judgement:
ivil Appeals Nos.
3008 3009 of 1984.
From the Judgment and Order dated 28.11.83 of the Bombay High Court in Appeal No. 880 of 1983.
Kapil Sibal, Harish Gajtiani, Rajiv Datta and Nitin Rout for the appellants.
Shanti Bhushan, J. Makhija, Mrs. A.K. Verma and D.N. Misra for Respondent Nos. 3 and 4.
G.B. Sathe and A.S. Bhasme for Respondent Nos. 1, 2 and 5.
K.K. Sanghi, Brij Bhushan and Anil Kumar Gupta for Respondent No. 7.
The Judgment of the Court was delivered by PATHAK, CJ.
These appeals are directed against an order of the Bombay High Court dismissing in limine the appeals filed by the appellants herein against the judgment of a Single Judge dismissing their writ petitions challenging the right of the police authorities to prepare and enforce a roster system for operating launch services between Gateway of India at Bombay and Elephanta Island.
828 The appellants are operating launch services for joy rides, film shootings, etc.
from Apollo Pier or Gateway of India to Elephanta Island, and respondent No. 7 is a cooper ative association of launch owners also engaged in the same activity.
It appears that originally the appellants were desirous of acquiring membership of this association but were denied entry, and thereafter it was the association which wanted the appellants to join its membership but the appellants declined the offer.
The members belonging to the association were operating launch services turn by turn on a voluntary roster system to avoid unhealthy competition.
It appears that when the efforts made by the police and the Port Trust Authorities to resolve the differences in the operation of launch services between the association and the appellants failed, a roster system was chalked out on the direction of the Deputy Conservator of Bombay Port Trust (Respondent No. 3) which was sought to be enforced by the police.
When some employees working in their launches were arrested for failure to act according to the roster system, the appellants filed writ petitions claiming that the police and the Port Trust authorities had no authority to compel them to follow the roster system.
The High Court dismissed the writ petitions holding that the Bombay Port Rules con ferred powers upon the Deputy Conservator to give directions for berthing and for mooring and unmooring the vessels in the Port and, that apart, the police and the Port Trust authorities had adequate powers under the Port of Bombay Passenger Boat Rules, 1962 and Section 67 of the Bombay Police Act to regulate the manner in which the launches carried passengers.
The only point for consideration in these appeals is whether the Deputy Conservator of Bombay Port Trust and/or the police had the power to prepare and enforce the roster system.
The Port of Bombay Passenger Boat Rules, 1962 have been framed by the Central Government in exercise of powers conferred by Section 6(1)(k) of the : 6(1) "The Government may, in addition to any rules which it may make under any other enact ment for the time being in force, make such rules, consistent with this Act, as it thinks necessary for any of the following purposes, namely: 829 (k) for licensing and regulating catamarans plying for hire, and flats and cargo, passenger and other boats plying, whether for hire or not, and whether regularly or only occasionally, in or partly within and partly without any such port and for licensing and regulating the crews of any such vessels, and for determining the quantity of cargo or number of passengers or of the crew to be carried by any such vessels; and may by such rules provide for the feeds payable in respect of any such license, and in the case of vessels plying for hire, for the rates of hire to be charged and the conditions under which such vessels shall be com pelled to ply for hire, and further for the conditions under which any licence may be revoked;" Rule 4 of the Port of Bombay Passenger Boat Rules, 1962 prescribes that boats plying for hire shall not lay beside the landing place longer than necessary and shall obey orders of the police for regulating the traffic.
Rule 6 forbids the tindals and the boatmen to tout for hire near the landing place.
Rule 4 of the Bombay Port Rules flamed by the Bombay Port Trust in exercise of powers conferred under the prescribes that all vessels within the port shall be bound to take up such berths as may be appointed for them by the Deputy Conservator and shall change their berths when required by the authorities.
Rule 19 thereof provides that all vessels within the port shall moor and unmoor or anchor in accordance with the orders of the Deputy Conservator.
Clauses (b) and (c) of Section 67 of the Bombay Police Act, 1951 provide: 67.
"It shall be the duty of a Police Officer . . (b) to keep order in the streets and at and within public bathing, washing and landing places, fairs, temples and all other places of public resort and in the neighbourhood of places of public worship, during the time of public worship; (c) to regulate resort to public bathing, washing and land ing places, to prevent overcrowding thereat and in public 830 ferry boats and, to the best of his ability, to prevent the infraction of any rule or order lawfully made for observance by the public at any such place or on any such boat.
" It is contended by learned counsel for the appellants that the Deputy Conservator of Bombay Port Trust, respondent No. 3 is not empowered in law to devise on order of the imposition of a roster.
It is urged that this action is beyond the powers conferred by the , the Bombay Ports Rules and the Port of Bombay Passenger Boat Rules.
We see no force in this contention.
The roster system provides for the regulation of traffic, so that each launch obtains an opportunity of access to the landing place.
This is not a distribution of business but a distribution of the time for which the landing place can be used, and therefore, a regulation of the use of the landing place.
Rule 4 of the Port of Bombay Passenger Boats Rules, 1962 provides that boats plying for hire should not lay along side landing places longer than necessary and must obey the orders of the police for regulating traffic.
The boat shall not be laid longer than actually necessary to embark or land passengers and their luggage, but must be kept off at a distance of at least 30 metres from the landing place or gangway ladders so as not to obstruct the approach thereto.
The licencees or other attendants of the boat are required to obey all orders given to them by the police for the regulation of the traf fic at the landing places or gangways of vessels.
Consistent with the provisions of Rule 4, which are plainly intended for the maintenance of order, is rule 6 which prohibits tindais and boatmen tout for hire near the landing places to the annoyance of people passing by, and rule 7 prohibits them from carrying on the business of a hawker.
The roster is intended to give effect to Rule 4, and we see no reason why recourse to a roster system should be considered as unreasonable.
The second contention of learned counsel for the appel lants is that the respondent No. 3 has purported to act under Rules 4 and 19 of the Bombay Port Rules, Rule 4 of the Passenger Boat Rules and section 67 of the Bombay Police Act in having the roster system enforced by the Inspector of Po lice.
We have considered those provisions, but we are not convinced that the context in which those provisions operate is in any manner inconsistent with the framing of a roster and its imposition for regulating the use of the landing place by the launches.
On the contrary, they contemplate a situation, and provide for just the exercise of power, which underlies the adoption of a roster system.
The dominant purpose of the regulation of the use of the landing place by the launches is to prevent congestion and a possible breach of peace.
831 The submission that the roster has been devised for the purpose of bringing about a distribution of passengers ignores the real purpose that the roster is intended to serve, namely to ensure the even flow of traffic at landing places.
An attempt has been made to show that the roster was prompted by malice, and we are referred to Smt.
S.R. Venka taraman vs Union of India & Anr., ; , but we see nothing to support the plea.
We cannot accept that an ulterior motive the regulation of business is behind the roster.
Brownells Limited vs The Ironmongers ' Wages Board, Brownelis Limited vs The Drapers ' Wages Board, ; and Hanson vs Radcliffe Urban District Council, [ do not help the appellants.
It is then urged that the roster has the tendency to prohibit trade and the power to regulate is being misused as a power to prohibit.
There is a fallacy in the argument.
There is no prohibition of the business at all.
All the launch owners have equitable access to the landing place and if the other conditions for plying the launches, such as holding of a proper; licence, are satisfied, there is no reason why the launches, turn by turn, cannot avail of the facility of an equitable opportunity to use the landing place.
It is said then that the imposition of the roster is too severe a measure to deal with the simple problem of over crowding and chaos and touting for passengers.
This is a matter for the judgment of the authority concerned and ex facie we do not see any ground for holding that the roster system is not reasonable in the circumstances.
There is no excessive invasion of the appellants ' Fundamental Right to carry on their business.
What should be the duration for which the appellants may be allowed to use the landing place, and what should be the turn in which such user may be permitted is essentially a matter for the judgment of the authorities concerned.
It is not possible for the Court to adjudicate on this point.
Learned counsel for the appellants complains that the provocation for devising and imposing a roster was the complaint made by the appellants ' trade rivals.
The disputes between the parties in relation to the application of the roster is not a matter on which this Court will readily enter.
Finally, it is contended for the appellants that the roster has been prepared and is being imposed without re course to any statutory provision enabling the third re spondent to devise it and impose it.
It seems to us that the imposition of a roster is reasonable and the power to 832 impose a roster can be spelt out from the powers conferred on the authorities under the statutory provisions already referred to.
The roster is only one method of regulation.
It may be feasible and fruitful in a certain set of circum stances.
In another set of circumstances it may be more appropriate to adopt some other principle for resolving the problem of a large number of launches using a limited land ing place.
It is apparent that passengers can be invited into the launches only when a boat is standing against the jetty, and it would be a matter for the launch owner to ensure that he has a sufficient number of passengers by the time indicated in the roster for berthing his launch at the landing place.
It must be remembered that Rule 4 envisages an opportunity to the owner of the boat to embark passen gers.
