judgement:
Civil Appeals Nos. 2475 to 2477 and 2579 of 1969 From the judgment and order dated the 15th April, 1969 of the Judicial Commissioner 's Court at Goa, Daman and Diu in Civil Appeal Nos. 3217, 3334/64 and 3466 of 1965 and 3467 of 1965.
V.M. Tarkunde, Bernardo Doss Reis and Naunit Lal for the Appellants in CA.
2476/69.
S.D. Tamba, Girish Chandra and Miss A. Subhashini, for the Respondents.
The Judgment of the Court was delivered by PATHAK, J.
These appeals by certificate granted by the Additional Judicial Commissioner of Goa, Daman and Diu arise out of suits for the recovery of loans made to the appellants at various branches of the Banco Nacional Ultramarino in Goa during Portuguese rule, 19 The territories, of Goa, Daman and Diu constituted the Estado de India of the sovereign State of Portugal.
The Banco Nacional Ultramarino (the National overseas Bank) with its Head office at Lisbon in Portugal, carried on banking business in Goa at different Branches, some of them being situate at Vasco Da Gama, Margao and Panjim.
It was also a currency issuing Bank and discharged the functions of a Government Treasury.
It issued Portuguese currency notes in Goa, and in its banking capacity it received deposits and granted loans.
On December 20, 1961 the territories of Goa, Daman and Diu were liberated from Portuguese rule and integrated with India.
On the eve of the transfer of power the Banco Nacional Ultramarino closed its Branches at Goa and removed a substantial portion of the valuable assets held there to its Head office at Lisbon and to other places overseas.
To provide for the administration of the liberated territories the President of India promulgated the Goa, Daman and Diu (Administration) ordinance, 1962, which on March 27, 1962 was replaced by enacted by Parliament.
By virtue of sub section
(1) of section 5 of the Act all laws in force immediately before "the appointed day" (December 20, 1961) in Goa, Daman and Diu were to continue to be in force therein until amended or repealed by a competent legislature or other competent authority.
The clo sure of the Branches of the Banco Nacional Ultramarino at Goa gave rise to considerable confusion.
It was necessary to take measures for the exchange of over nine crore rupees worth of Portuguese currency notes for Indian currency, and likewise to provide for the repayment of moneys and the return of valuables deposited with the Branches.
As the Banco Nacional Ultramarino had closed those Branches no one could operate on them.
To relieve the common confusion and distress, the President of India promulgated, under Article 240 of the Constitution, the Goa, Daman and Diu (Banks Reconstruction) Regulation, 1962 (hereinafter referred to as "the Regulation").
Section 3 declared that in view of the closure of the branches and the transfer of a substantial portion of their assets out of India on or about the "appointed day" and the difficulties experienced by depositors, the 20 Branches would, as from that day, be reconstructed in the interests of the general public in accordance with the provisions of the Regulation.
An examination of the provisions which follow shows that the Branches were integrated into a fully constituted Bank independent of the Banco Nacional Ultramarino, the purpose being to dispose of the business pending on December 20, 1961, with no fresh business being undertaken, and its functions being confined to the discharge of existing liabilities and the recovery of existing debts and other assets with a view to the ultimate winding up of the Bank.
A Custodian was appointed by the Central Government to take charge of the Bank.
The properties and assets as well as the obligations and liabilities of the Bank stood transferred to and vested in him, and he was empowered to realise any debts or other amounts due to the said Branches including any debts or other amounts due from the Head office of the Banco Nacional Ultramarino.
On March 30, 1963, the Custodian filed a suit in the Court of the Civil Judge at Ilhas, Panaji against the Agencia Commercial International, its managing partner, Jose Antonio Gouveia and his wife Geraldina Pereira Gouveia, alleging that the branch of the Banco Nacional Ultramarino at Panaji had, pursuant to a request of the Agencia, opened a current account in its favour upto the limit of Escudos 300.000$00 for three months renewable at 4% interest, 3% fine, 1 1/4% quarterly commission, penal interest at 6% and court expenses, the loan account being secured by a promissory note with its maturity date in blank, executed by the Agencia and guaranteed by the managing partner and his wife.
The limit was raised subsequently, and the excess was also guaranteed by a promissory note with its maturity date in blank and signed by the defendants.
The plaintiff stated that the loan account showed a debit balance of Escudos 428.612$37, equivalent to Rs. 71,435.40, in favour of the Panjim branch of the Banco Nacional Ultramarino, the account being closed on December 20, 1961 and the balance thereof becoming payable.
It was stated further that the promissory notes were not in the possession of the plaintiff and could be presumed to have been removed to Portugal.
The plaintiff prayed for a joint and several decree against the defendants for Rs. 71,435.40 with accrued interest, Penal interest, commission, fine and court expenses.
21 The suit was resisted by the defendants, principally on the ground that the Banco Nacional Ultramarino was a public limited company with its head office at Lisbon, that the Branch at Panjim did not possess a separate juridical personality from the Company and could not be said to possess assets or liabilities of its own, that transactions by the Panjim Branch were made under the direct superintendance of the Head office and credit was granted directly by B the Head office, and that the credit in question was incorporated in promissory notes lying with the Banco Nacional Ultramarino which had already informed its debtors that it would take action on the bills directly or by transferring them to a third party.
It was also pleaded that the debtors could be compelled to pay the credit incorporated in a promissory note only when the creditor returned the promissory note for payment, so that future duplication of payment would be avoided.
The defendants asserted that Escudos 25,794$45, equivalent to Rs. 4,234.09, had been entered to their credit in the Bank account and that they were entitled to a set off.
The plaintiff filed a replication to the written statement of the defendants, and the defendants followed with a rejoinder.
Civil suits were also filed by the Custodian against other defendants in respect of similar transactions, and a substantially similar defence was set up in all of them.
The suits were instituted in the Court of the Civil Judge, Senior Division at Margao.
Some of the suits filed at Margao were tried by Shri E.S. Silva, Comarca Judge, while the other by Shri Justino Coelho, Comarca Judge.
The preliminary objections to the maintainability of the suits found favour with Shri Silva, and he dismissed the suits before him altogether.
Sheo Coelho, however, found it necessary to try the suits instituted in his court on their merits, and he decreed them against the original debtor as well as the guarantor and surety.
The lone suit decided by Shri Ataide Lobo, the Comarca Judge, Ilhas at Panaji was decreed against the principal debtor but dismissed against the guarantors.
Ten appeals were filed before the Addl.
Judicial Commissioner.
The Additional Judicial Commissioner dismissed the appeals against the judgment of Shri Ataide Lobo.
Allowing the appeals against the judgments of Shri E.S. Silva, he decreed the suits and granted the reliefs claimed by the Custodian.
The appeals against the judgment of Shri Justino Coelho were dismissed except that the appeal tiled by Amalia Gomes Figueiredo, one of the guarantors, was allowed and the suit dismissed as against her.
22 The Additional Judicial Commissioner held that the Regulation effected a reconstruction of the Branches in Goa, Daman and Diu of the Banco Nacional Ultramarino, that the rights and obligations of the Branches referred to in the Regulation must be understood to mean the rights acquired and the obligations undertaken by the Banco Nacional Ultramarino through those Branches and therefore the Custodian was entitled to maintain the suits and sue for the realisation of debts arising out of transactions entered into through those Branches.
The Additional Judicial Commissioner also held that as the execution of the negotiable instruments had been admitted in the written statements and it was commonly agreed that they were not within the reach of the Custodian, having been removed by the officers of the Banco Nacional Ultramarino to Lisbon or elsewhere on December 20, 1961, there was nothing to preclude the Custodian claiming relief without producing those negotiable instruments.
He also repelled the contention that the bills of exchange and the promissory notes could on endorsement by the Banco Nacional Ultramarino in favour of others result in the defendants having to make payment a second time.
