judgement:
Civil Appeal No. 200 of 1954.
Under Article 133 of the Constitution and section 109 of the Code of Civil Procedure from the Judgment and decree dated the 6th December 1952, of the Circuit Bench of the Punjab High Court at Delhi (Weston C.J. and Bhandari J.) in Regular First Appeal No. 72 of 1952, arising out of the Judgment and Decree dated the 14th day of April 1952, of the Court of Subordinate Judge, Delhi in Suit No. 657 of 1950.
N. C. Chatterjee, (Tarachand Brijmohanlal and B. P. Maheshwari, with him) for the Appellant.
R. section Narula, for the Respondent, 405 1955.
April 21.
The Judgment of the Court was delivered by BosE J.
The defendant appeals.
The plaintiffs were the partners of a firm known as Harnam Singh Jagat Singh.
Before the partition of India they carried on the business of cotton cloth dealers at Lyallpur which is now in Pakistan.
The defendant is the Delhi Cloth and General Mills Co. Ltd. It is a registered company carrying on business at Delhi and other places and has its head office at Delhi.
One of the places at which it carried on business before the partition was Lyallpur.
The plaintiffs ' case is that they carried on business with the defendant company for some three or four years before 1947 and purchased cloth from the company from time to time.
In the course of their business they used to make lump sum payments to the defendant against their purchases.
Sometimes these were advance payments and at others the balance was against them.
When there was an adverse balance the plaintiffs paid the defendant interest: see the plaintiff Sardari Lal as P. W. 3.
On 28 7 1947 the account stood in the plaintiffs ' favour.
There was a balance of Rs. 79 6 6 lying to their credit plus a deposit of Rs. 1,000 as security.
On that day they deposited a further Rs. 55,000 bringing the balance in their favour up to Rs. 56,079 6 6.
The defendant company delivered cloth worth Rs. 43,583 0 0 to the plaintiffs against this amount at or about that time.
That left a balance of Rs. 11, 496 6 6.
The suit is to recover this balance plus interest.
The claim was decreed for Rs. 12,496 6 6 and this was upheld on appeal to the High Court.
The defendant appeals here.
The defendant admits the facts set out above but defends the action on the following ground.
It contends that when India was partitioned on 15 8 1947, Lyallpur, where these transactions took place and where the money is situate, was assigned to Pakistan.,.
The plaintiffs fled to India at this time and thus 406 became evacuees and the Pakistan Government froze all evacuee assets and later compelled the defendant to hand them over, to the Custodian of Evacuee Property in Pakistan.
The defendant is ready and willing to pay the money if the Pakistan Government will release it but until it does so the defendant contends that it, is unable to pay and is not liable.
The only question is, what are the rights and liabilities of the parties in those circumstances? The amount involved in this suit, though substantial, is not large when compared with the number of claims by and against persons in similar plight.
The defendant itself is involved in many similar transactions.
A list of them appears in exhibit D 11.
Mohd Bashir Khan, D.W. 1, says that the total comes to Rs. 1,46,209 1 9.
The defendant has accordingly chosen to defend this action as a test case.
The further facts are.
as follows.
At the relevant period, before the partition, cloth was rationed and its distribution controlled in, among other places, the Punjab where Lyallpur is situate.
According to the scheme, quotas were allotted to different areas and the manufacturers and suppliers of cloth could only distribute their cloth to retailers in accordance with those quotas, and dealers in those areas could only import cloth up to and in accordance with the quotas allotted to them.
If the suppliers themselves had a retail shop or business in a given area, then the quota for that area was divided between the supplier and a Government quota holder or quota holders called the nominated importer or importers.
The local agency of the suppliers was permitted to import up to the portion of the quota allotted to it in that area and the suppliers were obliged to give the balance of the quota to the Government quota holder or holders.
The plaintiffs were the Government quota holders for Lyallpur and the defendant company also carried on business there through the General Manager of the Lyallpur Mills.
It is admitted that the defendant owns these mills but it is a matter of dispute before us whether the mills are a branch of the defendant company; but 407 whatever the exact status of the Lyallpur mills may be, it is clear from the evidence and the documents that the General Manager of these mills conducted the defendant 's cotton business at Lyallpur.
It seems that the details of the cloth distribution scheme for Punjab, in so far as it affected the defendant company, were contained in a letter of the 24th October 1945 from the Secretary, Civil Supplies Department, Punjab.
That letter has not been filed and so we do not know its exact contents but reference to it is found in a series of letters written by the defendant company from Delhi to the District Magis trate at Lyallpur.
Those letters range in date from 3 1 1946 to 19 4 1947: (Exs.
P 5 to P 12).
They are all in the same form, only the figures and dates differ.
It will be enough to quote the first, exhibit P 5.
It is dated 3 1 1946 and is from the Central Marketing Organisation of the defendant company, the Delhi Cloth and General Mills Co. Ltd. It is written from Delhi to the District Magistrate, Lyallpur, and is as follows: "The District Magistrate, Lyallpur.
Re: Cloth Distribution Scheme.
Dear Sir Ref:Letter No. 15841 CL (D) 45/8342 of 24th Oct. 1945 from Secretary, Civil Supplies Deptt.
Punjab Govt., Lahore.
Kindly note that we have allotted 28 bales for your district for the month of January 1946.
Out of this a quantity of 18 bales will be despatched to our Retail stores in your district/State and the balance of 10 bales will be available for delivery to your nominated importer.
We shall be obliged if you kindly issue instructions to your nominated importer to collect these goods from us within 15 days of the two dates for delivery fixed, namely by the 20th of January and 5th of February 1946 respectively.
It may be noted that the first half quota will lapse in case delivery is 52 408 not taken by you by the former date and the second half will lapse if not taken by the latter date.
Yours faithfully, D.C. & Gen. Mills Co., Ltd. In each case a copy was sent to the plaintiffs marked as follows: "Copy to nominated importer: Jagat Singh Harnam Singh, Cloth Merchants, Lyallpur".
The Indian Independence Act, 1947 was passed on 18 7 1947 and the district of Lyallpur was assigned to Pakistan subject to the award of the Boundary Commission.
Then followed the partition on 15 8 1947 and at or about that time the plaintiffs fled to India.
This made them evacuees according to a later Ordinance.
But before that Ordinance was promulgated the Assistant Director of Civil Supplies, who was also an Under Secretary to the West Punjab Government, wrote to the defendant 's General Manager at Lyallpur (the General Manager of the Lyallpur Cloth Mills) on 17 2 1948 and told him that "The amount deposited by the non Muslim dealers should not be refunded to them till further orders".
(exhibit D 1).
The defendant did all it could, short of litigation, to protest this order and to try and get it set aside.
Its General Manager at Lyallpur wrote letters to the Assistant Director of Civil Supplies on 14 4 48, 9 8 48 (Exs.
D 2 and D 4) , 23 4 49 (exhibit D 7) and 6 6 49 (exhibit D 8), but the replies were unfavourable.
On 30 4 48 the Assistant Director said that "in no case" should the sums be refunded (exhibit D 3) and on 1 1 1 48 directed that these amounts should be deposited with the Custodian of Evacuee Property (exhibit D 5).
This was in accordance with an Ordinance which was then in force.
Later, on 8 11 48, the General Manager received orders from the Deputy Custodian that the moneys should be deposited with the Deputy Custodian(Ex.
D 6) and on 23 6 49 these orders were repeated by the Custodian (EX.D 9).
Meanwhile, the plaintiffs, who by then had shifted 409 to Delhi, made a series of demands on the defendant in Delhi for payment.
These are dated 3 1 49 (exhibit P.W. 4/4), 27 1 49 (exhibit P.W. 4/1), 11 3 49 (exhibit P.W. 4/3) and 26 3 49 (exhibit P.W. 4/2).
The defeddant 's attitude is summed up in its letter to the plaintiffs dated 12 2 49 (exhibit P 3).
The defendant said that its had received orders from the West Punjab Government, through the Assistant Director of Civil Supplies, not to make any refunds without the orders of the West Punjab Government.
On 15 10 1949 the Ordinance of 1948 was replaced by Ordinance No. XV of 1949 (exhibit D 26) but that made no difference to the law about evacuee funds and properties.
On 4 7 1950 the plaintiffs served the defendant with a notice of suit (exhibit P 14).
This notice was forwarded to the defendant 's General Manager at Lyallpur by the defendant 's Managing Director in Delhi urging the General Manager to try and obtain the sanction of the West Punjab Government for payment of the money to the plaintiffs; and on 27 7 1950 the defendant wrote to the plaintiffs saying "We confirm that the sum of Rs. 11,496 6 6 and Rs. 1,000 are due to you on account of your advance deposit and security deposit respectively with our Lyallpur Cotton Mills, Lyallpur, and the sum will be refunded to you by the said Mills as soon as the order of prohibition to refund such deposits issued by the West Punjab Government and served upon the said Mills is withdrawn or cancelled, and that your claim shall not be prejudiced by the usual time limit of three years having been exceeded ' (exhibit P 4).
The defendant 's reply did not satisfy the plaintiffs, so they instituted the present suit on 16 12 1950.
After the suit, the defendant 's Managing Director wrote personally to the Joint Secretary to the Government of Pakistan on 2 4 1951 but was told on 21 4 1951 that the matter had been carefully examine and that the money must be deposited with the Custodian (exhibit D 25).