The opportunity is not intended for the purpose of keeping the boat at the landing place for so long a period of time that it can fill up with passengers.
The time period is to be determined by the need to keep the traffic moving.
The circumstances that the boat may come in and stay no longer than is necessary to pick up the passengers indicates that the emphasis is on the maintenance of orderly traffic and the prevention of congestion at the landing place.
We see no substance in these appeals and we are of opinion that they must be dismissed.
A number of suggestion were made by learned counsel for the appellants by way of settling the controversy between the parties in regard to the use of the landing place and devising arrangements for securing optimum access for each boat.
These suggestions, it seems to us, can be made before respondent No. 3, and it is open to him to consider what would be the most equitable arrangement.
In the result the appeals are dismissed but there is no order as to costs.
N.V.K. Appeals dismissed.

summary:
The appellants were operating launch services for joy rides, film shooting, etc.
from Appollo Pier or Gateway of India to Elephanta Island in Bombay.
Respondent 7 was a cooperative association of launch owners also engaged in the same activities.
The members belonging to the associations were operating launch services turn by turn on voluntary roster system to avoid unhealthy competition.
When efforts were made by the police and the Port Trust Authorities to resolve the difference in the operation of launch services between the association and the appellants failed, a roster system was chalked out on the direction of the Deputy Conservator of Bombay Port Trust which was sought to be enforced by the police.
When some employees working in the launches were arrested for failure to act according to the roster system, the appellants filed writ petitions claiming that the police and the Port Trust Authorities had no authority to compel them to follow the roster system.
The High Court dismissed the writ petitions holding that the Bombay Port Trust Rules conferred powers upon the Deputy Conservator to give directions for berthing and for mooring and unmooring the vessels in the Port, and that apart the police and the Port Trust Authority had adequate powers under the Port of Bombay Passenger Boat Rules, 1962 and section 67 of the Bombay Police Act to regulate the manner in which the launches carried Passengers.
In the appeals to this Court, it was contended On behalf of the appellants that: (1) the Deputy Conservator of Bombay Port Trust, respondent No. 3 was not empowered in law to devise an order of the 826 imposition of a roster, and that this action was beyond the powers conferred by the , the Bombay Port Rules and the Port of Bombay Passengers Rules 1962.
(2) Respondent No. 3 had purported to act under Rules 4 and 19 of the Bombay Port Rules, Rule 4 of the Port of Bombay Passenger Boat Rules, and section 7 of the Bombay Police Act in having the roster system enforced by the Inspector of Police.
(3) The roster has tendency to prohibit trade and the power to regulate Is being misused as a power to prohib it.
(4) The imposition of the roster is too severe a measure to deal with the simple problem of overcrowding and chaos and touting for passengers, (5) The provocation for devising and imposing a roster was the complaint made by the appel lant 's trade rivals.
and (6) The roster has been prepared and is being enforced without recourse to any statutory provision enabling respondent No. 3 to devise it and impose it.
Dismissing the appeals, the Court, HELD: 1.
The roster system provides for the regulation of traffic, so that each launch obtains an opportunity of access to the landing place.
This is not a distribution of business, but a distribution of the time for which the landing place can be used, and therefore, a regulation of the use of the landing place.
The roster is intended to give effect to Rule 4 of the Port of Bombay Passenger Boats Rules, 1962.
There is no reason why recourse to a roster system should be considered as unreasonable.
[830C.F] 2.
The dominant purpose of the regulation of the use of the landing place by the launches is to prevent congestion and a possible breach of peace.
The real purpose that the roster is intended to serve, is to ensure the even flow of traffic at landing places.
[830H; 831A] Smt.
S.R. Venkataraman vs Union of India & Anr.
, ; ; Brownelis Limited vs The Ironmongers ' Wages Board Brownells Limited vs The Drapers ' Wages Board, ; and Hanson vs Radcliffe Urban District Coun cil, inapplicable.
All the launches owners have equitable access to the landing place and if the other conditions for plying the launches, such as holding of a proper licence, are satis fied, there is no reason why the launches, turn by turn, cannot avail of the facility of an equitable opportunity to use the landing place.
[831C D] 827 4(a) There is no excessive invasion of the appellants Fundamental Right to carry on business.
[831E] 4(b) What should be the duration for which the appel lants may be allowed to use the landing place, and what should be the turn in which such user may be permitted is essentially a matter for the judgment of the authorities concerned.
It is not possible for the Court to adjudicate on this point.
[831E F] 5.
The disputes between the parties in relation to the application of the roster is not a matter on which this Court will readily enter.
[831G] 6.
The imposition of a roster is reasonable and the power to impose a roster can be spelt out from the powers conferred on the authorities under the relevant statutory provisions.
The roster is only one method of regulation.
[831H; 832A]


judgement:
eview Petition Nos.
597 to 60 1 of 1987.
IN C.A. Nos, 3195/79, 4731 32/84, SLP No. 10108/80 and C.A.No. 793/84.
818 WITH C.A. Nos. 1313 & 388/81, SLPNo.
36/80, W.P. No. 192/77, SLP No. 404 1/81 and C.A. No. 2269/80.
A.K. Ganguli, K. Swamy and P. Parmeshwaran for the Petitioners.
F.S. Nariman, Anil B. Diwan, R.K. Lukose, K.R. Nambir, A.N. Haksar, D.N. Mishra and P.K. Ram for the Respondent.
The Order of the Court was delivered by PATHAK, CJ.
After hearing learned counsel for the parties briefly, we are satisfied that the judgment and order dated 20 December, 1986 of which review is sought, should be recalled and the cases be heard again on the merits.
It appears to us prima facie that in respect of certain items an inconsistency is present in the impugned judgment when regard is had to the law laid down by this Court in Union of India vs Bombay Tyres International Ltd., ; Inasmuch as the cases are being re opened, we refrain from expressing any opinion at this stage on the merits of the points raised in the cases.
Objection was taken by the respondent manufacturers to the Review Petitions on the ground that the finality of the judgment should be maintained and should not be disturbed lightly.
In our opinion, the points raised by the petitioners are of substantial public importance, and therefore call for recon sideration.
Accordingly, we allow the Review Petitions, and recall the judgment and order dated 20 December, 1986 and restore the cases to their original number and direct that they be listed again for fresh consideration.
There is no order as to costs.
N.P. V Petitions allowed.

dataset_name: IN-Abs

summary:
The petitioners revenue filed petitions for review of the judgment and order dated December 20, 1986 passed by this Court.
The respondent manufacturers objected to the same on the ground that finality of the judgment should be maintained and not disturbed lightly.
Allowing the Review petitions, this Court, HELD: Prima facie an inconsistency is present in the judgment in respect of certain items when regard is had to the law laid down by this Court in Union of India vs Bombay Tyres International Limited, ; Besides, the points raised by the petitioners are of substantial public importance and call for reconsideration [818D] Accordingly, the judgment and order dated December 20, 1986 are recalled and the cases directed to be listed again for fresh consideration.
[818D] Union of India vs Bombay Tyres International Limited, ; relied on.


judgement:
Civil Appeal No. 111(N) of 1981.
From the Judgment and Order dated 21.10.1980 of the Madras High Court in Application No. 2875 of 1980.
Abdul Kareem, A.T.M. Sampath and P.N. Ramalingam for the Appellant.
section Govind Swaminathan, Rajendra Chowdhary, N.S. Sivam and K. Madhavan for the Respondents.
T.S. Krishnamoorthi Iyer, section Balakrishnan and M.K.D. Namboodiri for the Intervener.
A question which arose for decision was whether the appellant should discharge the mortgage of the suit property created by the respondent in favour of the South Indian Bank.
The High Court held that the appellant was liable to discharge the mortgage and directed her to deposit in Court a sum of Rs.3,50,000 with interest for the purpose.
The appellant paid the amount direct to the mortgagee.
The High Court refused to accept the payment made directly to the mortgagee as due compliance with its decree and against that order of the High Court the appellant preferred civil Ap peals Nos.
1993 1994 of 1977.
This Court disposed of the said appeals by the following order dated 29 November, 1979: "We direct that a decree be passed that the plaintiff Appellant do deposit within six months from today the entire sum of Rs.3,45,000 together with interest due upto date at the rate of 11 per cent, together with an undertaking that she would give up all her rights under the mortgage decree passed in her favour in C.S. No. 154 of 1968 except to the extent of the amount actually paid to the South Indian Bank for taking the assignment.
If these two 822 conditions are fulfilled, the appeals will stand allowed and a final decree for specific performance passed.
In the event of non com pliance with either of these conditions the appeals will stand dismissed with costs.
" Purporting to comply with the above order of this Court, the appellant deposited a sum of Rs.2,42.822.19 on 11 April, 1980 in the High Court with the undertaking to give up all her rights decreed in C.S. No, 15 of 1968 and filed C.M.P Nos.