He recorded an oral undertaking furnished by the Custodian that in the event of a decree in such suits the Custodian would render compensation to the defendant to the extent that the Custodian had made realisation pursuant to the decrees under appeal.
Having regard to Article 53 of the Uniform Law on Bills of Exchange and Promissory Notes, the Additional Judicial Commissioner held that the holder had lost his right of recovery against all except the acceptor in respect of whom, observed the Judicial Commissioner, the suits were within time in view of Article 70 of the Uniform Law.
Shri V.M. Tarkunde appearing for the appellants in Civil Appeal No. 2476 of 1969 contends that the loans were granted by the Head office of the Banco Nacional Ultramarino, and not by the Branches at Goa, and that as the properties and assets, rights and claims of the Branches alone vested in the Custodian under the Regulation, the Custodian was not entitled to sue for recovery of the loans granted by the Head office.
Shri Tarkunde relies on the distinction made by the Regulation between the Head office and the Branches of the Bank and says that they have been regarded as separate entities.
Shri Tarkunde further says that even if the suits are held maintainable, the Additional Judicial Commissioner erred in not proceeding further to determine whether the appellants were 23 entitled to credit for the adjustments claimed by them in the loan accounts.
Shri Naunit Lal, appearing for the appellants in Civil Appeals Nos. 2475, 2477 and 2579 of 1979, adopts the submissions of Shri Tarkunde.
Shri F.S. Nariman, appearing for the appellants in Civil Appeals Nos.
2464 to 2468 of 1969, also disputes the maintainability of the suits.
He has strenuously urged that no dichotomy can be envisaged between the Head of the Banco Nacional Ultramarino and its Branches in Goa, and it is only the Banco Nacional Ultramarino at its Head office at Lisbon which can sue for recovery of the debts.
Alternatively he contends that even if the Head office and the Branches can be regarded in law as separate entities some, if not all, of the loans had been extended directly by the Mead office and in respect of them, he says, the Regulation cannot be applied.
He also urges that even if all the transactions are held covered by the Regulation, the suits cannot be decreed as there is no statutory discharge of the appellants ' liability to the Banco Nacional Ultramarino in respect of the debts.
The indemnity offered by the Custodian, he urges, is of no value in law.
Another reason why the suits cannot be decreed, says Shri Nariman, is because the promissory notes have not been produced.
There has been considerable dispute on the point whether the transactions were entered into by the Branches of the Banco Nacional Ultramarino or could be attributed to the Head office at Lisbon.
It seems to us clear from the material on the record that the appellants entered into the loan agreements with the Banco Nacional Ultramarino, and the Head office of the Bank at Lisbon authorised the relevant Branch at Goa to give effect to the agreement.
The evidence is clear that the agreements were signed on behalf of the bank by the Manager of the relevant branch and the loan accounts were opened by the branches in their books, that payments were made by the Branches to the appellants, that deposits by way of repayment were made by the appellants in these accounts maintained by the Branches, and the appellants pledged or hypothecated their goods in favour of the branches; in short while the Head office authorised the Branch to execute the agreements the transactions were regarded for all purposes as transactions pertaining to 24 the respective Branches, to be actually controlled and worked out by them.
The suits, it may be noted, were filed on the basis of the balance recorded in the accounts books of the relative Branch.
Now it is indisputable as a general proposition that a body corporate and its branches are not distinct and separate entities from each other, that the branches constitute mere components through which the corporate entity expresses itself and that all transactions entered into ostensibly with the branches are in legal reality transactions with the corporate body, and it is with the corporate body, that a person must deal directly.
But it is also now generally agreed that in the case of a Bank which operates through its Branches, the Branches are regarded for many purposes as separate and distinct entities from the Head office and from each other.
This Court observed in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others :(1) "In banking transactions the following rules are now settled: (1) the obligation of a bank to pay the cheques of a customer rests primarily on the branch at which he keeps his account and the bank can rightly refuse to cash a cheque at any other branch: Rex v Lovitt (1912) A.G. 212 at 219, Bank of Travancore vs Dhrit Ram (69 I.A. 1, 8 and 9) and New York Life Insurance Company vs Public Trustee , 110 at page 117; (2) a cumtomer must make a demand for payment at the branch where his current account is kept before he has a cause of action against the bank: Joachimson vs Swiss Bank Corporation (1921) 3 K.B. 119 quoted with approval by Lord Reid in Arab Bank Ltd. vs Barclayas Bank , 531) The rule is the same whether the account is a current account or whether it is a case of deposit.
The last two cases refer to a current account; the Privy Council case Bank of Travancore vs Dhrit Ram (supra) was a case of deposit.
Either way, there must be a demand by the customer at the branch where the current account is kept, or where the deposit is made and kept, before the bank need pay, and for these reasons the English Courts hold that the (3) at 422.
25 situs of the debts is at the place where the current account is kept and where the demand must be made.
" It was explained further that if the bank wrongly refused to pay when a demand was made at the proper place and time, then it could be sued at its head office as well as at its branch office, but the reason was that "the action is then, not on the debt, but on the breach of the contract to pay at the place specified in the agreement", and reference was made to Warrington, L.J. at page 116 and Atkin, L.J. at page 121 of New York Life Insurance Co. vs Public Trustee.(l) That is the position in regard to banking law and practice, and it is apparently in that light that the Regulation has been framed.
The Regulation was intended to achieve what emergency legislation was designed to secure in a somewhat different context by somewhat comparable methods.
In England, during the First World War the Trading with the Enemy Amendment Act, 1916 provided for the winding up of the business carried on in England by companies incorporated in Germany.
That Act was considered by the court In re W. Hagelberg Aktien Gesellschaft(2) and it was observed that although the branches and agency of a business could not be regarded as distinct from the principal business of.
the owner, nonetheless, if a statute was enacted to create that effect, effect had to be given to the statute for the purposes incorporated therein.
During the Second World War the courts in England were called upon to consider the Defence (Trading with the Enemy) Regulation, 1940 under which a winding up order could be made in respect of the business of any enemy bank carried on at its London offices.
In Re The Banca Commercial Italiana(3) the court observed that having regard to the language of the statute and previous cases on the point "a winding up order made under the regulation must be held to create for the purpose of winding up a new entity, namely, the business ordered to be wound up, and this entity is considered as one which can possess assets and have liabilities of its own." Corresponding legislation in India during the Chinese invasion and (1) (2) [1916] Chancery Division 503.
(3) [1943] 1 All Eng.
L.R. 480.
26 the Indo Pakistan Wars was incorporated in the Defence of India Rules framed from time to time.
In all these cases there is a departure from the general rule that the branches and agencies of a business are no more than the components through which the entire enterprise is carried on, and that they cannot be considered as distinct or separate from the Head office.
The departure was necessitated by an emergent or a normal situation, and incorporated and regulated by specific legislation enacted for the purpose of coping with the problems arising out of such a situation.
It is only right then that the true scope of what is intended by the legislation should be determined by close reference to the express terms of the legislation.
It is abundantly plain from the object and purpose of the Regulation and the provisions which seek to realise them that all transactions effected by or through the Branches of the Banco Nacional Ultramarino were intended to be brought within the compass of the Regulation.
As observed earlier, although the loan agreements may have been entered into with the Banco Nacional Ultramarino, the Branches were authorised by the Head office to give effect to those agreements, and accordingly the Branch concerned embarked upon the execution of the agreements and the working out of the transactions.
The entire business involved in those transactions and dealings was effected by the Brancn concerned, and it was only when occasion strictly so required that the Branch made reference to the Head office for authority to amend or enlarge the scope of the operation.
The transaction and the business nonetheless remained throughout those of the Branch, and this is fully affirmed by the existence and operation of the loan accounts in the books of the Branch, by the pledge or hypothecation of goods in almost all cases in favour of the Branch and by the overall nature and character of the transaction as an ordinary banking transaction falling within the normal business of a Branch.
