation while the Madras case was with respect to security deposit by an employee of a bank for due performance of his duties.
It may be added that such cases were later provided for specifically by the amendment of the Indian Companies Act (No. VII of 1913) which was made in 1936 and by which section 282 B was added to the Companies Act along with cl.
(e) in section 230(1) of the same Act.
Even so, these two cases make it clear that the proper approach to the question is to ask whether on the interpretation of the document, if there is one, or from proved or admitted facts and circumstances a trust is established or not.
if a trust is established, a provision for payment of interest by the trustee does not destroy the character of the trust nor does the fact that the money is not segregated.
The matter was again considered by the Calcutta High Court in Kshetra Mohan Das vs D. C. Basu(5) in connection with a deposit made by a sole, selling agent and the principle for deciding whether the deposit was in the nature of a trust or a loan was put thus:.
(1) XXVIII (3) A.I.R. 1932 Bom.
(2) (4) I.L.R. [1942] All.24.
(5) I.L.R. 433 "If the security deposit of an employee or an agent of a company in the hands of such company can be regarded as impressed with trust or held in a fiduciary capacity company then such employee or agent is entitled the whole of the security deposit even after such goes to liquidation. .
In the absence of or fiduciary relation the employee or the agent company in liquidation is merely a creditor of the and must share the assets pro rata with other There can in our opinion be no disagreement by such to get back company such trust of the company creditors.
There can in our opinion be no disagreement with the principle so enunciated, and the conclusion whether the deposit is in the nature of a trust or a loan will depend upon the facts,and circumstances of each case, particularly on the terms of the agreement if there is one in writing.
The difficulty however arises in the application of the principle to particular cases.
But the Calcutta and Madras High courts seem to lean to the view that where there is a security deposit it will generally be in the nature of a trust.
This brings us to the cases on the other side.
The Bombay High Court in Manekji Petit 's case(1) was 'also considering the case of a deposit by an agent.
It considered the terms of the agreement which provided for Rs. 6/ per cent interest.
Ordinarily the company was entitled to use the deposit as it thought fit, but there was a provision in the agreement that in the event of the company raising a loan secured by debentures of the company or by mortgaging company 's property, the moneys deposited by the agent were to be forthwith invested in Government securities and to be earmarked in some manner satisfactory to the agent.
It was held on the basis of this last clause in the agreement that there could be no trust till the contingency provided therein came to pass.
In that case that contingency had not come to pass and the moneys were mixed with the moneys of the company and used by it.
The Bombay High Court held that upto that stage there was no trust created.
In Maheshwarl Brothers(2), the question arose whether the security deposited by the agents for the fulfillment of their obligation under the agreement was impressed with trust.
The Allahabad High Court considered the agreement and came to the conclusion that as interest was provided and further as the company was entitled to use the deposit as its own and lastly because a floating charge was intended to be created on the assets of the company which failed for want of registration, the deposit was not in, the nature of a trust.
Thus absence of segregation and presence of interest coupled particularly with a,provision for a floating charge which had failed for want of registration inclined the court to hold that the deposit was not in the nature Of a trust.
(1) A.I.R. 1932 Bom.
Court./67 14 (2) I.L.R. [1942] All. 242. 434 It will thus be seen that the view of the learned Company Judge that the conflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other is more apparent than real is borne out by the fact that in each case the court considered the agreement to decide whether on the terms thereof and facts and circumstances of the case the deposit was impressed with a trust, though it must be admitted that the conclusion reached was not the same.
We are of opinion that the question whether the security deposit in a particular case can be said to be impressed with a trust will have to be decided on the basis of he terms of the agreement and the facts and circumstances of each case, without any leaning one way or the other on the fact that the 'money was given as a security deposit.
If the terms of the agreement, if it is in writing, clearly indicate that the deposit was in the nature of a trust, the court will come to that conclusion in spite of the fact that interest is provided for in the agreement.
But where the terms of the agreement do not clearly indicate a trust, the court will have to consider the facts and circumstances of each case along with the terms to decide whether in fact something in the nature of a trust was impressed on the security deposit.
In such a case the fact whether segregation was provided for or not would be one circumstance to be taken into consideration.
Where segregation is provided for the court would lean towards the deposit being in the nature of a trust.
But where segregation is not provided for and the deposit is permitted to be mixed up with the funds of the person with whom the deposit is made, the court may come to the conclusion that anything in the nature of trust was not intended, for generally speaking in view of section 51 of the Indian Trust Act, (No. 2 of 1882) a trustee cannot use or deal with the trust property for his own profit or for any other purpose unconnected with the trust.
It is true that where there is a clear trust and the trust deed if any provides that the trustee may use the trust property as he likes, the fact that the trustee can mix the trust property with his own may not make any difference.
But where there is no clear indication that a security deposit was impressed with a trust, absence of segregation would be a circumstance against there being a trust.
Another circumstance which may have to be taken into account in a case where the agreement does not indicate clearly that the security deposit is impressed with a trust is the payment of interest.
Where there is no payment of interest provided for an inference may be readily drawn that the deposit was in the nature of a trust.
But where the person with whom the deposit is made is to pay interest it may be possible to infer that payment of interest is a pointer towards there being no trust.
Further any other provision in the agreement and any other circumstance as to the manner in 435 which the deposit was dealt with may also have to be taken into account in coming to the conclusion whether the security deposit in a particular case was impressed with a trust or not.
We may now refer to some English and.
American cases in this connection.
In Gee vs Liddell(1) the facts and circumstances of the case were considered and it was held on those facts and circumstances that there was a trust.
In that cast pound 2,000 had been left as trust by a will, but the executor who was ', the son of the testator said that his father had intended to bequeath pound 3,000 and the question was whether the further pound.
1,000 was also a trust.
On the facts and circumstances of that case it was held that as the amount bequeathed (namely, pound 2,000) was certainly a trust, the addition of pound 1,000 to it by the executor would be of the same kind and would be equally impressed with trust.
That case also shows that where a trust can be inferred clearly a provision for payment of interest would be immaterial.
In re: Hallett 's Estate, Knatchbull vs Hallett(2) it was held that if a person held money in a fiduciary character but mixed it up with his own account, the person for whom the money was held could follow it and had a charge on the balance in the bankers ' hands.
This case again shows that the main question that courts have to decide in such cases is whether on the facts and circumstances a fiduciary relationship is established.
If it is established, then the fact that the money was mixed with the trustee 's money may not make any difference.
In re: Hallett & Co.,(3) segregation was the test used for the purpose of deciding whether there was trust or not.