2424 and 2425 of 1980 in the High Court for a declara tion that the payment as mentioned above was in compliance with the order of this Court and she claimed a set off of the amount of Rs.5,96,687.19 paid by her earlier to the South Indian Bank which she was entitled to recover from the respondent in accordance with the second condition of the order of this Court dated 29 November, 1979.
The time limit fixed for fulfilling the two conditions set out in this Court 's order dated 20 November, 1979 having fallen on 29 May, 1980 and the High Court not having passed orders on her C.M.Ps.
2424 2425 of 1980 till then, she paid into the High Court a sum of Rs.6,02,000 on 29 May, 1980 by cheque purporting to comply with the first condition set out in this Court 's order aforesaid.
C.M.Ps.
2424 and 2425 of 1980 filed by the appel lant in the High Court were dismissed by a Single Judge by an order dated 6 June, 1980 against which the appellant preferred Petitions for Special Leave to Appeal Nos.
947 48 of 1981.
The appellant also filed another C.M.P. No. 2875 of 1980 in the High Court for a declaration that she had com plied with the aforesaid order of this Court dated 29 Novem ber.
1979 which was dismissed by the High Court.
Civil Appeal No. 111 of 1981 has been preferred against the judg ment and order of the High Court in C.M.P. No. 2875 of 1980.
The only question decided against the appellant by the High Court in C.M.P. No. 2875 of 1980 was with regard to the deposit of the amount stipulated in the first condition of the order of this Court dated 29 November, 1979.
The crucial issue was whether the payment made by the appellant on 29 May, 1980 by cheque of the amount of Rs.6,02,009 together with the amount deposited earlier on 11 April, 1980 was in due compliance of the first condition of this Court 's Order dated 29 November, 1979.
The High Court found that the simple delivery of the cheque on 29 May, 1980 could not be deemed to be deposit of the specified sum of 29 May, 1980 in satisfaction of the order of this Court when the amount of the cheque had been realised only on 16 June, 1980.
The High Court held that the appellant was bound to 823 comply with the Original Side rules of the High Court which prescribed the procedure to be followed in depositing the money in Court, and in particular, Order 31, rules 1 to 6 thereof which were aimed at securing the deposit of the money in the Reserve Bank of India to the credit of a par ticular proceeding on or before the specified date.
Accord ingly, the High Court refused to grant the declaration that the appellant had complied with the order of this Court dated 29 November, 1979.
It is contended before us on behalf of the appellant that the cheque for Rs.6,02,000 was tendered in Court on 29 May, 1980 and that it was duly honoured by the Bank and money was realised under the cheque, and therefore it must be taken that payment had been effected by the appellant on 29 May, 1980 within the time stipulated by this Court in its order dated 29 November, 1979.
In Commissioner of Income Tax, Bombay South, Bombay vs Messrs Ogale Glass Works Ltd. Ogale Wadi; , it was laid down by this Court that payment by cheque realised subsequently on the cheque being honoured and encashed relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheque.
Payment by cheque is an ordinary incident of present day life, whether commercial or private, and unless it is specifically mentioned that payment must be in cash there is no reason why payment by cheque should not be taken to be due payment if the cheque is subsequently encashed in the ordinary course.
There is nothing in the order of this Court providing that the depos it by the appellant was to be in cash.
The terms of the order dated 29 November, 1979 are conclusive in this respect and it is the intent of that order which will determine whether payment by cheque within the period stipulated in that order was excluded as a mode in satisfaction of the terms of that order.
The time for payment is governed by the order of this Court.
It is alleged on behalf of the respondent that there was no money on the date of delivery of the cheque to support payment of it and that it was subsequently when arrangements were made that the cheque was realised.
Now, the High Court has not found that if the cheque was presented for encash ment on the date it was delivered the cheque would not have been encashed.
There is nothing to suggest also that the cheque was not honoured in due course and that the Bank had at any time declined to honour it for want of funds in the ordinary course.
In any event, there is nothing to suggest that, under the arrangements made for payment of the cheque, even if it had been encashed on the date it was delivered the cheque would not have been encashed.
There 824 is no finding by the High Court that on 29 May, 1980 the cheque would not have been realised.
That being so, the question whether the appellant had wrongly stated that her counsel had offered to pay cash to the High Court office on 29 May, 1980 ceases to be relevant.
We also see no substance in the objection taken before the High Court that in the letter dated 29 May, 1980 addressed by counsel for the appellant forwarding the cheque for Rs.6,02,000 there was a request for the return of the cheque in case it was found that the appellant was entitled to the set off claimed by her.
The application of the appellant claiming adjustment was pending in Court, and no conclusion can be drawn against her on the ground that she had requested a return of the cheque in the event of the adjustment being allowed by the Court.
We are of the view that the conditions set forth in the order of this Court dated 29 November, 1979 in the facts and the circumstances of the case have been complied with by the appellant substantially and she is entitled to the benefit of that order.
The appeal is allowed, the order dated 21 October, 1980 of the High Court is set aside and the application by the appellant for a direction to the respondent to execute the sale deed in her favour is allowed.
In the circumstances of the case, there is no order as to costs.
N.V.K. Appeal allowed.

summary:
The appellant filed a civil suit in the High Court for specific performance of a contract to sell the suit property by the respondents to her.
The High Court held the appellant liable to discharge the mortgage and directed her to deposit in Court a sum of Rs.3.5 lakhs with interest for the pur pose.
The appellant paid the amount direct to the mortgagee, which the High Court refused to accept as due compliance with its decree.
The appellant preferred appeals to this Court, which were disposed of on 29th November, 1979 with the direction that the appellant was to deposit within six months from the date of the order, the entire sum of Rs.3.15 lakhs together with interest.
Purporting to comply with the aforesaid order of this Court, appellant deposited a sum of Rs.2,42,822.19 on 11 April, 7980 and filed two Civil Misc.
Petitions in the High Court for a declaration that the payment was in compliance with the order of this Court and claimed as set off of the amount of Rs.5,96,687.19 paid by her earlier to the South Indian Bank, which she was entitled to recover from the respondent.
The time limit fixed for fulfilling the two conditions set out in this Court 's order dated 29th November, 1979 having fallen on 29th May, 1980 and the High Court not having passed orders on the appellant 's two CMP 's the appel lant paid into the High Court a sum of Rs.6.02 lakhs on 29th May, 1980 by cheque purporting to comply with the first condition of this Court 's order.
820 The High Court dismissed the appellant 's CMP and refused to grant the declaration that the appellant had complied with the order of this Court dated 29th November.
1979, on the ground that the appellant was bound to comply with the Original Side Rules of the High Court which prescribed the procedure to be followed in depositing money into Court particularly Order XXXI Rules 1 to 6 which aimed at securing the deposit of the money in the Reserve Bank of India to the credit of a particular proceeding, on or before the speci fied date.
In the appeal to this Court, on the question; whether payment made by the appellant on 29th May, 1980 by cheque of the amount of Rs.6.02 lakhs together with the amount depos ited earlier on 11th May, 1980 was in due compliance with this Court 's order dated 29th November, 1979.
Allowing the Appeal and setting aside the order of the High Court, this Court HELD: 1.
Payment by cheque is an ordinary incident of present day life, whether commercial or private, and unless it is specifically mentioned that payment must be in cash there is no reason why payment by cheque should not be taken to be due payment if the cheque is subsequently encashed in the ordinary course.
[823D E] In the instant case, there is nothing in the order of this Court providing that the deposit by the appellant was to be in cash.
The terms of the order dated November 29, 1979 are conclusive in this respect and it is the intent of that order which will determine whether payment by cheque within the period stipulated in that order was excluded as a mode in satisfaction of the terms of that order.
The time for payment of governed by the order of this Court.
[823E F] 2.
Payment on the cheque being honoured and encashed relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheque.
[823F] Commissioner of Income Tax, Bombay South, Bombay vs Messrs Ogale Glass Works Ltd. Ogale Wadi, A.I.R. 1954 S.C. 429 referred to.
In the instant case, there is nothing to suggest that the cheque was not honoured in due course and that the Bank had at any time declined to honour it for want of funds in the ordinary cause.
[823G] 821 3.
The conditions set forth in the order of this Court dated 29th November, 1979 have been complied with by the appellant substantially and she is entitled to the benefit of that order.
[824C D]


judgement:
vil Appeal Nos.
63031 of 1975.
1002 From the Judgment and Order dated 10.9.1974 of the Kerala High Court in Income Tax Reference Nos. 85 and 86 of 1972.
Soli J. Sorabjee, Udayu Lalit, D. Vidyanandan and M. Raghuraman for the Appellant.
D.V. Gauri Shankar and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by PATHAK, CJ.
These appeals, by certificate granted by the High Court of Kerala, are directed against the judgment of that High Court answering the following question of law referred to it in an Income tax Reference in favour of the Revenue and against the assessee: "Whether, on the facts and in the circum stances of the case, the Tribunal is justified in law in cancelling the penalties levied under section 271(1)(a) of the Income tax Act, 1961, for the assessment years 1965 66, and 1966 67?" The assessee is a registered firm trading in hill pro duce.