It will be noticed that section S of the Regulation expressly speaks of "properties and assets, all rights, powers, claims, demands, interests, authorities and privileges and all obligations and liabilities" of the Branches and of "all contracts, deeds, bonds, agreements. " to which the Branches are a party or which are in their favour.
It proceeds clearly on the basis that the Branches must be regarded as entering into and carrying out transactions identifiable as theirs.
These are transactions distinct from those exclusively carried on by 27 the Head office of the Banco Nacional Ultramarino, with which transactions in their essence the Branches had nothing to do.
It will also be noticed that by sub section
(2) of section 7 the Regulation envisages financial transactions between the Branches and the Head office.
The entire purpose of the Regulation is to reconstruct by operation of statute the closed Branches of the Banco Nacional Ultramarino and to constitute them into a Bank and to work out existing transactions and square up all pending business with a view to ultimately winding up the affairs of the Branches.
section 14 of the Regulation provides: "The Central Government shall, on the expiry of twelve years, and may, at any time before such expiry, direct that the books of account and affairs of the branches of the Banco Nacional Ultramarino in Goa, Daman and Diu shall be inspected by the Reserve Bank or by such other agency as the Central Government may determine and that a report on the basis of such inspection shall be made and the Central Government may, after considering the said report, direct the winding up of the affairs of the said branches on such terms and conditions to be specified by that Government which shall, as far as practicable, be in consonance with the provisions relating to winding up of a banking company under the Banking Companies Act, 1949".
To accept the contentions advanced by the appellants would be to negative the very object and purpose of the Regulation and to nullify its provisions.
Such a construction of the Regulation is not open to the Court, for it could never be supposed that in enacting the Regulation the President intended an exercise in futility.
It is well settled that the construction put by a court on the provision of a statute should accord with the object and purpose of the statute, and in that behalf the rule in Heydon 's case(1) relied on by this Court in R.M.D. Chamarbaugwalla vs The Union of India(2) is attracted.
What was the law before the statute was passed, what was the mischief or defect for which the law had not provided, what remedy had the legislation appointed and what was the reason of the remedy ? That substantially was also the test laid down in (1) ; (2) ; 28 Vrajlal Manilal & Co. & Ors.
vs State of Madhya Pradesh & ors.(1) It was observed in Kanai Lal Sur vs Paramnidhi Sadhukhan:(2) "When the material words are capable of two cons tructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction.
" We are of opinion that the transactions under consideration in these appeals fall within the scope of the Regulation and the Custodian is fully entitled to sue for the recovery of the debts covered by the loan agreements.
The contention of the appellants to the contrary is rejected.
We now turn to the remaining points raised in these appeals.
It has been urged that the statutes cannot be decreed because the Promissory Notes and the Bills of Exchange have not been produced by the Custodian before the trial court.
Now, it is not disputed that the documents have been removed from Goa to Portugal or to other places overseas and are no longer in the possession of the Branches.
The debts were sought to be proved on the basis of the accounts maintained in the books of account of the relevant Branches.
This was permissible by virtue of sub section
(1) of 8. 8 of the Regulation which provides: "8.
(1) If for the prosecution of any suit, appeal or other legal proceeding by the Custodian in any court it is necessary to produce any document or other particulars and the said document or particulars are proved to the satisfaction of the Court to have been removed to Portugal or to any of the territories under Portuguese control, it shall be lawful for the Court, in disposing of the suit, appeal or other legal proceeding to base its decree or decision on the books of account of the branches of the Banco Nacional Ultramarino in Goa, Daman and Diu and on the evidence which can be otherwise produced." (1) ; , 410.
(2) ; 367. 29 Having regard to the circumstances, it is within the competence of the court to base its decree on the books of account of the Branches in Goa and on other evidence which can be produced.
It was not necessary for the Custodian, indeed it was not possible, to produce the Promissory Notes and Bills of Exchange.
Our attention has been invited to a passage in Byles on Bills of Exchange (1) which declares that "in any action or proceeding upon a bill, the court or a judge may order that the loss of the instrument shall not be set up provided an indemnity be given to the satisfaction of the court or judge against the claims of any other person upon the instrument in question".
The provisions of Rule 16 of order VII of the Code of Civil Procedure and section 81 of the were also referred to.
It is true that those provisions require the plaintiff to furnish an indemnity before a suit can be decreed if the negotiable instrument on which the suit is founded is proved to have been lost or cannot be produced.
It seems to us that resort to those provisions cannot be justified inasmuch as the cases fall to be determined under the Regulation and the Portuguese law which continued in force in Goa.
Even in respect of the Portuguese law, that is to say, provisions in the Portuguese Commercial Code and the Portuguese Uniform Law, to which our attention has been specifically drawn, we are of opinion that it stands superseded by reason of the express provisions contained in sub section
(1) of section 8 of the Regulation.
No indemnity can be reasonably required of the Custodian when it has been proved to the satisfaction of the court that the document has been removed to Portugal or to any of the territories under Portuguese control.
The sub section plainly makes no provision for indemnifying the debtors against any further claims made against them.
Such a measure was not considered necessary, because the Regulation vested the entire right in the Custodian to recover the debt and no further right was left in anyone else; The debts were regarded as properties and assets of the Branches, and all rights in respect of them stood transferred to and vested in the Custodian by virtue of sub section
(I) of section 5.
Having regard to the provisions of the Regulation and the object with which it was enacted it is not possible to conceive that it would be open to the Head office of the Banco Nacional Ultramarino to sue the debtors for recovery of those debts.
Shri Nariman contends that an express provision was neces (1) 22nd Edn.
p. 389 para.
30 sary in the Regulation to effect a complete discharge of the debtors from further liability as was the case in section 11 (2) of the Pakistan Ordinance considered in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others.(1) We think it is not necessary that there should be such a specific provision.
rt is sufficient if the same conclusion can be drawn from a proper construction of the general provisions of the Regulation and the object with which it has been enacted.
We may point out that although reference was made by this Court in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others (supra) to section 11 (2) of the Pakistan Ordinance, it was also observed on page 425 that alternatively: "Such payment would operate as a good discharge even under the English rules: see Fouad Bishara Jabbour vs State of Israel(2) where a number of English authorities are cited, including a decision of the Privy Council in Odwin vs Forbes.(3) That was also the result of the decisions in the following English cases, which are similar to this, though the basis of the decisions was the situs of the debt and the multiple residence of corporations: Fouad Bishara Jabbour vs State of Israel (supra), Re.
Bangue Des March ands De Moscou Barclays Bank(4), Arab Bank Lrd.
vs Braclays Bank(5).
The Learned Additional Judicial Commissioner has reached the same conclusion, but in doing so he has relied on certain provisions of the Portuguese Uniform Law.
We have not found it possible to examine the validity of his reasons because a complete statement of the Portuguese Uniform Law is not before us, and therefore we can find no justification for disturbing the basis on which he has come to his finding.
The learned Additional Judicial Commissioner has also adverted to an undertaking offered by the Custodian to indemnify the debtors against any action by anyone else for recovery of the debts, but on the view that we have taken we need not examine the validity or sufficiency of that undertaking, (1) , 425.
(2) @ 154.
(3) (4) (5) , 529.
31 We are satisfied that the discharge of the debts under the Regulation amounts to their complete discharge and it is not open to anyone else to sue for their recovery.
No indemnity is required to be furnished by the Custodian on the ground that the relevant documents cannot be produced.
It is faintly urged that the suits filed by the Custodian were premature.
This point was not raised before the courts below and we cannot allow it to be raised at this stage.
There is one point, however, which, in our opinion, requires consideration by the trial court.
In some of the suits it has been pleaded by the appellants that they were entitled to a set off by reason of certain credits in their favour.
The learned Additional Judicial Commissioner has held that the trial court was justified in declining to enter into those claims.
We think that in this regard the courts below have erred.
