judgement:
Civil Appeal No. 1340 of 1982.
Appeal by Special leave from the judgment and order dated the 1st March, 1982 of the Allahabad High Court in Civil Miscellaneous Petition No. 6933 of 1981.
G.L. Sanghi, R.D. Upadhaya, V.K. Pandita and section Srinivasan for the Appellants.
R. K Garg and section N. Singh for the Respondent.
The Judgment of the Court was delivered DESAI, J.
Even with an ever widening control of the State on the private management of educational institutions, the minimal residuary power still enjoyed by private management can be used to successfully harass a highly qualified teacher is the tragic lesson of this litigation.
973 Appellant, a double M.A. and holding a Doctorate applied in response to an advertisement that appeared in Hindi Daily Bhirgu A Chetna and Dainik Jagran dated May 18, 1980 for the post of a principal of Shrinath Intermediate College, Garhmalpur Sahulie, Distt.
Balia ( 'College ' for short) issued by the Committee of Management of the College.
The Selection Committee as envisaged by sec.
16F of the Intermediate Education Act, 1921 ( 'Act ' for short) held the interview on April 12, 1981.
The Selection Committee consisted of Shri Sudhakar Tiwari Manager/President of the Selection Committee, Shri Ram Dularey Tripathi, Principal Nagrik Degree College, Jaunpur and Dr. Gauri Shanker Misra, Principal, Narihsun Degree College, Harihaun Distt.
Jaunpur.
The Selection Committee unanimously selected the appellant for appointment to the post of Principal.
Pursuant to this decision of the Selection Committee, the Manager of the Committee of Management of the College issued an appointment order dated April 27, 1981 to the appellant informing him that the Committee of Management of the College vide its Resolution No. 3 dated April 19, 1981 has appointed the appellant as Principal on one year probation in the scale of 550 1200 at initial pay alongwith DA admissible under the rules.
The appellant was required to present himself before the Manager of the College and take over the charge within 10 days of the receipt of the order of appointment failing which the appointment would be void.
On receipt of this letter of appointment the appellant presented himself at the College on May 1, 1981 and requested the Manager to hand over charge to him.
There is an endorsement below this communication by the Manager that the appellant was permitted to take charge.
On the same day, the appellant wrote to the Manager of the College that as permitted by him he has assumed charge of the post of Principal at 7.30 A.M. and has started functioning.
An intimation of the same was also sent to the Distt.
Inspector of Schools, Ballia.
The appellant on the same day circulated a notice to the staff intimating to them that he has assumed charge of the post of Principal and he has convened an urgent meeting of the staff to be held on the same day after college hours in the teachers ' room.
It appears that the State Government was contemplating to bring about a radical change in the mode, method and power of appointment of the teaching staff in non government aided schools and accordingly Secretary to the Government of U.P. Education 974 Department issued an order dated April 7, 1981, communicated by a radiogram to the various authorities.
It reads as under: "From Secretary to Government of U.P. Education/ Department G. O. No. 1701/l5 7 FI 1 (27)/81 dated 1.4.81 Stop all fresh selections and appointments of Principals Headmasters and teachers including recruitment by promotion in all non government aided secondary schools except minority institutions pending further orders(.) District Inspectors to ensure non drawal of pay of teachers appointed after his date(.) Detailed instructions follow(.)" Pursuant to the receipt of this radiogram, the District Inspector of Schools, Ballia had sent a copy of it to the College.
There is some dispute between the parties as to whether this copy of the radiogram was received by the Management of the College but there is a letter dated May 1, 1981 addressed by the District Inspector of Schools, Ballia to the Manager of Shrinath Intermediate College which reads as under: "Letter.
No. 2/26 62/80 81 dated 1.5.81 Sub: In Ref: Appointment of Principals.
Sir, In reference to letter No. Sri Nath Inter College dated 27.4.1981 regarding the above mentioned subject, it is informed that as soon as G.O. No. 1701/15 7F (27)/81 dated 7.4.1981 in regard to the prohibition on appointments is received in this office, it has been sent by letter No. 60/81 82 dated 8.4.1981 and it has been received by the clerk of your office on 8.4.1981 and the message of the G.O. have been sent to the experts by telegram.
Hence in such a situation there is no question of appointment on the post of Principal.
Sd/ B. N. Pandey, District Inspector of Schools, Ballia, l.5.1981 975 Serious dispute arose whether the appellant 's appointment as Principal was valid.
The controversy was accentuated by the conduct of one Jagannath who was aspiring to be the Principal and who, it is alleged has some local influence.
The management did not pay any salary to the appellant though he functioned as the Principal and ultimately the appellant approached the High Court under article 226 of the Constitution praying for a writ of mandamus directing the 5th respondent, the Committee of Management of the College, not to interfere with the work of the appellant discharging his duties as Principal of the College and also to pay salary.
Pursuant to the interim relief granted by the High Court the appellant was paid his salary.
To the Writ Petition filed by the appellant he had impleaded 5 respondents including the State of U.P., the Director of Education, U.P, the Deputy Director of Education, VI Region, Varanasi, District Inspector of Schools, Ballia and the Committee of the Management of the College.
The petition was primarily contested by the 5th respondent, the Committee of Management.
One Shri Phul Deo Pandey filed an affidavit in opposition on behalf of the Committee of Management inter alia contending that the appointment of the appellant was not valid as the power to appoint was withdrawn by the State Government.
Reliance was placed on the radiogram in this behalf.
The High Court held that the radiogram dated April 7, 1981 contained an order of the State Government in discharge of its executive functions suspending or withdrawing power of appointment of teaching staff including Principal and therefore the Committee of Management of the College had no power to set up a selection committee nor the selection committee had any power to make any appointment and therefore the appointment of the appellant alleged to have been made on May 1, 1981 was not valid.
The High Court accordingly dismissed the Writ Petition.
Hence this appeal by special leave.
Mr. G. L. Sanghi, learned counsel who appeared for the appellant canvassed two contentions at the hearing of this appeal.
It was urged that the day i.e. May 1, 1981 on which appointment of appellant was made as Principal of the College, the Committee of Management had the power to make the necessary appointment and the order contained in the radiogram had no effect on the validity of appointment.
It was next contended that assuming such a power to issue radiogram was available to the State Government, 976 if the appointment was made without the knowledge of the order contained in the radiogram, the appointment would be valid.
Alternatively, it was contended that in any case once appointment was mad unless the procedure prescribed in sub sec.
10 of sec.
16 F. Of the Act is followed, the appointment of the appellant could not be invalidated, and therefore it may be declared that the appellant continues to hold the post of the Principal of the College.
Before we deal with these submissions, a brief reference to the relevant provisions of the Act would be advantageous.
The Act is a pre Constitution Act enacted in 1921 with a view to acquiring power to establish a Board to take the place of the Allahabad University in regulating and supervising the system of High School and Intermediate Education of the United Provinces.
It was more or less an innocuous enactment.
The power and authority enjoyed by private managements of educational institutions was left untouched.
But there was a comprehensive amendment of the Act by U.P. Act No. 26 of 1975.
For implementing the provisions of the Act, sec.
3 envisaged the constitution of a Board.
7 prescribes the power of the Board which would also imply duties and functions of the Board.
9 preserves and protects the powers of the State Government.
Sub sec.
4 is material and may be extracted: "(4) Whenever, in the opinion of the State Govern ment, it is necessary or expedient to take immediate action, it may, without making any reference to the Board under the foregoing provisions, pass such order or take such other action consistent with the provisions of this Act as it deems necessary, and in particular, may by such order modify or rescind or make any regulation in respect of any matter and shall forthwith inform the Board accordingly.
" Section 13 confers power on the Board to appoint various committees.
Section 15 confers power on the Board to make regulations with the previous sanction of the State Government (see sec.
16) for the purpose of carrying into effect the provisions of the Act.
16 A to sec.
16 I were inserted by U.P. Act No. 35 of 1958.
Section 16 A provides for a scheme of administration for every institution whether recognised before or after the commencement of U.P. Act No. 35 of 1958.
The Scheme of Administration was to inter alia provide for constitution of a Committee of Management 977 vested with authority to manage and conduct the affairs of the Institution.
16 F(I) provides for setting up a Selection Committee for appointment of Head of an Institution and sub sec.
2 provides for setting up of a Committee for selection of candidates for appointment as teacher.