The assessee did not file its income tax return under the Income tax Act, 1961 for the assessment year 1965 66 within the statutory period, that is to say by 30 June, 1965, and instead applied for time to file the return.
Time was granted up to 31.August, 1966.
Yet no return was filed.
It was only after notice under section 139(2) of the Act was served on the assessee on 22 September, 1967 that it filed a return on the next day.
Similarly for the assessment year 1966 67 no return was filed upto 30 June, 1966.
No applica tion for extension of time was made either.
When notice under section 139(2) was served on the assessee on 21 June, 1966 it filed a return on 23 September, 1967.
In the circum stances, the Income tax Officer initiated penalty proceed ings against the assessee under section 271(1)(a) of the Act for the two assessment years.
A sum of Rs. 14,784 was levied as penalty for the assessment year 1965 66 and a sum of Rs. 11,447 was imposed as penalty for the assessment year 1966 67.
The explanation of the assessee that he was under the bona fide belief that he had no assessable income and had, therefore, not filed the returns earlier was not accepted by the Income tax Officer.
In appeal before the Appellate Assistant Commissioner of Income Tax, the assessee did not press the ground that there was no deliberate omission on his part to file the returns and that therefore section 271(1)(a) of the Act was not attracted.
In second appeal before the Income tax Appellate Tribunal permission was granted to the assessee to raise the 1003 ground.
The Appellate Tribunal allowed the appeals holding that the Income tax Officer had failed to bring on record any material to show that the explanation of the assessee tendered before him in regard to the delay should not be accepted, and that as the element of mens rea was required to be proved and had not been proved, the penalties were liable to be cancelled.
At the instance of the Revenue the Appellate Tribunal referred the question set forth earlier to the High Court of Kerala.
It may be mentioned that another question was also referred, which related to the Appellate Tribunal entertain ing the additional ground of appeal, but the appeals before us are not concerned with that question.
The question with which we are concerned was referred to a Full Bench of the High Court, and the High Court has taken the view that mens rea need not be established before penalty is imposed under section 271(1)(a) of the Act, and that, therefore, the Appellate Tribunal was not justified in cancelling the penalties levied for the two assessment years.
Learned counsel for the assessee has addressed an ex haustive argument before us on the question whether a penal ty imposed under section 271(1)(a) of the Act:involves the ele ment of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in Order to demonstrate that the proceedings by way of penalty under section 271(1)(a) of the Act are quasi criminal in nature and that therefore the element of mens rea is a mandatory requirement before a penalty can be imposed under section 271(1)(a).
We are relieved of the neces sity of referring to all those decisions.
Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal.
It is sufficient for us to refer to section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income, and to section 276C which provides that if a person wilfully fails to furnish in due time the return of income required under section 139(1), he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine.
It is clear that in the former case what is intended is a civil obligation while in the latter what is imposed is a criminal sentence.
There can be no dispute that having regard to the provisions of section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of ' mens rea is established.
In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent.
The 1004 creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to dis courage the repetition of the offence.
In the case of a proceeding under section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty.
In this connection the terms in which the penalty falls to be measured is significant.
Unless there is some thing in the language of the statute indicating the need of establish the element of mens tea it is generally sufficient to prove that a default in complying with the statute has occurred.
In our opinion, there is nothing in section 271(1)(a) which requires that mens tea must be proved before penalty can be levied under that provision.
We are supported by the statement in Corpus Juris Secundum, volume 85, page 580, paragraph 1023: "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws.
" Accordingly, we hold that the element of mens rea was not required to be proved in the proceedings taken by the Income tax Officer under section 271(1)(a) of the Income tax Act against the assessee for the assessment years 1965 66 and 1966 67.
In the result the appeals fail and are dismissed with costs.
N.V.K. Appeals failed.

summary:
The assessee appellant did not file its income tax returns under the Income Tax Act, 1961 for the assessment years 1965 66, 1966 67 within the statutory period.
It was only after notices under section 139(2) of the Act were served on the assessee the returns were filed.
In the said circum stances the Income Tax Officer initiated penalty proceedings against the assessee under section 271(1)(a) of the Act for the two assessment years and imposed penalties.
The explanation of the assessee that he was under the bona fide belief that he had no assessable income and had, therefore, not filed the returns earlier was not accepted by the Income tax Officer.
The Appellate Assistant Commissioner dismissed the appeal, but in second appeal the Appellate Tribunal allowed the appeal holding that the Income Tax Officer had failed to bring on record any material to show that the explanation of the assessee tendered before him in regard t9 the delay should not be accepted, and that as the element of mens rea was required to be proved and had not been proved, the penalties were liable to be cancelled.
The Appellate Tribunal at the instance of the Revenue referred the question to the High Court, and a Full Bench of the High Court took the view that mens rea need not be established before penalty is imposed under section 271(1)(a) of the Act, and the Appellate Tribunal was therefore not justi fied in cancelling the penalties levied for the two assess ment years.
On the question whether the element of mens tea is a mandatory requirement before a penalty can be imposed under section 271(1 )(a) of 1001 the Income Tax Act, 1961.
Dismissing the appeal, the Court.
HELD: 1.
A penalty may be imposed under section 271(1)(a) if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income.
while section 276C provides that if a person wilfully fails to furnish in due time the return of income required under section 139(1) he shall be punishable with rigorous imprisonment which may extend to one year or with fine.
It is, therefore, clear that in the former case what was intended was a civil obligation, while in the latter what is imposed is a criminal sentence.
[1003E F] 2.
There can be no dispute that having regard to the provisions of section 276C, which speaks of wilful failure on the part of defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be im posed under that provision unless the element of mens rea is established.
[1003G H] 3.
The creation of an offence by Statute proceeds on the assumption that society suffers injury by the act or omis sion of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence.
[1004A B] 4.
Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred.
[1004B C] 5.
In a proceeding under section 271(1)(a), it seems that the intention of the legislature is to emphasise the fact of loss of.
Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present.
in the penalty.
In this connection the terms in which the penalty falls to be measured is significant.
[1004B] Corpus Juris Secundum, volume 85, page 580, para. 1023, referred to.
There is nothing in section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision.
[1004C]


judgement:
ivil Appeal No. 859(NM) of 1988.
From the Judgment and Order dated 12.1.1987 in the High Court of Delhi at New Delhi in C.W. No. 355 of 1985.
A. Subba Rao, P. Parmeshwaran and Mrs. Sushma Suri for the Petitioners.
M. Chandrasekharan, N.M. Popli and V.J. Francis for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal by special leave from the judgment and order of ,the High Court.
of Delhi dated 12th January, 1988.
The respondent company manufactured wireless receiving sets, tape recorders, tape players which were assessable under Tariff Items ' 1026 33A and 37AA of the Central Excise Tariff and it had filed classification list and price lists in respect of the said goods.
On verification of the said lists, it was found that goods were unbranded and on investigation it was alleged to have come to the notice of the Department that the respond ent company was engaged in the manufacture Of wireless receiving sets and tape recorders in the brand name of "Bush".
From the documents filed by the respondent, accord ing to the appellants, it was revealed that the respondent manufactured their entire products in the brand name of "Bush" from the very beginning and were selling the same exclusively to M/s Bush India Limited or its authorised wholesale dealers only.
This fact was nowhere mentioned by the respondent in its price list or its classification lists and this, according to the appellants, amounted to wilful suppression of facts with the intention to evade payment of central excise duty.
Certain enquiries were made and to safeguard the interest of revenue the respondent was re quested time and again to observe the provisions of rule 9B of the Central Excise Rules, 1944 and execute B 13 surety bond.
However, it is stated that respondent evaded the execution of the said bond which was, according to the appellants, done deliberately.
Thereafter, on 4th January, 1985, a Show Cause Notice was issued for the period 1st April, 1983 to 30th November, 1984 requiring the respondent to show cause as to why M/s Bush India Limited should not be treated as a related person and a favoured buyer of the respondent company for the purpose of determination of wholesale cash price and as to why the concessional rate of duty under notification No. 358/77 CE should not be denied to the respondent and as to why the differential duty in respect of the goods cleared during the period should not be recovered.
While the adjudication on the basis of the Show Cause Notice was pending, the respondent company was again requested to execute the surety bond in July, 1984.
Respond ent company thereafter filed a writ petition in the High Court of Delhi under Article 226 of the Constitution praying for quashing of the Show Cause Notice and the communication dated 11th July, 1984 and for mandamus to allow it to clear the goods on the basis of the price at which the goods were sold by it allowing the benefit of the relevant notifica tion.
The High Court by the order dated 12th January, 1987 held that the value of the goods manufactured by the re spondent company was the price charged by it from M/s Bush India Ltd. and not the market value at which M/s Bush India Ltd. sold the goods to its wholesalers.
In the premises, it was held that there was no misdeclaration of the value and the Show Cause Notices were quashed.
In passing the impugned order, the High Court followed its decision in C.W. 197/85.