A second attempt was made 30 4 1951 (exhibit D 24) and the Joint Secretary was again approached.
Soon after, an Extraordine 410 Ordinance was promulgated on 9 5 1951 (exhibit D 27) exempting "cash deposits of individuals in banks" from the operation of the main Ordinance.
But the Joint Secretary wrote on 2 6 1951 that this did not apply to private debts and deposits and again asked the defendant to deposit the Money with the Custodian (exhibit D 23).
Finally, the Custodian issued an order on 6 11 1951 directing that the deposits be made by the 15th of that month, "failing which legal action will have to be taken against you".
(exhibit D 10).
The money was deposited on 15 11 1951 on the last day of grace (exhibit D 12).
The first question that we must determine is the exact nature of the contract from which the obligation which the plaintiffs seek to enforce arises.
The sum claimed in the suit, aside from the interest, is made up of three items: (1)Rs.
79 6 6 outstanding from a previous account; (2)Rs.
11,496 6 6 being the balance of a sum of Rs. 55,000 deposited on 28 7 1947; and (3) Rs. 1,000 as security.
The three items appear to be linked up but we ' will, for the moment, concentrate on the largest, the deposit of Rs. 55,000.
Both sides have spoken of it as a "deposit" throughout but we will have to examine its exact nature because deposits are of various kinds and it will be necessary to know which sort this was before we can apply the law.
Unfortunately, the evidence is meagre and scrappy, so we have been obliged to piece much disjointed material together to form an intelligible pattern.
It is admitted that the distribution of cloth in this area was controlled by the Government of Punjab (in undivided India) at all material times.
It is also admitted that the plaintiffs were, what were called, "Government nominees" for Lyallpur.
In the plaint the plaintiffs also called themselves the "reserve dealer".
This term has not been explained but the use of these words and the words "nominated importer", indicates that the plaintiffs occupied a privileged ]position.
The letters (Exs.
P 5 to P 12), on 411 which the plaintiffs relied very strongly, also point to that; exhibit P 5, for example, shows that the defendant was obliged to give 10 bales out of a quota of 28 for that area to the plaintiffs under the orders of the Punjab Government and could only keep 18 for its own retail stores in the month of January 1946.
In April the defendant was allowed to keep all 28 but in July the distribution was 35: 25 in the plaintiff 's favour.
In September, November (1946) and April 1947 it was half and half.
In February and March 1947 it was 10 : 26 and 29 : 26 for the plaintiffs and the defendant 's stores respectively.
Now, ordinarily, a privilege has to be paid for and it seems that the price of this privilege was (1) payment of a security deposit of Rs. 1,000 and (2) payment of a second deposit against which cloth was issued from time to time in much the same way as a banker hands out money to a customer against deposits of money in a current account, only here the payments were issues of cloth instead of sums of money.
We draw this inference from what we have said above and from the following facts: (1) Both sides have called the payment a "deposit" in their pleadings; (2) The plaintiffs speak of receiving goods "against this deposit" (paragraph 3 of the plaint) and Mohd. Bashir Khan (D.W. 1) of delivery being made "against this advance"; (3) The plaintiff Sardari Lal (P.W. 3) says that the parties have been carrying on dealings for 3 or 4 years and that "advances used to be made to the mills from time to time.
Sometimes our balance stood at credit"; (4) Sardari Lal says that when their balance was on the debit side, they paid the defendant 's interest but the defendant paid no interest when the balance was in the plaintiffs ' favour.
(This is the position when there is an overdraft in a bank); (5) There was a balance of Rs. 79 6 6 standing in the, plaintiffs ' favour when the deposit of Rs. 55,000 was made; (6) The plaintiffs said in their letter (exhibit P.W. 4/1) 412 to the defendant that they had a "current account" with the defendant in which a sum of Rs. 11,496 6 6 was in "reserve account".
This figure of Rs. 11 ,496 6 6 is made up by including the old balance of Rs. 79 6 6 in this account; (7) In their letter exhibit P 14 the plaintiffs said that they had "deposited" money in the plaintiffs ' account at Lyallpur "as reserve dealers", against that they received goods leaving a balance of Rs. 11,496 6 6.
Again, this figure includes Rs. 79 6 6.
All this shows that the payment of Rs. 55,000 was not just an advance payment for a specified quantity of goods but was a running account very like a customer 's current account in a bank.
The only matter that can be said to indicate the contrary is the fact that the defendant has listed this money in exhibit D 11 under the head "Purchaser 's advance".
But the mere use of this term cannot alter the substance of the transactions any more than the mere use of the word "deposit".
The fact that the parties choose to call it this or that is, of course, relevant but is not conclusive, and in order to determine the true nature of a transaction it is necessary to view it as a whole and to consider other factors.
But in this case we need not speculate because the plaintiffs have themselves explained the sense in which the term "Purchasers advance account" is used.
In their statement of the case which they filed here, they say "The defendants maintained a 'Purchasers advance account ' in their books at Delhi.
The plaintiffs used to pay the defendants advance amounts against which cloth was supplied and the balance had to be adjusted periodically".
But the banking analogy must not be pushed too far.
The stress laid by the parties on the terms "Government nominees", "nominated importer" and Preserve dealer", both in the correspondence and in the pleadings and evidence, suggests that the defendant was dealing with the plaintiffs in their capacity of "Government nominees" and that, in its turn, imports the condition that the dealings would stop the moment the plaintiffs ceased to occupy that pri 413 vileged position.
As we have seen, the import of cloth was controlled by the Punjab Government at all relevant times with the result that the defendant could not sell to anybody it pleased.
The sales had to be to the Government nominees.
Therefore, if Government withdrew their recognition, the defendant would not have been able to sell to the plaintiffs any longer and it is fair to assume that the parties did not contemplate a continuance of their relationship in such an eventuality.
But, as this was not a definite contract for the supply of a given quantity of goods which were to be delivered in instalments but a course of dealings with a running account, it is also reasonable to infer that the parties were at liberty to put an end to their business relationship at anytime they pleased by giving due notice to the other side and in that event whichever side owed money to the other would have to pay.
But, either way, the place of performance would, in these circumstances, be Lyalipur.
We say this because all the known factors were situate in Lyallpur.
The plaintiffs were the Government nominees for Lyallpur and they were resident there.
The defendant carried on business there and the goods had to be delivered at Lyallpur and could not be deliverer] elsewhere, and so performance was to be there.
The accounts were kept at Lyallpur, and though copies appear to have been forwarded to Delhi from time to time, the books were situate there and the Lyallpur office would be the only place to know the up to the minute state of the accounts.
In the circumstances, it is reasonable to assume, as in the case of banking and insurance (matters we shall deal with presently), that on the termination of the contract the balance was to be paid at Lyallpur and not elsewhere.
That localises the place of primary obligation.
This also, in our opinion, imports another factor.
The defendant in Delhi would not necessarily know of any change of recognition by the Lyallpur authorities.
The correspondence with the Collector indicates that the Government nominee cleared the goods from the defendant 's Lyallpur godowns under the orders of the District Magistrate.
If, therefore, the 414 nominee was suddenly changed, intimation of this fact would have to be given to the defendant at Lyallpur and not at Delhi, otherwise there would be a time lag in which the defendant ' Lyallpur office might easily deliver the goods to the plaintiffs as usual despite withdrawal of the recognition.
Everything therefore points to the fact that the notice of termination would have to be given at Lyallpur and the obligation to return the balance would not arise until this notice of termination was received.
That obligation would therefore necessarily arise at Lyallpur.
The plaintiffs ' learned counsel argued very strongly that the defendant 's Lyallpur business was carried on from Delhi and that the accounts were kept there, that there was no branch office at Lyallpur and that Lyalipur had no independent local control of the business.
He relied on the letters written by the defendant to the District Magistrate, Lyallpur, about the allotments of quotas (Exs.
P 5 to P 12) and also on exhibit D 7, a letter written by the defendant 's General Manager at Lyallpur to the Deputy Custodian of Evacuee Property at Lyallpur in which he says that a " Complete list showing the list of all non Muslims falling under item (3) with the amount to be paid has been asked for from our Head Office and will be submitted as soon as received".
Counsel contended that the Lyallpur people bad so little to do with the accounts that they were notable to supply even a list of the persons who dealt with them.
they had to find that out from Delhi.
These matters should have been put to the defendant 's witnesses.
exhibit D 7 was written in reply to a letter from the Deputy Custodian of Evacuee Property.
That letter is exhibit D 6 and in it the Deputy Custodian refers to some earlier correspondence with the Under Secretary to the West Punjab Government, Lahore, which has not been filed.
When we turn to the list that was eventually supplied from Delhi (exhibit D 1 1) we find that it relates to accounts from allover Pakistan such as, Multan, Peshawar, Lahore, Sialkot, Rawalpindi and even Karachi and Sukkar.
Obviously, a local office like the Lyallpur office would not be in 415 a position to supply that sort of information.
The defendant 's accountant at Lyallpur, Sewa Ram (P.W. 4), says that "Purchasers ' deposits at Lyallpur were not recorded in the books of the defendant at Delhi but statements used to be despatched from there to Delhi.
An account book was prepared from statements received from Lyallpur.
That book is known as 'Reference Book ' ".