It was necessary to do complete justice between the parties having regard to the peculiar circumstances of these cases, and we are of opinion that so far as these claims are concerned the trial court should now examine them on their merits.
In the result, the appeals are dismissed subject to the direction that the trial court will take up the suits again solely for the purpose of examining the validity of the claims to set off made by the appellants in those suits.
We make no orders as to costs of these appeals.
P.B.R. Appeals dismissed.

summary:
The Banco Nacional Ultramarino (B.N.U.) with its head office at Lisbon in Portugal carried on banking business in Goa, Daman and Diu.
On the eve of the liberation of these territories from Portuguese rule and their integration with India the B.N.U. removed a substantial portion of valuable assets held there to its head office at Lisbon.
To relieve the distress closure to the people by reason of the closure of the B.N.U. the President promulgated regulations by which the branches at these places were integrated into a fully constituted bank independent of the B.N.U. and a Custodian was appointed to take charge of the bank.
The Custodian was empowered to realise all debts due to the branches including any debts from the head office of the B.N.U.
The Custodian filed a suit against the appellants stating that the loan accounts of the appellants showed a debit balance in favour of the branch.
It was also stated that the promissory notes were not in his possession but that they could be presumed to have been removed to Portugal.
While suits similar in nature filed in some courts had been dismissed, suits filed in other courts were decreed against the original debtor as well as tho guarantor and surety.
The Additional Judicial Commissioner on appeal decreed the suits against tho appellants and granted the reliefs claimed by the Custodian, holding that the 17 Custodian was entitled to maintain the suits and sue for the realisation of debts arising out of the transactions entered into through the branches.
He further hold that the execution of the negotiable instruments having been admitted in the written statement and these documents having been removed by the B.N.U. to Lisbon there was nothing to preclude the Custodian from claiming relief without producing those negotiable instruments.
In appeal to this Court, it was contended on behalf of the appellants that since the loans had been granted by the head office of the B.N.U. and not its branches, the Custodian was not entitled to sue for recovery of loans granted by the head office.
Dismissing the appeals, ^ HELD: The transactions under consideration fell within the scope of the regulations and the Custodian was fully entitled to sue for the recovery of the debts covered by the loan agreements.
[28 C] It is settled law that a body corporate and its branches are not distinct and separate entities from each other, that the branches constitute mere components through which the corporate entity expresses itself and that all transactions entered into ostensibly with the branches are in legal reality transactions with the corporate body and that it is with the corporate body that a person must deal directly.
In the case of a bank which operates through its branches, however, the branches are regarded for many purposes as separate and distinct entities from the head office and from each other.
If the bank wrongly refuses to pay when a demand is made at the proper place and time, then it can be sued at its head office as well as at its branch office the reason being that the action is then not on the debt, but on the breach of the contract to pay at the place specified in the agreement.
The regulations had been made apparently in the light of this banking law and practice.
[24 B C; 25 B] The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others, at 422, referred to.
The regulations were intended to achieve what emergency legislation was designed to secure.
In all such emergency laws there is a departure from the general rule that the branches and agencies of a business are no more than components through which the entire enterprise is carried on and that they cannot be considered as distinct and separate from the head office.
[26 A B] It is abundantly plain from the object and purpose of the regulations and the provisions which seek to realise them that all transactions effected by or through the branches of the B.N.U. were intended to be brought within the compass of the Regulations.
[26 D] New York Life Insurance Co. vs Public Trustee, ; In re: W. Hagelberg Aktien Gesellschaft, 1916 Chancery Division 503 and Re The Banca Commercial Italiana, [1943] 1 All England Law Reports 480, referred to. 18 In the instant case although the loan agreements might have been entered into with the B.N.U, the branches were authorised by the head office to give effect to those agreements and accordingly the branch concerned embarked upon the execution of the agreements and the working out of the transactions.
The entire business involved in those transactions and dealings was effected by the branch concerned and it was only when occasion strictly so required that the branch made reference to the head office for authority to amend or enlarge the scope of the operation.
The transaction and the business nonetheless remained throughout those of the branch and this is fully affirmed by the existence and operation of the loan accounts in the books of the branch by the pledge or hypothecation of goods in almost all cases in favour of the branch and by the overall nature and character of the transaction as an ordinary banking transaction falling within the normal business of a branch.
[26 E F] The discharge of the debts under the Regulation amounted to their complete discharge and it was not open to anyone else to sue for their recovery.
No indemnity was required to be furnished by the Custodian on the ground that the relevant documents could not be produced.
Having regard to the circumstances of this case it was within the competence of The Court to base its decree on the books of account of the branches in Goa and on other evidence.
The Portuguese law stands superseded by reason of the express provisions of regulation 8 (1).
[31 A] The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others, , 425, distinguished.


judgement:
riminal Appeals Nos.
20 to 23 of 1955.
Appeals by special leave from the judgment and order dated May 7, 1954, of the Madras High Court in Criminal Revision Cases Nos. 57 to 60 of 1954 and Case Referred Nos.
2 to 5 of 1954.
N. C. Chatterji, section Venkatakrishnan and section Subramanian, for the appellants.
V. K. T. Chari, Advocate General, Madras, Ganapathy Iyer and T. M. Sen, for the respondent.
November 28.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The point for decision in these appeals is whether sections 4(2), 28, 29, 30, 31 and 32 of the Madras Prohibition Act No. X of 1937, hereinafter referred to as the Act, are unconstitutional and void.
It will be convenient first to set out the impugned statutory provisions.
Section 4, omitting what is not material runs as follows; 401 4(1) " Whoever (a) imports, exports, transports or possesses liquor or any intoxicating drug; or (g) uses, keeps or has in his possession any materials, still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug; or (j) consumes or buys liquor or any intoxicating drug ; or (k) allows any of the acts aforesaid upon premises in his immediate possession, shall be punished Provided that nothing contained in this sub section shall apply to any act done under, and in accordance with, the provisions of this Act or the terms of any rule, notification, order, licence or permit issued thereunder.
(2) It shall be presumed until the contrary is shown (a) that a person accused of any offence under clauses (a) to (j) of sub section (1) has committed such offence in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug, for the possession of which he is unable to account satisfactorily ; and (b) that a person accused of any offence under clause (k) of sub section (1) has committed such offence if an offence is proved to have been committed in premises in his immediate possession in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug.
402 Section 28 provides that if any Collector, Prohibition Officer or Magistrate has reason to believe that an offence under section 4(1) has been committed, he may issue a warrant for search.
Section 29 confers on certain officers power to search and seize articles even without a warrant, under certain circumstances.
Section 30 provides for certain classes of officers entering any place by day or night for inspection of stills, implements, liquor and the like.
Section 31 authorises the officers empowered to make entry under sections 28, 29 or 30, to break open any door or window and remove obstacles, if otherwise they could not make entry.
Section 32 confers authority on a Prohibition Officer or any officer of the Police or Land Revenue Departments to arrest without warrant any person found committing any offence under section 4(1).
Now, the facts are that on November 18, 1953, the Prohibition Officer, Madras City, and the Deputy Commissioner of Police made a search of premises No. 28, Thanikachala Chetty Street, Thyagarayanagar, Madras, and seized several bottles of foreign liquor and glasses containing whisky and soda.
The appellant, Lakshmanan Chettiar, was residing at the premises, and the other three appellants, A. section Krishna, R. Venkataraman and V. section Krishnaswamy, were found drinking from the glass tumblers.
All the four were immediately put under arrest and in due course charge sheets were laid against them for offences under the Act.
The three appellants other than Lakshmanan Chettiar were charged under sections 4 (1) (a) and 4 (1) (j) for possession and consumption of liquor, and Lakshmanan Chettiar was charged under section 4 (1) (k) for allowing the above acts in premises in his immediate possession, a under section 12 for abetment of the offences.