It is, therefore, necessary to refer to the said decision of the High Court.
The said decision challenged 1027 the notice dated 31st December, 1984 and a demand notice of the same date.
It was contended on behalf of the petitioner in that case, who is the respondent in the instant appeal that the said respondent merely manufacture the aforesaid items for Bush India and after manufacturing those, it sells those to M/s Bush India Ltd. It was contended that for the purpose of finding out the price for payment of excise duty, only the price which was charged by the respondent from Bush India Limited could be taken into account and the price at which M/s Bush India Ltd. further sold those goods in the market was not the price which was to be taken for the excise duty.
It was contended that Bush India Ltd. was not a related person of the respondent within the meaning of Section 4(4)(c) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ') and reliance was placed on the decision of this Court in Union of India vs Bombay Tyre International, ; On the merits of the case, reliance was also placed on certain decisions of this Court as well as the decision of the Delhi High Court.
The High Court found that the case of the respondent was directly covered by all these decisions.
In the prem ises, the High Court quashed the said Show Cause Notices and the demand notice.
The question, therefore, is whether the High Court was right in the view it took.
Unfortunately, in the instant case, apart from the facts recorded hereinbefore, there is no other fact.
Learned Counsel appearing for the revenue, Shri A. Subba Rao con tended before us that the High Court was in error in not realising that in the facts and the circumstances of this case, it was an arranged affair and really M/s Bush India Ltd. was a related person and as such the price charged from it could not represent the correct assessable value for the purpose of excise duty.
As noted hereinbefore, the events in this case happened from 1985 onwards.
In the premises, the amended provisions of Section 4 of the Act, as amended by the Amendment Act of 1973, would be applicable.
Section 3 of the said Act enjoins that there shall be levied and collected in such manner as might be prescribed duties of excise on all excisable goods other than salt which are produced and manufactured in India.
Section 4(1)(a) of the Act provides: "4.
(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this sec tion, be deemed to be (a) the normal price thereof, that is to 1028 say, the price at which such goods are ordi narily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that (i) where, in accordance with the normal practice of the wholesale 'trade in such goods, such goods are sold by the asses see at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each class of buyers ;" Proviso (iii) to section 4(1)(a) of the Act enjoins that: "where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related per sons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail.
" According to clause (c) of sub section (4) of section 4 of the Act, "related person" means a person who is so asso ciated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub distributor of such distributor.
The Explanation to Section 4(4)(c) further provides that in this clause "holding company", "subsidiary company" and "relative" have the same meanings as in the ( 1 of 1956).
It is in this context that the validity or otherwise of the High Court 's view has to be judged.
In Union of India vs Bombay Tyre International, (supra), this Court had to examine this question.
This Court examined the scheme of Section 4(1)(a) before the Amendment Act, 1973 and also the position after the amendment.
It was contended in that case before this Court that the definition of the expression "related person" was 1029 arbitrary and it included within its ambit a distributor of the assessee.
This Court however held that in the definition of "related person" being a relative and a distributor could be legitimately read down and its validity upheld.
The definition of related person should be so read, this court emphasised, that the words "a relative and a distributor of the assessee" should be understood to mean a distributor who was a relative of the assessee.
The Explanation to section 4(4)(c) provides that the expression "relative" has the same meaning as in the .
The definition of "related person", as being "a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company . . ", shows a sufficiently restricted basis for employing the legal fic tion.
This Court reiterated that it is well settled that in a suitable case the court could lift the corporate veil where the companies share the relationship of a holding company and a subsidiary company and also to pay regard to the economic realities behind the legal facade.
The true position, it was explained by the aforesaid decision, under the said Act is the price at which the excisable goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of remov al as defined in sub section (4)(b) of section 4 of the Act is the basis for determination of excisable value provided, of course, the buyer is not a related person within the meaning of sub section (4)(c) of section 4 and the price is the sole consideration for the sale.
This aspect was further examined by this Court in Union of India & Ors.
vs Atic Industries Ltd., ; This Court referred to the decision of Bombay Tyre International (supra) and also referred to the first part of the definition of "related person" in clause (c) of section 4(4) which defines "related person" to mean "a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other".
It was not enough, it was held, that the person alleged to be a related person had an inter est, direct or indirect in the business of the assessee.
To attract the applicability of the first part of the defini tion, the assessee and, the person alleged to be a related person must have interest direct or indirect in the business of each other.
Each of them must have a direct or indirect interest in the business of the other.
The quality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct while the interest of the latter in the business of the former may be indirect.
That would not make any difference so long as each has got some inter est, direct or indirect in the business of the other.
In that case, this Court found that Atul Products Ltd. has interest in the business of M/s Atic Industries Ltd. since it held 50% of 1030 the share capital of that assessee and had interest as shareholder in the business carried on by the assessee.
But this Court was of the view that it could not be said that the assessee, a limited company, had any interest, direct or indirect in the business carried on by one of its sharehold ers, namely, Atul Products Ltd., even though the sharehold ing of such shareholder might be 50%.
Secondly, it was noted that Atul Products Ltd. was a wholesale buyer of the dyes manufactured by the assessee but even then, since the trans actions between them were as principal to principal, it was difficult to appreciate how the assessee could be said by virtue of that circumstances to have any interest, direct or indirect, in the business of Atul Products Ltd. The asses see, it was observed, was not concerned whether Atul Products sold or did not sell the dyes purchased by it from the assessee nor was it concerned whether Atul Products Ltd. sold such dyes at a profit or at a loss.
In those circum stances, the first part of the definition of related persons in clause (c) of sub section (4) of section 4 of the amended Act was, therefore, clearly not satisfied both in relation to Atul Products Ltd. as also in relation to Crescent Dves and Chemicals Ltd., a subsidiary company of Atic Industries Ltd., and neither of them could be said to be a "related person" vis a vis the assessee within the meaning of the definition of that term in clause (c) of sub section (4) of section 4 of the amended Act.
In those circumstances, the assessable value, it was held, of the dyes manufactured by the assessee could not be determined with reference to the selling price charged by Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. to their purchasers but must be determined on the basis of the wholesale case price charged by the assessee to Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. In that case, the assessee at all material times sold the large bulk of dyes manufactured by it in wholesale to Atul Products and Imperial Chemical Industries (India) Pvt. Ltd. which subsequently came to be known as Crescent Dyes & Chemicals Ltd. at a uniform price applicable alike to both these wholesale buyers and these wholesale buyers sold these dyes to dealers and consumers at a higher price which inter alia included the expenses incurred by them as also their profit.
It was noted that the transac tions between the assessee .on the one hand and Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. on the other were as principal to principal and the wholesale price charged by the assessee to Atul Products Ltd. and Crescent Dyes and Chemicals was the sole consideration for the sale and no extra commercial consideration entered in the deter mination of such price.
For appreciating how the wholesale price could be the basis of the determination of the assess able value, a reference may be made to the decision of this Court in Union of India & Ors.
vs Cibatul Limited, [1985] Supp.
3 SCR 95.
In 1031 that case, the respondent Cibatul Ltd. entered into two agreements with Ciba Geigy of India Ltd. for manufacturing resins by the seller.
The joint manufacturing programme indicated that the resins were to be manufactured in accord ance with the restrictions and specifications constituting the buyer 's standard and supplied at prices to be agreed upon from time to time.
The buyer was entitled to test a sample of each batch of the goods and after its approval the goods were to be released for sale to the buyer.
The products were to bear certain trademarks being the property of the foreign company Ciba Geigy of Basle.
Tripartite agreements were also executed between the buyer, the seller and the foreign company, recognising the buyer as the regis tered or licensed user of the trade marks, authorising the seller to affix the trade marks on the products manufactured "as an agent for and on behalf of the buyer and not of his own account" and the right of the buyer being reserved to revoke the authority given to the seller to affix the trade marks.
The respondent in that case filed declaration for the purposes of levy of excise under the said Act show ing the wholesale prices of different classes .of goods sold by it during the period May, 1972 to May, 1975.
The declara tion included the wholesale prices of the different resins manufactured under the two aforesaid agreements.
The Assist ant Collector of Custom revised those prices upwards on the basis that the wholesale price should be the price for which the buyer sold the product in the market.
According to the Assistant Collector the buyer was the manufacturer of goods and not the seller.
The Collector of Central Excise allowed the appeals of the respondent and accepted the plea that the wholesale price disclosed by the seller was the proper basis for determining the excise duty.
The Appellate orders were, however, revised by the Central Govt.
under sub section (2) of section 36 of the Act and the orders made by the Assistant Collector were restored.
According to the Central Govt.
the buyer was the person engaged in the production of the goods and the seller merely manufactured them on behalf of.the buyer and that under the agreements the seller was required to affix the trade marks of the buyer on the manufactured goods and that indicated that the goods belonged to the buyer.
There is a ring of similarity between the facts of that case and the facts of the instant appeal before us.
The orders of the Central Govt.
were challenged under Article 226 of the Constitution.