16 D confers power on the Director of Education to cause inspection of recognised institution to be made from time to time and sub clause 2 to sub sec.
3 inter alia requires ascertaining in course of inspection whether the Committee of Management has failed to appoint teaching staff possessing such qualifications as are necessary for the purpose of ensuring the management of academic standards in the Institution or has appointed or retained in service any teaching or non teaching staff in contravention of the provisions of the Act or the Regulations.
Having browsed through the relevant provisions let us turn to the contentions raised by Mr. Sanghi.
The contention which was put in the forefront was that the date on which appellant was appointed as Principal, the Committee of Management had the power to make appointment notwithstanding the fact that the order contained in the radiogram had suspended or withdrawn its power.
While setting out the chronology of events leading to the petition we have pointed out that at the meeting of E the Selection Committee held on April 12, 1981 appellant was selected as a Principal.
The question is whether the Selection Committee had any power to make the selection on April 12, 1981 and whether the Committee of Management pursuant or selection had any power on April 27, 1981 to issue appointment order.
It is conceded that relevant regulations conferred power on the Committee of management to make appointment upon the recommendation of the Selection Committee.
The power to make appointment is conferred by the regulations.
The Board has the power to make regulations under sec.
IS and this power can be exercised only with the previous sanction of the State Government; Thus the State Government has authority to sanction or not to sanction the regulation proposed by the Board.
Every such recognised institution must have a Scheme of Administration as envisaged by sec.
16A and the Scheme of Administration envisages the setting up of a Committee of Management and the Committee of Management has the power to set up a Selection Committee for selecting the candidate for appointment as Head of an Institution as provided in sec 16 F.
This power is being regulated by the regulations, 978 Thus it becomes clear that the Board enacts regulations.
The regulations confer power of appointments including of the appointment of a Head of the Institution and of the teachers.
Sub sec.
4 of section 9 which has been extracted hereinbefore confers power on the State Government without making any reference to the Board to make an order or take such other action consistent with the provisions of the Act as it deems necessary and in particular, may by such order modify or rescind or make any regulation in respect of any matter.
It would thus unquestionably transpire that while enacting the regulations prior sanction of the State Government is necessary and under sub section 4 of sec.
9 the State Government enjoys the power to make, modify or rescind any regulation.
Armed with this power the State Government issued an order dated April 7, 1981 stopping all fresh selections and appointments of Principals etc.
in all non government aided schools.
Sri Nath Intermediate College is non government aided school.
The effect of the order conveyed by the radiogram would be to rescind the regulation conferring power on the Committee of Management to make appointment and withdrawing and/or suspending power of appointment of Principal and teachers.
The issuance of the order is not in dispute.
The argument, in the High Court, was that the State Government had no such power and that even if sub sec (4) is deemed to confer such a power it has to be reading just a position with the power conferred on the State Government by sub sections (1), (2), (3) preceding sub sec.
(4) of sec.
The High Court therefore had to examine the width and ambit of the executive power of the State Government in exercise of which according to the High Court, the order contained in the radiogram was issued.
We need not go that far because in our opinion sub sec.
(4) specifically confers power on the State Government without making any reference to the Board to make, modify or rescind any regulation as also make such other order consistent with the provisions of the Act.
This power of wide amplitude will comprehend the power to stop all appointments for the time being.
And the power appears to have been exercised as Government was contemplating taking away the power of private management of non government aided schools to make appointment of teachers including Principals.
In order to avoid forestalling of governmental action by private managements, the power to make appointments was suspended for the time being.
As pointed out earlier, the regulation confers power on the Committee of Management to make appointment.
The regulation was 979 enacted by the Board with the prior sanction of the State Government.
The State Government could be said to have rescinded that A regulation conferring power of appointment or at any rate suspend the power conferred on the Committee of Management to make appointment.
The order became effective the moment it is issued.
The effect of this order is that the Selection Committee had no right to select the appellant nor the Committee of Management had any power to make the appointment.
Mr. Sanghi further contended that this order was never received by the institution and therefore the power of the Committee of Management notwithstanding the fact that its power to make appointment was suspended remained intact and therefore the appointment of the appellant would be valid: There is no merit in the submission because the letter dated May 1, 1981 which has been extracted hereinafter clearly shows that on April 7, 1981 the order contained in the radiogram was communicated to the Manager of the Institution.
There is no affidavit in opposition of the then Manager of Institution or any responsible person then in charge of the management denying the receipt of the letter dated May 1, 1981.
This letter shows that on April 8, 1981 the Institution had received the order that the power of appointment of Principal has been withdrawn or suspended.
If the order was valid and power to make appointment was withdrawn or suspended it would not be open to the Selection Committee to make and select appellant nor the Manager on behalf of the Committee of Management can issue appointment order dated April 27, 1981 to the appellant and the appointment of the appellant would be by a body not authorised to make the appointment and hence ineffective though it may not be invalid.
In view of the finding that sub sec.
(4) of section 9 did confer power on the State Government to make, modify or rescind the regulation or make any other order consistent with the provisions of the Act, the second contention of Mr. Sanghi is equally bound to fail.
It is therefore necessary to turn to the alternative contention based on sub sec.
(10) of section 16 E.
The marginal note of sec.
16 E reads: "Procedure for selection of teachers and head of institutions.
Sub sec.
(I) confers power on the Committee of the Management to make appointment." 980 Sub sec.
10 provides as under: ("10.) Where the State Government., in case of the appointment of Head of Institution and the Director in the case of the appointment of teacher of an institution is satisfied that any person has been appointed as Head of Institution or teacher, as the case may be, in contravention of the provisions of this Act, the State Government or, as the case may be, the Director may, after affording an opportunity of being heard to such person, cancel such appointment and pass such consequential order as may be necessary.
" It was urged that if the State Government is satisfied that any person has been appointed as head of an Institution in contravention of the provisions of the Act, the State Government after affording an opportunity of being heard to such person cancel such appointment and pass such consequential order as may be necessary.
Mr. Sanghi vehemently contended that if the appointment of appellant is in contravention of the provisions of the Act, the State Government was bound to hear the appellant before making any consequential order.
Sub sec.
(I O) provides for a contingency where an appointment is made and the State Government later on comes to know that the appointment has been made in contravention of the Act in respect of a particular individual that the rules of natural justice require that he may be heard before making an order, adverse to such person.
The present case is not one which can be dealt with or was required to be dealt with by sub sec.
The situation is that the power of appointment conferred by regulation on Committee of Management of all non government aided institutions was withdrawn or suspended.
The Committee of Management had no power to make the appointment.
It cannot be said that the appointment was in contravention of any provision of the Act.
Therefore sub sec.
(10) is not attracted in this case and the contention must fail.
Undoubtedly appellant is a highly qualified person.
There was nothing hanky panky in his appointment.
If the power to make appointment was riot suspended we would have no difficulty in upholding the appointment of the appellant and we are not oblivious to the machinations of Shri Jagannath, who possibly thought that the appellant would be a formidable rival and wanted him to be out of way.
The private management, at the instance of Shri 981 Jagannath appears to have subsequently backed out from the appointment of the appellant which at one stage they were willing to defend.
But as there was no power of appointment, we are unable to help the appellant.
However, we would like to make it very clear that the appointment was otherwise valid, though ineffective and if appellant under the orders of the High Court functioned as Principal, discharged his duties and was paid, no question of recovery of amount paid to him could arise and neither the Government nor the Committee of Management nor the Institution would be entitled to recover any salary paid to the appellant.
The State Government promulgated the U.P. Secondary Education Service Commission and Selection Board ordinance, 1981 (8 of 1981) which was replaced by the act bearing the identical name.
The Act envisages setting up of a Commission for selecting and recommending appointments of teachers including Heads of Institution.
The College is topless and an unfair advantage is being taken of this situation by Jagannath whose credentials to be appointed as Principal are still to be investigated.
It is the statutory duty of the Commission to proceed to take effective steps to fill in the post of Principal of the College.
It is imperative that the State Government should direct the Commission to take necessary steps to fill in the post of Principal of Sri Nath Intermediate College Garhmalpur Ballia within three months from today.
Appellant would be eligible to apply for the same.
We direct accordingly.
As we find no merit in any of the contentions canvassed on behalf of appellants, the appeal fails and is dismissed subject to the directions in the preceding paragraph but in the circumstances of the case with no order as to costs.
P.B.R. Appeal dismissed.

