judgement:
Appeal No. 1291 of 1968.
Appeal by special leave from the Award dated October 29,1967 of the Industrial Tribunal, 'Madras in Industrial Dispute No. 65 of 1966 published in the Supplement to Section I of the Fort St. George Gazette dated the 15th day of November 1967.
M. K. Ramamurthi, R. C. Pathak and J. Ramamurthi, for the appellants.
B. Sen, C. Doraiswami and D. N. Gupta, for the respondent.
The Judgment of the Court was delivered by VAIDIALINGAM, J.
This appeal, by special leave, by the workmen is against the award dated October 20, 1967, of the Industrial Tribual, Madras, in I.D. No. 65 of 1966 in so far as it declined to grant additional bonus for the years 1962 and 1963.
The respondent, Dunlop Rubber Company of India Limited, which is engaged in the manufacture and sale of types and tubes for light and heavy vehicles, has a factory in Calcutta 'besides one at Ambattur in Madras, which was started or about 1959.
At the time of the award, the company was employing about 1200 workmen but, 230 during the years 1962 and 1963, it wag employing about 800 workmen.
The company paid to its workmen for each of these two years, 1962 and 1963, 12 weeks ' basic wages as annual bonus.
The workmen were not satisfied with the said payment and demanded additional bonus of three months ' basic wages for each of these years.
According to the workmen, the company has made a net profit of about 3.30 crones in each of these years.
The company, however, declined to meet the demand with the result that the Government of Madras by its order dated October 15, 1966, referred the dispute regarding the additional bonus to the Industrial Tribunal, Madras.
There was also another dispute referred regarding the alteration of the gratuity scheme.
But we are not concerned with this dispute.
The case of the workmen, as disclosed by their written statement before the Tribunal, was as follows The company, according to their published profit and loss account has made a net profit of Rs. 3.30 crores and Rs. 3.27 crores for the years 1962 and 1963 respectively.
The management have made various deductions from their gross profit, which were not justified according to the Full Bench Formula.
The management in their work sheet claimed Rs. 2.49 crores as rehabilitation and this huge amount has been claimed to purposely defeat the just demands of the workmen.
Having due regard to the profits earned by the company, the demand of three months ' basic wages as additional bonus was justified The company resisted the claim of the union.
The case of the company was as follows : In each of these two years, 1962 and 1963, it has paid to its workmen in India bonus equivalent to.
fifteen weeks ' basic wages.
All the workmen, except the workmen at Ambattur, who represent only about 12 per cent of.
the total number of employees, have accepted the payment and they are fully satisfied with the amount paid voluntarily by the company.
The company made proper deductions and additions according to the Full Bench Formula and arrived at the available surplus.
Out of the said available surplus, the company has paid nearly 60 or 63 per cent as bonus to the workmen which represents fifteen weeks ' basic wages.
Before the Tribunal, the company as well as the workmen filed charts in respect of their pleas.
The union objected to the deduction made by the company in respect of the commission received out of the sales made by the Dunlop United Kingdom as well as the royalties receivable out of the sales made by the London firm.
There were also objections taken by the union in respect of certain deductions and claims made by the company.
As those contentions have been raised before us also, we will refer to those matters later.
There was also controversy regarding the rehabilitation claimed by the company.
The Tribunal, on a consideration of the materials placed before it by both the parties, ultimately accepted the case of the management and held that the bonus already paid to the workmen was sufficient and that they are not entitled to any additional bonus for these two years.
231 Mr. M. K. Ramamurthi, learned counsel for the appellant workmen attacked the view of the Tribunal accepting the claims made by the company in respect of several items.
The company had filed before the Tribunal a statement, Ext.
M 3, extracted below, showing the available surplus for the years 1962 and 1963 : "The Dunlop Rubber Co. (India) Limited Available Surplus Computations for the years 1962 and 1963.