He was also charged under section 4 (1) (a) on the allegation that though he was a permit holder, he was in possession of more units than were allowed under the permit, and that by reason of the proviso to that section, he had committed an offence under section 4 (1) (a).
Immediately after service of summons, the appellants filed an application unders.
432 of the Criminal Procedure Code, wherein they contended that sections 4(2) and 28 to 32 of the Act were 403 repugnant to the provisions of the Constitution, and were therefore void, and prayed that the above question might be referred for the decision of the High Court.
The Third Presidency Magistrate, before whom the proceedings were pending, allowed the application, and referred to the High Court as many as seven questions on the constitutionality of various sections of the Act.
This reference was heard by Rajamannar, C.J., and Umamaheswaram, J., who held, disagreeing with the appellants, that sections 4(2) and 28 to 32 were valid,, and answered the reference against them.
Against this judgment, the appellants have preferred the present appeals under article 136 of the Constitution.
Two contentions have been urged in support of the appeals: (1) Section 4(2) and sa.
28 to 32 of the Act are void under section 107 of the Government of India Act, 1935, which was the Constitution Act in force when the Act in question was passed, because they are repugnant to the provisions of existing Indian laws with respect to the same matter, to wit, I of 1872 and Criminal Procedure Code Act No. V of 1898, and (2) the impugned sections are repugnant to article 14 of the Constitution, and have therefore become void under article 13(1).
(1) Taking the first contention, the point for ' decision is whether the impugned provisions are hit by section 107 of the Government of India Act, 1935.
Subsection (1) of section 107, which is the relevant provision, runs as follows: "If any provision of a Provincial law is repugnant to any provision of a Federal law which the Federal legislature is competent to enact or to any provision of an existing Indian law with respect to one of the matters enumerated in the Concurrent Legislative List, then, subject to the provisions of this section, the Federal law, whether passed before or after the Provincial law, or, as the case may be, the existing Indian law, shall prevail and the Provincial law shall, to the extent of the repugnancy, be void.
" For this section to apply, two conditions must be fulfilled: (1) The provisions of the Provincial law and those of the Central legislation must both be in respect 404 of a matter which is enumerated ' in the Concurrent List, and (2) they must be repugnant to each other.
It is only when both these requirements are satisfied that the provincial law will, to the extent of the repugnancy, become void.
The first question, therefore, that has to be decided is, is the subject matter of the impugned legislation one that falls, within the Provincial List, in which case section 107 would be inapplicable, or is it one which falls within the Concurrent List, in which case the further question, whether it is repugnant to the Central legislation will have to be decided ? The Entries in the Lists which are material for the present discussion are the following: List II Provincial Legislative List.
Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts.
Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject, as respects opium, to the provisions of List I and, as respects poisons and dangerous drugs, to the provisions of List 111.
Offences against laws with respect of any of the matters in this list.
List III Concurrent Legislative List.
Criminal Procedure, including all matters included in the Code of Criminal Procedure at the date of the passing of this Act.
Evidence and oaths; recognition of laws, public acts and records and judicial proceedings.
Now, it is not contested that the Madras Prohibition Act, as a whole, is a law in respect of intoxicating liquors, falling within Entry 31 of the Provincial list.
The declared object of the enactment as stated in the preamble to it is "to bring about the prohibition. of the production, manufacture, possession, export, import, transport, purchase, sale and assumption of 405 intoxicating liquors. .
And this is carried out in section 4(1), which enacts prohibition in respect of the above matters, and imposes penalties for breach of the same.
The other provisions of the Act may broadly be divided into those which are intended to effectuate section 4(1) and those which regulate the grant of licences and permits.
The legislation is thus on a topic which is reserved to the Provinces and would therefore fall outside a. 107(1) of the Constitution Act.
The argument of Mr. N. C. Chatterjee for the appellant is that though the Act is within the competence of the Provincial Legislature in so far as it prohibits possession, sale, consumption, etc., of liquor under 3.
4(1), the matters dealt with under section 4(2) and sections 28 to 32 fall not within Entry 31 of List II but within Entries 5 and 2 respectively of List III, and to that extent, the legislation is on matters enumerated in the Concurrent List.
He contends that a. 4(2) enacting as it does a presumption to be drawn by the court on certain facts being established, deals with what is purely a matter of evidence, and it is therefore not a law on intoxicating liquors but evidence.
Likewise, he argues, the provisions in sections 28 to 32 deal with matters pertaining to Criminal Procedure, such as warrants, seizure and arrest, and have no connection with intoxicating liquors.
It is accordingly contended that sections 4(2) and 28 to 32 are legislation under Entries 5 and 2 of List III, and that their validity must be tested under section 107(1).
The appellants are right in their contention that section 4(2) of the Act enacts a rule of evidence but does it follow from this that it is a law on evidence, such as is contemplated by Entry 5 in the Concurrent List ? so also sections 28 to 32 undoubtedly deal with matters of Procedure in relation to crimes, but are they for that reason to be regarded as legislation on Criminal Procedure Code within Entry 2 of List III ? The basic assumption on which the argument of the appellants rests is that the heads of legislation set out in the several Lists are so precisely drawn as to be mutually exclusive.
But then, it must be remembered that we are construing a federal Constitution, It is of the 406 essence of such a Constitution that there should be a distribution of the legislative powers of the Federation between the Centre and the Provinces.
The scheme Of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of, the fields of legislation is inevitable.
The British North America Act, 1867, which established a federal Constitution for Canada, enumerated in sections 91 and 92 the topic, ,, on which the Dominion and the Provinces could respectively legislate.
Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures.
It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires, regard must be had to its pith and substance.
That is to say, if a statute is found in substance to relate to a topic with.
in the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within it competence, the legislature is, in truth, making a law on a subject beyond its competence.
But where that is not the position, then the fact of encroachmen does not affect the vires of the law even as regards the area of encroachment.
Vide Citizens Insurance Company of Canada vs William Parson8(1), The Attorney General of Ontario vs The Attorney General for the Dominion of Canada(1), The Attorney General of Ontari, vs The Attorney General for the Dominion(3 ), Union Colliery Company of British Columbia vs Bryden(4) Attorney General for ' Canada vs Attorney General for (1) [1881] 7 A. C. 96.
(3) (2) (4) 407 Ontario(,), Attorney General for Alberta vs AttorneyGeneral for Canada(2 ), and Board of Trustees of Letherbridge Northern Irrigation District vs Independent Order of Foresters(1).
The principles laid down in the above decisions have been applied in deciding questions as to the vires of statutes passed by the Indian legislatures under the Government of India Act, 1935.
In Subrahmanyan Chettiar vs Muttuswami Goundan(4), the question was as to whether the Madras Agriculturalist ' Relief Act IV of 1938, which was within the exclusive competence of the Provincial Legislature under Entries 20 and 21 in List 11 was ultra vires, in so far as it related to promissory notes executed by agriculturists by reason of the fact that under Entry 28, List I, "cheques, bills of exchange, promissory notes and other like instruments " were matters falling within the exclusive jurisdiction of the Centre.
In holding that the legislation was intra vires, Sir Maurice Gwyer C. J. stated the reason in these terms: " It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its ' pith and substance ' or its 'true nature and character ', for the purpose of determining whether it is legislation in respect of matters in this list or in that. . " This point arose directly for decision before the Privy Council in Prafulla 'Kumar Mukherjee vs The Bank of Commerce, Ltd. (5).
There, the question was whether the Bengal Money Lenders Act, 1940, which (1) (4) (2) (5) [1946 47] 74 I.A. 23.
(3) 53 408 limited the amount recoverable by a money lender for principal and interest on his loans, was valid in so far as it related to promissory notes.
Money lending is within the exclusive competence of the Provincial Legislature under Item 27 of List II, but promissory note is a topic reserved for the Centre, vide List 1, Item 28.