summary:
The Committee of Management of a non Government aided school, by its resolution dated April 19,1981 appointed the appellant as Principal of the college run by it.
The order was communicated to the appellant on April 27 198} and he assumed charge on May 1, 1981.
In the meanwhile on April 7, 1981 the Secretary to the Government of U. P. Education Department communicated by radiogram to the various authorities the order of the Government stopping all fresh selections and appointments of principals in all non Government aided secondary schools.
A copy of it was sent to the college by the District Inspector of Schools on May 1,1981.
Though the appellant continued to function as Principal of the college the Committee of Management stopped payment of his salary on the ground that his appointment was not valid after the issue of the Government order dated April 7,1981.
The appellant filed a writ petition under Article 226 of the Constitution praying for a writ of mandamus directing the Committees of Management of the College not to interfere with the discharge of his duties as Principal and also to pay him his salary.
T he High Court, dismissing his petition, held that the appellant 's appointment as Principal of the college was invalid in that the Committee of Management had no power to set up the Selection Committee nor had the Selection Committee the power to make any appointment.
In appeal to this Court it was contended on behalf of the appellant that on the date of his appointment as Principal the Committee of Management had the power to make the appointment notwithstanding the fact that the Government had withdrawn that power.
Dismissing the appeal, ^ HELD: The order of the Government became effective the moment it was issued.
The effect of that order was that the Selection Committee had no right to select the appellant nor did the Committee of Management have any power to make the appointment.
[1979 A B] 972 The Board constituted under the Act had the power to make regulations and this power could be exercised only with the previous sanction of the State Government.
Section 9(4) specifically confers power on the State Government without making any reference to the Board to make, modify or rescind any regulation.
This power comprehend the power to stop all appointments for the time being.
Exercising power under this section the State Government issued orders stopping all fresh selections and appointments of Principals in all non Government aided schools.
The effect of the order was to rescind the regulation conferring power on the Committee of Management to make appointments of Principals.
[978 B G] There was no merit in the submission that the letter dated May 1, 1981 had not been received by the Management.
[979 D] If the order was valid and power to make the appointment was with drawn or suspended, it would not be open to the Selection Committee to select the appellant an issue the order of appointment to him.
The appointment in that event would be by a body not authorised to make it and so it was in effective though not invalid.
[979 E F] Section 16E (10) which provides that where the competent authority was satisfied that a person had been appointed as Principal in contravention of the provisions of the Act, it may cancel such appointment after affording him an opportunity of being heard has no application to the present case because power of appointment conferred by the regulation on the Committee of Management was withdrawn or suspended and therefore the Committee had no power to make the appointment.
1980 E Gl


judgement:
Special Leave Petition Nos.
4513 14 of 1983.
From the Judgment and Order dated the 10th March, 1983 of the Orissa High Court in O.J.C. No. 590 of 1983.
WITH Writ Petition Nos.
3363 64 of 1983.
(Under Article 32 of the Constitution) S.R. Banerjee and Vinoo Bhagat for the Petitioners in S.L.P. Vinoo Bhagat for the Petitioner in Writ Petition.
F.S. Nariman, V.S. Desai, and R.K. Mehta: for the Respondent in S.L.P. S,K. Mehta, for the Respondent in Writ Petition.
The Judgment of the Court was delivered by SEN, J.
These two special leave petitions are directed against an order of the Orissa High Court dated March 18, 1983 dismissing the Writ Petitions flied by the petitioners in limine challenging the two orders of assessment passed by the Assistant Sales Tax Officer, Cuttack II Circle, Cuttack dated February 16, 1983.
The connected petitions under Act.
32 of the Constitution are by an Officer of the Company challenging the two orders of assessment.
By one of the Writ Petitions, the petitioners challenged the validity of the order of assessment under the for the assessment year 1980 81 passed by the Assistant Sales Tax Officer, Cuttack II Circle, Cuttack dated February 16, 1983 under r.15 of the Central Sales Tax (Orissa) Rules, 1957 treating the gross turnover of Rs. 7, 13, 94, 903. 63p.
as returned by the 746 petitioners to be their taxable turnover and the tax payable thereon at 10% at Rs. 71,39,490.36p.
By the other, the petitioners challenged the validity of an order of assessment under the Orissa Sales Tax Act.
1947 for the assessment year 1980 81 passed by the Assistant Sales Tax Officer, Cuttack II Circle, Cuttack dated February 16, 1983 under sub section
(4) of s.12 of the Orissa Sales Tax Act, 1947 treating the gross turnover of Rs. 2,02,07,852.65p.
as returned by the petitioners to be their taxable turnover and the tax payable thereon at 7% at Rs. 14,14,549.71p.
It appears from the impugned orders of assessment that proceedings under r.12 (5) of the Central Sales Tax (Orissa) Rules, 1957 ("Rules" for short) and under sub section
(4) of s.12 of the Orissa Sales Tax Act, 1947 ("Act" for short) were initiated against the petitioners for the assessment year 1980 81 in relation to assessment of tax on sales in the course of inter state trade and commerce under the and inside sales effected during the year in question under the Orissa Sales Tax Act, 1947.
The provisions contained in r. 12 (5) of the Rules and in sub section
(4) of s.12 of the Act enjoin the affording of reasonable opportunity to the dealer for completion of assessment.
The learned Sales Tax Officer observes that he gave repeated opportunities to the petitioners to get themselves ready for the assessment of tax and to produce their account books and other documents but they sought adjournments on one pretext or another.
Eventually on February 16,1983 the learned Sales Tax Officer refused to grant any further adjournment holding that the petitioners had sufficient opportunity and accordingly proceeded to best judgment under r.15 of the Rules and sub section
(4) of s.12 of the Act.
In the absence of any material, the learned Sales Tax Officer made an assessment under r.15 of the Rules treating the gross turnover of sales in the course of inter State trade and commerce amounting to Rs. 7,13,94,903.63p.
as returned by the petitioners under the to be their taxable turnover and the tax payable thereon at 10% at Rs. 71,39,490.36p.
After allowing an adjustment of Rs. 27,88,388.47p.
paid by the petitioners along with the quarterly return, the learned Sales Tax Officer has raised a demand for payment of a sum of Rs. 43,51,101.89p.
He disallowed their claim for deduction of Rs. 6,74,99,085.65p.
representing sales to registered dealers and departments of Government as well as of Rs. 28,24,224.42p.
claimed as deduction on account of tax collected from purchasers as the requisite declarations in Form 'C ' were not forthcoming.
He also disallowed the concessional rate of tax at 4%.
Similarly, while 747 making an assessment under sub section
(4) of s.12 of the Orissa Sales Tax Act, 1947, he treated the gross turnover of inside sales amounting to Rs. 2,02,07,852.65p.
as returned by the petitioners to be their taxable turnover and the tax payable thereon at 7% at Rs. 14,14,549. 71p.
After allowing an adjustment of Rs. 1,08,480.11p.
paid by the petitioners along with the quarterly return, the learned Sales Tax Officer has raised a demand for payment of a sum of Rs. 13,06,069.60p.
It would thus appear that by the impugned orders of assessment the petitioners are faced with a total demand of Rs. 56,57,171.49p.
for the assessment year 1980 81.
The petitioners instead of preferring appeals under sub section (1) of section 23 of the Act filed petitions before the High Court under article 226 of the Constitution challenging the validity of the two orders of assessment.
The only contention raised before the High Court was that the impugned orders of assessment being a nullity, the petitioners were entitled to invoke the extraordinary jurisdiction of the High Court under article 226 of the Constitution, but the High Court was not satisfied that this was a case of inherent lack of jurisdiction.
The High Court while dismissing the writ petitions observed: "Having heard the learned counsel for both the parties and having gone through the records, we are not inclined to interfere with the impugned order (s) in exercise with our extra ordinary jurisdiction since there is a right of appeal against the same.
It is contended on behalf of the petitioner that the impunged order being a nullity is entitled to invoke our extra ordinary jurisdiction.
We are not satisfied that this is a case of inherent lack of jurisdiction.
There is no violation of principles of natural justice." In support of these petitions, the submissions advanced by learned counsel for the petitioners rest purely on procedural irregularities or touch upon the merits of the assessments.
Broadly speaking, the contentions were that: (1) The learned Sales Tax Officer had no authority or jurisdiction while making an assessment under r. 15 of the Central Sales Tax (Orissa) Rules, 1957 to treat the gross turnover as returned by the petitioners to be their taxable turnover.