The High Court held that the goods were manufactured by the seller as its own goods, and there fore, the wholesale price charged by the seller must form the true basis for the levy of excise duty.
On appeal.
this Court held that the High Court was right in concluding that the wholesale price of the goods manufactured by the seller was the wholesale price at which it sold those goods to the buyer, and it was 1032 not the wholesale price at which the buyer sold those goods to others.
The relevant provisions of the agreements and the other material on the record showed that the manufacturing programme was drawn up jointly by the buyer and the seller and not merely by the buyer, and that the buyer was obliged to purchase the manufactured product from the seller only if it conformed to the buyer 's standard.
For this purpose, the buyer was entitled to test a sample of each batch of the manufactured product and it was only on approval by him that the product was released for sale by the seller to the buyer.
It was apparent that the seller could not be said to manufacture the goods in those facts, it was held, on behalf of the buyer.
It was further found that it was clear from the record that the trade marks of the buyer were to be affixed on those goods only which were found to conform to the specifications or standard stipulated by the buyer.
All goods not approved by the buyer could not bear those trade marks and were disposed of by the sellers without the advan tage of those trade marks.
This question was again examined by this Court in Joint Secretary to.the Govt.
of India & Ors.
vs Food Specialities Ltd., [1985] Supp.
3 SCR 165.
There the respondent used to manufacture certain goods for sale in India by M/s Nestle 's Products India Ltd. (for short Nestle 's) under certain trade marks in respect of which the latter was registered as the sole registered user in India.
The goods were supplied to Nestle 's at wholesale price on rail at Moga or free on lorry at factory.
The respondent disputed the value of the goods determined by the excise authorities for the purpose of the levy under the said Act and ultimately the respondent filed writ petitions in the High Court.
The High Court allowed the writ petitions holding that the value of the trade marks could not form a component of the value of the goods for the purpose of assessment of excise duty.
In appeal to this Court, the appellant contended that the value of the goods sold by the respondent to Nestle 's should, for the purpose of levy of excise duty, include the value of the trade marks under which the goods were sold in the market and that the value of such trade marks should be added to the wholesale price for which the goods were sold by the respondent to Nestle 'section Dismissing the appeal, it was held that the value of Nestle 's trade marks could not be added to the wholesale price charged by the respondent to Nestle 's for the purpose of computing the value of the goods manufactured by the respondent in the assessment to excise duty.
In that case, it was held that what were sold and supplied by the respond ent were goods manufactured by it with the trade marks affixed to them and it was the wholesale cash price of goods that must determine the value for the purpose of assessment of excise duty.
It 1033 was immaterial that the trade marks belonged to Nestle 'section What was material was that Nestle 's had authorised the respondent to affix the trade marks on the goods manufac tured by it and it was the goods with the trade marks af fixed to them that were sold by the respondent to Nestle 'section There could, therefore, be no doubt, it was held, that the wholesale price at which the goods with the trade marks affixed to them were sold by the respondent to Nestle 's as stipulated under the agreements would be the value of the goods for the purpose of excise duty.
That was the price at which the respondent sold the goods to Nestle 's in the course of wholesale trade.
Similarly in the instant case, it appears that the brand name "Bush" was affixed to the goods produced by the re spondent.
In M/s Sidhosons and Others vs Union of India and others, [1987] 1 SCC 25, it was held that the excise duty was payable on the market value fetched by the goods, in the wholesale market at the factory gate manufactured by the manufacturers, i.e., the price charged by the manufacturers to the buyer under the agreement.
It could not be assessed on the basis of the market value obtained by the buyers who also add to the value of the manufactured goods the value of their own property in the goodwill of the 'brand name '.
In view of the facts that have emerged in this case, the High Court came to the conclusion that the market value of the goods of the respondent herein was the price charged from M/s Bush India Ltd. and not the market value at which price M/s Bush India Ltd. sold to its whole sellers for the purpose of payment of excise duty.
The High Court, there fore, quashed the Show Cause Notice and the Demand Notice.
Shri A. Subba Rao on behalf of the Revenue tried to contend before us that the facts of this case revealed that it was a device to under charge.
The respondent herein was brought in to divide the sale price of M/s Bush India Ltd. to be the basis of the assessable value.
It is true that the facts of this case do warrant a great deal of suspicion.
But it is not possible to hold otherwise than what has been held by the High Court in this case.
It is true, as Shri Rao drew our attention, that even though the Corporation might be a legal personality distinct from its members, the Court is entitled to lift the mask of corporate entity if the concep tion is used for tax evasion, or to circumvent tax obliga tion or to perpetrate a fraud.
In this connection, reference may be made to the observations of this Court in Juggi Lal Kamlapat vs Commissioner of Income tax, U.P., In the background of the facts 1034 found we, however, need not get ourselves bogged with the controversy as to judicial approach to tax avoidance devices as tax pointed out in McDowell and Co. Ltd. vs Commercial Tax Officer, , where this Court tried to discourage colourable devices.
It is true that tax planning may be legitimate provided it is within the framework of the law.
Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods.
It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges.
It is also true that in order to create,the atmosphere of tax compliance, taxes must be reasonably collected and when collected, should be utilised in proper expenditure and not wasted.
(See the observations in Commissioner of Wealth Tax vs Arvind Narottam; , , It is not necessary, in the facts of this case to notice the change in the trend of judicial approach in England: (Sherdeley vs Sherdeley, While it is true, as observed by Chinnappa Reddy, J. in McDowell and Co. Ltd. vs Commercial Tax Offi cer, (supra) too much to expect the legislature to intervene and take care of every device and scheme to avoid taxation and it is up to the court sometimes to take stock to deter mine the nature of the new and sophisticated legal devices to avoid tax and to expose the devices for what they really are and to refuse to give judicial ' benediction, it is necessary to remember as observed by Lord Reid in Greenberg vs IRC, that one must find out the true nature of the transaction.
It is unsafe to make bad laws out of hard facts and one should avoid subverting the rule of law.
Unfortunately, in the instant case, facts have not been found with such an approach by the lower authori ties and the High Court had no alternative on the facts as found but to quash the Show Cause and the Demand Notices.
In that view of the matter, the appeal fails and is accordingly dismissed.
But there will be no order as to costs.
We dismiss this appeal with reluctance.
Our reluc tance is not to be ascribed to any hesitation to accept the inference flowing from the facts found but reluctance is due to the fact that the facts were not properly found.
T.N.A. Appeal dismissed.

summary:
The respondent company was engaged in the manufacture of wireless receiving sets, tape recorders, tape players.
These products were assessable under Tariff Items 33A and 37AA of the Central Excise Tariff.
In the classification list and price lists filed by the respondentassessee company these goods were shown as unbranded goods.
Subsequentiy it was found that the respondent assessee company was manufacturing their products in the brand name of "Bush" and were selling the same exclusively to M/s Bush India Ltd. or its autho rised wholesale dealers only.
The appellants Revenue alleged that there was wilful suppression of facts by the respondent company with intention to evade excise duty because this fact was not mentioned by the company in the price list or classification list, filed.
A show Cause Notice was issued requiring the respondent company to show cause as to why, (i) M/s Bush India Limited should not be treated as .a 'related person ' and a favoured buyer of the respondent company for the purpose of determi nation of wholesale cash price, (ii) the concessional rate of duty under notification No. 358/77 CE should 1024 not be denied to the respondent and, (iii) the differential duty in respect of the goods cleared should not be recov ered.
Instead of executing the surety bond the respondent assessee company filed a writ petition in the High Court praying for quashing of the Show Cause Notice and for a mandamus to allow it to clear the goods on the basis of the price at which the goods were sold by it to Bush India Limited allowing the benefit of the relevant notification.
The High Court following its earlier decision held that for the purpose of payment of excise duty the market value of the goods of the respondent assessee company was the price charged by it from M/s Bush India Ltd., and not the market value at which price M/s Bush India Ltd. sold the goods.
It further held that there was no misdeclaration of the value by the assessee company, and it accordingly quashed the Show Cause Notice and the Demand Notice for recovery.
In this appeal by the Revenue it was contended that in the facts and circumstances of the case the High Court committed an error in not realising that M/s Bush India Ltd. was a related person and as such the price charged by the respondent company from M/s Bush India could not represent the correct assessable value for the purpose of excise duty.
Dismissing the appeal, HELD: 1.
Tax planning may be legitimate provided it is within the ' framework of the law.
But colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods.
It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges.
In order to create the atmosphere of tax com pliance, taxes must be reasonably collected and when col lected, should be utilised in proper expenditure and not wasted.
It is too much to expect the legislature to inter vene and take care of every device and scheme to avoid taxation and it is up to the court sometimes to take stock to determine the nature of the new sophisticated legal devices to avoid tax and to expose the devices for what they really are and to refuse to give judicial benediction.
[1034A B, D] 2.
One must find out the true nature of the transaction.
Even though the corporation might be a legal personality distinct from its members, the court is entitled to lift the mask of corporate entity if the conception is used for tax evasion, or to circumvent tax obligation perpetrate a fraud.