Presumably, that would also be the practice of the other branch offices, so the head office would be the only place from where a general overall picture (which appears to be what was asked for) could be obtained.
Now, the plaintiffs resided at Lyallpur at all relevant times and the defendant carried on business there through a local General Manager.
We do not know where the contract was made but we do know that the plaintiffs contracted in a special capacity that was localised at Lyallpur, namely as the Government nominees for Lyallpur.
We know that the goods were to be delivered at Lyallpur and could not be delivered anywhere else.
We know that there was a running account and that that account was kept at Lyallpur, and we have held that the 'debt" did not become due till the defendant was given notice at Lyallpur that the business relationship between the parties had terminated.
The termination came about because of acts that arose at Lyallpur, namely the assignment of Lyallpur to the newly created State of Pakistan and the flight of the plaintiffs from Lyallpur which made further performance of the primary contract impossible.
The only factors that do not concern Lyallpur are the defendant 's residence in India and the demands for payment made in Delhi.
The fact of demand is not material because the obligation to pay arose at the date of termination and arose at Lyallpur, but if a demand for payment is essential, then it would, along the lines of the banking and insurance cases to which we shall refer later, have to be made at Lyallpur and a demand made elsewhere would be ineffective.
On these facts we hold that the elements of this contract, that is to say, the contract 53 416 out of which the obligation to pay arose, were most densely grouped at Lyallpur and that that was its natural seat and the place with which the transaction had its closest and most real connection.
It follows from this that the "proper law of the contract", in so far as that is material, was the Lyallpur law.
We have next to see when notice 'to close the account and a demand for return of the balance was made and where.
The plaintiff Jagat Singh (P.W. 5) says that he made a written demand in October 1947.
But the earliest demand we have on record is exhibit P.W. 4/4 dated 3 1 1949.
It is understandable that the plaintiffs, who had to flee for their lives, would have no copies of their correspondence, but it is a matter for comment that the demand which is filed (exhibit P.W. 4/4) does not refer to an earlier demand or demands.
The defendant was asked to produce all the correspondence because the plaintiffs had lost their own files.
The defendant produced all we have on record and no suggestion was made that anything had been suppressed.
Consequently we are not prepared to accept the plaintiffs ' statement and we hold that there was no demand before 3 1 1949.
Another point is that the earlier demand, even if made, could not have been made at Lyallpur.
The plaintiff Jagat Singh says he made the demand to the defendant 's Managing Director.
He resides in Delhi and the plaintiffs had by then fled from Pakistan.
Therefore, the demand could not have been made at Lyallpur, and apart from those demands, there is no other notice of termination, so, technically, the defendant would have been justified in declining to pay on the strength of a demand made in Delhi.
The same defect attaches to exhibit P. W. 4/4.
However, we are fortunately absolved from the need to base on so technical a ground.
Now at the date of the demand the Pakistan Ordinance (exhibit D 26) was in force and under it the defendant was prohibited from paying the money to the plaintiffs who were evacuees according to Pakistan laws.
The defendant was directed, instead, to deposit the money with the Deputy Custodian of Evacuee 417 Property.
This was done on 15 11 1951 (exhibit D 12) and the deposit was made along with other similar deposits.
We now have to determine the legal liabilities which arise out of these facts.
This raises complex questions of private international law, and two distinct lines of thought emerge.
One is that applied by the English Courts, namely, the lex situs; the other is the one favoured by Cheshire in his book on Private International Law, namely, the "proper law of the contract".
The English approach is to treat the debt as property and determine its situs and then, in general, to apply the law that obtains there at the date when payment is due.
But the difficulty of the English view is that they have different sets of rules for ascertaining the situs, with the result that the situs shifts from place to place for different purposes, also that it is determined by intention.
Thus, it can be in one place for purposes of jurisdiction and in others for those of banking, insurance, death duties and probate.
The situs also varies in the cases of simple contract debts and those of speciality.
That a debt is property is, we think, clear.
It is a chose in action and is heritable and assignable and it is treated as property in India under the Transfer of Property Act which calls it an "actionable claim": sections 3 and 130.
But to give it position in space is not easy because it is intangible and so cannot have location except notionally and in order to give it notional position rules have to be framed along arbitrary lines.
Cheshire points out in his book on Private International Law, 4th edition, pages 449 to 451 that the situs rule is not logical and leads to practical difficulties when there is a succession of assignments because it is not possible to fix the situation of a debt under the situs rule in one place and only one place.
Speaking, of that Cheshire, quoting Foote, where Foote says that the assignment of a chose in action arising out of a contract is governed by the "proper law of the contract" paraphrases Foote thus at page 450 418 "If we understand him correctly, the appropriate law is not the 'proper law ' (using that expression in its contractual sense) of the assignment, but the proper law of the original transaction out of which the chose in action arose.
It is reasonable and logical to refer most questions relating to a debt to the transaction in which it has its source and to the legal system which governs that transaction.
One undeniable merit of this is that, where there have been assignments in different countries, no confusion can arise from a conflict of laws, since all questions are referred to a single legal system".
The expression the "proper law of the contract" has been carefully analysed by Cheshire in Chapter VIII of his ' book.
In Mount Albert Borough Council vs Australasian Temperance and General Mutual Life, Assurance Society(1) Lord Wright defined it at page 240 as "that law which the English or other Court is to apply in determining the obligations under the contract", that is to say, obligation as contrasted with performance.
Lord Wright drew the distinction between obligation and performance at page 240.
In a later case, Lord Simonds described it as "the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connexion".
Bonython vs Commonwealth of Australia(2).
Cheshire sets out the definition given by some American Courts at page 203 and adopts it: "It is submitted that, at any rate with regard to the question of valid creation, the proper law is the law of the country in which the contract is localized.
Its localization will be indicated by what may be called the grouping of its elements as reflected in its formation and in its terms.
The country in which its elements are most densely grouped will represent its natural seat the country with which the contract is in fact most substantially associated and in which lies its natural seat or centre of gravity".
(1) ; , (2) , 219.
419 This involves two considerations.
The first is whether the proper law is to be ascertained objectively or whether parties are free to fix it subjectively by ranging over the world and picking out whatever laws they like from any part of the globe and agreeing that those laws shall govern their contract.
Cheshire points out at page 202 that "the subjective theory may produce strangly unrealistic results".
It is also obvious that difficulties will arise if the contract is illegal or against public policy according to the laws of the country in which it is sought to be enforced though lawful according to the laws of the country which the parties choose: see Lord Wright in Mount Albert Borough Council vs Australasian Temperance, etc.
Society(1) at page 240.
Cheshire prefers the view of an American Judge which he quotes at page 203 "Some law must impose the obligation, and the parties have nothing whatsoever to do with that, no more than with whether their acts are torts or crimes".
The contract we are considering is silent about these matters.
There is no express provision either about the law that is to obtain or about the situs.
We have therefore to examine the rules that obtain when that is the case.
The most usual way of expressing the law in that class of case is to say that an intention must be implied or imputed.
In the Bank of Travancore vs Dhrit )Ram(2), Lord Atkin said that when no intention is expressed in the contract the Courts are left to infer one by reference to considerations where the contract was made and how and where it was to be performed and by the nature of the business or transaction to which it refers.
In the Mount Albert Borough Council case(1), Lord Wright put it this way at page 240 "The parties may not have thought of the matter at all.
Then the Court has to impute an intention, or to determine for the parties what is the proper law which, as just and reasonable persons, they ought or would have intended if they had thought about the question when they made the contract".
(1) (2) 69 I.A. 1, 8.
420 But , to us, it seems unnecessarily artificial to impute an intention when we know there was none, especially in a type of case where the parties would never have contracted at all if they bad contemplated the possibility of events turning out as they did.
In our opinion, what the Courts really do, when there is no express provision, is to apply an objective test, though they appear to regard the intention subjec tively, and that is also Cheshire 's conclusion at page 201 where, after reviewing the English decisions, he says "In other words, the truth may be that the judges, though emphasising in unrestricted terms the omnipotence of intention, in fact do nothing more than impute to the parties an intention to submit their contract to the law of the country with which factually it is most closely connected".
If driven to a choice, we would prefer this way of stating the law but we need not decide this because, so far as the present case is concerned, the result is the same whether we apply the proper law of the contract or the English rules about the lex situs.
It may be that in some future case this Court will have to choose between these two views but the question bristles with difficulties and it is not necessary for us to make the choice here.
All we wish to do here is to indicate that we have considered both and have envisaged cases where perhaps a choice will have to be made.
We gather that English judges fall back on the lex situs and make rules for determining the position of a debt for historical reasons.
Atkin, L. J. said in New York Life Insurance Company vs Public Trustee(1) that the rules laid down in England are derived from the practice of ecclesiastical authorities in granting administration because their jurisdiction was limited territorially.
"The ordinary had only a jurisdiction within a particular territory, and the question whether he should issue letters of administration ' depended upon whether or not assets were to be found within his (1) , 119.
421 jurisdiction, and the test in respect of simple contracts was: Where was the debtor residing?. . the reason why the residence of the debtor was adopted as that which determined where the debt was situate was because it was in that place where the debtor was that the creditor could, in fact, enforce payment of the debt".
(See also Dicey 's Conflict of Laws, 6th edition, page 303).
The rules, therefore, appear to have been arbitrarily selected for practical purposes and because they were found to be convenient.