In Frank M. McKey vs Maurcie Paradise,(4) the question arose with reference to a claim of an employee welfare association against the employer and it was held that without segregating any money as due to the association there could be no trust.
This case shows the significance of segregation in arriving at the inference whether there was a trust.
A consideration of these English and American cases also in our opinion shows that the first question in each case where the court is dealing with a security deposit is to ask whether on the agreement in writing, if any, and on the facts and circumstances of the case and.
conduct of the parties it can be said that the security deposit was unpressed with some kind of a trust.
If that can be said then the question whether interest was provided for and whether the trustee could mix the deposit money with his own money would not be of importance and would not take away the character of the deposit being impressed with a trust.
The mere fact that money was deposited as a security is not sufficient to come to the conclusion (1) ; (3) (2) (1879 80) XIII Ch.
D. 696.
(4) ; 436 that it must be treated as trust money.
The court will have to look to all the terms of the agreement if in writing and to the facts and circumstances of the case and to the conduct of the parties before coming to the conclusion whether with a trust.
If a trust can clearly be spelled out from the agreement that ends the matter.
spelled out clearly the fact there was for and the fact that interest was to be to show that the deposit was not impressed trust particularly where the person with whom the made could mix it with his own money and could use it In such a case the inference would be that the relationship the parties was that of a debtor and creditor.
Further these circumstances if there is any other term which a security deposit was impressed the terms of But if the trust cannot be no segregation provided paid would go a long way with the character of a deposit was for himself.
between besides suggests one kind of relationship rather than the other that will also have to be taken into account.
Illustrations of this will be found both in the Bombay case (i.e. in Manekji 's case(1) and in the Allahabad case (i.e., Maheshwari Brothers ' case(1).
In the Bombay case besides absence of segregation and presence of interest there was a further fact that in certain circumstances segregation had been provided for.
The court was entitled to take that fact into consideration and hold that the deposit was not impressed with trust till segregation took place.
In the Allahabad case a floating charge was created which failed for want of registration, and that circumstance was also used to show that the relationship between the parties was that of a debtor and creditor and not that of a trustee and beneficiary.
Let us now apply these principles to the facts of the present case.
The facts show that there was no segregation in this case and the Mills could mix the security deposit with its own money and use it for its own purpose.
Further because the Mills could use the money for its own purpose, it had to pay interest.
In addition to these two circumstances which would incline one to the view that the relationship was that of a debtor and creditor, there is the further fact that cl.
(9) of the agreement provides that even though the period fixed in the agreement would continue if the security deposit mission due is not paid.
We agree Judge that the last words in cl.(9) commission due on a par.
The commission other than a debt; the security deposit That is a further indication that the case was that of a debtor and creditor are of opinion that the High Court was commission due is not paid.
The agreement is not refunded and the commission with the learned Company make the security deposit and due can be nothing is put on a par with that relationship in the resent In the circumstances we right in its view as to the nature of the security deposit in the present case.
The appeal therefore fails and is hereby dismissed with costs.
G.C. Appeal dismissed.
(1) A.LR.
(2) LL.R. [1942] All. 242.

summary:
The appellant firm was appointed sole selling agent of a sugar manufacturing company and deposited Rs. 50,000 as security for due performance of the contract; this amount was to carry interest at 6 per cent per annum.
There was no restriction on the use of the said deposit by the, company.
According to cl.
(9) of the agreement the security and interest were to be refunded at the termination of the agency; in default of such payment the appellant firm was entitled to a commission as if agency had not terminated.
The clause further said that "as long as security with interest is not refunded and commission due is not paid this agreement will not be terminated.
" The company was ordered to be wound up before the period of agency came to an end.
Consequent on the winding up the appellant made an application praying for refund of its security deposit along with interest.
It was contended that as the company held the amount of deposit as a trustee the appellant was entitled to priority among the creditors.
On behalf of the liquidators it was denied that the amount deposited was in the nature of a trust entitled to preference over other debts.
The company judge held that he amount was an ordinary debt.
The Division Bench of the High Court also decided against the appellant.
In appeal by special leave to this ' Court.
HELD:The deposit did not amount to a trust.
The question whether the security deposit in a particular case can be said to be impressed with a trust will have to be decided on the basis of the terms of the agreement and the facts and circumstances of each case, without any leaning one way or the other on the fact that the money was given as a., security deposit.
[434 C] If a trust can clearly be spelled out from the terms of the agreement that ends the matter.
But if the trust cannot be spelled out clearly the fact that there was no segregation provided for, and the fact that interest was paid, would go a long way to show that the deposit was not impressed ' with the character of a trust particularly when the person with whom the deposit was made could mix it with his own money and could use it for himself.
In such a case the inference would be that the relationship between the parties was that of a debtor and creditor.
Further besides these circumstances, if there is any other term which suggests one kind of ' f relationship rather than the other that will also have to be taken into account.
[436 B C] In the present case the company was free to use the money for its own purpose and had to pay interest on it.
Further, in cl.
(9) of the agreement the security was put on a par with the commission which was nothing but a debt.
The courts below had therefore rightly treated the security deposit as an ordinary debt.
[436 F] Peter Donald Macpherson vs Dugald Mckechine and Ors.
XXVIII In the matter of Travancore National and 430 Quilon Bank Limited, Official Liquidators and Another Applicants, , In re Manekji Petit Manufacturing Company Ltd. A.I.R. 1932 Bom.
31 1, Maheshwari Brothers vs Official Liquidators, I.L.R. [1942] All. 242, Keshetra Mohan Das vs D. C. Basu, I.L.R. Gee vs Liddell, ; , Knatchbull vs Hallett, (1879 80) XIII Ch.
D. 696.
In re Hallett & Co., and Frank M.Mckey vs Maurcie Paradise, ; , referred to.


judgement:
Appeal No. 490 of 1965.
Appeal from the judgment and decree dated April 30, 1964 of the Gujarat High Court in Special Civil Application No. 39 of 1963.
section T. Desai, P. B. Patwari, and O. C. Mathur, for the appellants.
Respondent No. 2 appeared in person.
H. R. Gokhale, section P. Nayyar for R. H. Dhebar, for respondent No. 3.
The Judgment of the Court, was delivered by Bhargava, J.
The appellants in this appeal are the Ahmedabad Mill owners Association, of which all the cotton mills in Ahmedabad local area are members, including the second appellant, the Nagd Mills Ltd. The third respondent, the Textile Labour Association, Bhadra, Ahmedabad (hereinafter referred to as "the Union") represents the workmen employed in the various mills which are members of the first appellant Association.