1962 1963 Rs. Rs. Rs. Rs. Net Profit per Accounts 95,59,317 1,68,86,953 Add: Bonus (account charged in accounts) 48,86,449 48,40,912 Provision for Taxation per Accounts 2,34,78,958 1,88,82,441 Depreciation per Accounts 60,79,969 3,41,45,376 59,82,6642, 67,06,024 4,37,04,693 4,35,92,977 Deducts Commission receivable (Note 1) 3,94,9643,94,973 Royalties receivable (Note 2) 59,19150,580 Profit on sale of Fixed Assets (Note 3) 92,5962,974 Provision for Retirement Gratuities written back 5,52,7515,00,0009,42,579 Total Gross Profit 4,31,51,942 4,26,50,398 Less : Notional Normal Depre ciation 72,67,88783,90,107 3,58,84,0551,76,23,953,3,42,60,291 Less : Notional Income Tax and Super Tax 1,84,68,616 Notional Super Profits Tax/Sur Tax.
49,09,9652,33,78,58125,36,5852,01,60,538 1,25,05,4741,40,99,753 Less Return on paid up Capital Ordinary share Capital (6%).
27,00,00027,00,000 Share Premium (6% ) 4,20,0004,20,000 Preference share Capital (Actual).
4,60,0004,60,000 4% Return on Reserves employed as working capital Schedule A. 23,35,00959,15,O0,924,90,56360,70, 563 Available surplus subject to rehabilitation claim 65,90,465 80,29,190 Note 1.
Commission receivable arises out of sales made by Dunlop U. K. of their products to India either through the Indian High Commissioners purchasing Commission in London or to direct importers.
2 32 Note 2.
Royalties receivable arise out of sales made by Dunlop U.K., of their products to Afghanistan, Burma and Pakistan.
According to the company, it has paid more than 60 per cent of the available surplus as bonus to the workmen and that they are not entitled to any additional bonus.
The first item that was challenged by Mr. Ramamurthi was regarding the deduction made by the company in the sum of Rs. 3,94,964 and Rs. 3,94,973 for the years 1962 and 1963 respectively as commission as well as the sums of Rs. 59,191 and 50,582 as royalties for the years 1962 and 1963 respectively received from Dunlop, United Kingdom.
According to the counsel, the workmen have also contributed to enable the company to earn these amounts and, therefore, they will be entitled to a share in the said profits.
In this connection, Mr. Rammurthi referred us to the decision of this Court in The Tata Oil Mills Co. Ltd. vs Its Workmen and mothers.(1) In that decision certain items were claimed by the company as extraneous income obtained by them without any contribution by labour.
While allowing the claim of the company in respect of two items regarding the rest it was held by this Court that they had been earned by the company in the normal course of its business and that there was no reason why the labour should be ' excluded from its share in the profit.
It was no doubt observed by this Court that normally there must be contribution of the workmen in earning profits before they are entitled to profit bonus, but it is not necessary that a direct connection between the efforts of the workmen and a particular item of profit earned has to be established before the profit can be taken into account for the purpose of arriving at the available surplus.
Mr. B. Sen, learned counsel for the company, on the other hand, referred us to Notes 1 and 2 in Ext.
M 3, which has been extracted by us earlier.
Notes 1 and 2 clearly explain the circumstances under which the said amounts are earned by the company and they show that the labour has made no contribution whatsoever in the company 's earning either the commission or the royalties.
Mr. Sen also drew Our attention to the evidence of MW 1, the Deputy Chief Accountant of the company, who has explained the circumstances under which the said amounts were received.
We are of the opinion that the Tribunal was justified in accepting the contention of the company that the amounts received as commission and royalties need not be added back.
MB 1, the Deputy Chief Accountant of the, company, has deposed to the nature of these amounts received by the company.
According to him, the commission is received from the parent company in United Kingdom for sales made by them through the High Commission in London or sales effected as against orders received directly by the company from the Indian customers.
The amounts due to the company were credited by the London office.
Similarly, royalties were also received out of sales of Dunlop products made to Afghanistan, Burma and Pakistan.
No canvassing for orders in those countries is done by the company Apart from the, fact that Notes 1 and 2 in Ext.
M 3, (1) ; , 233 have not been challenged, we also find that there is no cross examination by the union of MB 1 when he has referred to the nature of these receipts, which go to show that the workmen in India have not at all contributed, in any measure, in earning those amounts.
In our opinion, the amounts received by the company, by way of commission and royalties, are analogous to the home delivery commission, which was held by this Court in Workmen of M/S Hindustan Motors Ltd. vs MIS Hindustan Motors Ltd. & Anr.(1) to be extraneous income.