(2) He was not justified in disallowing the claim for deduction of Rs. 6,74,99,085.65p.
representing sales to registered dealers and departments of Government as well as of Rs. 28,24,224.42p.
on account of tax collected from the purchasers from the gross 748 turnover of sales in the course of inter State trade and commerce amounting to Rs. 7,13,94,903.63p.
(3) He wrongly denied the petitioners the benefit of the concessional rate of tax at 4% merely because they failed to furnish the requisite declarations in Form 'C ' (4) He could not, for similar reasons, while making an assessment under sub section
(4) of section 12 of the Orissa Sales Tax Act, 1947 treat the gross turnover of inside sales amounting to Rs. 2,02,07,852.65p.
as returned by the petitioners to be their taxable turnover nor was he justified in disallowing their claim for deduction of Rs. 1, 80, 65, 167.66p.
representing sales to registered dealers merely because they failed to produce the prescribed declarations from registered dealers.
(5) And the learned Sales Tax officer had acted in flagrant violation of the rules of natural justice as the petitioners were deprived of an opportunity to place their case for the assessment year in question.
We are afraid, these contentions cannot prevail.
It is not for us to say whether or not the learned Sales Tax Officer was justified in proceeding to best judgment under r. 15 of the Central Sales Tax (Orissa) Rules, 1957 and under sub section
(4) of section 12 of the Orissa Sales Tax Act, 1947 or whether he was justified in treating the gross turnover as returned by the petitioners to be their taxable turnover or whether he was wrong in disallowing the deductions claimed for the assessment year in question.
In the very nature of things, these are the questions which the petitioners should raise in appeals preferred before the prescribed Appellate Authority under sub section
(1) of section 23 of the Act.
We are constrained to dismiss these petitions on the short ground that the petitioners have an equally efficacious alternative remedy by way of an appeal to the prescribed authority under sub section
(1) of section 23 of the Act, then a second appeal to the Tribunal under sub section (3) (a) thereof, and thereafter in the event the petitioners get no relief, to have the case stated to the High Court under section 23 of the Act.
In Raleigh Investment Company Limited vs Governor General in Council,(1) Lord Uthwatt, J. in delivering the judgment of the Board observed that in the provenance of tax where the Act provided for a complete machinery which enabled an assessee to effectively to raise in the courts the question of the validity of an assessment denied an alternative jurisdiction to the High Court to interfere.
It is true that the decision of the Privy Council in Raleigh Investment Company 's case, supra, was in relation to a suit brought for a declaration that an assessment made by the Income Tax Officer was 749 a nullity, and it was held by the Privy Council that an assessment made under the machinery provided by the Act, even if based on a provision subsequently held to be ultra vires, was not a nullity like an order of a court lacking jurisdiction and that section 67 of the Income Tax Act, 1922 operated as a bar to the maintainability of such a suit.
In dealing with the question whether section 67 operated as a bar to a suit to set aside or modify an assessment made under a provision of the Act which is ultra vires, the Privy Council observed: "In construing the section it is pertinent, in their Lordships opinion to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the courts the question whether a particular provision of the Income Tax Act bearing on the assessment made is or is not ultra vires.
The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to inquire into the same subject matter.
" We are not oblivious of the fact that this Court in K.S. Venkataraman & Co. vs State of Madras,(1) in a five Judge Bench by a majority of 3: 2 has dissented with the view expressed by the Privy Council in Raleigh Investment Company 's case, supra, and held that an assessment made on the basis of a provision which is ultra vires is not an assessment made under the Act.
It was observed that the entire reasoning of the Judicial Committee was based upon the assumption that the question of ultra vires can be canvassed and finally decided through the machinery provided under the Income Tax Act.
The majority observed that the hierarchy of authorities set up under the Act being creatures of statute were not concerned as to whether the provisions of the Act were intra vires or not.
If an assessee raises such a question, according to the decision of the majority in Venkataraman 's case, supra, the Appellate Tribunal can only reject it on the ground that it has no jurisdiction to entertain such objection or render any decision on it.
As no such question can be raised or can even arise out of the order of the Appellate Tribunal, the High Court cannot possibly give any decision on the question of ultra vires because its jurisdiction under section 66 is a special advisory jurisdiction and its scope is strictly limited.
It can only decide questions of law that arise out of the order of the Appellate Tribunal and that are referred to it.
Further, an appeal to this 750 Court under section 66A (2) does not enlarge the scope of the jurisdiction of this Court as this Court can only do what the High Court can under section 66.
It would therefore appear that the majority decision in Venkataramon 's case, supra, rests on the principle that (i) An ultra vires provision cannot be regarded as a part of the Act at all, and an assessment under such a provision is not "made under the Act" but is wholly without the jurisdiction and is not directed by section 67 of the Act.
And (ii) The question whether a provision is ultra vires or not cannot be decided by any of the authorities created by the Act and therefore cannot be the subject matter of a reference to the High Court or a subsequent appeal to this Court.
No such question arises in a case like the present where the impugned orders of assessment are not challenged on the ground that they are based on a provision which is ultra vires.
We are dealing with a case in which the entrustment of power to assess is not in dispute, and the authority within the limits of his power is a Tribunal of exclusive jurisdiction.
The challenge is only to the regularity of the proceeding before the learned Sales Tax Officer as also his authority to treat the gross turnover returned by the petitioners to be the taxable turnover.
Investment of authority to tax involves authority to tax transactions which in exercise of his authority the Taxing Officer regards as taxable, and not merely authority to tax only those transactions which are, on a true view of the facts and the law, taxable.
Emphasis is laid on the following observations made by this Court in State of Uttar Pradesh vs Mohammad Nooh(1): "If an inferior Court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court 's sense of fair play the superior Court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the Court or tribunal of first instance, even if an appeal to another inferior Court or tribunal was available and recourse was not had to it or if recourse was had to it, it confirmed what ex facie was a nullity for reasons aforementioned.
" We find no justification for extending the principles laid down in Mohammad Nooh 's case, supra, to a case like the present where 751 there is an assessment made by the learned Sales Tax Officer under the Act.
In Raleigh Investment Company 's case, supra, the Privy Council rightly observed that the phrase "made under the Act" described the provenance of the assessment; it does not relate to its accuracy in point of law.
The use of the machinery provided by the Act, not the result of that use, is the test.
The decision in Mohamamd Nooh 's case, (supra) is clearly distinguishable as in that case there was total lack of jurisdiction.
There is no suggestion that the learned Sales Tax Officer had no jurisdiction to make an assessment.
Nor can it be contended that he had acted in breach of rules of natural justice.
There is no denying the fact that the petitioner was served with a notice of the proceedings under r. 12(5) of the Rules and sub section
(4) of section 12 of the Act.
The impugned orders clearly show that the petitioners were afforded sufficient opportunity to place their case.
Merely because the learned Sales Tax Officer refused to grant any further adjournment and decided to proceed to best judgment, it cannot be said that he acted in violation of the rules of natural justice.
The question whether another adjournment should have been granted or not was within the discretion of the learned Sales Tax Officer and is a matter which can properly be raised only in an appeal under sub section
(1) of section 23 of the Act.
All that this Court laid down in Mohammad Nooh 's case, supra, is that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than a rule of law; in other words, it does not bar the jurisdiction of the Court.
Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of.
The petitioners have the right to prefer an appeal before the prescribed authority under sub section
(1) of section 23 of the Act.
If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub section
(3) of section 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under section 24 of the Act.
The Act provides for a complete machinery to challenge an order of assessment and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under article 226 of the Constitution.
It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must 752 be availed of.
This rule was stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. vs Hawkesford(1) in the following passage: "There are three classes of cases in which a liability may be established founded upon statute. . . . . .
But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. . . the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class.
The form given by the statute must be adopted and adhered to.
" The rule laid down in this passage was approved by the House of Lords in Neville vs London Express Newspaper Ltd.(2) and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago vs Gordon Grant & Co.(3) and Secretary of State vs Mask & Co.(4) It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout.
The High Court was therefore justified in dismissing the writ petitions in limine.
Furthermore, the Act provides for an adequate safeguard against an arbitrary or unjust assessment.
The petitioners have a right to prefer an appeal under sub section
(1) of section 23 of the Act subject to their payment of the admitted amount of tax as enjoined by the proviso thereto.