Under Standing Orders ,Settled under the Bombay Industrial Relations Act, 1946 (Bombay Act XI of 1947) (hereinafter referred to as "the Act"), conditions of service, including those relating to leave, were prescribed in view of clause 6 of Schedule 1 of the Act.
These Standing Orders were settled at a time when this clause 6 of the First Schedule to the Act read as follows: "Conditions, Procedure and Authority to grant leave." Subsequently, Schedule 1 was amended so as to read as: "Procedure and authority to grant leave," and simultaneously, clause 11 was added in Schedule 11 which read as: "All matters pertaining to leave and holidays, other than those specified in items 6 and 7 in Schedule 1.
" Consequent to this amendment in the Schedules, matters pertaining to leave could, thereafter, no longer be prescribed by Standing Orders, which were confined to matters contained in Schedule Iorly.
By a letter dated 21st April,, 1961, the Union gave notice to the first appellant, desiring that changes be made as specified in the Annexure to this letter.
Those changes sought in the Annexure related to grant of privilege leave, sick leave, casual leave, and pay in lieu of privilege leave to all workers employed in the local textile industry in the same manner in which, under the earlier Standing 439 Orders, the clerical and some other staff were granted these benefits.
This notice was given by the Union under section 42(2) of the Act.
The dispute was not amicably settled, and consequently, the matter was referred for conciliation.
The conciliation proceedings also failed, and, thereupon, the Conciliator, on 23rd June, 1961, issued a certificate that he had come to the conclusion from the discussions which the parties had before him that the dispute ' was not capable of being settled by conciliation.
Thereupon, by the letter dated 29th July, 1961, the Union referred the dispute to the Industrial Court under section 73A of the Act.
Before the Industrial Court, various pleas were taken on behalf of the appellants, and some of these pleas were the subject matter of preliminary issues which were decided before the Industrial Court could proceed to give the final Award.
Though a number of such preliminary issues were decided by the Industrial Court, we are only concerned with two such issues, as they were the only two matters pressed before us on behalf of the appellants in this appeal.
One issue raised was that section 73A of the Act was ultra vires Article 14 of the Constitution as it granted a right to the Union to make a reference to the Industrial Court, while no such right was granted to the employers.
The second point urged was that the Act did not apply to the cotton mills which were members of the first appellant Association, because it had not been made applicable to them under section 2(4) of the Act, while it could not become applicable to them under section 2(3) of the Act, because the Bombay Industrial Disputes Act, 1938, was not in force in these industries immediately before the commencement of the Act.
Both these points were decided by the Industrial Court against the appellants.
Consequently, the appellants moved a petition under Articles 226 and 227 of the Constitution in the High Court of Gujarat.
The High Court rejected these preliminary pleas raised on behalf of the appellants and upheld the view of the Industrial Court that the reference was competent.
The appellants have now come up to this Court under certificate granted by the High Court against this order of the High Court.
As we have mentioned earlier, the appellants had raised a number of pleas which were the subject matter of preliminary issues before the Industrial Court and several ' of them were the subject matter of the petition before the High Court also.
In this Court, however, reliance has been placed only on the two pleas, mentioned above.
The first plea is based on the language of section 73A of the Act which, on the face of it, grants the right to a Union only to make a reference of an industrial dispute for arbitration to the Industrial Court and does not grant any such right to an employer.
It was, however, urged on behalf of the respondents that, in fact, this section was introduced in the Act for the very purpose of placing the employers and the Union on terms of equality, and that, instead of creating any discrimination between them, this section, on the 440 contrary, was necessary to satisfy the requirements of article 14 of the Constitution.
To appreciate this submission made on behalf of the respon dents, certain features of the Act have to be examined and their implication taken into account.
Section 73A grants a right of making a reference of an industrial dispute for arbitration to the Industrial Court only to "a registered union which is a representative of employees and which is also an approved union.
" Further, under the proviso to that section, the reference cannot be made if the employer offers in writing before the Conciliator to submit the dispute to arbitration under the Act and the Union refuses to agree to it.
Two other conditions attached are that the dispute must first be submitted to the Conciliator and can be referred for arbitration to the Industrial Court only when the Conciliator certifies that the dispute is not capable of being settled by conciliation, and that no such dispute is to be referred if, under any provisions of the Act, it is required to be referred to the Labour Court for its decision.
It is the effect of all these detailed provisions, laying down limitations for reference under section 73A, that requires examination.
Under section 12 of the Act, the Registrar has to maintain registers of unions registered by him and a list of approved unions.
A Union is entitled to registration only if, during the whole of the period of three calendar months immediately preceding the calendar month in which it so applies, the membership of the Union has been not less than 15 per cent of the total number of employees employed in the industry, when it can be registered as a Representative Union.
In case there is no such Representative Union, a Union can be also registered either as a Qualified Union or as a Primary Union.
But it is clear from the language of section 73A that only a Representative Union has been given the right under that section.
Further, section 73A requires that the Union must also be an approved Union, which means that the Union must comply with the requirements of section 23 of the Act and have its name entered in the approved list.
Amongst the conditions required to be complied with by a Union to be brought.
on the, approved list, the most important is one which lays down that its rules must provide that every industrial dispute, in which a settlement is not reached by conciliation, shall be offered to be submitted to arbitration, and that arbitration under Chapter XI shall not be refused by it in any dispute.
It will thus be seen that the right of making reference under section 73A is only granted to a Union which is registered as a Representative Union and, being on approved list, has already made rules laying down that the Union shall offer every industrial dispute for submission to arbitration and will also not refuse arbitration of any dispute if the employers offer to submit the dispute for arbitration under Chapter XI of the Act.
Section 66 makes provision for submission of an industrial dispute for arbitration.
Sub section
(1) of that section gives the power to make a 441 reference to any person chosen by agreement by the disputing parties, while sub s ' (2) gives the option that the submission of the dispute may be made to the arbitration of a Labour Court or the Industrial Court.
Further, sub section
(5) of section 58 requires that before closing the conciliation proceedings before him, the Conciliator shall ascertain from the parties whether they are willing to submit the dispute to.
arbitration.
These disputes, to which these provisions apply, can only be those not relating to matters in Schedules I and III, because, under sub section
(1) of section 42, and employer is given the right to give a notice of change in respect of any industrial matter specified in Schedule 11, while, under sub section
(2) of section 42, the employee is granted a similar '.
right to give a notice if a change is desired in respect of an industrial matter not specified in Schedule I or Ill.