The Hindustan Motors Limited, which was manufacturing cars in collaboration with a foreign concern, was entitled to commission on the sales made in India by the foreign concern, even though the company was not a party to those transactions.
This amount was called home delivery commission.
The company claimed that the said commission should be deducted while calculating the surplus out of the profits available for distribution of bonus.
The workmen challenged the said deduction.
This Court, however, rejected the contention of the workmen and held that the amount received as home delivery commission has to be treated as extraneous income, which was earned by the company without any activities in which the workmen participated or contributed their labour.
The decision relied on by Mr. Rammurthi in the Tata Oil Mills Co. Ltd.(2) was referred and it was held that the situation therein was entirely different.
But the principle laid in the Tata Oil Mills Co. Ltd.(2) that if any income was earned in the course of the normal business of a company in which the workmen were also engaged, that income must be included in the profits for calculation of surplus available for distribution of bonus, was approved in the Hindustan Motors(1) case.
Applying the said principle to the case on hand, we are of the opinion that the commission and royalties received by the company did not require any contribution or work or labour on the part of the workmen and it accrued to the company in view of the arrangements spoken to by MW 1.
In the circumstances, the deduction of these amounts from the profits by the company was fully justified.
It may be mentioned that the company had deducted from the profits the provision made for retirement gratuities written back.
Mr. Sen has quite fairly accepted that the deduction is not justified.
Therefore, this item need not be discussed further.
The company had claimed Rs. 4,20,000 for each of these years being return of 6% on the share premium of 70 lakhs.
The company had also claimed a sum of Rs. 27 lakhs for each of these years being 6% return on ordinary share capital.
The claim for return made in respect of ordinary share capital is not challenged.
But the claim made for return on the share premium of 70 lakhs is attacked by Mr. Ramamurthi on the ground that the share premium does not represent paid up capital.
The Tribunal did not accept this contention advanced on behalf of the workmen.
MW 1 has again spoken regarding the share premium amount.
From his evidence it is clear that when a company makes a Rights (1) ; (2) ; 234 issue, the Government, while giving consent, fixes a certain amount of premium to be charged for those shares.
Those shares are issued only to the shareholders who ask for it and who pay the premium amount in addition to the nominal value of the share.
A capital introduced by the shareholders in the company is shown as part of share capital according to the Companies Act upto 1956.
When the said Act was amended, it had to be shown in accordance with Schedule VI as a separate item, as it was only available for issue to shareholders and could not be distributed as dividend.
The said share premium amount had no bearing as general reserves and they were really the share capital of the company and, therefore, the company was justified in claiming 6% return on this amount.
The share premium is not undistributed profit and cannot be distributed as dividend.
We are satisfied, in the circumstances, that the contention of the union that no return should be allowed on the share premium amount, has been rightly rejected by the Tribunal.
The third item relates to the deductions made, by the respondent out of the profits of two items of donations made in 1962.
No donations were claimed as deduction in 1963.
As a substantial part of the donations was for the National Defence Fund, the Tribunal held that the expenditure was properly incurred and the company was justified in deducting the donations from the profits.
Mr. Sen accepted that the deduction made by the management under this head is not justified.
Even otherwise, the company is not entitled to deduct those amounts, as is clear from the decision of this Court in Voltas Ltd. vs Its Workmen(1).
The fourth item, which is contested by the appellant, is the return of 4% on reserves employed as working capital.
The company claimed Rs. 23,35,009 and Rs. 24,90,563 as 4% return on reserves employed as working capital in 1962 and 1963 respectively.
According to Mr. Ramamurthi, this claim has not been established in accordance with the decisions of this Court.
He referred us to the decision in The Oriental Gas Company Ltd. vs The Workmen( ') and Bareilly Electricity Supply Col. Ltd. vs The Workmen & Ors.(3).
In both these decisions, the nature of the evidence to sustain a claim for return on working capital has been discussed and laid down.
In particular, in the second decision cited above, the various decisions bearing on the point have been exhaustively reviewed.
The position emerging from the decisions of this Court is that mere production of a balance sheet by a company cannot be taken as proof of a claim, as to what portion of the reserves has been actually used as working capital.