[1034E, 1033G] 1025 3.
It is unsafe to make bad laws out of hard facts and one should avoid subverting the rule of law.
In the instant case, facts have not been found with such an approach by the lower authorities, and the High Court had no alternative on the facts as found but to quash the Show Cause and Demand Notices.
It appears that the brand name "Bush" was affixed to the goods produced by the respondent.
For the purpose of excise duty, the market value of such goods was the price charged from M/s Bush India Ltd. and not the market value at which price M/s Bush India sold the same.
[1034E, 1033C, E] Juggi Lal Kamlapat vs Commissioner of Income tax, U.P., ; Mc Dowell and Co. Ltd. vs Commercial Tax Officer, ; Commissioner of Wealth Tax vs Arvind Narottam, ; Sherdeley vs Sherdeley, and Greenberg vs IRC.
referred to.
Union of India vs Bombay Tyre International, ; ; Union of India & Ors., vs Atic Industries Ltd., ; ; Union of India & Ors.
vs Cibatul Limited, [1985] Supp.
3 SCR 95; Joint Secretary to the Government of India & Ors.
vs Food Specialities Ltd., [1985] Supp.
3 SCR 165 and M/s Sidhosons & Ors.
vs Union of India & Ors, [1987] 1 SCC 25 relied on.


judgement:
ivil Appeal No. 251 of 1954.
Appeal from the judgment and decree dated April 22, 1952, of the Punjab High Court in Civil Regular First Appeal No. 1/E of 1947 arising out of the judgment and decree dated July 1, 1947, of the Court of SubJudge, Ambala in Suit No. 239 of 1946.
Tarachand Brijmohan Lal, for the appellant.
Hardayal Hardy, for respondent No. 1. 1958.
May 1.
This is a plaintiff 's appeal against the judgment and decree passed on April 22, 1952, by a Division Bench of the Punjab High Court reversing the decree passed on July 1, 1947, by the First Class Subordinate Judge, Ambala in favour of the plaintiff and dismissing the plaintiff 's Suit No. 239 of 1946.
The appeal has been preferred on the strength of a certificate granted by the ]Division Bench on December 19, 1952.
The facts material for the purpose of this appeal may now be shortly stated: One Lala Beni Pershad died in the year 1910 leaving him surviving his widow Mst.
Daropadi (defendant respondent No. 2) and ' two sons by her, namely, Gokul Chand (defendant respondent No. 1) and Raghunath Das (plaintiff appellant) who was then a minor.
Lala Beni Pershad left considerable moveable properties including many G. P. Notes and also various immoveable properties including agricul tural land, gardens and houses.
After his death the family continued to be joint until disputes and.
differences arose between the two brothers in 1934.
Eventually oil November 12, 1934, the two brothers executed an agreement referring their disputes relating to the partition of the family properties to the arbitration of Lala Ramji Das who was a common relation.
813 It is alleged that the respondent Gokul Chand had disposed of part of the () 'F. P. Notes and that at the date of the reference to arbitration G. P. Notes of the value of Rs. 26,500 only were held by Gokul Chand, as the Karta of the family.
On June 21, 1936, the arbitrator made an award which was signed by both the, brothers statedly ill token of their acceptance thereof.
The award was registered on July 28, 1936.
By that award the arbitrator divided the imoveable, properties and shops as therein mentioned.
As regards the G. P. Notes the arbitrator directed and awarded that out of the G. P. Notes of the value of Rs. 26,500, which then stood in the name of Gokul Chand, G. P. Notes of the value of Rs. 13,300 should be entered into the names of Gokul Chand and Mst.
Daropadi and the remaining Notes of the value of Rs. 13,200 should be endorsed in the names of Raghunatb Das and Mst.
Daropadi and that till her death Mst.
Daropadi should alone be entitled to the interest on the entire G. P. Notes of the value of Its. 26,500 and that after her death Gokul Chand would be the owner of the ("X. P. Notes of the value of Rs. 13,300 and Raghunath Das of G. P. Notes of the value of Rs. 13,200.
The arbitrator further directed Gokul Chand to pay to Raghunath Das a sum of Rs. 20,000 in four several instalments together with interest thereon as mentioned therein.
On August 31, 1936, Gokul Chand applied to the District Judge, Ambala under paragraph 20, of Schedule 11 to the Code of Civil Procedure for filing the award.
During the pendency of those Proceedings the two brothers entered into a compromise modifying certain terms of the award which are not material for the purpose of the present appeal.
By an order made on November 18, 1936, the District Judge directed the award as modified by the compromise to be filed and passed a decree in accordance with the terms of the award thus modified.
On November 15, 1939, Raghunath Das made an application to the court of the District judge for execution of the decree.
The District Judge transferred the application to the court of the Subordinate Judge 814 who directed notice of that application to be issued to Gokul Chand.
Gokul Chand filed objection to the execution mainly on the ground that the decree had been passed without jurisdiction in that the District Judge had no power to pass a decree for partition of agricultural lands.
The Subordinate Judge on December 23, 1942, accepted Gokul Chand 's plea and dismissed the execution application.
On appeal by Raghunath Das to the High Court a learned Single Judge on April 5, 1944, accepted the appeal, but on Letters Patent Appeal filed by Gokul Chand the Division Bench on March 15, 1945, reversed the order of the Single Judge and restored the order of dismissal passed by the Subordinate Judge.
Having failed to obtain the relief granted to him by the decree passed upon the award on the ground of defect of jurisdiction in the court which passed the decree and consequently for want of jurisdiction in the executing court, Raghunath Das, on August 21, 1945, instituted Suit No. 80 of 1945 against Gokul Chand for the recovery of Rs. 7,310 11 3 being the balance with interest remaining due to him out of the said sum of Rs. 20,000, awarded in his favour.
Gokul Chand raised a number of pleas but eventually all his pleas were negatived and the senior Subordinate Judge, Ambala, by his judgment pronounced on December 22, 1945, decreed the suit in favour of Raghunath Das.
Gokul Chand did not file any appeal therefrom and consequently that decree became final and binding as between the parties thereto.
On June 5, 1946, Raghunath Das filed in the court of the Senior Subordinate Judge, Ambala a suit being Suit No. 239 of 1946 out of which the present appeal has arisen.
In this suit Raghunath Das claimed that Gokul Chand be ordered to transfer G. P. Notes of the value of Rs. 13,200 out of the G. P. Notes of the value of Rs. 26,500 to Raghunath Das and Mst.
Daropadi by means of endorsement or some other legal way, to get them entered into the Government registers and to make them over to Raghunath Das, the plaintiff.
Particulars of the numbers, the year of issue, the face value and the interest payable on all the said G. P. 815 Notes were set out in the prayer.
There was an alternative prayer that Gokul Chand be ordered to pay Rs. 13,200 to the plaintiff.
Gokul Chand filed his written statement taking a number of pleas in bar to the suit.
Not less than 12 issues were raised, out of which only issues Nos. 2 and 3 appear from the judgment of the Subordinate Judge to have been seriously pressed.
Those two issues were as follows: " (2) Is the suit within time ? and (3) Is the suit barred by Order 2, Rule 2 of the Civil Procedure Code?" The Subordinate Judge decided both the issues in favour of the plaintiff.
He held that article 49 of the Indian Limitation Act had no application to the facts of this case and that there being no other specific Article applicable, the suit was governed by the residuary article 120.
The learned Subordinate Judge also took the view that the period from November 15, 1939 to March 15, 1945, spent in the execution proceedings should be excluded under section 14 of the Indian Limitation Act in computing the period of limitation under article 120.
The learned Subordinate Judge also held that the cause of action in the earlier suit for the recovery of the sum of Rs. 7,310 11 3 was not the same as the cause of action in the present suit and, therefore, the present suit was not barred under 0. 2, r. 2, of the Code of Civil Procedure.
The learned Subordinate Judge accordingly decreed the suit in favour of Raghunath Das.
Gokul Chand appealed to the High Court.
The appeal came up for hearing before a Division Bench of the Punjab High Court.
Only two points, were pressed in support of the appeal, namely, (1) whether the suit was barred by time and (2) whether the suit was barred under 0. 2, r. 2, of the Code of Civil Procedure.
Learned counsel appearing for Gokul Chand urged that the suit was one for the recovery of " other specific moveable property " that is to say specific moveable property other than those falling within Arta.
48, 48A and 48B of the Indian Limitation Act and was accordingly governed by article 49.
Article 49.
provides three years ' period of limitation I04 816 for a suit for " other specific moveable property or for compensation for wrongful taking or injuring or wrongfully detaining the same " and this period of three years begins to run from " when the property is wrongfully taken or injured or when the detainer 's possession becomes unlawful ".
In the opinion of the High Court the suit was for the recovery of specific Government promissory notes and this, according to the High Court, was plain from the perusal of para.
18 of the plaint which set out the reliefs claimed by the plaintiff in the suit.