In respect of matters covered by Schedules I and 111, provision is made in sub section
(4) of section 42 which lays down that such disputes are to be decided by making an application to the Labour Court; and, as we have indicated earlier, section 73A does not apply to disputes which are required to be referred to a Labour Court.
The result of all these provisions is that section 73A of the Act comes into play only in cases where the dispute relates to matters not contained in Schedules I and III, the dispute is not resolved by private agreement or by conciliation, and there is no submission of the dispute to arbitration under section 66 of the Act.
It is in this light that the provision which has to be made by the Union in its rules under section 23(1)(v) assumes importance.
Whenever a dispute is raised either by an employer or by a Union which can ultimately take advantage of section 73A; of the Act, the Union must invariably offer that the dispute be submitted to arbitration, and, in the alternative, if the employer offers to submit the dispute to arbitration, the Union must not refuse it.
The result is that in respect of any such dispute, the Union has no option but to offer or agree to arbitration of the dispute under section 66 of the Act.
On the other hand, there is no such limitation placed on the employer.
There is no provision in the Act making it compulsory for the employer either to submit the dispute to arbitration or to agree to the submission of the dispute to arbitration when offered by the Union.
Consequently, whenever any industrial dispute arises, the employer can always ensure arbitration of that dispute by making an offer to the Union under section 66 of the Act, whereupon the Union is compelled to agree to submission of the dispute to arbitration.
Clearly, therefore, there was no need to make any Provision empowering the employer to make a reference of the dispute for arbitration to the Industrial Court.
On the other hand, if a Union wants a dispute to be settled and even offers that the dispute be submitted to arbitration under section 66 of the Act, the employer can refuse, whereupon the Union would be left without any remedy.
It is obvious that section 73A was enacted to fill this gap and place the Union on parity with the 442 employer so as to enable the Union to have any dispute settled by arbitration even when the employer does not agree to arbitration.
These provisions granting.
the rights to the employers and the Union are, of course, in addition to, and without prejudice to, the provisions contained in sections 72 and 73 of the Act, under which the State Government is given the power to refer any industrial dispute between employees and employees, and employers and employees to the arbitration of a Labour Court or the Industrial Court on the basis of a report made by the Labour Officer, or even otherwise.
These provisions in sections 72 and 73 leave the discretion with the State Government to make a reference in appropriate cases, so that neither the employers nor the employees can, as of right, obtain a reference under these sections from the State Government.
So far as they are concerned, the provisions contained in the Act require that the disputes between them must first go before a Conciliator for conciliation, and subsequently, either party can exercise its option of offering the submission of the dispute to arbitration when such an enquiry is made from them by the Conciliator under section 58(5) of the Act.
Thereafter, if the offer is by an employer, the Union, under its rules, is bound to accept the submission, so that whenever an employer desires that a dispute be decided by arbitration, the Union is compelled to agree to it.
In the reverse case, when a Union wants submission of the dispute to arbitration, the employer has discretion not to agree, and then only can the Union resort to section 73A and refer the dispute to the Industrial Court.
This section, in these circumstances did not at all require that the right granted to the Union should also be granted to the employer.
In this connection, two other points were urged by learned ,counsel for the appellants before us.
One was that, under section 66 of the Act, the offer to submit the dispute for arbitration can be to any private individual also, and this did not give the right to the employer to have it decided by an Industrial Court so as to be equated with the right of the Union to have it decided by the Industrial Court.
We do not think that the provision contained in section 66 of the Act places the employer under any such handicap.
Under sub section
(2) of section 66, the employer can straight away offer that the dispute be referred to the arbitration of the Industrial Court, and thereupon 'the Union would be debarred from refusing to agree to that submission.
In any case, even if the Union were to refuse to agree to it, the State Government will determine under s.71 of the Act whether the dispute should be referred to the arbitration of the Labour Court or the Industrial Court and refer it to that body.
The mere fact that the Union may not agree to .he offer of the employer to submit the dispute for arbitration to the Industrial Court whereupon the State Government can direct that the arbitration be made by a Labour Court or the Industrial Court does not, in our opinion, place the employer in any disadvantageous position, and we do not 443 think, therefore, that there was any requirement that the employer should also be given a right corresponding to the right of the Union under section 13A of the Act.
The second point urged by the learned counsel was that if the dispute is referred to the Industrial Court by a submission under section 66(2) of the Act, that Court will proceed to give its award in accordance with the provisions of the in view of section 68 of the Act, while if the dispute is referred at the instance of a Union under s.73A of the Act, the Industrial Court will deal with it as a .judicial Tribunal and will give its decision in accordance with the regulations made under section 92 of the Act.
We consider that this submission is based on a misapprehension of the scope of section 92 of the Act.
The rules and regulations made by the Industrial Court under section 92 are to govern the procedure of the Industrial Court in all proceedings before it irrespective of the fact whether those proceedings come up before it by a reference made by the State Government under.
s, 72 or section 73 of the Act, or by a reference made by the Union under section 73A of the Act, or by a joint submission made by the parties under section 66(2) of the Act.
Section 68 of the Act is in very general terms, and lays down that proceedings in arbitration under the whole of the Chapter XI are to be in accordance with the provisions of the , in.
so far as they may be applicable.
The provisions of the have, therefore, been made applicable not only to arbitrations by submission under section 66 of the Act, but also to arbitrations on references made by the State Government under section 72 or section 73 or a reference made by a Union under section 73A of the Act.
If the submission or the reference happens to be to the Industrial Court, that Court must follow the and regulations made under s.92, and the provisions of the will only apply insofar as they may be applicable in view of those rules and regulations.
Consequently, whether a dispute is referred for arbitration to the Industrial Court by submission under section 66(2) of the Act, or by a reference under section 73A of the Act, that Court has to proceed in the same identical manner and the parties seeking the reference obtain the award in both cases under identical circumstances.
In this connection, the regulations made by the Industrial Court, known as the Industrial Court Regulations, 1947 were brought to our notice.
A perusal of these regulations shows that, in the matter of procedure of the Industrial Court for dealing with arbitrations made by submissions under section 66, or by references under other sections, there is uniformity and no distinction is made between references under these different sections.
The Industrial Court is required to proceed in the same manner in all cases and to give its decision under section 87 of the Act.
It is significant that section 87, defining the duties of the Industrial Court, uses identical language in respect of all arbitrations by the Industrial Court; under clause (v) the duty 444 of the Industrial Court is laid down to be to decide industrial disputes referred to it in accordance with submissions registered under section 66 which provide for such reference to the Industrial Court, and under clause (vi), the duty of the Industrial Court is similarly defined to be to decide industrial disputes referred to it under sections 71, 72, 73 or 73A.