But despite that the English Courts have never treated them as rigid.
They have only regarded them as primafacie presumptions in the absence of anything express in the contract itself: see Lord Wright 's speech in Mount Albert Borough Council case (1) at page 240.
Also, many exceptions have been engrafted to meet modern conditions.
Atkin, L. J. draws attention to one in New York Life Insurance Company vs
Public Trustee(2) at page 120 where he says"therefore, cases do arise where a debt may be enforced in one jurisdiction, and the debtor, being an ordinary living person, resides elsewhere".
So also Lord Wright in Mount Albert Borough Council case(1) at page 240 "It is true that, when stating this general rule, there are qualifications to be borne in mind, as for instance, that the law of the place of performance will prima facie govern the incidents or mode of performance, that is, performance as contrasted with obligation".
and at page 241 he says "Again, different considerations may arise in particular cases, as, for instance, where the stipulated performance is illegal by the law of the place of performance".
And so also Lord Robson in Rex, vs Lovitt(3) at page 220 "It cannot mean that for all purposes the actual situation of the property of a deceased owner is to be (1) ; (2) , 119.
(3)1912 A.C. 212.
422 ignored and regard had only to the testator 's domicil, for executors find themselves obliged in order to get the property at all to take out ancillary probate according to the locality where such property is properly recoverable, and no legal fiction as to its 'following the owner ' so as to be theoretically situate elsewhere will avail them".
And he says at page 221 that these rules are only "for certain limited purposes".
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 vs Lovitt(1) at 219, Bank of Travancore vs Dhrit Ram(2) and New York Life Insurance Company vs Public Trustee(3) at page 117; (2) a customer 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(4) quoted with approval by Lord Reid in Arab Bank Ltd. vs Barclays Bank(5).
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(2)) 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 situs of the debt is at the place where the current account is kept and where the demand must be made.
This class of case forms an exception to the rule that a debtor must seek his creditor because, though that is the general rule, there is nothing to prevent the parties from agreeing, if they wish, that that shall not be the duty of the debtor and, as Lord Reid explains in the Arab Bank case(5) at page 531, a contract of current account necessarily implies an (1) (2) 69 I.A. 1, 8 and 9.
(3) , 119.
(4) (5)[1951] A.C. 495, 531.
423 agreement that that shall not be the bank 's duty, otherwise the whole object of the contract would be frustrated.
We have stressed the word "primarily" because the rules we have set out relate to the primary obligation.
If the bank wrongly refuses to pay when a demand is made at the proper place and time, then it could be sued at its head office as well as at its branch office and, possibly, wherever it could be found, though we do not decide that.
But the reason is 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: see Warrington, L. J. at page 116 and Atk in, L. J. at page 121 of New York Life Insurance Co. V. Public Trustee(1).
Now the rules set out above are not confined to the business of banking.
They are of wider application and have also been applied in insurance cases: Fouad Bishara Jabbour vs State of Israel(2) and New York Life Insurance Co. vs Public Trustee(1).
Similar considerations obtain in England when an involuntary assignment of a debt is effected by garnishment.
Cheshire has collected a list of English cases at pages 460 to 463 of his Private International Law from which we have quoted above.
He sums up the position at page 461 thus "It is difficult to state the rule with exactitude but it is probably true to say that a debt is properly garnishable in the country where, according to the ordinary usages of business, it would normally be regarded as payable".
But when all is said and done, we find that in every one of these cases the proper law of the contract was applied, that is to say, the law of the country in which its elements were most densely grouped and with which factually the contract was most closely connected.
It is true the judges purport to apply the leX Situs but in determining the situs they apply rules (and modify them where necessary to suit changing modern conditions) which in fact are the very rules (1) (2) , 424 which in practice would be used to determine the proper law of the contract.
The English Judges say that when the intention is not express one must be inferred and the rules they have made come to this: that as reasonable men they must be taken to have intended that the proper law of the contract should obtain.
The other view is that the intention does not govern even when express and that the proper law must be applied objectively.
But either way, the result is the same when there is no express term.
The "proper law," is in fact applied and for present purposes it does not matter whether that is done for the reasons given by Cheshire or because the fluid English rules that centre round the lex situs lead to the same conclusion in this class of case.
That, however, raises a further question.
Which is the proper law? The law that obtains when the contract was made and the obligation fashioned or the law in force at the time when performance is due? Here again, we think the answer is correctly given by Cheshire at page 210, quoting Wolff 's Private International Law, page 424, and Be.
Chesterman 's Trusts(1): "A proper law intended as a whole to govern a contract is administered as 'a living and changing body of law ' and effect is given to any changes occur.
ring in it before performance falls due".
This is what the English Courts did in New York Insurance Co. vs Public Trustee(2), Re.
Banque Des Marchands De Moscou(3), Fouad Bishara Jabbour vs State of Israel(4), and Arab Bank Ld.
vs Barclays Bank(5).
They were all cases in which the law changed because of the outbreak of war and where performance became impossible because of local legislation.
In the last two cases, the debts vested in the Custodian because of local legislation and payment by the debtor to the Custodian was regarded as a good discharge of the debt.
The position in those two cases was just what it is here.
(1)[1923] 2 Ch.
466, 478.
(2) (3) (4) (5)[1954] A.C. 495, 529.
425 Counsel argued that as Lyallpur was part of India, when the contract was made, the Indian law must be applied and that no different intention can be imputed to the parties.
But that is not the law, as we understand it, whether we apply the "proper law" or the situs rules.
The proper law will be the law at Lyallpur applied as a living and changing whole, and this would have been the case even if India had not been divided, because each State had the right to make different local laws even in undivided India, as witness the different money lending laws and the cloth and grain control orders: indeed this very case is an illustration of that, for the controls which gave rise to this very contract were not uniform throughout India.
But even apart from the "proper law" the decision of the Privy Council in Arab Bank Ld.
vs Barclays Bank(1) and of the Queens Bench Division in Fouad Bishara Jabbour vs State of Israel (2 ) negatives this contention when ail intention has to be imputed or a clause in the contract implied.
It is necessary, however, to bear in mind that, under modern conditions, choses in action arising out of contract have two aspects: (1) as property and (2) as involving a contractual obligation for performance.
The property aspect is relevant for purposes of assignment, administration, taxation and the like; the contractual aspect for performance.
In the present case, we are primarily concerned with the property aspect because the Pakistan Ordinance regards debts as property and vests all evacuee property in the Custodian and requires every person holding such property to surrender it to the Custodian on pain of penalties prescribed by the Ordinance, and section 11(2) states that "Any person who makes a payment under subsection (!) shall be discharged from further liability to pay to the extent of the payment made".
The payment was made and that, in our opinion, exonerated the defendant from further liability.
Such payment would operate as a good discharge even under the English rules: see Fouad Bishara Jabbour vs (1) , 529.
(2) 426 State of Israel(1) at page 154 where a number of English authorities are cited, including a decision of the Privy Council in Odwin vs Forbes(2).
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(1), Be Banque Des Marchands De Moscou(3) and Arab Bank Ld.
vs Barclays Bank (4).
The same result follows from the decision of the Judicial Committee in the Bank of Travancore Ltd. vs Dhrit Ram(5) where Lord Atkin said "When consideration is being given to the question, what law did the parties intend to govern the contract? it seems proper to bear in mind that the promisor is a bank incorporated under Travancore law with, apparently, some connection with the State of Travancore, and governed as to its business by any law of Travancore that may affect banking. .
The only difference between that case and this is that at the date of the deposit in this case there was no difference between the laws of Punjab and Delhi on the present point.
But they could have differed even if India had not been divided, as we have just pointed out.
The English cases are, however, in point and we can see little in principle to distinguish them from this case.
The learned counsel for the plaintiffs respondents argued that even if the law is what we have said, the Pakistan Ordinance does not apply to this case because "a cash deposit in a bank" is excluded.
The argument was based on the definition of "property" in section 2(5) of the Ordinance.
But this is not a cash deposit in a bank as between the plaintiffs and the defendant.
It is a debt which the defendant owes, or owed, to the plaintiffs, and the same definition states that "property" means, among other things, any debt or actionable claim The portion of the definition which speaks of a "cash deposit in a bank" means that such a deposit is not to be treated as (1) (2) (3) (4) , 529, (5)69 I. A. 1, 9. 427 "property" for the purposes of the Ordinance as between the bank and the customer who owns or controls the deposit.
We hold, therefore, that whether the proper law of the contract applies or the English law of situs in a case of this kind, the defendant is exonerated because, the debt being "property", the Ordinance divested the plaintiffs of ownership in it and vested the debt in the Custodian and at the same time interfered with the obligation for performance by providing that payment to the Custodian shall operate as a discharge of the obligation.
But we wish to emphasize that we decide this because payment was in fact made to the Custodian and that we express no opinion about what would happen in a case where there is no payment and the defendant has no garnishable assets in Pakistan out of which the West Punjab Government could realise the debt by attachment of the defendant 's property.
Different conclusions might possibly arise in such a case.
Lastly, it was urged that the Pakistan Ordinance is a penal law and is confiscatory in character, therefore, no domestic tribunal will recognise it or give effect to it.