It was held by the Privy Council that the pith and substance of the impugned legislation being money lending, it was valid notwithstanding that it incidentally encroached on a field of legislation reserved for the Centre under Entry 28.
After quoting with approval the observations of Sir Maurice Gwyer C.J. in Subrahmanyan Chettiar vs Muttuswami Goundan, (supra) above quoted, Lord Porter observed: "Their Lordships agree that this passage correctly describes the grounds on which the rule is founded, and that it applies to Indian as well as to Dominion legislation. "No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental.
But the overlapping of subjectmatter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions.
Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found.
If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to Provincial legislation could never effectively be dealt with.
" Then, dealing with the question of the extent of the invasion by the Provincial legislation into the Federal fields, Lord Porter observed: "No doubt it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the 409 pith and substance of the impugned Act.
Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with ProVincial matters, but the question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking? Once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content.
" Then, there is the decision of the Federal Court in Lakhi Narayan Das vs The Province of Bihar (1).
There, the question related to the validity of Ordinance No. IV of 1949 promulgated by the Governor of Bihar.
It was attacked on the ground that as a legislation in terms of the Ordinance would have been void, under section 107(1) of the Government of India Act, the Ordinance itself was void.
The object of the Ordinance was the maintenance of public order, and under Entry I of List II, that is a topic within the exclusive competence of the Province.
Then the Ordinance provided for preventive detention, imposition of collective fines, control of processions and public meetings, and there were special provisions for arrest and trial for offences under the Act.
The contention was that though the sections of the Ordinance relating to maintenance of public order might be covered by Entry I in List II, the sections constituting the offences and providing for search and trial fell within Items I and 2 of the Concurrent List, and they were void as being repugnant to the provisions of the Criminal Procedure Code.
In rejecting this contention, Mukherjea J. observed: " Thus all the provisions of the Ordinance relate to or are concerned primarily with the maintenance of public order in the Province of Bihar and provide for preventive detention and similar other measures in connection with the same.
It is true that violation of the provisions of the Ordinance or of orders passed under it have been made criminal offences but offences against laws with respect to matters specified in List 11 (1) 410 would come within Item 37 of List II itself, and have been expressly excluded from Item I of the Concurrent List.
The ancillary matters laying down the procedure for trial of such offences and the conferring of jurisdiction on certain courts for that purpose would be covered completely by Item 2 of List II and it is not necessary for the Provincial Legislature to invoke the powers under Item 2 of the Concurrent List." He accordingly held that the entire legislation fell within Entries I and 2 of List II, and that no question of repugnancy under section 107(1) arose.
This reasoning furnishes a complete answer to the contention of the appellants.
The position, then, might thus be summed up When a law is impugned on the ground.
that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation.
To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions.
If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might inci dentally trench on matters which are beyond its competence.
It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires, and what are not.
Now, the Madras Prohibition Act is, as already stated, both in form and in substance, a law relating to intoxicating liquors.
The presumptions in section 4(2) are not presumptions which are to be raised in the trial of all criminal cases, as are those enacted in the Evidence Act.
They are to be raised only in the trial of offences under section 4(1) of the Act.
They are therefore purely ancillary to the exercise of the legis lative power in respect of Entry 31 in List 11.
So also, the provisions relating to search, seizure and arrest in sections 28 to 32 are only with reference to offences 411 committed or suspected to have been committed under the Act.
They have no Operation generally or to offences which fall outside the Act.
Neither the presumptions in section 4(2) nor the provisions contained in sections 28 to 32 have any operation apart from offences created by the Act, and must, in our opinion, be held to be wholly ancillary to the legislation under Entry 31 in List II.
The Madras Prohibition Act is thus in its entirety a law within the exclusive competence of the Provincial Legislature, and the question of repugnancy under section 107(1) does not arise.
(2) It is next contended that the presumptions raised in section 4(2) of the Act, are repugnant to article 14 of the Constitution, and that the section must accordingly be declared to have become void under article 13(1).
We are unable to see how section 4(2) offends the requirement as to equality before law or the equal protection of laws.
The presumptions enacted therein have to be raised against all persons against whom the facts mentioned therein are established.
The argument of Mr. N. C. Chatterjee is that the facts set out in section 4(2) on which the presumption of guilt is raised have no reasonable relation to the offences themselves, that for example, possession of liquor can be no evidence of possession of materials or apparatus for manufacture of liquor under section 4(1)(g), nor possession of materials, apparatus for manufacture of liquor, evidence of possession or consumption of liquor under section 4(1) (a) and (j), and that therefore the impugned provision must be struck down as denying equal protection.
He relied in support of this contention on the following observations of Holmes J. in William N. McFarland vs American Sugar Refining Company (1): " As to the presumptions, of course the legislatures may go a good way in raising one or in changing the burden of proof, but there are limits.
It is essential that there shall be some rational connection between the fact proved and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate.
Mobile J. & K.C.R. Co. vs Turnipseed(2)." (1) ; at 86 87 ; ; , 904.
(2) ; , 43; ; , 80.
412 The law on this subject is thus stated by Rottschaefer on Constitutional Law, 1939 Edition, at page 835: " The power of a legislature to prescribe rules of evidence is universally recognised, but it is equally well established that due process limits it in this matter.
It may establish rebuttable presumptions only if there is a rational connection between what is proved and what is permitted to be inferred therefrom.
" The law would thus appear to be based on the due ,process clause, and it is extremely doubtful whether it can have application under our Constitution.
But a reference to American authorities clearly shows that the presumptions of the kind enacted in section 4 (2) have been upheld as reasonable and not hit by the due process or equal protection clause.
In Albert J. Adams vs People of the State of New York (1), a law of New York had made it an (offence to be knowingly in possession of gambling instruments, and enacted further that possession of such instruments was presumptive evidence of knowledge.
It is thus in terms similar to section 4(1)(a) of the Act, which makes it an offence to be in possession of liquor, and to section 4(2) which raises a rebuttable presumption of guilt under section 4(1)(a).
In rejecting the contention that the presumption was a violation of the due process clause, the Court observed: " We fail to perceive any force in this argument.
The policy slips are property of an unusual character, and not likely, particularly in large quantities, to be found in the possession of innocent parties.
Like other gambling paraphernalia, their possession indicates their use or intended use, and may well raise some inference against their possessor in the absence of explanation.
Such is the effect of this statute.
Innocent persons would have no trouble in explaining the possession of these tickets, and in any event the possession is only prima facie evidence, and the party is permitted to produce such testimony as will show the truth concerning the possession of the slips.
Furthermore, it is within the established power of the state to prescribe the evidence which is to be received in the courts of its own government." (1) ; ; 413 In Robert Hawes vs State of Georgia (1), the question arose with reference to a statute of the State of Georgia, which had made it an offence to knowingly permit persons to locate in premises apparatus for distilling and manufacturing prohibited liquors.
It also enacted a presumption that when such apparatus was found in a place, the person in occupation thereof shall be presumed to have knowingly permitted the location of the apparatus.
The question was whether this presumption was repugnant to the due process clause.
In holding that it was not, the Court observed: " Distilling spirits is not an ordinary incident of a farm, and, in a prohibition state, has illicit character and purpose, and certainly is not so silent and obscure in use that one who rented a farm upon which it was or had been conducted would probably be ignorant of it.
On the contrary, it may be presumed that one on such a farm, or one who occupies it, will know what there is upon it.
It is not 'arbitrary for the state to act upon the presumption and erect it into evidence of knowledge;.
not peremptory, of course, but subject to explanation, and affording the means of explanation.
" It is therefore clear that even on the application of the due process clause, the presumptions laid down in section 4(2) cannot be struck down as unconstitutional.
We should add that the construction which the appellants seek to put on section 4 (2) that a person in possession of liquor could, under that section, be presumed to have committed an offence under section 4(1) (g) or that a person who is in possession of materials, implement or apparatus could be presumed to have committed offences under section 4 (1) (a) and (j) is not correct.