The ' Industrial Court, in all cases, is required to give a decision on the dispute, and hence, in all these proceedings, the parties have identical rights in the matter of procedure of the Industrial Court of, hearing and of obtaining a decision from it.
This makes it clear that section 73A of the Act was required only to fill up a gap which would have existed, leaving no remedy to a Union to obtain arbitration of a dispute if the employers did not agree to that arbitration, and that no similar right was required to be conferred on the employers who, under the other provisions of the Act, could always obtain a reference of the dispute to arbitration by making a submission under section 66 which the Union was bound to agree to.
The first point raised on behalf of the appellants has, therefore, no force and section 73A of the Act cannot be held to be invalid.
On the second question, it has rightly been urged on behalf of the appellants that the Act was not applied by the State Government to the industries run by the appellants, whether generally or by specifying any local area by issue of a notification under sub section
(4) of section 2 of the Act.
On behalf of the respondents, reliance was placed on sub section
(3) of section 2 for urging that the Act became applicable to the industries run by the appellants, because the Bombay Industrial Disputes Act, 1938 (hereinafter referred to as "the Bombay Act of 1938") was in force in these industries immediately before the commencement of the Act.
Admittedly, the Bombay Act of 1938 was made applicable to the entire cotton industry throughout the Province of Bombay by various notifications issued in the year 1939 under that Act by the then Provincial Government.
Ahmedabad, where the industries of the appellants are situated, was then a part of the Province of Bombay.
The Bombay Act of 1938 was never entirely repealed.
However, the Central Government enacted the Industrial Disputes Act No. 14 of 1947 which received the assent of the Governor General on 17th March, 1947, a id was brought into force from April 1, 1947.
This Act did not, in terms, repeal the Bombay Act of 1938, but the contention on behalf of the appellants is that the Bombay Act of 1938 and the Central both covered the same field of industrial disputes, and consequently, it should be held that the Bombay Act of 1938 became void on the ground of repugnancy with the under sub section
(1) of section 107 of the Government of India Act, 1935.
It was urged that the Bombay Act of 1938 as well as the were both enacted under the power conferred on 445 the Bombay Legislature and the Central Legislature under item 29 of of the Concurrent List III of the Seventh Schedule to the Government of India Act, 1935.
The principle relied upon by the appellants is that, if two pieces of legislation cover the same field and each one of them contains a complete code making detailed provision for all aspects of the subject matter of the legislation, repugnancy must be held to arise, even though one Act may not, in terms, repeal the other and may not correspond section by section with the other.
For this principle, reliance was placed on the tests enumerated by Nicholas in his Australian Constitution, 2nd Edition, p. 303, to determine inconsistency or repugnancy between a State law and a Commonwealth law in Australia.
The three tests were enumerated as follows: "(1) There may be inconsistency in the actual terms of the competing statutes; (2) Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive code; and (3) Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter.
" This principle was deduced from the decisions in Ex Parte McLean(1) and the State of Victoria and Others 'V.
The Commonwealth of Australia and OtherS(2).
Reliance was also placed on decisions of this Court in Zaverbhai Amaidas vs The State of Bombay(3), Ch.
Tika Ramji & Ors.
vs The state of Uttar Pradesh & Ors.(4) and Deep Chand vs The State of Uttar Pradesh and Others(5).
In the last of these cases, after quoting from Nicholas, this Court held: 'Repugnancy between two statutes may thus be ascertained on the basis of the following three principles: (1) Whether there is direct conflict between the two provisions; (2) Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature; and (3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field." (1) ; (3) [1955] 1 S.C.R. 799.
(5) (1959] Supp. 2 S.C.R. 8.
(2) ; (4) (1956] 1 section C. R. 393.
446 Relying on these principles, it has been urged that the intended to lay down an exhaustive code in respect of settlement of all industrial disputes, and since the Bombay Act of 1938 was also on the same subject, it must be presumed that the two statutes are repugnant, so that the Bombay Act of 1938 became void with effect from 1st April, 1947 when the came into force.
It has, however, been rightly pointed out by the High Court in the judgment under appeal that the Bombay Act of 1938 did not confine itself entirely to the subject of settlement of industrial disputes.
Chapter V of that Act, containing sections 26 to 33 deals with a matter which is not covered by the at all.
These sections of the Bombay Act of 1938 lay.
down the procedure for prescribing Standing Orders regulating the relations between an employer and his employees, and for making changes therein.
The prescribing of the Standing Orders and making of changes in them may not involve any industrial dispute at all.
In fact, at the first stage, when Standing Orders are prescribed, no question would arise of any industrial dispute requiring settlement.
The , did not contain any provisions at all dealing with this subject of prescribing Standing Orders and making changes therein.
Consequently, even if the submission made on behalf of the appellants be accepted that the , is an exhaustive code dealing with the question of, settlement of industrial disputes, only those provisions of the Bombay Act of 1938 can be held to be repugnant and void on account of the repugnancy which also dealt with the same subject matter of settlement of industrial disputes.
The provisions contained in Chapter V of that Act, which had nothing to do with settlement of industrial disputes, could not, therefore, be affected by the enactment of the , and hence, the enforcement of the did not in any way affect the applicability of the provisions of Chapter V of the Bombay Act of 1938 to the industry run by the appellants.
To the extent that Bombay Act of 1938 contained these provisions in Chapter V, that Act, therefore, continued in force and also continued to apply to the industries now in question.
It was also urged that the did not, similarly, make any provision for arbitration of industrial disputes and, consequently, the provisions of the Bombay Act of 1938, relating to arbitration of industrial disputes, could not be held to have become invalid.
It is not necessary to examine this further question in view of our decision that at 1 east the provisions of Chapter V of the Bombay Act of 1938 continued in force.
That Act did not stand repealed as a whole; at best, only a part of that Act can be held to have ceased to be effective because of the repugnancy with the .
But, while another part of that Act continued to be in force, the Bombay Act of 1938 also continued to be applicable to the cotton industry in Ahmedabad 447 with which we are concerned.
When the Bombay Industrial Relations Act, 1946 came into force on 29th September, 1947, therefore, the Bombay Act of 1938 was applicable to these industries, and consequently, under sub section
(3) of section 2 of the Act, the Act became applicable to the industry ' of the appellants and did not require a notification under sub section (4) of section 2 to make it applicable.