The reference to the numbers, value and the year of issue of G. P. Notes and the rates of interest carried by them appeared to the High Court to be decisive on this point.
The High Court held that the suit was governed by article 49 and that, as the plaintiff would be out of time even if the period between November 15, 1939, and March 15, 1945, was excluded, the High Court did not think it necessary to consider the question of the applicability of section 14 of the Indian Limitation Act.
As its finding on the issue of limitation was sufficient to dispose of the suit, the High Court did not discuss the other issue founded on 0. 2, r. 2, of the Code of Civil Procedure but allowed the appeal and dismissed the suit as barred by limitation.
We are unable to accept the decision of the High Court as correct.
The High Court overlooked the fact that so far as the G. P. Notes were concerned the decree upon the award only declared the rights of the parties.
Under the decree Raghunath Das was entitled to have G. P. Notes of the value of Rs. 13,200 endorsed in the names of himself and Mst.
Daropadi out of the G. P. Notes of the value of Rs. 26,500.
The award or the decree thereon did not actually divide the G. P. Notes by specifying which particular G. P. Notes were to be endorsed in the names of Gokul Chand and Mst.
Daropadi or which of them were to be endorsed in the names of Raghunath Das and his mother.
Until the G. P. Notes were actually divided, either by consent of parties or by the decree of the court, neither of the brothers could claim any particular piece of G. P. Notes as his separate property or 817 ask for delivery of any particular C. P. Notes in specie.
Gokul Chand not being agreeable to come to an amicable division of the G. P. Notes, Raghunath Das had perforce to seek the assistance of the court and pray that the entire lot of C. P. Notes of the value of Rs. 26,500 be divided by or under the directions of the court into two lots and one lot making up the value of Rs. 13,200 be endorsed in favour of him (Raghunath Das) and his mother by or on behalf of Gokul Chand and then delivered to him, the plaintiff.
He could not in his plaint claim that particular pieces of G. P. Notes making up the value of Rs. 13,200 be delivered to him in specie.
This being the true position, as we conceive it, Raghunath Das 's suit cannot possibly be regarded as a suit for a " specific moveable property ".
That expression is apt only to cover a suit wherein the plaintiff can allege that he is entitled to certain specific moveable property and/or of which he is presently entitled to possession in specie and which the defendant has wrongfully taken from him and/or is illegally withholding from him.
That is not the position here.
It should be remembered that the two brothers were entitled to the G. P. Notes of the value of Rs. 26,500 originally as joint coparceners and thereafter, when the decree upon the award had been passed, as tenants in common.
Until actual partition by consent of the parties or by court Gokul Chand, who held the custody of the G. P. Notes, could not be said to have taken them wrongfully from Raghunath Das and his possession of them could not be said to be or to have become unlawful.
These considerations clearly distinguish this case from the case of Gopal Chandra Bose vs Surendra Nath Dutt (1) on which the High Court relied because in that case the defendant had no right to or interest in the G. P. Notes in question and had no right to retain possession thereof.
Therefore, to the present situation the terminus a quo specified in the third column of article 49 can have no application.
It is now well established that a suit by an heir against other heirs to recover his share of the moveable estate of a deceased person is not one for (1) (1908) XII C. W. N. 1010 818 specific moveable property wrongfully taken such as is contemplated by Art 49, but is governed by article 120.
See Mohomed Riasat Ali vs Mussumat Hasin Banu (1).
The only difference between the facts of that case and those of the present case is that here the rights of the parties had been declared by the decree upon the award but that circumstance does not appear to us to make any material difference in the application of the principle laid down by the Judicial Committee.
The substance of the plaintiff 's claims in both cases is for separating his share out of the estate and for allotment and delivery to him of his share so separated.
In short such a suit is nothing but a suit for partition or division of the moveable properties held jointly or as tenants in common by the parties and there being no specific Article applicable to such a suit it must be governed by article 120.
The period of limitation fixed by article 120 is six years from the date when the right to sue accrues.
In order, therefore, to be within the period of limitation the plaintiff claims to exclude the period November 15, 1939, to March 15, 1945, spent in the execution proceedings.
Section 14 (1) of the Indian Limitation Act runs as follows: " 14 (1) In computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with, due diligence another civil proceeding, whether in a Court of first instance or in a Court of appeal, against the defendant, shall be excluded where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a Court which, for defect of jurisdiction, or other cause of a like nature is unable to entertain it.
" The respondent contends that the above section has no application to the facts of his case.
We do not think that such contention is well founded.
The execution proceedings initiated by Raghunath Das were certainly civil proceedings and there can be no doubt that he prosecuted such civil proceedings with due diligence and good faith, for lie was obviously (i) (1893) L. R. 20 I. A. 155.
819 anxious to have his share of the G. P. Notes separately allocated to him.
He lost in the execution court but went on appeal to the High Court where he succeeded before a Single Judge, but eventually he failed before the Division Bench which reversed the order the Single Judge had passed in his favour.
Therefore, there can be no question of want of due diligence and good faith on the part of Raghunath Das.
In the next place the section excludes the time spent both in a court of first instance and in a court of appeal.
Therefore, other conditions being satisfied, the entire period mentioned above would be liable to be excluded.
The only questions that remain are (1) whether the proceedings were founded upon the same cause of action and (2) whether he prosecuted the proceedings in good faith in a court which for defect of jurisdiction ",as unable to entertain it.
The execution proceedings were founded upon his claim to enforce his rights declared under the decree upon the award.
The cause of action in the present suit is also for enforcement of the same right, the only difference being that in the former proceedings Raghunath Das was seeking to enforce his rights in execution and in the present instance he is seeking to enforce the same rights in a regular suit.
There is nothing new that he is asking for in the present suit.
That he prosecuted the execution proceedings in the Subordinate Court as well as in the High Court in good faith cannot be denied, for the Single Judge of the High Court actually upheld his contention that the court had jurisdiction to entertain his application.
The execution proceedings failed before the Division Bench on no other ground than that the executing court had no jurisdiction to entertain the application, because the decree sought to be executed was a nullity having been passed by a court which had no jurisdiction to pass it.
Therefore, the defect of jurisdiction in the court that passed the decree became, as it were, attached to the decree itself and the executing court could not entertain the execution proceeding on account of the same defect.
The defect of jurisdiction in the executing court was finally determined when 820 the Division Bench reversed the decision of the Single Judge who had entertained the execution proceeding.
In our opinion Raghunath Das is entitled to the benefit of section 14 (1) of the Indian Limitation Act and the period here in before mentioned being excluded, there can be no doubt that the suit was filed well within the prescribed period of limitation and the judgment of the Division Bench cannot be sustained.
In the view it took on the question of limitation the Division Bench did not consider it necessary to go into or give any decision on the other issue, namely, as to whether the suit was barred by 0. 2, r. 2.
The suit should, therefore, go back to the High Court for determination of that issue.
The result, therefore, is that we accept the appeal, set aside the judgment and decree of the High Court and remand the case back to the High Court for a decision on issue No. 3 only.
The appellant will get the costs of this appeal as well as the costs of the hearing in the High Court resulting in the decree under appeal and the general costs of the appeal and the costs of further hearing on remand will be dealt with by the High Court.
Appeal allowed.
Case remanded.

summary:
The words " specific moveable property " occurring in article 49 Of the Indian Limitation Act can mean only such specific items of moveable property in respect of which the plaintiff is entitled to claim immediate possession in specie from the defendant who has either wrongfully taken or is wrongfully withholding them from him.
A suit by one heir against the others for recovery of his share of the moveable property of a deceased person is not one for a specific moveable property wrongfully taken such as is contemplated by article 49 and must, in the absence of any other specific provision in the Act, be governed by article 12o and not article 49 of the Indian Limitation Act.
Mohomed Raisat Ali vs Musummat Hasin Banu, (1893) L,R. 2o I,A. 155, relied on.
Consequently, in a case where the decree passed upon an award, without specifying any particular G. P. Notes or dividing them, directed the elder brother to transfer G. P. Notes of the value of Rs. 13,200 to the younger brother from out of the G. P. Notes of the total value of Rs. 26,500 left by the father in the custody of the former, and the younger brother, failing to obtain relief by way of execution of the decree, brought the suit, out of which the present appeal arises, against the elder brother for a division of the G. P. Notes and a direction on him that G. P. Notes of the value of Rs. 13,200 might be transferred to him and claimed that the entire period covered by the execution proceeding from its inception till the final disposal by the High Court should be excluded in computing the period of limitation : Held, that the suit in substance was one for the division of moveable property held in joint ownership and not for possession of any specific.
item of moveable property and as such was governed, not by article 49, but by article 120 of the Indian Limitation Act.
Gopal Chandra Bose vs Surendra Nath Dutt, (1908) 12 C.W.N. 1010, distinguished and held inapplicable.
812 As the facts and circumstances of the case satisfied the requirements of section 14(1) Of the Indian Limitation Act in computing the prescribed period of limitation the time covered by the execution proceeding from its inception till its final disposal by the High Court must be excluded.