As regards the disputed amount of tax, the petitioners have the remedy of applying for stay of recovery to the Commissioner of Sales Tax under cl.
(a) of the second proviso to sub section
(1) of section 13 of the Act which runs: "Provided further that (a) When the dealer or person, as the case may be, has presented an appeal under sub section
(1) of section 23, the Commissioner may, on an application in that behalf filed by such dealer or person within thirty days from the date of 753 receipt by him of the notice under sub section
(4), in his discretion, stay the recovery of the amount in respect of which such notice has been issued or any portion thereof, for such period and subject to such conditions as the Commissioner thinks fit;" The petitioners are at liberty to make an application for stay of the disputed amount and the Commissioner will decide whether or not there should be such stay on such terms and conditions as he thinks fit, looking to the nature of the demand raised in the facts and circumstances of the present case.
For these reasons, the petitions must fail and are dismissed.
We hope and trust that the Appellate Authority will dispose of the appeals as expeditiously as possible.
Shri Nariman, appearing on behalf of the State of Orissa fairly stated that he has no objection to the appeal being heard as early as possible without any objection as to limitation.
Petitions dismissed.

dataset_name: IN-Abs

summary:
It appears that proceedings under r. 12(5) of the Central Sales Tax (Orissa) Rules 1957 and under sub section
(4) of section 12 of the Orissa Sales Tax Act, 1947 were initiated against the petitioners for the assessment year 1980 81 in relation to assessment of tax on sales in the course of inter state trade and commerce under the and inside sales effected during the year in question under the Orissa Sales Tax Act, 1947.
Despite repeated opportunities to get themselves ready for the assessment of tax and to produce their account books and other documents, they sought adjournments on the one pretext or another.
Eventually the Assistant Sales Tax Officer, Cuttack II circle, Cuttack before whom the assessment proceedings were pending, refused to grant any further adjournment and proceeded to best judgment assessment and treated the gross turnover of Rs. 7,13,94,903.63 p. as returned by the petitioners for purposes of the to be their taxable turnover.
Similarly, he treated the gross turnover of Rs. 2,02,07,852.65 p returned by the petitioners as representing inside sales vis a vis the State of Orissa to be their taxable turnover.
After allowing adjustment of Rs. 27,88,388.47 p paid by the petitioners, the learned Sales Tax Officer raised a demand for the payment of a sum of Rs. 43,57,101.89 p towards tax on sales in the course of inter State trade and commerce payable under the and after allowing adjustment of Rs. 1,08,480.11 p paid by the petitioners, he raised the demand for payment of a sum of Rs. 13,06, 069.60 p as tax payable under the Orissa Sales Tax Act, 1947.
Thus the petitioners were faced with a total demand of Rs. 56,57,171.49 p for the assessment year 1980 81.
The petitioners instead of preferring appeals under sub s (1) of section 23 of the Act filed petitions before the High Court under article 226 of the Constitution challenging the validity of the two orders of assessment.
The High Court was not satisfied that this was a case of inherent lack of jurisdiction or any violation of principles of natural justice and accordingly held that they were not entitled to invoke the extraordinary jurisdiction of the High Court under article 226 of the Constitution, Dismissing the Petitions, ^ HELD: In the provenance, of tax where the Act provides for a complete machinery which enables an assessee to effectively raise in the courts the question of the validity of an assessment denied an alternative jurisdiction 744 to the High Court to interfere under article 226 of the Constitution.
The phrase "made under the Act" describes the provenance of the assessment; it does not relate to its accuracy in point of law.
The use of the machinery provided by the Act, not the result of that use, is the test.
[748 G H; 749 A] Under the scheme of the Act, there is hierarchy of authorities before which the petitioners can get adequate redress against the wrongful act complained of.
They have the right to prefer an appeal before the prescribed authority under sub section
(1) of section 23 of the Act.
If they are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub section
(3) of section 23 of the Act, and then ask for a case to be stated on a question of law for the opinion of the High Court under section 24 of the Act.
The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under article 226 of the Constitution.
[751 F H] Raleigh Investment Company Limited vs Governor General in Council, 74 IA 50, followed.
K.S. Venkataraman & Co. vs State of Madras ; and State of Uttar Pradesh vs Mohammad Nooh ; ; distinguished.
The question whether a provision is ultra vires or not cannot obviously be decided by any of the authorities created by the Act and therefore cannot be the subject matter of a reference to the High Court or a subsequent appeal to this Court.
No such question arises in a case like the present where the impugned orders of assessment are not challenged on the ground that they are based on a provision which is ultra vires.
This is a case in which the entrustment of power to assess is not in dispute and the authority within the limits of his power is a Tribunal of exclusive jurisdiction.
The challenge is only to the regularity of the proceedings before the learned Sales Tax Officer as also his authority to treat the gross turnover returned by the petitioners to be the taxable turnover.
Investment of authority to tax involves authority to take transactions which in exercise of his authority the taxing officer regards as taxable and not merely authority to tax only those transactions which are, on a true view of the facts and the law, taxable.
There is no justification for extending the principles laid down in Raleigh Investment Company 's case or Mohammad Nooh 's case to a case like the present where there is an assessment made by the learned Sales Tax Officer under the Act.
[749 E H; 753 A B] The question whether another adjournment should have been granted or not was within the discretion of the learned Sales Tax Officer and is a matter which can properly be raised in an appeal under sub section
(1) of section 23 of the Act.[751 D] The rule laid down in Mohammad Nooh 's case which requires the exhaustion of alternative remedies is a rule of convenience and discretion, rather than a rule of law.
[751 E] 745 The Act provides for an adequate safeguard against an arbitrary or unjust assessment.
The petitioner have a right to prefer an appeal under sub section
(1) of section 23 of the Act subject to their payment of an admitted amount of tax as enjoined by the proviso thereto.
As regards the disputed amount of tax, they have the remedy of applying for stay of recovery to the Commissioner of Sales Tax under cl.
(a) of the second proviso to sub section
(1) of section 13 of the Act.
It is for the Commissioner to decide whether or not there should be such stay on such terms and conditions as he thinks fit, looking to the nature of the demand raised in the facts and circumstances of the present case.
[752 E F; 753B C]


judgement:
Civil Appeal No. 2612 of 1981.
Appeal by special leave from the judgment and order dated the 6th January, 1981 of the Madhya Pradesh High Court (Jabalpur Bench) in M.P. No. 87 of 1980.
Amlan Ghosh for the Appellants.
Sobhagmal Jain and S.K. Jain for the Respondents.
The Judgment of the Court was delivered by BAHARUL ISLAM, J.
This appeal by special leave is by the judgment debtors.
The material facts which are not in dispute may be stated thus: 2.
The predecessor of the respondents (hereinafter referred to as 'the decree holder ') filed a suit for eviction of the predecessor of the appellants (hereinafter referred to as 'the judgment debtor ') and obtained a decree on 21.3.1960, inter alia, for eviction from a 203 shop.
The decree holder filed a petition for execution of the decree for eviction in the executing court on 3.1.1961.
The petition was dismissed on 20.1.1961.
A fresh petition for execution was filed on 19.1.1965.
It was also dismissed on 20.3.1965.
The decree holder again filed an application for execution of the decree on 22.6.1966.
During the pendency of this execution proceeding, the parties filed a compromise petition on 31.3.1968.
The terms of the compromise on the interpretation of which the result of this appeal depends were as follows: (Material portions only): "In the above case, a compromise has taken place between the parties as follows: (1) That for the present the judgment debtor is not getting a shop.
His established business will be ruined by vacating the shop in hurry.
Therefore, the judgment debtor wants time till 31.12.1972 from the decree holder for vacating half the shop in his possession.
So the judgment debtor will vacate the shop and give possession thereof to the decree holder by 31.12.1972.
He has vacated half the shop and given its possession.
(2) That during this period the judgment debtor shall pay damages to the decree holder for use of the shop @ 110/ per month.
(3) That the damages shall be paid upto the 5th of every month.
In the event of non payment of damages for any six months, the decree holder shall be entitled to get the shop immediately vacated, by filing execution, from the possession of the judgment debtor, without any objection as regards limitation.
(4) The decree holder wants to have new shutters put up after removing the present shutters in the front portion of the shop.
The judgment debtor will not be entitled to object to this.
He will help in the putting of girders and he will vacate the portion.
If he will demur to it, the decree holder can have the shop vacated, without any objection as regards the above limitation.