This point was also therefore, rightly decided against the appellants, and the judgment of the High Court must be upheld.
The appeal is, therefore, dismissed with costs.

summary:
A dispute regarding amendment of rules relating to privilege leave etc.
arose between the Ahmedabad Millowners ' Association and the union of workmen employed in the textile industry.
After conceliation proceedings were declared by the Conciliator to have failed, the union referred the dispute to the Industrial Court under section 73A of the Bombay Industrial Relations Act, 1946.
The Industrial Court decided against the Millowners who filed a writ petition in the ' High Court and thereafter appealed to this Court.
It was urged on behalf of the appellants that (i) section 73A was violative of article 14 of the Constitution since it gave a right to the workers union to make a reference but not to the employer (ii) the Act had not been made applicable to the cotton industry at Ahmedabad under section 2(4) and it was not applicable under section 2(3) because the Bombay Industrial Disputes Act, 1938 was repugnant to Central) and must be deemed to have been repealed.
HELD:(i) Section 73A was not violative of article 14.
Whenever any industrial dispute arises the employer can always ensure arbitration of that dispute by making an offer to the union under section 66 of the Act whereupon a registered and approved union is compelled to agree to submission of the dispute to arbitration.
Clearly therefore there was no need to make any Provision empowering the employer to make a reference of the dispute for arbitration to the Industrial Court.
On the other hand if a Union wants a dispute to be settled and even offers that the dispute be submitted to arbitration under section 66 of the Act, the employer can refuse, whereupon the union would be left without any remedy.
It is obvious that section 73A was enacted to fill this gap and place the union on with the employer so as to enable the union to have any dispute = by arbitration even when the employer does not agree to arbitration.
This section, in these circumstances did not at all require that the right granted to the union should also be granted to the employer.
[441 G H] There was no difference in the procedure to be followed by the Industrial Court in a reference under section 73A and that to be followed when the reference is under section 66.
In both the procedure under section 92 had to be followed.
[443 E F] (ii)Chapter V of the Bombay Industrial Disputes Act 1938 was not repugnant to the Central Act of 1947 and therefore continued to be in force, and consequently under section 2(3) of the Bombay Industrial Relations Act 1947 the latter Act became applicable to the industry of the appellants and did not require a notification under section 2(4) to make it applicable [446 G H; 447 A B] 438 Ex Parte McLean, ; Victoria and Others vs The Commonwealth of Australia and Others, ; , Zaverbhai Amaidas vs The State of Bombay, [1955] 1 S.C.R. 799, Ch.
Tika Ramji & Ors.
vs The State of Uttar Pradesh & Ors., and Deep Chand vs The State of Uttar Pradesh and Others, [1959] Supp. 2 S.C.R. 8.


judgement:
Appeal No. 806 of 1964.
Appeal by special leave from the judgment and decree dated July 13, 1962, of the Madras High Court in Appeal No. 347 of 1958.
449 C. B. Agarwala, B. Dutta, T. section Krishnaswamy Iyenr, P. L. Meyyappan and J. B. Dadachanji, for the appellant.
A. K. Sen and R. Ganapathji Iyer, for respondent.
No. 1.
K. R. Chaudhuri and K. Rajendra Chaudhury, for respondent No. 2.
The Judgment of the Court was delivered by Wanchoo, J.
This is an appeal by special leave against the judgment of the Madras High Court.
The facts are not now in dispute and may be briefly narrated.
A suit was brought by Nagappa Chettiar, respondent No. 1 (hereinafter referred to as the respondent) against Villiammi Achi appellant and Nachiammai Achi now dead and represented by her legal representative.
The respondent claimed two thirds share of the properties left by his father, Pallaniappa and prayed for a decree for separate possession of that share after partition.
The facts on which this claim was based are not now in dispute and are these.
The respondent is the adopted son of Pallaniappa.
having been adopted in 1941.
The appellant is the widow of Pallaniappa and Nachiammai Achi was Pallaniappa 's mother.
Pallaniappa 's father also named Nagappa had considerable properties.
This Nagappa made a will on June 10, 1934 by which after making certain dis positions, in favour of certain persons including his own wife he gave the residue of his property absolutely to Pallaniappa and appointed him as the executor of the will.
In one place the will stated that all the property except a small part was the exclusive and self acquired property of the testator while at the end the testator said that he had made the will with the full consent of his son Pallaniappa.
After Nagappa 's death in July 1934 Pallaniappa obtained probate of the will and after providing for the legacies to others as indicated therein came into possession of the residue of the property.
In 1941 the respondent was adopted by Pallaniappa.
In the trial court there was a dispute between the parties whether Pallaniappa and his father were members of a joint Hindu family and whether properties left by Pallaniappa 's father were the joint family properties of both.
But it has been found that all the properties left by Pallaniappa 's father were joint family properties of Pallaniappa and his father which Pallaniappa could acquire by survivorship on his father 's death.
This finding was upheld by the High Court and is not now in dispute.
We have to proceed on the basis that even though Pallaniappa 's father said in the will that the properties, except a small part, were his self acquired properties,.
in fact all the properties mentioned in the will of Pallaniappa 's, father were joint family properties of Pallaniappa and his father.
The case of the appellant was that even though the properties left by Pallaniappa 's father were joint family properties which MISup.
CI/67 15 450 Pallaniappa could acquire by survivorship, the conduct of Pallaniappa in obtaining probate of the will and carrying out its terms amounted to election and thereafter Pallaniappa became absolute owner of the residue of the properties bequeathed to him by the will.
The consequence of this was that when Pallaniappa adopted the respondent in 1941 long after he had become the absolute owner of the properties, the respondent acquired no interest in the properties left by his grand father by virtue of the adoption.
Pallaniappa died.
on September 16, 1956 after the Hindu Succession Act, (No. 30 of 1956) came into force.
As there was no joint family property of Pallaniappa and the respondent at the time of Pallaniappa 's ,death, the respondent could not claim half the property on the ground that it was joint family property of himself and Pallaniappa, as Pallaniappa 's election to take under the will of his father would bind the respondent also.
Reliance in this connection was placed ,on section 180 of the Indian Succession Act, (No. 39 of 1925) also.
The reply on behalf of the respondent to this contention was two fold.
In the first place, it was urged that there was no question of election even by Pallaniappa in this case and section 180 of the Indian Succession Act would not apply.
It was further urged that even assuming that there could be election by Pallaniappa the respondent would not be bound by that election as the property left by his grandfather was joint family property and the respondent would acquire interest therein as soon ;is he was adopted by Pallaniappa, even though Pallaniappa might have been the sole co parcener for sometime i. e. between 1934 and 1941.