The utilisation of any amount from the reserves as working capital has to be proved by an employer by adducing proper evidence by way of affidavit or otherwise, after giving an opportunity to the workmen to contest the correctness of the same in cross examination.
The company will have to satisfactorily prove that the amount on which return is claimed, has been actually used as working capital.
(1) ; (2) (3)[1972]1 section C. R. 241.
235 The question is whether the criticism of Mr. Ramamurthi that the company has not properly established its claim for return on working capital in accordance with the decisions of this Court, is justified? The company has filed Ext.
M 8 containing particulars regarding the amount used as working capital for the years 1962 and 1963.
It has also filed Ext.
M 9, the certificate of the Chartered Accountant, that reserves of Rs. 5,83,75,236 and Rs. 6,22,54,083 have been used as working capital in the years 1962 and 1963 respectively.
MW 1 has spoken to the con tents of Exts.
M 8 and M 9.
The Chartered Accountant of the auditors, who issued the certificate, Ext.
M 9, has also given evidence as MW 2.
When they have spoken about the amounts used as working capital, there is absolutely no cross examination by the union regarding these matters. ' This is not a case where, merely the profit and loss account alone has been filed without any further evidence adduced by the management.
Mr. Ramamurthi no doubt attempted to satisfy us by a reference to the profit and loss account for the two years that the entire amount claimed by the company could not have been used as working capital.
We have gone through the balance sheet and profit and loss account.
We are satisfied that the Tribunal has rightly accepted the claim of the management for 4% return on the working capital.
The fifth and the last item that is in controversy between the parties is the claim for rehabilitation made by the company.
Before we consider that question, we must refer to a contention raised by Mr. Ramamurthi that the management had no claim for rehabilitation and, therefore, no claim for rehabilitation should be allowed.
In particular, Mr. Ramamurthi referred us to the statement in Ext.
M 3, which we have adverted to earlier, to the effect "available surplus subject to rehabilitation claim" and stressed that the company itself has made a calculation without claiming any rehabilitation.
We are not inclined to accept this plea of Mr. Ramamurthi.
On the other hand, Ext.
M 3 shows that the company was prepared to take a stand that even without any claim for rehabilitation being allowed in its favour, the available surplus, shown in Ext.
M 3 will establish that the workmen have been paid more than 60 to 62% of the available surplus as bonus for each of the two years.
M 3 does not and cannot be put against the company if it can properly establish a claim for rehabilitation.
Before we discuss further the claim for rehabilitation, it is now necessary to work out the figures on the basis of the findings recorded by us earlier.
We have accepted the claim for deduction of commission and royalties in favour of the company.
We have also accepted its claim for return on the share premium amount 2 36 of Rs. 70 lakhs.
We have disallowed the claim of the company regarding the amount paid by them as donation in 1962.
We have allowed the company 's claim for return on the working capital.
On the above basis, two charts have been prepared of the available surplus for the years 1962 and 1963.
They areas follows Available Surplus Computations for the year 1962.
Rs. Rs. Net Profit per Accounts 95,59,317 Add: Bonus (amount charged in Accounts) 45,86,449 Provision for taxation per Accounts.
2,34,73,958 Donation to N. D. F. 5,25,000 Depreciation per Accounts.
60,79,9693,46,70,376 4,42,29,693 Deduct:Commission receivable (Note 1) 3,94,964 Royalties receivable (Note 2).59,191 Profit on sale of fixed Assets (Note 3).98,5965,52,51 Total Gross Profits : 4 ,93942 Less :Notional Normal Depreciation 72,67,887 3,64,09,065 Less :Notional Income tax and Supertax 1,87,31,118 Notional Super Profits Tax/Surtax 50,53,4342,37,34,542 1,25,24,513 Less :Return on paid up capital Ordinary Share Capital (6 %) 27,00,000 Share Premium (6 %) 4,20,000 Preference Share Capital (Actual)4,60,000 4 % Return on Reserves employed as working capital (Schedule A).23,35,009 59,15,006 Available Surplus 67,09,504 Available Surplus Computations for the year 1963 Rs. Rs. Net Profit per Accounts1,68,86,952 Add: Bonus (amount charged in Accounts.)48,40,912 Prevision for Taxation per Accounts.1,58,82,448 Depreciation per Accounts.