That proposition is, in any event, too widely stated, but we are unable to condemn this law as opposed to the public policy of this country be,cause we have exactly the same kind of laws here, as do other civilised countries which find themselves in similar predicament or at the outbreak of war; see Arab Bank Ltd. vs Barclays Bank(1) and also Fouad Bishara Jabbour vs State of Israel(2) and Re.
Munster(3) where a like argument was repelled.
We hold that this legislation is not confiscatory.
The same rules apply to the item of Rs. 79 6 6 and to the deposit of Rs. 1,000 as security.
The appeal succeeds.
The decrees of the lower Courts are set aside.
A decree will now be passed dismissing the plaintiffs ' claim, but in the special circumstanoes of this case the parties will bear their own costs throughout.
(1) (2) , 157, (3) [1920] 1 ch.268.

summary:
During the years in question cloth was rationed at Lyallpur, then a part.
of the Punjab in undivided India, and sales could only be made to government nominees and other authorised persons.
The plaintiffs, resident in Lyallpur, were the government nominees, The 403 defendant company, with its head office at Delhi had a branch office and mills at Lyallpur, and supplied the plaintiffs with cloth from time to time in accordance with the government quota through its branch manager at Lyallpur.
Their dealings lasted some 4 or 5 years prior to 1947.
In accordance with their contract the plaintiffs left a security deposit of Rs. 1,000 with the defendant 's branch manager at Lyallpur, and deposited further sums of money with him from time to time at Lyallpur.
The defendant supplied the plaintiffs with their quota of cloth against those deposits.
There was thus a running account between the parties in which the balance was sometimes in the plaintiffs ' favour and sometimes against them; when against, they paid the defendant interest on the "overdraft".
The goods had to be supplied at Lyallpur and all moneys were paid there.
The accounts were kept at Lyallpur though copies were sent to the defendant 's head office at Delhi.
In 1947, when India was partitioned, Lyallpur was assigned to Pakistan.
The plaintiffs thereupon fled the country and entered India as refugees.
They settled in Delhi and thus became "evacuees" according to a Pakistan ordinance.
At that time there was a balance of Rs. 11,496 6 6 in the plaintiffs ' favour.
They accordingly made a demand at Delhi for payment of this sum and for return of their security deposit.
In the meanwhile the Pakistan Government issued an ordinance (1) vesting all evacuee property in the Custodian of Evacuee Property in Pakistan (2) prohibiting the 'payment of money to evacuees; and (3) requiring all moneys payable to, or claimable by, evacuees to be paid to the Deputy Custodian of Evacuee Property in Pakistan.
Payments so made were to operate as a discharge from further liability to the extent of the payment.
Breach of this law was punishable as an offence.
The Deputy Custodian demanded payment from the defendant of the moneys owing to the plaintiff.
After some correspondence and demur, the payment was made as required.
The defendant pleaded this as a defence to the action.
Held: (1) Lyallpur was the place of primary obligation because under the contract the balance remaining at its termination was to be paid there and not elsewhere, accordingly the demand for payment made at Delhi before a demand and refusal at Lyallpur was ineffective; (2) That the elements out of which the contract to pay arose were most densely grouped at Lyallpur, so Lyallpur was the natural seat of the contract and the place with which it had its closest and most real connection.
Accordingly, the "proper law of the contract" was the Lyallpur Law; (3) Under the English doctrine also the situs of the debt was Lyallpur; and so 404 (4) either way, the Lyallpur law applied (5) as it obtained at Lyallpur at the time when performance was due because a " proper law" intended as a whole to govern a contract is administered as a "living and changing body of law", accordingly, effect is given to any changes occurring in it before performance is due; (6) a "debt" being a chose in action is "property" within the meaning of the Pakistan Ordinance and so, (7) the money was rightly paid to the Deputy Custodian and that operated as a good discharge and exonerated the defendant from further liability.
But quaere, whether different conditions would not arise in a case where no payment is made and the defendant has no garnishable assets in Pakistan out of which the West Punjab Government could realise the debt out of the defendant 's property there.
(8)The provisions of the Pakistan ordinance relevant to the case are not opposed to the public policy of India and so can be relied on as a defence to an action of this nature.
Appeal allowed.
Mount Albert Borough Council vs Australasian Temperance, etc.
; , Bonython vs Commonwealth of Australia at 219), Bank of Travancore vs Dhirt Ram (69 I.A. I at 8), New York Life Insurance vs Public Trustee ([1924] 2 Ch.
101 at 119), Rex vs Lovitt , Joachinsons vs Swiss Bank Corporation ([1921] 3 K.B. 110), Arab Bank vs Barclays Bank at 531), Fouad Bishara vs State of Israel ([1954] 1 A.E.R. 145).
Chesterman 's Trusts [(1923] 2 Ch.
466 at 478), Be.
Banque Des Marchands De Moscou ([1954] 2 A.E.R. 746), Odwin vs Forbes and Re. Munster ([1920] 1 Ch.
268), referred to.


judgement:
Civil Appeal No. 90 of 1973.
From the Judgment and Order dated the 24th and 25th July, 1972 of the Gujarat High Court in Election Petition No. 2 of 1971.
section N. Andley, K. J. John and Shri Narain Mathur for the appellant.
F. section Nariman, P. H. Parekh, Mrs. section Bhandare and Manju Jaitley for respondent No. 1.
The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This appeal arises out of an election petition questioning the election of 1st respondent in the election held in March 1971 to the Lok Sabha from the Banaskantha constituency in Gujarat.
In that election the 1st respondent, a nominee of the Ruling Congress was declared elected securing 1,16,632 votes as against 92,945 votes secured by the 2nd respondent, a nominee of the Organisation Congress.
The appellant, a voter in the constituency, also belonging to the Organisation Congress, filed a petition challenging the validity of the election on various grounds out of which only those covered by issue No. 10, hereinafter set out, survive for consi deration: "(10) Whether respondent No. 1 or his agents or/ other persons with his consent made a gift or promise of gratification to the petitioner with the object directly or indirectly of inducing the petitioner to vote for respondent No. 1 or to refrain from voting for respondent No. 2 ?" The allegation relating to this charge in the election petition is that the 1st respondent and his agent Maulvi Abdur Rehman and the 1st respondent 's son Bipin Popatlal Joshi with the consent of the 1st respondent had made a gift and a promise of gratification to the appellant for voting in 1st respondent 's favour.
The appellant as well as one Madhusudansinhji, who has been examined as P.W. 10, seem to have been at that time prominent members of the Organisation Congress and also leaders of the Kshatriya community which formed 900 about 20 to 25 per cent of the votes in the Banaskantha constituency.
It was alleged that on February 9, 1971 the 1st respondent and Maulvi Abdur Rehman came to the appellant 's residence and persuaded him to leave Congress (O) and join Congress (R) offering (1) to secure a party ticket for the appellant for the election to the Gujarat Legislative Assembly in 1972, (2) to meet all his expenses for that election and to pay him Rs. 10,000/ in cash towards the said expenses, and (3) to construct a hostel for the Kshatriya students of the Banaskantha district.
A specific allegation was made that the 1st respondent wanted the appellant to vote for him.
It was also alleged that the 1st respondent asked the appellant to convey to Madhusudansinhji an offer of a party ticket for the Legislative Assembly election in 1972 and to pay him also a sum of Rs. 10,000/ .
The Prime Minister was addressing a meeting at Palanpur on that day.
The appellant, his wife and Madhusudansinhji were taken to the helipad, Palanpur when the Prime Minister landed there and also to the dais from which the Prime Minister was addressing a public meeting.
One Akbarbhai Chavda, convener of the District Congress Committee announced that the appellant and Madhusudansinhji had joined Congress (R), and asked the appellant to say a few words.
The appellant went to the microphone, took out the bundle of notes of Rs. 10,000/ given to him and flung it in the air and told the gathering that he and his colleagues could not be purchased and that they would remain loyal to the Organisation Congress.
During the trial of the election petition Madhusudansinhji, who had by that time joined the Ruling Congress and Maulvi Abdur Rehman were examined as witnesses on behalf of the appellant.
The learned Judge of the High Court after considering the evidence before him held that Bipin Popatlal Joshi, son of the 1st responident, handed over Rs. 10,000/ to the appellant as a bribe to bring about the appellant 's defection from the Organisation Congress.
But he took the view that the object of the gift was to bring about the appellant 's defection from the Organisation Congress and not induce directly or indirectly any voters to cast their votes for the Ruling Congress candidate or to refrain from voting in favour of the 2nd respondent.
As regards the offer to build the hostel for Kshatriya students he held that the fact that a person who defects from another party to the Ruling Congress would be expected to work for that party and would be expected to use his personal influence in support of the candidate of that party does not mean that the object of bringing about the defection was to indirectly induce the Kshatriya voters to cast their votes for the 1st respondent.
He therefore held that payment of such money and holding out such inducement does not amount to any offence under the Election Law and it was with regret that he had to decide the case in favour of the 1st respondent.
We are in entire agreement with the finding of the learned Judge as regards the payment of Rs. 10,000/ to the appellant and also the offer to build hostel for Kshatriya students and do not consider it 901 necessary to go into the evidence in support of that finding.
That finding is supported not only by the evidence of Madnusudansinhji and Maulvi Abdur Rehman but also the letter exhibit T, passed by the latter to the appellant and Madhusudansinhji.
The question is whether that finding is enough to establish the charge of bribery against the 1st respondent.