This interest of the respondent in the joint family property was independent of his father Pallaniappa and even though Pallaniappa might be bound by any election that he might have made the respondent would not be so bound and would be entitled to treat the property as joint family property in the hands of, Pallaniappa in which he would acquire interest on being adopted.
In the second place the respondent 's case was that in any case after his adoption Pallaniappa threw the ,entire property into the family hotch pot and therefore it became joint family property by blending.
Two questions therefore arose for consideration in this case namely (i) whether there was election by Pallaniappa and if so whether the respondent would be bound by it, and (ii) whether Pallaniappa threw the entire property into the family hotch pot after adoption of the respondent and therefore it became joint family property in any case.
The trial court accepted the case put forward on behalf of the respondent and decreed the suit passing a preliminary decree giving two thirds share to the respondent and one sixth each to the appellant,, and the mother of Pallaniappa.
The appellant then appealed to the High Court.
The High Court dismissed the appeal.
On the question of election, the 451 High Court held that as Pallaniappa and his father were members of a joint Hindu family and as the entire property left by Pallanippa 's father was joint family property, Pallaniappa had interest in the residue as a survivor and in consequence there was no question of election by Pallaniappa for all the property he got by will would have come to him by survivorship.
In such a case there could be no question of election, for Pallaniappa had title to the property irrespective of the will.
The High Court also held that in any case the claim of the respondent as a member of the joint family was not under his father but independent of him and therefore the respondent would not be bound , even if Pallaniappa were held to have made an election.
The High Court also found in favour of the respondent on the question whether the property was thrown into family hotch pot after the adoption of the respondent and in the result dismissed the appeal.
The High Court having refused to grant a certificate to appeal to this Court, the appellant applied for and obtained special leave from this Court; and that is how the matter has come before us.
The same two questions, as indicated above, arise for consi deration in this appeal.
We shall first consider the question of election in the background of the fact that the entire property left by Pallaniappa 's father was joint family property of himself and Pallaniappa and that Pallaniappa had interest in that property as a member of a joint Hindu family.
Section 180 of the Indian Succession Act which enunciates the doctrine of election as known to English law for this country is in these terms : "Where a person, by his will professes to dispose of something which he has no right to dispose of, the person to whom the thing belongs shall elect either to confirm such disposition or to dissent from it, and, in the latter case, he shall give up any benefits which may have been provided for him by the will.
" It is urged on behalf of the appellant that section 180 would apply to the facts of the present case for the property willed by Pallaniappa 's father was not his which he could will away as it was joint family property in which Pallaniappa who was the residuary legatee had also equal interest.
Therefore Pallaniappa had either to confirm the disposition or dissent from it, and his conduct showed that he had confirmed it for he took out probate.
Therefore it must be held that after probate was taken out the residue became the absolute property of Pallaniappa and lost its character as joint Hindu family property.
Now it is clear from section 180 that after the legatee elects to dissent from the will he must give up any benefits provided for him by the will.
This shows that election under section 180 would only arise 452 where the legatee derives some benefit from the will to which he would not be entitled except for the will.
In such a case he has to elect whether to confirm the will or dissent from it.
But where there is no question of the legatee deriving any benefit from the will to which he would not be entitled except for the will, the fact that he confirms the will and accepts what the will provides would not amount to election, for he would have in any case got what the will gave him.
Thus election only arises where the legatee has to choose between his own property which might have been willed away to somebody else and the property which belongs to the testator and which the testator has given to the legatee by the will.
The matter is brought out in Halsbury 's Laws of England, Third Edition, Vol. 14, at p. 588, para 1091 in the following words "Where a testator by his will purports to give property to A which in fact belongs to B and at the same time out of his own property confers, benefits on B . in such cir cumstances B is not allowed to take the full benefit given him by the will unless he is prepared to carry into effect the whole of the testator 's dispositions.
He is accordingly put to his election to take either under the instrument or against it.
If he elects to take under the will he is bound and may be ordered to convoy his own property to A; if he elects to take against the will and to keep his own property, and so disappoints A, then, he cannot take any benefits under the will without compensating A out of such benefits to the extent of the value of the property of which A is disappointed.
" Following this principle the High Court held that as the property which the will gave to Pallaniappa would in any case have come to him as a member of the joint family, there was no question of election even by Pallaniappa in this case.
This view appears to us to be correct.
But even assuming that there was some kind of election by Pallaniappa we cannot see how the nature of the property left by Pallaniappa 's father would change merely because Pallaniappa 's father made a will giving the residue absolutely to Pallaniappa and Pallaniappa took out probate of the will.
The property being joint family property Pallaniappa 's father was not entitled to will it away and his making a will would make no difference to the nature of the property when it came into the hands of Pallaniappa.
A father cannot turn joint family property into absolute property of his son by merely making a will, thus depriving sons of the son who might be born thereafter of their right in the joint family property.
It is well settled that the share which a co sharer obtains on partition of ancestral property is ancestral property as regards his male issues.
They take an interest in it by birth whether 453 they are in existence at the time of partition or are born subsequently : [see Hindu Law by Mulla, Thirteenth Edition p. 249, para 223 (2) (4)].
If that is so and the character of the ancestral property does not change so far as sons are concerned even after partition, we fail to see how that character can change merely because the father makes a will by which he gives the residue of the joint family property (after making certain bequests) to the son.
A father in a Mitakshara family has a very limited right to make a will and Pallaniappa 's father could not make the will disposing of the entire joint family property, though he gave the residue to his son.
We are therefore of opinion,that merely because Pallanappa 's father made the will and Pallaniappa probably as a dutiful son took out probate and carried out the wishes of his father, the nature of the property could not change and it will be joint family property in the hands of Pallaniappa so far as his male issues are concerned.
Further it is equally well settled that under the Mitakshara law each son upon his birth takes an interest equal to that of his father in ancestral property, whether it be movable or immovable.
It is very important to note that the right which the son takes at his birth in the ancestral property is wholly independent of his father.
He does not claim through the father. " (see Mulla 's Hindu Law, Thirteenth Edition, p. 251, para 224).
It follows therefore that the character of the property did not change in this case because of the will of Pallaniappa 's father and it would still be joint family property in the hands of Pallaniappa so far as his male issue was concerned.
Further as soon as the respondent was adopted he acquired interest in the joint family property in the hands of Pallaniappa and this interest of his was independent of his father Pallaniappa.