204 So, the aforesaid compromise be accepted and kept on record.
It is also not in dispute that at the time of the compromise, half of the shop had been vacated and its possession delivered to the decree holder as stated in the compromise petition.
In order to appreciate the intention of the parties to the compromise, it is also necessary to refer to the order dated 21.3.1968 recorded by the execution court on the basis of the compromise.
The material para of the order is para 3 and it is in the following terms: "The judgment debtor to give vacant possession of the shop to the decree holder by 31.12.72 according to the compromise and he will pay damages for use and occupation by the 5th of every month to the decree holder according to the compromise @ Rs. 110/ per month.
On six months ' damages being due, the decree holder will be entitled to have the shop vacated.
The decree holder will provide shutters in the front portion.
The judgment debtor will not object to them.
The case is decided in terms of the compromise.
The compromise be recorded.
On 25.11.1975, the decree holder filed an execution petition for recovery of possession of the portion of shop in possession of the judgment debtor, alleging that the judgment debtor had not paid damages at the rate of Rs. 110/ per month from 1.7.1975.
Notice of the execution petition was issued to the judgment debtor who appeared and raised several objections to the execution proceedings.
But we are concerned in this appeal only with one which was that in terms of the compromise, a fresh lease was created in favour of the judgment debtor in respect of the remaining half of the shop.
It was therefore submitted that the decree was not executable.
The Executing Court upheld the objection holding that the compromise dated 21.3.1968 amounted to a fresh lease.
An appeal was taken to the Court of the District Judge who set aside the order of the Executing Court.
In a second appeal, the High Court upheld the order of the District Judge, and dismissed the appeal.
It is against this order of the High Court is this appeal by special leave.
205 5.
The only point urged before us by Shri Amlan Ghosh, learned counsel for the judgment debtor was that the compromise dated 21.3.1968 created a fresh lease in favour of the judgment debtor in respect of the undelivered half of the shop, and the decree holder 's remedy was by a suit for recovery of its possession.
When a compromise petition is filed in an execution proceeding, and a contention is raised by the judgment debtor on a subsequent execution being started by the decree holder that the compromise has given rise to a fresh contract between the parties and that the decree sought to be executed is not executable, what is to be seen is whether the decree has been extinguished as a result of the compromise and a fresh contract has emerged.
When a compromise takes place in the course of execution of a decree for eviction, the compromise may extinguish the decree and create a fresh lease, or the compromise may provide a mere mode for the discharge of the decree.
What actually takes place depends on the intention of the parties to the compromise.
And the intention has to be gathered from the terms of the compromise and the surrounding circumstances including the order recorded by the Court on the basis of the compromise.
In the instant case, paragraph 1 of the compromise petition quoted above and the order of the Executing Court recording the compromise are important and disclose the intention of the parties.
Paragraph 1 of the compromise petition shows that the judgment debtor had already "vacated half of the shop and given its possession" and time was granted till 31.12.1972 for vacating and delivering possession of the other half of the shop as the judgment debtor wanted time till then lest his business "will be ruined by vacating the shop in hurry".
This clearly shows that the intention of the parties was not to create a fresh lease in respect of the half of the shop in possession of the judgment debtor, but to help the judgment debtor find out, not in a hurry; alternative accommodation for his shop so that his established business was not 'ruined ' and time for vacating the half of the room was given till 31.12.1972.
And this was also how the compromise petition was understood by the Executing Court when it recorded in para 3 of its order: "The judgment debtor to give vacant possession of the shop to the decree holder by 31.12.1972 according to the compromise. .".
The intention of the parties clearly was not to extinguish the decree for eviction but to create a mode of its full discharge.
206 8.
The above interpretation gets support from the use of the term 'damages ', and not 'rents ', in the compromise petition as well as the order of the Executing Court.
The view we have taken gets support also from a decision of this Court reported in ; In that case, the appellant filed a suit for eviction of the respondent from the appellant 's house.
The suit was dismissed by the trial court In appeal compromise was entered into between the parties and the decree was passed in terms of the compromise.
The compromise provided for the respondent 's continuation of possession of the house for five years, but it enabled the appellant to execute the decree by evicting the respondent, if the latter failed to pay rent for three consecutive months.
When the appellant sought to evict the respondent, the latter claimed protection from eviction on the ground that the compromise decree created a lease.
It was held by this Court that the facts that the appellant had filed a suit for eviction of the respondent and the compromise decree enabled him to execute the decree by evicting the respondent, showed that the intention of the parties, which was the decisive test, was not to enter into a relationship of landlord and tenant.
9 This appeal has no merit and is dismissed with costs.
N.V.K. Appeal dismissed.

summary:
The predecessor of the respondents filed a suit for eviction of the predecessor of the appellants from a shop and obtained a decree on March 21, 1960 for eviction.
The decree holder filed an application for the execution of the decree on March 22, 1966 and during the pendency of these proceedings, a compromise was entered into between the parties, and the Executing Court passed an order dated March 21, 1968 in terms of the compromise.
The compromise provided for the judgment debtor to give vacant possession of the remaining half of the shop to the decree holder by December 31, 1972 and to pay damages for use and occupation by the 5th of every month to the decree holder at Rs. 110/ per month, and that on six months damages being due the decree holder will be entitled to have the shop vacated.
The decree holder filed an execution petition for recovery of possession on November 25, 1975 alleging that the judgment debtor had not paid damages at the rate of Rs. 110/ per month from July 1, 1975.
The judgment debtor contested the execution proceedings contending that the terms of compromise created a fresh lease in favour of the judgment debtor in respect of the remaining half of the shop, and that the decree was therefore not executable.
The Executing Court upheld the objection holding that the compromise dated March 21, 1968 amounted to a fresh lease.
On appeal, the District Judge, set aside the order of the Executing Court, but in Second Appeal, the High Court upheld the order of the District Judge, and dismissed the appeal.
In the appeal to this Court it was contended on behalf of the appellant/judgment debtor, that the compromise dated March 21, 1968 created a fresh lease, in favour of the judgment debtor in respect of the undelivered half of the shop and the decree holder 's remedy was by way of a suit for recovery of possession.
202 Dismissing the appeal, ^ HELD: When a compromise takes place in the course of execution of a decree for eviction the compromise may extinguish the decree and create a fresh lease, or the compromise may provide a mere mode for the discharge of the decree.
What actually takes place depends upon the intention of the parties to the compromise, and the intention has to be gathered from the terms of the compromise and the surrounding circumstances including the order recorded by the Court on the basis of the compromise.
[205 C D] In the instant case para 1 of the compromise petition and the order of the Executing Court recording the compromise disclose the intention of the parties.
The judgment debtor had already vacated "half of the shop and given its possession" and time was granted till December 31, 1972 for vacating and delivering possession of the other half of the shop as the judgment debtor wanted time till then lest his business "will be ruined by vacating the shop in hurry." This shows that the intention of the parties was not to create a fresh lease in respect of the half of the shop in possession of the judgment debtor but to help him to find out alternative accommodation and time for vacating was given till December 31, 1972.
Further, the term 'damages ', and not 'rents ' is used in the compromise petition as well as the order of the Executing Court.
The intention of the parties clearly was not to extinguish the decree for eviction but to create a mode of its full discharge.
[205 E H] Konchada Ramamurthy Subudhi & Anr.
vs Gopinath Naik, ; , referred to.


judgement:
ivil Appeal Nos.
954 959 of 1978.
Appeals by Special leave from the Judgment and Order dated the 22nd November, 1976 of the Andhra Pradesh High Court in Second Appeal Nos. 76, 83, 84, 91, 100 and 152 of 1975.
A. Subba Rao for the Appellant.
A. K. Ganguli, L. K.Gupta and Somnath Mukherjee for the Respondent.
1029 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
M/s M.G.Brothers Lorry Service, the appellant is a firm, which carried on at the relevant time trans port business and on the 1st of May, 1969 under a Way Bill, the plaintiff firm, M/s Prasad Textiles, the respondent herein had consigned one bale of yarn worth about Rs. 5,000 from their head office at Guntur to Vijayawada, at which place there was a branch office consigned "to self".
The Way Bill and the invoice were in the usual course delivered to the State Bank of India with the instructions to deliver the same to the plaintiff respondent M/s Prasad Textiles at Vijayawada.