In our opinion, the matters mentioned in section 4 (2) should be read distributively in relation to the offences mentioned in section 4(1).
Possession of liquor, for example, is an offence under section 4(1) (a).
The presumption in section 4(2) is that if it is found in the possession of a person, he should be presumed to have committed the offence under section 4(1)(a), unless he could give satisfactory explanation therefor, as for example, that it must have been foisted in the place without his knowledge.
Likewise, it would be an (1) ; ; 414 offence under section 4(1)(g) to be in possession of materials, still, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor.
Under section 4(2)(a), if a person is found to be in possession of materials or other things mentioned in the sub section, there is a presumption that he has committed an offence under section 4(1)(g), but it is open to him to account satisfactorily therefor.
The contention, therefore, that there is no reasonable relation between the presumption and the offence is, in our opinion, based on a misreading of the section.
Both the contentions urged on behalf of the appellants having failed, these appeals are dismissed.
Appeals dismissed.

dataset_name: IN-Abs

summary:
The appellants were charged before the Presidency Magistrate for offences under the Madras Prohibition Act, 1937 and when the cases were taken up for trial they raised the contentions that SS.
4(2) and 28 to 32 of the Act are void under section 107(I) of the Government of India Act, 1935, because they are repugnant to the provisions of the , and the Code of Criminal Procedure, 1898, and also because they are repugnant to article 14 Of the Constitution of India.
On their application, the Magistrate referred the questions for the opinion of the High Court under section 432 ' of the Code of Criminal Procedure.
The High Court having answered the questions against the appellants they preferred the present appeal under article 136.
Held, that the Madras Prohibition Act, 1937, is both in form and in substance a law relating to intoxicating liquors and that the presumptions in section 4(2) and the provisions relating to search, seizure and arrest in SS. 28 to 32 of the Act have no operation apart from offences created by the Act and are wholly ancillary to the exercise of the legislative power under Entry 31 in List II, Sch. 7 of the Government of India Act, 1935.
Accordingly the Act is in its entirety a law within the exclusive competence of the Provincial Legislature and the question of repugnancy under section 107(1) of the Government of India Act, 1935, does not arise.
When a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation.
To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions.
If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might incidentally trench on matters which are beyond its competence.
It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts 52 400 would severally fall, and by that process determine what portions thereof are intra vires, and what are not.
Subrahmanyan Chettiar vs Muthuswami Goundain, (1940) F.C.R. 188, Pyafulla Kumar Mukherjee vs The Bank of Commerce Ltd. (1940) L.R. 74 I.A. 23 and Lakhi Narayan Das vs The Province of Bihar , relied on.
Held further, that the presumptions in section 4(2) Of the Act do not off end the requirements as to equality before law or the equal protection of laws under article 14, as they have to be raised against all persons against whom the facts mentioned therein are established.
Even assuming that the law in America that a presumption of guilt would offend the requirement of the equal protection of laws unless there is a rational connection between the act proved and the ultimate fact presumed, could have application to the Indian Constitution, on a proper reading of the sections there is a reasonable relation between the presumption raised in section 4(2) and the offences under section 4(1).
William N. McFarland vs American Sugar Refining Company, ; 24I U.S. 79; , Albert 1.
Adams vs People of the State of New York, ; and Robert Hawes vs State of Georiya, 258 U.S.
I ; , referred to.


judgement:
N: Petition for Special Leave to Appeal (CRL) No. 1523 of 1982.
From the judgment and order dated the 12th April, 1982 of the Bombay High Court in Criminal Revision Application No. 1742 of 1981.
L.N. Sinha, Attorney General, Dr. Y.S. Chitale, and Miss A. Subhashini for the petitioner.
Soli J. Sorabjee and Miss Rani Jethmalani for Respondent No. 1.
A.K. Sen and B.R. Handa for Respondent No. 2.
The order of the Court was delivered by CHINNAPA REDDY, J. Abdul Rehman Antulay was the Chief Minister of the State of Maharashtra till January 12, 1982.
While he was yet holding the office of Chief Minister one Ramdas Shrinivas Nayak, an erstwhile Member of the Maharashtra Legislative Assembly, professing a keen interest in clean administration and so keeping a watchful eye on centres of power and sources of corruption, filed a complaint against Shri Antulay, in the court of the Metropolitan Magistrate, 28th Court, Esplanade, Bombay charging him with the commission of offences punishable under sections 161 and 185 of the Indian Penal Code and S of the Prevention 10 of Corruption Act.
The substance of the allegation was that Shri Antulay founded and controlled a number of trusts called by various names freely, and falsely making it appear that the Prime Minister and the Government of Maharashtra were either interested or had sponsored the trusts, collected contributions and donations for the alleged benefit of the Trusts by misuse of his position and power by dispensing favours and holding out threats, and, thereby placed himself in a position where he could juggle and manipulate a sum of over Rs. five crores.
The learned Metropolitan Magistrate refused to enteratain the complaint holding that it was not maintainable without the requisite sanction of the Government under section 6 of the Prevention of Corruption Act.
Against the order of the learned Metropolitan Magistrate, R.S. Nayak presented a Criminal Revision Application to the High Court of Maharashtra purporting to be under sections 407 and 482 of the Code of Criminal Procedure and article 228 of the Constitution.
The State of Maharashtra and Shri Antulay were impleaded as Respondents.
During the course of the pendency of the Criminal Revision Application, Shri Antualy resigned his position as the Chief Minister of the State of Maharashtra.
By an elaborate order dated April 12, 1982, Gadgil and Kotwal, JJ upheld the view that sanction was necessary and dismissed the Revision Application.
While dismissing the application, the learned Judges noticed that an application had been made to the Governor of Maharashtra for grant of the requisite sanction and observed that the application should not be decided by the Law Minister or any other Minister, but that "it deserved to be decided by the Governor in his individual discretion".
The State of Maharashtra though not aggrieved by the dismissal of the Criminal Revision Application, seeks special leave to appeal to this Court under article 136 of the Constitution against the judgment of the High Court of Maharashtra in so far as the judgment may be said to have directed the Governor of Maharashtra to exercise his individual discretion in deciding the question whether sanction should or should not be granted to prosecute Shri Antulay.
The learned Attorney General, who appeared for the State of Maharashtra, raised the contention that it was not for the Court to decide whether in respect of a particular matter, the Governor should act in his discretion or with the aid and advice of the Council of Ministers and that under article 163(2), if any question arose whether any matter was or was not a matter as respects which the Governor was by or under the Constitution required to act in his discretion, the decision of the 11 Governor in his discretion was final, and the validity of anything done by the Governor was not liable to be called in question on the ground that he ought not to have acted in his discretion.
He also invited our attention to article 163 (3) which provides that the question whether any, and if so what, advice was tendered by Ministers to the Governor shall not be inquired into in any Court.
The question posed by the learned Attorney General is no doubt an important question, probably worthy of serious consideration by this court under article 136 of the Constitution.
But, in the present case, we do not propose to grant special leave under article 136 of the Constitution, solely in order to consider this question firstly because the Criminal Revision a Application itself has been dismissed by the High Court and secondly and this is important there was an express concession made in the High Court by the Respondents that in the situation presented by the facts of the present case, the Governor should act in the exercise of his individual discretion.
Gadgil, J. referred to the concession in the following words : "However, I may observe at this juncture itself that at one stage it was expressly submitted by the learned counsel on behalf of the respondent that in case if it is felt that bias is well apparently inherent in the proposed action of the concerned Ministry, then in such a case situation notwithstanding the other Ministers not being joined in the arena of the prospective accused, it would be a justified ground for the Governor on his own, independently and without any reference to any Ministry.
to decide that question.
Kotwal, J. put it even more explicitly and said: ".