In such circumstances even if Pallaniappa could be said to have made an election there can be no question of the respondent being bound by that election, for he is not claiming through his father.
In this view of the matter, it is unnecessary to consider the question whether Pallaniappa, after the, respondent 's adoption, threw the property into.
the family hotch pot.
The appeal therefore fails and is hereby dismissed with costs.
Y.P. Appeals dismissed.

summary:
A Hindu died after making a will in respect of certain joint family properties and appointed his son as the executor.
The son obtained pro.
bate of the will, provided for the legacies indicated therein and came into possession of the residue of the property.
Thereafter, he adopted the plaintiff.
The adoptive father died after the Hindu Succession Act came into force and the plaintiff filed the suit claiming two thirds share of the properties left by his father.
The defendants (viz., the widow and mother Of the plaintiffs adoptive father) contended that the conduct of the plaintiff 's adoptive father in obtaining the probate of the will and carrying out its terms amounted to an election and therefore the father became absolute owner of the residue of the properties bequeathed to him by the will, and as the election to take under the will, would bind the plaintiff also he could not claim half the property on the ground that it was joint family property of himself and his father.
The trial Court decreed the suit, which in appeal was upheld by the High Court.
The defendants appealed to this Court.
HELD:The appeal must be dismissed.
The character of the property did not change because of the will and it would still be joint family property in the hands of the plaintiff 's father as far as his male issue was concerned.
Further, as soon as the plaintiff was adopted he acquired interest in the joint family property in the hands of his adoptive father and this interest of his was independent of that of his father.
In such circumstances even if his father could be said to have made an election there could be no question of the plaintiff being bound by that election, for he was not claiming through his father.
[453 C, E F] Election under section 180 of the Indian Succession Act, would only arise where the legate derives some benefit from the will to which he would not be entitled except for the will.
In such a case he has to elect whether to confirm the will or dissent from it.
But where there is no question of the legate deriving any benefit from the will to which he would not be entitled except for the will the fact at he confirms the will and accepts what the will provides would not account to election, for he would have in any case got what the will gave him.
Thus election only arises where the legate has to choose between his own property which might have been testator and which the testator has given to the legate by the will.
[451 H 452 C]


judgement:
minal Appeals Nos. 65 and 243 of 1964.
Appeals by special leave from the judgment and order dated September 18, 1963 of the Andhra Pradesh High Court in Criminal Appeal No. 385 of 1962.
section C. Agarwala, for the appellant (in Cr. A. No. 65/64) and respondent No. 2 (in Cr. A. No. 243/64).
K. R. Chaudhuri, for the appellant (in Cr. A. No. 243/64) and respondent No. 1 (in Cr. A. No. 65/64).
T. V.R. Tatachari, for respondent No. 2 (in Cr. A. No. 65/64) and respondent No. 1 (in Cr. A. No. 243/64).
The Judgment of the Court was delivered by Hidayatullah, J.
These are two appeals, one (Criminal Appeal No. 243 of 1964) by one Purna Chandra Rao who has been convicted under section 342, Indian Penal Code by the High Court of Andhra Pradesh but in lieu of the sentence the High Court released him under section 562(1 A) of the Criminal Procedure Code after due admonition, and the other (Criminal Appeal No, 65 of 1964) by one A. K. Mallu against the judgment of the Andhra Pradesh High Court releasing the respondent (who is the appellant 310 in the other appeal) after admonition under section 562 (1 A) of the Code of Criminal Procedure.
The two appeals have been respectively filed by the complainant who had lodged a complaint against him on which the conviction resulted, and by the accused.
In so far as the appeal of the accused is concerned, we have recorded an order separately which shows that Mr. K. R. Chaudhary, advocate of this Court appeared before us and told us that he would like to withdraw from the case.
As the accused is not represented before us, there is no alternative but to dismiss his appeal in default.
As regards the other appeal, Mr. section C. Aggarwal contends that section 562 (I A) is not applicable to an offence under section 342 of the Indian Penal Code.
His reasons are: that section 562 (1 A) is concerned with offences concerning property and offences not so concerned cannot be subjected to treatment under that section.
Section 562 (1 A) reads as follows: "In any case in which a person is convicted of theft, theft in a building, dishonest misappropriation, cheating or any offence under the Indian Penal Code punishable with not more than two years ' imprisonment and no previous conviction is proved against him the Court before whom he is so convicted may, if it thinks fit, having regard to the age, character, antecedents or physical or mental condition of the offender and to the trivial nature of the offence or any extenuating circumstances under which the offence was committed, instead of sentencing him to any punishment, release him after due admonition.
" Mr. Aggarwala contends that the Code has mentioned several offences by description, such as theft, theft in building, dishonest misappropriation and cheating which are offences connected with property and, therefore, words "any offence under the Indian Penal Code" which follow, must be given an interpretation, confining them to those sections of the Penal Code where property is either directly or indirectly involved.
In our opinion, this submission is not correct and Mr. Aggarwala is not right in reading the section as he contends.
The offences which are earlier mentioned in the section are punishable with imprisonment of more than two years and, therefore, it was necessary to mention them so as to include them in addition to offences under the Indian Penal Code punishable with not more than two years ' imprisonment.
The words "any offence under the Indian Penal Code" therefore cannot be read ejusdem generis with the offences which are mentioned earlier.
This clause stands by itself and indicates that all offences punishable with not more than two years ' imprisonment are also capable of 311 being dealt with under s.562 (1 A).
Offences against property are all included in Ch.
17 of the Indian Penal Code and if it was desired to limit the operation of section 562(1 A) to offences against property, it would have been the easiest thing to have mentioned the Seventeenth Chapter of the Code.
For these reasons, we do not accept the argument.
As a result, both the appeals fail and are dismissed.
V.P.S. Appeals dismissed.

summary:
The accused was convicted of the offence of wrongful confinement under section 342 I.P.C., and was released after due admonition under section 562(1 A), Criminal Procedure Code.
On the question whether the latter section is concerned only with offences relating to property and was therefore not applicable in the present case, HELD : The clause "any offence under the Indian Penal Code punishable with not more than two years ' imprisonment" in section 562(1 A) Cr.P.C., stands by itself and indicates that all offences punishable with not more than two years ' imprisonment are capable of being dealt with under the section.
The words "any offence under the Indian Penal Code" cannot be read ejusdem generis with the offences of theft etc.
mentioned earlier in the section.
Those offences had to be specifically mentioned so as to be included in the section, because, they are offences punishable with im prisonment of more than two years.
[310 G H]