There is still another finding necessary in regard to the allegations made in the petition in respect of which the learned Judge has given no finding and that is with regard to what happened of the 9th of February 1971.
We are at one with the view of the learned Judge that the payment of Rs. 10,000/ to the appellant was with a view to induce him to defect from organisation Congress to the Ruling Congress.
It may carry with it the implication that he was expected to use his influence with the voters to vote for the candidate set up by the Ruling Congress.
It has been held by this Court in Kalia Singh vs Genda Lal & ors.(1) to which two of us (Untwalia & Alagiriswami JJ) are party, that a payment made to a person in order to induce him to canvass votes on behalf of the bribe giver would not be bribery within the definition of that word in section 123(1) of the Representation of the People Act.
It was held that it is only in a case where the payment to a third person by itself induces the voter to vote for the bribe giver that it would fall under section 123(1).
Mr. Andley appearing on behalf of the appellant tried to persuade us that that decision requires reconsideration.
After having considered his arguments we are still of the opinion that the view taken in that decision is correct.
The object of providing that a payment should not be made to a person in order that that payment should induce some other person to vote for the bribe giver is obvious.
It is apparently intended to cover situations where payment to a husband, wife, son or father is intended to induce the wife, husband, father or son to vote for the bribe giver.
That would be indirect inducement.
otherwise it would be easy for the bribe giver to say that he did not bribe the voter himself and therefore it is not bribery.
That this provision was not intended to cover a case where money is paid to a certain person in order to make him induce another person to vote for the person who paid him the money would be obvious by looking at the converse case.
Under section 123(1)(B)(b) the receipt of or agreement to receive, any gratification, whether as a motive or a reward by any person whomsoever for himself or any other person for voting or refraining from voting or inducing or attempting to induce any elector to vote or refrain from voting, or any candidate to with draw or not to withdraw his candidature is bribery.
Under this clause any person who receives or agrees to receive any gratification as a reward for inducing or attempting to induce any elector to vote etc. would be receiving a bribe.
The law therefore contemplates that where a person makes any payment to another person in order to make him use his influence to induce a third person to vote for him that is not bribery by the person who pays but the receipt of money by the second person for inducing or attempting to induce another elector to vote is bribery.
It is also bribery for the voter himself to receive 902 the money.
We, therefore, reiterate the view that when a candidate or anybody on his behalf pays any gratification to a person in order that the payment made to him may induce the voter to vote for the bribe giver it is bribery.
But where the gratification is paid to a person in order that he may induce the other persons to vote for the bribe giver it is not bribery on the part of the bribe giver.
It is, however, as we have explained above, bribery on the part of the bribe taker even when he takes it in order to induce an elector to vote for the bribe giver.
In this case it is obvious that the primary object of the payment made to the appellant was to induce him to defect from the Organisation Congress to the Ruling Congress.
That is not a corrupt practice under the Representation of the People Act.
Even if the payment was received with the promise that he would induce the voters to vote for the bribe giver it will not be bribery on the part of the bribe giver but only bribery on the part the bribe taker.
The defection of the appellant to the Ruling Congress, if it took place, might mean that he was expected to work for the Ruling Congress.
Equally it may not.
A person who changes his party allegiance at the time of the election probably might not command much respect among electors if the 1 electors knew that he had done so after receiving some money.
Otherwise the fact that two important persons the appellant and Madhusudansinhji, a younger brother of the ex ruler of Danta Stata had joined the Ruling Congress might be expected to influence the voters to vote for the candidate set up by the Ruling Congress.
But that would be not because of the payment made to the appellant and Madhusudansinhji.
Nor would such payment be bribery.
To reiterate, it is the payment to the appellant that must induce the voters to vote for the candidate set up by the Ruling Congress in order that it might amount to bribery.
It is not enough that his defection from organisation Congress to the Ruling Congress induces voters to vote for the Ruling Congress candidate.
As we said earlier, if the payment to the appellant came to be known as the cause for his changing allegiance it may have a boomerang effect.
It is therefore clear that the payment made to the appellant would not have induced the voters to vote for the Ruling Congress candidate.
While after his defection therefore the appellant might have been expected to work for the Ruling Congress candidate or equally might not have been, it is perhaps implicit that he would also vote for the Ruling Congress candidate.
Is this enough to make the payment made to the appellant bribery ? The payment was made not for the purpose of inducing him to vote but to make him defect to the Ruling Congress.
That was the purpose for which the payment was made.
That incidentally he might vote for the Ruling Congress candidate does mean that the payment was made to him in order to make him vote for the Ruling Congress candidate.
The bargain was not for his vote, the bargain was for his defection.
Therefore on this point we agree with the learned Judge of the High Court.
But if there was a specific request by the 1st respondent to the appellant that he should vote for him then the position would be different.
In that case it would be bribery and even bribery to one 903 person is enough to make an election void.
A specific allegation to that effect has been made in the election petition and that has not been considered by the learned Judge of the High Court.
We shall now proceed to do so.
The appellant gave evidence to the effect that the 1st respondent asked him on 9th February to vote for him and made the three promises earlier referred to.
He was not cross examined on that point but the 1st respondent in his turn deniesd this when he gave evidence.
Maulvi Abdul Rehman speaks to his having met the appellant on February 9, 1971 but he says that the 1st respondent was not with him at that time.
Madhusudansinhji says that he had met the appellant before the 14th and that at that time the appellant told him that the Maulvi and the 1st respondent were insisting that the appellant and he (Madhusudansinh) should join Congress (R).
He also denied a suggestion put to him in cross examination that it was not true that the appellant had told him before the 14th of February anything about the Maulvi or the 1st respondent telling the appellant that the appellant and he (Madhusudansinh) should join the Congress (R) on certain terms.
This is the evidence relied on to show that on the 9th the 1st respondent also had met the appellant.
If the appellant and Madhusudansinhji had met at Palanpur before the 14th and the appellant then told him that Maulvi and the 1st respondent were insisting that they should join the Ruling Congress the meeting should have been on the 13th or earlier and the request to him on the 12th or earlier.
Naturally having chosen to examine Madhusudansinhji, who had by that time joined the Ruling Congress, as his witness the appellant would not have risked putting questions about the exact date on which Maulvi and the 1st respondent had met him.
Quite possibly there was no such meeting on the 9th of February and that was why that question was not specifically put to him.
When that question was put to Maulvi Abdul Rehman, who was examined as P.W. 8 a little earlier, he denied that the 1st respondent was with him on the 9th February.
Coming to the conversation which the appellant and Madhusudansinhji had before the 14th, if the Maulvi and the 1st respondent were insisting either on the 13th or earlier that the appellant should join the Ruling Congress there should have been a meeting between them a little earlier than the 13th and it should have been on the 9th is the argument on behalf of the appellant.
But there are many imponderables in this argument.
If the Maulvi and the 1st respondent were insisting that the appellant and Madhusudansinhji should join the Ruling Congress it does not mean that they both did so at the same time.
They could have been doing it on different occasions separately.
Nor does it follow that the Maulvi and the 1st respondent met him on the 9th.
Nor does it follow that on that date the 1st respondent asked the appellant to vote for him.
The statement of Madhusudansinh is too slender a foundation on which this argument could be built.
It is thus a case of the appellant 's oath against 1st respondent 's oath and in a case of a serious charge like bribery we would not be satisfied merely on the basis of an oath against oath to hold that it has been satisfactorily established that the 904 1st respondent asked the appellant on 9th February to vote for him.
He may also mention that with regard to the alleged visit of the Maulvi and the 1st respondent to the appellant three other possible witnesses including the appellant 's wife, Pushpaben who could have been examined to establish that the 1st respondent accompanied the Maulvi to the appellant had not been examined.
A further fact which improbabilises this story is that in the election petition it is stated that the 1st respondent told the appellant that he would arrange for a ticket for Madhusudansinh in the 1972 elecations and pay him Rs. 10,000/ if Madhusudansinh left organisation Congress and joined the Ruling Congress and voted and worked for him (1st respondent) and asked him to convey the offer to Madhusudansinh.
No evidence was let in about the voting and what is more Madhusudansinh was not a voter in the Banaskantha Constituency.
This shows that the allegation regarding the request to appellant to vote for 1st respondent is of the character as the request to Madhusudansinh and put in merely for the purposes of the election petition and not a fact.
On broader considerations also it is very unlikely that when the talk was about the appellant and Madhusudansinh defecting to the Ruling Congress from the organisation Congress there would have been any talk about the voting itself.
All parties would have proceeded on the understanding that when they defected to the Ruling Congress they would both work and vote for the Ruling Congress.
The distinction between a gift or offer combined with the request to vote and the gift or offer to a person asking him to work for him with the incidental result that person might vote for him should always be kept in mind.
In such a case there is no specific bargain for the vote.
Were it not so it would be impossible for persons standing for election to get any person to work for them who is not also a voter in the constituency.
This was brought out by this Court in the decision in onkar Singh vs Ghasiram Majhi(1).
We would, therefore, hold that the case that 1st respondent bargained for the appellant 's vote has not been satisfactorily made out.
On behalf of the 1st respondent it was urged that the actions of the appellant and Madhusudansinhji immediately after the payment of Rs. 10,000/ and the dramatic developments at the meeting addressed by the Prime Minister show that there would not have been any bargaining for the appellant 's vote.