At one stage it was unequivocally submitted by the learned counsel on behalf of the respondents in no uncertain terms that even in this case notwithstanding there being no accusation against the Law Minister as such if the court feels that in the nature of things a bias in favour of the respondent and against a complainant would be manifestly inherent, apparent and implied in the mind of the Law 12 Minister, then in that event, he would not be entitled to consider complainant 's application and on the equal footing even the other Ministers may not be qualified to do so and the learned counsel further expressly submitted that in such an event, it would only the Governor, who on his own, independently, will be entitled to consider that question.
" When we drew the attention of the learned Attorney General to the concession made before the High Court, Shri A.K. Sen, who appeared for the State of Maharashtra before the High Court and led the arguments for the respondents there and who appeared for Shri Antulay before us intervened and protested that he never made any such concession and invited us to peruse the written submissions made by him in the High Court.
We are afraid that we cannot launch into an inquiry as to what transpired in the High Court.
It is simply not done.
Public Policy bars us.
Judicial decorum restrains us.
Matters of judicial record are unquestionable.
They are not open to doubt.
Judges cannot be dragged into the arena.
"Judgments cannot be treated as mere counters in the game of litigation".(1) We are bound to accept the statement of the Judges recorded in their judgment, as to what transpired in court.
We cannot allow the statement of the judges to be contradicted by statements at the Bar or by affidavit and other evidence.
If the judges say in their judgment that something was done, said or admitted before them, that has to be the last word on the subject.
The principle is well settled that statements of fact as to what transpired at the hearing, recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence.
If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the judges, to call attention of the very judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error.
(2) That is the only way to have the record corrected.
If no such step is taken, the matter must necessarily end there.
Of course a party may resile and an Appellate (I) Per Lord Atkinson in Somasundaran vs Subramanian, A.I.R (2) (Per Lord Buckmaster in Madhusudan vs Chanderwati, A.I.R. 1917 P.C. 30.
13 Court may permit him in rare and appropriate cases to resile from a concession on the ground that the concession was made on a wrong appreciation of the law and had led to gross injustice; but, he may not call in question the very fact of making the concession as recorded in the judgment.
In Rev. Mellor, 7 Cox.
P.C. 454 Martin was reported to have said: "we must consider the statement of the learned judge as absolute verity and we ought to take his statement precisely as a record and act on it in the same manner as on a record of Court which of itself implies an absolute verity".
In Ring Emperor vs Barendra Kumar Ghose (1): said, ". these proceedings emphasise the importance of rigidly maintaining the rule that a statement by a learned judge as to what took place during the course of a trial before him is final and decisive; it is not to be criticised or circumvented; much less is it to be exposed to animad version".
In Sarat Chandra vs Bibhabati Debi (2) Sir Asutosh Mookerjee explained what had to be done: "It is plain that in cases of this character where a litigant feels aggrieved by the statement in a judgment that an admission has been made, the most convenient and satisfactory course to follow, wherever practicable, is to apply to the Judge without delay and ask for rectification or review of the judgment" So the judges, record is conclusive.
Neither lawyer nor litigant may claim to contradict it, except before the judge himself, but nowhere else.
On the invitation of Mr. Sen, we have also perused the written submissions made by him before the High Court.
We have two comments to make: First, oral submissions do not always conform to written submissions.
In the course of argument, counsel, often, wisely and fairly, make concessions which may not find a place in the written submissions.
Discussion draws out many a concession.
(1) (2) 34 C.L.J. 302.
14 Second, there are some significant sentences in the written submissions which probabilise the concession.
They are: "If in the existing case, the entire Council of Ministers becomes interested in the use of the statutory power one way or the other, the doctrine of necessity will fill up the gap by enabling the Governor by dispensing with the advice of His Council of Ministers and take a decision of his own on the merits of the case.
Such a discretion of the Governor must be implied as inherent in his constitutional powers.
The doctrine of necessity will supply the necessary power to the Governor to act without the advice of the Council of Ministers in such a case where the entire Council of Ministers is biased.
In fact, it will be contrary to the Constitution and the principles of democratic Government which it enshrines if the Governor was obliged not to act and to decline to perform his statutory duties because his Ministers had become involved personally.
For the interest of democratic Government and its functioning, the Governor must act in such a case on his own.
Otherwise, he will become an instrument for serving the personal and selfish interest of his Ministers.
" We wish to say no more.
As we said, we cannot and we will not embark upon an enquiry.
We will go by the judges ' record.
We may add, there is nothing before us to think that any such mistake occurred, nor is there any ground taken in the petition for grant of special leave that the learned judges proceeded on a mistaken view that the learned counsel had made a concession that there might arise circumstances, under which the Governor in granting sanction to prosecute a Minister must act in his own discretion and not on the advice of the Council of Ministers.
The statement in the judgment that such a concession was made is conclusive and, if we may say so, the concession was rightly made.
[n the facts and circumstances of the present case, we have no doubt in our mind that when there is to be a prosecution of the Chief Minister, the Governor would, while determining whether sanction for such prosecution should be granted or not under section 6 of the Prevention of Corruption Act, as a matter of propriety, necessarily act in his own discretion and not on the advice of the Council of Ministers.
The question then is whether we should permit the State of Maharashtra to resile from the concession made before the High Court and raise before us the contention now advanced by the learned Attorney General.
We have not the slightest doubt that 15 the cause of justice would in no way be advanced by permitting the State of Maharashtra to now resile from the concession and agitate the question posed by the learned Attorney General.
On the other hand we are satisfied that the concession was made to advance the cause of justice as it was rightly thought that in deciding to sanction or not to sanction the prosecution of a Chief Minister, the Governor would act in the exercise of his discretion and not with the aid and advice of the Council of Ministers.
The application for grant of special leave is, therefore, dismissed.
S.R. Petition dismissed.

summary:
Sanction for the prosecution of the Chief Minister under Section 6 of the Prevention of Corruption Act Whether the Governor should act in his discretion or with the aid and advice of the Council of Ministers Constitution of India, 1950, Article 163.
Dismissing the Special Leave Petition, the Court, ^ HELD: 1:1.
Supreme Court is bound to accept the statement of the judges recorded in their judgment and, therefore, it cannot launch into an inquiry as to what transpired in the High Court.
It is simply not done.
Public policy bars such an action and judicial decorum restrains it.
[12 C] 1:2.
Supreme Court cannot allow the statement of the judges to be contradicted by statements at the Bar or by affidavit and other evidence.
Matters of judicial record are unquestionable and not open to doubt.
Judges cannot be dragged into the arena.
If the judges say in their judgments that something was done, said or admitted before them, that has to be the last word on the subject.
Judges record is conclusive.
[12 C E] 1:3.
If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the judges, to call the attention of the very Judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error.
That is the only way to have the record corrected.
If no such step is taken, the matter must necessarily end there.
Of course, a party may resile and an Appellate Court may permit him, in rare and appropriate cases to resile from a concession on the ground that the concession was made on a wrong appreciation of the law and had led to gross injustice, but he may not call in question the very fact of making the concession as recorded in the judgment.
[12 F H, 13 A] 9 Rex vs Mellor , quoted with approval.
Madhusudan vs Chandrawati, A.l.R. ; King Emperor vs Barendra Kumar Ghose, Sarat Chandra vs Bibhabati Debi, Samasundaram vs Subramanian.
A.I.R 1926 P.C. 136: approved.
In the facts and circumstances of the present case, it is clear that, when there is to be a prosecution of the Chief Minister, tho Governor would, while determining whether sanction for such prosecution should be granted or not under section 6 of the Prevention of Corruption Act, as a matter of propriety, necessarily act in his own discretion and not on the advice of the Council of Ministers.
[14 F G] 3.
In the instant case, the cause of justice would in no way be advanced by permitting the state of Maharashtra to now resile from the concession so made.
On the other hand the concession was rightly made before the High Court to advance the cause of justice.
[15 A]