59,82,6642,67,06,024 4,35,92,977 Deduct Commission receivable (Note 1).3,94,973 Royalties receivable (Note 2) 50,580 Profit on Sales of Fixed Assets (Note 3).(2,974)4,42,579 Total Gross Profit4, 31,50,298 Less : Notional Normal Depreciation 83,90,197 2,47,60,291 Less : Notional Income tax and Supertax.1,78,73,953 Notional Super Profits Tax/Sur Tax.21,90,5282,00,64,481 1,46,95,810 2 3 7 Less:Return on paid up capital Ordinary Share Capital (6%) 27,00,000 Share Premium (6 %) 4,20,000 Preference Share Capital (Actual).
4,60,000 4% Return on Reserves employed as working capital (Schedule A).
24,90,56360,70,563 Available Surplus 26,25,247" In both the charts no claim for rehabilitation has been taken into account.
Out of the available surplus in 1962, the company paid nearly 66% as bonus for that year.
Similarly out of the available surplus in 1963, the company has paid nearly 60 to 62% as bonus.
Prima facie, we are of the view that even if the claim of the company for rehabilitation is rejected completely, still on the basis of the figures worked out in the above charts, after taking into account the rebate in Income tax that will be, received by the company, the workmen have been paid bonus at a rate which has been accepted as correct by this Court and as such they cannot have any grievance.
Regarding the claim for ' rehabilitation, the company had filed three statements.
M 15, M 16 and M 17 are charts relating to the buildings, plant and machinery and moulds.
The company has also adduced evidence in respect of the claims made in these statements.
Mr. Ramamurthi has attacked the claim for rehabilitation made by the company.
When the charts prepared by the management regarding rehabilitation were before the Tribunal, we find that several matters spoken to by the witnesses regarding the charts do not appear to have been seriously challenged by the workmen.
Regarding the multipliers and divisor for plant and machinery, including moulds, these have been spoken to by the factory Engineer, MW 3.
Regarding the buildings, the Architect, MW 4, has also given evidence.
Regarding all these matters, the Chartered Accountant attached to the auditors of the respondent company, has given evidence as MW 2.
The appellant has not objected to the data adduced as well as the documents produced by the company.
No suggestions have been made to these witnesses that the figures on the basis of which the rehabilitation claim was made, were in any way erroneous.
It is before us for the first time that Mr. Ramamurthi has urged that the evidence of these witnesses is not sufficient to justify the claim for rehabilitation made by the company.
Mr. Ramamurthi has referred us to the variousdecision regarding the nature of the evidence that is required to be produced by a company when it makes a claim for rehabilitation.
Mr. B. Sen invited our attention to the award dated February 5, 1960of the Industrial Tribunal, Calcutta, Ext.
M 26, which related tothe claim of the workmen of the respondent company in Calcutta for bonus for the year 1957.
In that award, the Tribunal has very elaborately gone into the evidence adduced by the company and has allowed a sum of Rs. 2,18,36,983, as calculated by the company, as,rehabilitation charges.
When once a Tribunal has considered a similar claim and has adopted on the basis of the evidence adduced by the parties, normally the amount awarded towards rehabilitation claim should be adopted.
We do not say that it is conclusive.
But that award is certainly entitled to due consideration at our hands.
In 238 that award the Tribunal had worked out the rehabilitation claim for the year 1957.
The charts filed by the company regarding rehabilitation, though for the years 1962 and 1963, were worked out only on the basis of the replacement cost of the year 1958.
, We are mentioning this aspect because if the appellant 's case was that the Tribunal, when working out the claim for 1957 in Ext.
M 26 has not properly appreciated evidence, it should have elicited from the witnesses, who deposed on behalf of the company, that the figures furnished by them are not correct and cannot be accepted.
No such attempt has been made by the appellant.
Mr. Sen, learned counsel, relied on the decision of this Court in M/s Hindustan Motors Ltd.(1) case and pointed out that according to that decision, the only permissible deduction from the total amount claimed as required for rehabilitation by the appellant can be the depreciation amounting to Rs. 5.17 crores and Rs. 5.75 crores in 1962 and 1963 respectively.