The points relied upon were (1) that it was not said by the appellant when he threw the money into the crowd on the 18th that he was asked to vote for the 1st respondent, (2) that it was not mentioned in the statement (exhibit 5) made by the appellant and Madhusudansinhji on 18 2 1971, (3) that was not mentioned in the interview given to the newspaper reporters found in exhibit 7 or in the newspaper report exhibit 8.
We do not consider that these things are of much importance.
At that time the most important factor was the attempt to persuade the appellant and Madhusudansinhji to defect to the Ruling Congress and any request to the appellant to vote for the 1st respondent would have been insignificant 905 even as we have held that when requesting the appellant and Madhusudansinhji to defect to the Ruling Congress it is not likely that they would have been asked to vote for the 1st respondent.
The reference to the piece of evidence just mentioned cannot be said to establish that there was no request made to the appellant to vote for the 1st respondent.
That would have to be decided on other factors and other evidence and on the basis of that evidence we have already held that it is not established that the 1st respondent requested the appellant to vote for him.
Now remains the question of the offer to build a hostel for Kshatriya boys.
Strictly speaking this does not arise on issue 10.
This is probabilised by the evidence of Madhusudansinhji, Maulvi Abdul Rehman and the appellant as well as exhibit T.
Whether it was to be in Danta or Banaskantha does not make much difference as long as it was for the Kshatriya boys.
The two places are near to each other though in different Parliamentary constituencies and in whichever place it was situate it will benefit Kshatriya boys and there is No. doubt that if the hostel were constructed by respondent No. 1 or the Ruling Congress party at his instance that would induce the voters to vote for the Ruling Congress candidate.
But before that happens the matter should come to the knowledge of the voters.
Only if the voters knew that the promise had been made to the appellant and Madhusudansinhji that promise would induce the voters to vote for 1st respondent.
But the knowledge of the prormise remained confined to the appellant and P.W. 10, in addition of course to Maulvi Abdul Rehman and the 1st respondent 's son.
If the payment or the promise was to induce the voters, it cannot induce the voters unless they come to know about the payment or the promise.
There is no evidence her that the voters knew about the promise to build the hostel.
The bargain in such cases as we have mentioned in the judgement delivered by us today in section Iqbal Singh vs Gurdas Singh & Ors. is really an offer on the part of the bribe giver that he would do such a thing if the voters would vote for him.
It is not necessary that the voters should have accepted it.
But the voters should have a knowledge about the offer.
Then only it would be a bargain.
An offer contemplated and retained in the mind of the offerer and not articulated and made known to the offeree will not be a bargain.
It therefore follows that in this case the offer to build a hostel does not also amount to bribery.
In the result we upheld the judgment of the High Court and dismise this appeal.
We make no order as to costs.
P.H.P Appeal dismissed.

dataset_name: IN-Abs

summary:
The first respondent, a candidate of the ruling Congress was elected to the Lok Sabha from Banaskantha constituency in Gujarat, defeating his rival candidate of Organisation Congress.
The appellant a voter in the constituency belonging to the Organisation Congress filed an election petition challenging the validity of election of respondent No. 1 on various grounds.
The only ground surviving now is the allegation that respondent No. 1 or his agents or other persons with his consent made a gift or promise of gratification to the petitioner with the object of directly or indirectly inducing the petitioner to vote for respondent No 1 or to refrain from voting for respondent No. 2.
The allegation is that the first respondent 's agent Maulvi and the respondent 's son Bipin with the consent of the first respondent made a gift of Rs. 10,000/ and promised to secure a party ticket for the appellant and to construct a hostel for the Kshatriya students of the Bansaskantha district.
A specific allegation was made that the first respondent wanted the appellant to vote for him.
It was also alleged that the first respondent asked the appellant to convey to Madhusudan Sinhji, another voter an offer of a party ticket for the Legislative Assembly election, and to pay to him also a sum of Rs. 10,000/ The High Court after considering the evidence held that Bipin handed over Rs. 10,000/ to the appellant to bring about the appellant 's defection from the Organisation Congress.
The High Court took the view that the object of the gift was to bring about the appellant 's defection from the Organisation Congress and not to induce directly or indirectly any voters to cast their votes for the ruling Congress candidate or to refrain from voting in favour of the second respondent.
The High Court held that the payment of Rs. 10,000/ and holding out inducement to build the hostel for Kshatriya students does not amount to any offence under the election law.
On an appeal, the appellant contended: (i) that the first respondent or his agent or his son with his consent induced the appellant and Madhusudan Sinhji to vote for respondent No. 1 and to refrain from voting for respondent No. 2.
(ii) that the whole purpose of the defection was that the appellant and Madhusudan Sinhji should canvass votes for respondent No. 1.
particularly, from the Kshatriya voters on the inducement of building hostel for the Kshatriya students.
(iii) that the decision of this Court in the case of Kalia Singh vs Gendalal requires to be reconsidered.
(iv) that there was a specific request by respondent No. 1 to the appellant to vote for him in exchange for the gift and inducement.
Dismissing the appeal, ^ HELD: (1) We are in entire agreement with the finding of the High Court as regards the payment of Rs. 10,000/ to the appellant and also the offer to build hostel for Kshatriya students.
[900 H] 898 (2) The payment of Rs. 10,000/ to the appellant was with a view to induce him to defect from Organisation Congress to the ruling Congress.
It may carry with it the implication that he was expected to use his influence with the voters to vote for the candidate set up by the ruling Congress.
[901 B C] (3) The decision of this Court in the case of Kalia Singh vs Genda Lal approved.
The said decision does not require any re consideration.
The expression "directly or indirectly" is intended to cover situations where payment to a husband, wife son or father is intended to induce the wife, husband, father or son to vote for the bribe giver, that would be indirect inducement.
Otherwise it would be easy for the bribe given to say that he did not bribe the voter himself.
This provision was not intended to cover a case where money is paid to a certain person in order to make him induce another person to vote for the person who paid him the money would be obvious by looking at the converse case.
When a candidate or anybody on his behalf pays any gratification to a person in order that the payment made to him may induce the voter to vote for the bribe giver, it is bribery.
But where the gratification is paid to a person in order that he may induce the other person to vote for the bribe giver, it is not bribery on the part of the bribe giver.
[901 C H, 902 A] (4) In this case it is obvious that the primary object of the payment made to the appellant was to induce him to defect from the Organisation Congress to the ruling Congress.
The bargain was not for his vote.
The bargain was for defection.
That is not a corrupt parctice under the Representations of the People Act.
Even if the payment was received with the promise that he would induce the voters to vote for the bribe giver, it will not be bribery on the part of the bribe giver but only bribery on the part of the bribe taker.
The defection of the appellant to the ruling Congress, if it took place, might mean that he was expected to work for the ruling Congress.
Equally it may not.
The fact of the appellant and Madhusudan Sinhji 's joining the ruling Congress might be expected to influence the voters to vote for the candidate set up by the ruling Congress.
But, that would not be because of the payment made to the appellant and Madhusudan Sinhji nor would such payment be bribery.
It is the payment to the appellant that must induce the voters to vote for the candidate set up by the ruling Congress in order that it might amount to bribery.
It is not enough that his defection from Organisation Congress to the ruling Congress induces voters to vote for the ruling Congress candidate.
[902 B E] (5) As far as the promise to build a hostel for the Kshatriya students is concerned, before it can be termed a bribery the matter should come to the knowledge of the voters.
Only if the voters know that the promise has been made to the appellant and Madhusudan Sinhji, can that promise would induce the voters to vote for the first respondent.
In the present case, the knowledge of the promise remained confined to the appellant.
If the payment or the promise was to induce the voters, it cannot induce the voters unless they come to know about the payment or the promise.
It is not necessary that the voters should have accepted the bribe but the voters must have a knowledge about the offer.
Then only it would be a bargain.
Therefore, in the present case the offer to build a hostel does not amount to bribery.
[904 D F] (6) But, if there was a specific request by the first respondent to the appellant that he should vote for him in exchange for the gift and the inducement in that case it would be bribery and even bribery to one voter is enough to make a election void.
A specific allegation to that effect was made in the election petition and that has not been considered by the High Court.
This Court, therefore, went through the evidence and came to the conclusion that no such request for vote was made to the appellant for the following reasons.
[902H; 903A] (i) Madhusudan Sinhji was not put a question about the exact date on which Maulvi and the first respondent met him.
Quite possibly there was no such meeting on the 9th February and that is why the question was not put to him.
[903 E] 899 (ii) The statement of Madhusudan Sinhji is too slander a foundation on which the argument could be built.
It is, thus, a case of the appellant 's oath against the first respondent 's oath and in a case of serious charge like bribery we would not be satisfied merely on the basis of an oath against an oath.
[903 H] (iii) Three other possible witnesses including the appellant 's wife Pushpa who could have been examined to establish that the first respondent accompanied the Maulvi to the appellant had not been examined.
[904 A] (iv) No evidence was led about the first respondent 's having asked the appellant to vote.
The allegation regarding the request to appellant to vote for first respondent is put in merely for the purpose of election petition and not a fact.
[904 C] (v) All parties would have proceeded on the understanding that when the appellant defected to the ruling Congress, he would both work and vote for the ruling Congress.
There could not have been a specific bargain for the vote.
[904 D]


judgement:
Civil Appeal No 837 of 1975.