It appears that the defendant appellant M/s. M.G. Brothers Lorry Service failed to deliver the said goods to the respondent plaintiff at Vijayawada.
The appellant 's case was that the said goods had actually arrived at Vijayawada on the very next day.
but the same were, however, not taken delivery of at Vijayawada for some time.
and that between 16th and 20th of May, 1969 there was a cyclone at Vijayawada as a result of which the said goods were damaged in their godown and when the said goods were opened on 20th May, 1969 in the presence of the representative of the appellant at Vijayawada, that the damage was discovered.
On 20th June, 1969, the plaintiff firm gave a notice of claim to the defendant firm and thereafter instituted six suits for recovery of various sums of money as claims on the ground that the plaintiff had entrusted the said consignment to the lorry service of the defendant firm to be delivered at Vijayawada and they had failed to do so and hence the plaintiff was obliged to file those suits.
All these suits were tried together by the learned trial Judge on the ground that common issues arose in each of those suits and the question to be considered was the same.
The lower court gave a common finding.
We are not concerned, in view of the points arising in these appeals before us, to consider all the points For our purposes it is sufficient to note that the trial Court held that the defendant being the appellant before us had failed to prove that the non delivery of the six consignments was not due to the negligence of the defendant or his men and the defendant was liable for the damages of Rs. 2,220 in each of the suits towards the value of the consignment which was not delivered by the defendant and it was also held that the plaintiff would be entitled to claim interest on the amount so decreed.
The trial Court, however, ultimately held that the suits were barred by 1030 virtue of Condition 15 of the Way Bill.
The goods were consigned under terms and conditions mentioned in the Way Bill.
Thereafter all the suits were dismissed.
Being aggrieved by the said decision, the defendant went up in appeal before the court of Sub ordinate Judge, Vijayawada.
The only point which is material for us to note is that the contention was that the consignment was accepted for transport by the appellant herein which was defendant in the original suit, at Guntur subject to special conditions printed on the reverse of the Way Bill.
Condition 15 which is material for our purpose is as follows: "No suit shall lie against the firm in respect of any consignment without a claim made in writing in that behalf and preferred within thirty days from the date of booking or from the date of arrival at the destination by the party concerned.
" The trial Court 's dismissal of the plaintiff 's suit on the ground that these were barred because of Condition 15 was confirmed by the Lower Appellate Court.
There was second appeal to the High Court before learned Single Judge of the High Court of Andhra Pradesh, Hyderabad.
The High Court held that if Condition 15 of the Way Bill was given effect to it would clearly defeat the provisions of section 10 of the Carriers Act and as such would be void.
It, therefore, allowed the appeal.
Thereafter the question arose as to whether further appeal would lie from the decision of a single Judge of the High Court in second appeal to the Division Bench of the Andhra Pradesh High Court.
In that view of the matter, special leave application was filed before this Court.
This Court was of the view, that whether under Section 100A of Civil Procedure Code, any appeal would lie to the Division Bench of the High Court, should be decided by the High Court itself.
The special leave application was adjourned for a period of four months pending disposal of this question by the Division Bench of the High Court.
The Division Bench of the High Court held subsequently that Letters Patent Appeal was no longer maintainable after coming into operation of Section, 100A of the Code of Civil Procedure.
In those circumstances 1031 special leave to appeal was granted by this Court on 20th April, 1978.
Thus this appeal comes up before us.
In view of the contentions raised before the trial Court and the High Court, the only question that falls for our consideration in this appeal, is, whether clause or condition 15 of the Way Bill as set out hereinbefore under which the goods were carried by the carrier in this case, was contrary to section 10 of the Carriers Act, 1865 and as such the said condition 15 was void in view of section 23 of the Contract Act.
Section 10 of the Carriers Act, 1865 provides as follows: "No suit shall be instituted against a common carrier for the loss of, or injury to, goods entrusted to him for carriage, unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff.
" The section was added by Act 10 of 1899.
The original section was repealed by Act 9 of 1890.
In order to consider the contentions urged in this case, it is therefore necessary to bear in mind the provisions of the Carriers Act, 1865 and the purpose of the same and to determine whether in fact by Condition 15 of the Way Bill, the liability of the carrier was limited, and if so to what effect.
The Carriers Act, 1865, as the preamble states, was enacted because it was thought expedient not only to enable common carriers to limit their liability for loss of or damage.
to property delivered to them to be carried but also to declare their liability for loss of or damage to such property occasioned by the negligence or criminal acts of themselves, their servants or agents.
Therefore it is important to keep in the background that the Act was passed for both the purposes; to limit the liability of the carriers, as well as to declare the liability of the carriers.
Section 6 of the Act stipulates that the liability of any common carrier for the loss of or damage to any property delivered to him to be carried, not being of the description contained in the Schedule to the Act, (and in this connection it may 1032 be stated that the goods in question with which we are concerned in this appeal are not type of goods described in the schedule) shall not be deemed to be limited or affected by any public notice.
It further provides that such carrier may, by special contract, signed by the owner of such property so delivered or by some person duly authorised in that behalf by such owner, limit his liability in respect of the same.
Section 8 of the Carriers Act provides inter alia, that common carrier shall be liable for loss and damage to any property when such loss or damage shall have arisen from the criminal act of the carrier or any of his agents or servants.
As we have noted before the liability of a common carrier can be limited by agreement under the provisions noted hereinbefore but that must be limitation of the liability.
This position was highlighted by the Privy Council in the case of The India General Navigation and Railway Co. Ltd. vs The Dekhari Tea Co. Ltd, and Ors.(1) the Privy Council reiterated on the construction of Section 6 of the Carriers Act that what was required in the case of a person who answered the definition under the Indian Carriers Act, viz., was that the nature of the contract entered into must either have the limitation of the liability under the Indian Carriers Act made expressly and in writing or the facts must be such that for the contract in question the contractor was departing from his usual business and engaging in a different type of business from that of common carrier.
In this connection, it appears to us that on the construction of condition 15 of the Way Bill that there was no limitation of liability expressed or intended but what was provided was that no suit shall lie against the firm unless a particular claim was made in a particular manner within a particular time.
In this case there was neither any extinguishment of liability or contracting out of liability but only a special period of limitation of notice was provided other than section 10 of the Carriers Act, 1865.
Section 10 of the Carriers Act, as we have noted before, provides that unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff no suit shall be instituted.
Condition 15 of the Way Bill in the 1033 instant case makes it imperative to give notice either within 30 days from the date of the booking or from the date of the arrival of the goods at the destination by the party concerned, to sustain a suit.
The date of arrival of the goods at the destination by the party may not be known to the party concerned for long time.
No claim can be made without the loss of the goods and therefore 30 days from the date of booking would become irrelevant unless loss or damage, occurs.
Therefore, it appears to us that condition 15 of the Way Bill was designed to avoid the liability contemplated under section 10 of the Carriers Act, 1865 and that too in a situation where the parties had not by express contract limited their liability as contemplated under section 6 of the Carriers Act.
It appears to us, therefore, that the learned Judge of the Andhra Pradesh High Court was right in the view he took.
The trial court and the first appellate court had held that condition 15 of the Way Bill was not violative of section 28 of the Indian Contract Act, That view of the lower courts has not been challenged before the High Court in the second appeal.
Before us also that view was not seriously challenged.
It also appears to us that neither there is restriction absolutely from enforcing rights by the usual legal proceedings nor limitation of time within which such rights might be enforced in the instant case but condition 15 was only intended to defeat or by pass the provisions of section 10 of the Carriers Act.
Section 23 of the Indian Contract Act provides that the consideration or object of agreement was lawful, unless, inter alia, it was of such a nature, that, if permitted, would defeat the provisions of any law.
In the instant case, it appears to us that if condition 15 be permitted then it will defeat the provisions of section 10 of the Carriers Act, even in a case where notice in writing of the loss or injury has been given to given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff.
Even in a case where the plaintiff was unaware of the arrival of the goods at the destination or was unaware of a loss or damage, the plaintiff would not have any right to institute a suit if no claim was made and could not have been made within 30 days as stipulated in condition 15 of the Way Bill.
In that view of the matters, we are of the opinion that condition 15 must be held to be void in view of section 23 of the Indian Contract Act because its object was to defeat the provisions of section 10 of the Carriers Act.
This conclusion, in our opinion, follows from the construction of the section and condition 15 of the Way Bill.