Appeal by special leave from the judgment and order dated 6th March,, 1975 of the Andhra Pradesh High Court in Writ Appeal No. 96/75.
A. V. Koteswara Rao and B. Kanta Rao, for the appellant.
P. Ram Reddy and P. P. Rao, for the respondent.
The Judgment of the Court was delivered by ALAGIRISWAMI J.
On 15 7 1974 the appellant applied for a licence under the Andhra Pradesh (Andhra Area) Places of Public Resort Act, 1888 for conducting games of skill and dances and other quality performances in a village adjoining the district headquarters ' town of Nellore, with its 12 cinema theaters, in Andhra Pradesh.
That Act has been extended to this Panchayat.
On 25 9 1974 the licence was refused by the Executive Officer of the Panchayat.
Its grant had been objected to by the Superintendent of Police as also two associations called Mitramandali and the Town Yuvajanasangham.
But on appeal to the village Panchayat as provided in section 129 of the Panchayats Act a licence was granted on 1st October, 1974.
The Mitramandali made a representation to the Chief Minister and the District Panchayat officer, the Deputy Superintendent of Police, the Superintendent of Police, the Tehsildar, and the Revenue Divisional officer also reported against the grant of licence.
On 21st January 1975 the Additional District Magistrate issued a notice to the appellant to show cause why the licence issued to him should not be cancelled.
The appellant had in the meanwhile put up semi permanent structures as required under the terms of the licence which even according to the Executive Engineer, Zila Parishad, Nellore should have cost him Rs. 27,000/ .
He commenced his business on 22nd January 1975 and the show cause notice issued by the District Magistrate reached him on the 25th.
He sent a reply on the 27th and on the 28th the licence was cancelled.
The appellant 's writ petition questioning the cancellation was dismissed by a Single Judge of the Andhra Pradesh High Court, so was an appeal against that dismissal by a Division Bench.
This appeal has been filed in pursuance of special leave granted by this Court.
In his reply to the show cause notice the appellant had asked for copies of the various documents on the basis of which the show cause notice had been issued and stated that in their absence he was not in a position to submit a detailed explanation in reply and he was, however,, offering a tentative explanation promising a fuller and detailed 4 L1276SCI/75 40 explanation after the receipt of the copies.
In particular in respect of a reference to a murder in the show cause notice he stated that it took place in the premises of another amusement park long after it was closed for want of licence.
The District Magistrate considered that the explanation offered was a routine one and was not convincing.
Section 12 of the Andhra Pradesh (Andhra Area) Places of public Resort Act enables the District Magistrate to call for and examine the record, of any proceeding taken under the Act, to call for any report in connection therewith, to make or cause to be made any further enquiry and to pass any order which the authority holding the proceeding might have passed.
Under section 9 any authority granting a licence may for reasons recorded in writing, revoke or suspend the same when he has reason to believe: (a) that the licence has been fraudulently obtained; (b) that the enclosed place or building has been used for other purposes of public resort or entertainment than that for which the licence was granted; and (c) that the place or building can no longer be safely used for the purpose for which the licence was granted.
Undoubtedly none of the reasons applied in this case.
Under section 7 if the authority is satisfied (a) that the enclosed place or building may safely be used for the purpose of public resort or entertainment proposed; (b) that no objection, arising from its situation, ownership, or the purpose proposed, exists, he shall grant to the applicant a written licence.
The only ground in this section applicable to the present case would be 'the purpose pro posed '.
The argument before us was that the power of the District Magistrate to revoke the licence under section 12 can be for only any of the grounds mentioned in section 9.
The power under section 12 is to pass any order which the authority holding the proceeding might have passed" that is, an order granting revoking or suspending.
In other words, if the authority competent to grant the licence refuses, the District Magistrate in exercise of his power under section 12 may grant the licence and vice versa, Similarly he can revoke or suspend the licence granted by the authority or where the authority has revoked or suspended the licence cancel that order.
In other words the power under section 12 is to pass the kind of order which might be passed under section 7 or 9.
The reasons for which this power can he exercised are not restricted to those mentioned in section 7 or 9.
The revisional power under section 12 is not a limited one.
It is as wide as that of the original authority.
The considerations which the District Magistrate took into account in revoking the appellant 's licence were the same as those which were before the Village Panchayat when it decided to grant the licence.
The revising authority is entitled on the same material to take a view different from that of the authority whose order is revised.
41 But the main ground of attack against the order of cancellation is that in making it the district Magistrate had failed to observe the principles of natural justice.
The order that the District Magistrate passed is a quasi judicial order and therefore the appellant is right in contending that the principles of natural justice should have been followed before that order was passed.
It is now well established by decisions of this Court that such is the requirement of law even where the statute in question itself does not so provide.
It is also well established that the principles of natural justice do not necessarily conform to a fixed formula, nor is it a procrustean bed into which all proceedings must be fitted.
The principles of natural justice will always depend upon the facts of each case.
The learned Judges of the High Court examined the various documents the copies of which had been asked for by the appellant and came to the conclusion that the show cause notice issued to him contained a summary of all those documents which was sufficient to enable the appellant to make his representation.
We cannot say that this conclusion is wrong.
It is not always necessary that the documents asked for should itself be furnished provided the substance of those documents is furnished, always provided, however, that the summary is not misleading.
Such is not the case here.
But when the appellant asked for the original documents he could at least have been told that he had already been given a summary of the documents which was sufficient to enable him to make his representation and he could make his fuller representation as he had promised in his earlier so called interim reply.
The District Magistrate 's characterisation of the interim reply of the appellant as a routine one is not correct.
After all the opinion of the Village Panchayat which is a representative body of all the villagers is entitled to great if not greater weight than that of the Mitramandli and the Town Yuvajanasangham, the composition of which or the strength of which we do not know.
The Village Panchayat was also competent on a consideration of all the facts to form its own opinion.
The opinions of representative bodies should not be lightly brushed aside unless of course there is reason to think that they have acted out of considerations other than relevant.
We are of opinion that the order passed by the District Magistrate post haste immediately he received the appellants reply without either giving him the copies asked for or at least telling him that the material already furnished was sufficient to enable him to make his representation and if he had ally further representation to make he could do so offends the principles of natural justice.
We are aware that we are dealing with an appeal questioning the proceedings initiated under Article 226 of the Constitution where the power of the court is a limited one, that is to say, limited to cases where there is any error of law apparent on the face of the record.
But the observance of the principles of natural justice is fundamental to the discharge of any quasi judicial function.
We therefore allow the appeal and set aside the order of the District Magistrate.
There will be no order as to costs.
P.B.R. Appeal allowed .

summary:
Section 12 of the Andhra Pradesh (Andhra Area) Places of Public Resort Act, 1888, empowers the District Magistrate to can for examining the record any of any proceeding taken under the Act to can for any report in connection .
therewith, to make or cause to be made any further enquiry and to pass any order which the authority holding the proceeding might have passed.
Section 7 of the Act states when the authority concerned could grant a licence Section 9 states when an authority granting a licence could revoke or suspend the same.
The appellant was granted a licence for conducting games of skill and dances and other quality performances.
Objections having been raised the Additional District Magistrate issued a show cause notice to the appellant In reply the appellant had asked for copies of certain documents on the basis of which the show cause notice had been issued.
In the meantime, however the appellant submitted a tentative explanation stating that a detailed explanation would be sent after the receipt of the copies of the documents.
Immediately thereafter the District Magistrate cancelled the licence on the ground that the explanation offered was a routine one and was not convincing.
The High, Court dismissed the writ petition of the appellant.
On appeal to this Court it was contended that (i) the order of cancellation was in violation of the principles of natural justice.
and (ii) the District Magistrate could revoke the licence under s.12 only on any of the grounds mentioned in s.9.
Allowing the appeal.
^ HELD : 1 (a) The order passed by the District Magistrate immediately after he received the appellant 's reply without either giving him the copies asked for or at least telling him that the material already furnished was sufficient to enable him to make his representation and if he and any further representation to make, he could do so, offends the principles of natural justice.
[41 F].
(b) It is now well established by decisions of this Court that an authority making a quasi judicial order should follow the principles of natural Justice before passing an order, even where the statute in question does not so provide.
It is also well established that principles of natural justice do not necessarily is l; conform to a fixed formula nor is it a procrustean bed into which all proceedings must be fitted.
The principles of natural justice will always depend upon the facts of each case.
[41 B].
In the instant case when the appellant asked for the original documents, .
he could at least have been told that he had already been given a summary of the documents which was sufficient to enable him to make his representation.
The District Magistrate 's characterisation of the interim reply of the t appellant as a routine one is not correct.
[41 D E] 2.
The revising authority under the Act is entitled on the same material, to take a view different from that of the authority whose order is revised.
" The power under section 12 is to pass any order which the authority holding the r 39 proceeding might have passed, that is an order granting, revoking or suspending a licence.
If the authority competent to grant a licence refuses, the District Magistrate, in exercise of his powers under section 12, may grant a licence and l ice versa.
Similarly, he could revoke or suspend the licence granted by the authority or where the authority has revoked or suspended the licence, cancel that order.
The reason for which this power could be exercised are not restricted to those mentioned in section 7 or 9.
The revisional power under section 12 is not a limited one.
It is as wide as that of the original authority.[40 G H].