It was contended before the courts below and it was reiterated before us that Carriers Act was essentially enacted for the benefit of 1034 the common carriers and section 10 of the Act should be so construed.
It was, therefore, urged that it could not be construed as precluding notice for a shorter period than a period of six months from the date of loss specified therein.
But the preamble as we have noted before indicates that the Act was passed, not only to limit the liability of the carriers, but also to declare the liability of the carriers.
Therefore, any contract or bargain which seeks to defeat the liability of the carriers as enacted by law, would, in our opinion, defeat the provisions of the Act.
Furthermore, as we have noted hereinbefore in essence condition 15 is to impose additional obligation upon the owner or consignee because it stipulates giving of the notice either from the date of the arrival of the goods at the destination which more often than not, is not known to the owner of the goods, or from the date of booking, which again is useless because unless loss or damage occurs no liability arises.
In the decision of the Privy Council in the case of Home Insurance Company of New York vs Victoria Montreal Fire Insurance Company,(1) to which our attention was drawn, there was a contract of re insurance which was engrafted on an ordinary printed from of fire insurance policy, and incorporated all its terms, there was a clause which purported to prohibit an action thereon unless commenced within twelve months next after the fire.
It was held by the Judicial Committee that having regard to the true construction of the contract, which had carelessly purported to include many conditions inapplicable to reinsurance, the above clause must also be regarded as inapplicable.
Such a clause is reasonable in the original policy where the assured can sue immediately on incurring loss, it cannot apply where the insured was unable to sue until the direct loss was ascertained between the parties over whom he had no control.
Though the facts of the instant case and the condition with which we are concerned are different, the observations of Lord Macnaghten at page 64 are of some relevance that the clause prescribing legal proceedings after a limited period was a reasonable provision in a policy of insurance against direct loss to specific property, in such a case the insured was master of the situation, and he could bring his action immediately, but in a case of re insurance against liability the insured was helpless, would throw light on the 1035 present condition 15 in the instant case as we have noted hereinbefore.
In the instant case as we have noted hereinbefore, the arrival at the destination of the goods may not be known to the owner or the consignee for a considerable period of time.
Learned advocate for the appellant also drew our attention to the decision of the Court of Appeal in England in the case of Bank of Australasia and Others vs Clan Line Steamers Limited.(1) In the facts of this case, in our opinion, the said decision is not relevant for the controversy before us.
Our attention was also drawn to a decision in the case of India General Steam Navigation Company (Defendants) vs Joykristo Shaha and Others (Plaintiffs)(2) where the point on which the Court rested its decision was that the contract in question was a divisible one.
No such problem arises here.
So it is not necessary to discuss the decision.
In the case of Haji Shakoor Gany vs H.E. Hinde & Co., Ltd.,(3) the plaintiffs under a bill of lading incorporating the provisions of the English Carriage of Goods by Sea Act, had shipped sugar on defendant 1 's ship.
One of the provisions of the Act on the bill of lading was as follows : "In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit was brought within one year after delivery of the goods or the date when the goods should have been delivered.
" The ship arrived in Bombay on 4th May, 1929 and was completely discharged on 8th May, 1929.
The plaintiffs had sued on 27th June, 1930 to recover the value of the sugar short delivered to them from defendants 1 and 2 who were the Bombay agents of defendant 1 and who gave a declaration to the customs authorities that they were answerable for the discharge of all claims for damage or short delivery which might be established by the owner of any goods comprised in the import cargo in respect of such goods.
It was held that the effect of the incorporation of the provisions in the bill of lading was that the rights of the plaintiffs were extinguished in respect of the claim made after one year, As we have mentioned hereinbefore, if under a particular bargain the rights of the parties were extinguished that would be 1036 permissible, that will not hit the provisions of section 28 of Contract Act and as such would not be violative of section 23 of the said Act.
But if rights are not extinguished but only the remedies are barred different consideration would apply.
As in the cases of The Ruby General Insurance Co. Ltd. vs The Bharat Bank, Ltd. and others,(1) Dawood Tar Mahomed Bros. and others vs Queensland Insurance Co. Ltd.,(2) Pearl Insurance Co. vs Atma Ram,(3) Baroda Spinning and Weaving Co. Ltd. vs Satyanarayan Marine and Fire Insurance Co. Ltd.,(4) Assam Roadways vs National Insurance Co. and others,(5) M/s Indian Drugs and Pharmaceuticals Ltd. Hyderabad vs M/s Savani Transport P. Ltd., Hyderabad,(6) Rivers Steam Navigation Co. Ltd., and another vs Bisweswar Kundu(7) and Vulcan Insurance Co Ltd. vs Maharaj Singh and another,(8) the points decided and views expressed were different from the present controversy, it is not necessary to refer to those decisions or express any opinion on those.
For the reasons we have mentioned hereinbefore, we are of the opinion that the decision of the learned single Judge of the Andhra Pradesh High Court on appeal must, therefore, be upheld.
These appeals accordingly fail and are dismissed with costs.
H.L.C. Appeals dismissed.

summary:
The respondent entrusted a consignment of goods to the appellant on May 1, 1969 under a Way Bill for being transported from Guntur to Vijawada.
As the appellant failed to deliver the goods at Vijayawada, the respondent gave a notice of claim on June 20,1969 and thereafter instituted suits for recovery of damages from the appellant.
The trial court held that the suit were barred by Condition.
15 of the Way Bill which stipulate that no suit shall lie against the firm in respect of any consignment without a claim made in writing in that behalf and preferred within 30 days from the date of booking or from the date of arrival at the destination by the party concerned.
The lower appellate court confirmed the dismissal of the suits but the second appeal preferred by the respondent was allowed by the High Court which held that if Condition 14 of the Way Bill was given effect to, it would defeat the provisions of section 10 of the Carriers Act.
Dismissing the appeals, ^ HELD: (a) Section 10 of the Carriers Act, 1865 provides that unless notice in writing of the loss or injury has been given to him before the institution of the suit and within 6 months of time when the loss or injury first came to the knowledge of plaintiff, no suit shall be instituted against a common carrier.
In the instant case, in order to sustain the suit, Condition 15 of the Way Bill makes it imperative on the party concerned to give notice either within 30 days from the date of the booking or from the date of the arrival of the goods at the destination.
The date of arrival of the goods at the destination may not be known to the party concerned for a long time.
No claim can be made without the loss of the goods and therefore 30 days from the date of booking would become irrelevant unless loss or damage occurs.
Even in a case where the plaintiff was unaware of the arrival of the goods at the destination or was unaware of the loss or damage, the plaintiff would not have any right to institute a suit if no claim was made and could not have been made within 30 days.
Condition 15 of the Way Bill, therefore, was designed to avoid the liability contemplated under section 10 of the Carriers Act and that too in a situation where the parties had not by express contract limited their 1028 liability as contemplated under section 6 thereof.
Condition 15 must therefore, be held to be void in view of section 23 of the Indian Contract Act because its object was to defeat the provisions of section 10 of the Carriers Act.
[1032 H,1033 A H] Home Insurance Company of New York vs Victoria Montreal Fire Insurance Co.,[1907] Law Reports A.C. 59, referred to.
(b) The liability of a common carrier can be limited by agreement as provided under section 6 of the Carriers Act but that must be limitation of the liability.
The nature of the contract entered into must either have the limitation of the liability under the Carriers Act made expressly and in writing or the facts must be such that for the contract in question the contractor was departing from his usual business and engaging in a different type of business from that of common carrier.
In the instant case it is clear from Condition 15 of the Way Bill that there was no limitation of liability expressed or intended but what was provided was that no suit shall lie against the firm unless a particular claim was made in a particular manner within a particular time.
Their was neither any extinguishment of liability, nor contracting out of liability but what was provided was only, a special period of limitation, other than the one in section 10 of the Carriers Act, for issue of notice.
[1032 D G] The India General Navigation and Railway Co. Ltd. vs The Dekhari Tea Company ltd. and Ors., AIR 1924 P.C., 40 referred to.
(c) The Contention that the Carriers Act was essentially enacted for the benefit of the common carriers and therefore s.10 should not be construed as precluding notice of a period shorter than 6 months from the date of loss cannot be accepted.
From the preamble to the Act it is clear that the Act was passed not only to limit the liability of the but also to declare their liability.
Therefore, any contract or bargain which seeks to defeat the liability of the carriers as enacted by law would defeat the provisions of the Act.
[1034 A C]