He further pointed out that if the amount representing depreciation reserve is taken out of the total reserves, which is established by the evidence, then the balance amount has been utilised in raw material and hence there were no available liquid assets towards rehabilitation.
We do not propose to go into the details of the claim for rehabilitation made by the respondent company, as well 'as the objections now made on behalf of the workmen to the said claim.
The reason is that when evidence, oral and documentary, was adduced by the company before the Tribunal, the appellant has not objected to the data adduced and the documents produced by the management and they have not put any questions to the witnesses to establish that the calculation made by the company is erroneous.
There is also the additional fact that from the two charts of available surplus for the years 1962 and 1963, reproduced earlier, even without allowing any claim for rehabilitation, the workmen have been paid bonus for the two years in question at rates higher than 60%.
Allowing for the benefit that the management will get by way of tax rebate on the amount of bonus paid, the payment of bonus already made is in accordance with the Proportion accepted by this Court vide M/s Gannon Dunkerley and Co. Ltd. vs Their WorkMen(2).
Even on the basis of the calculation to be made, according to the appellant, in respect of the rehabilitation claim, the company will be entitled to.
some amount at least in that regard.
Even if the amount, as contended by Mr. Ramamurthi, is taken into account, the available surplus, as shown in the charts, will be reduced further.
The result will be that even the amount paid as bonus already by the company, will be more than what the work (1) ; (2) AIR 1971 section C. 2567.
239 men will be entitled to according to the decisions of this Court.
As pointed out earlier, even without making any provision for rehabilitation, the percentage of bonus paid is amply sufficient.
Considering the matter from any point of view, there is no question of the workmen being entitled to any additional bonus over and above what has already been paid.
To conclude, we are satisfied that the award of the Tribunal holding that the workmen are not entitled to any additional bonus for the years in question, is correct.
The appeal fails and is dismissed.
There will be no order as to costs.
V. P. section Appeal dismissed.

summary:
For the years 1962 and 1963 the appellants workmen demanded additional bonus of three months ' basic wages.
The tribunal, to which, the industrial dispute was referred on a consideration of the materials placed before it by both the parties, accepted the case of the respondent management, regarding certain deductions made from the profits.
and held that the bonus already paid to the workmen was sufficient and that they were not entitled to any additional bonus for those two years.
Dismissing the appeal to this Court.
HELD : (i) The commission and royalties received from Dunlop, U.K., for the two years were rightly not included by the respondent in its profits, because, the evidence established that the circumstances under which the respondent earned the amounts showed that appellants had not made any ,contribution of work or labour for earning those amounts.
It accrued to the respondent as extraneous income.
[233D F] Workmen of M/s Hindustan Motors Ltd. vs M/s Hindustan Motors Ltd. & Anr, [1968] 2 S .C.R. 311, followed.
Tata Oil Mills Co. Ltd. vs Its Workmen and Others ; , referred to.
(ii) The contention of the appellants that no return should be allowed on the share premium of Rs. 70 lacs was rightly rejected by the tribunal.
When ,a company makes a Rights issue, the Government, while giving consent, fixes a certain amount of premium to be charged for those shares.
Those shares are issued only to the shareholders who ask for them and who pay the premium amount in addition to the nominal value of the share.
Under the , as amended, a capital introduced by the shareholders in a company had to be shown in accordance with schedule VI as a separate item.
But the share premium is not undistributed profit and cannot be distributed as dividend.
It is really the share capital of the respondent and therefore, the respondent was justified in claiming 6% return on this amount.
[234 A C] (iii) Mere production of a balance sheet by a company cannot be taken.
as proof of a claim as to what portion of the reserves had been actually used as working capital.
The utilisation of any amount from the reserves as working capital has to be proved by an employer by adducing proper evidence by way of affidavit or otherwise after giving opportunity to the workmen to contest its correctness in cross examination.
The company will have to satisfactorily prove that the amount on which the return is claimed has been actually used as working capital.
But in the present case the respondent has adduced oral and documentary evidence.
It is not a case where merely profit and loss account alone has been filed without any further evidence being adduced by ' the respondent.
Therefore there is no basis for the contention of the appellants that the respondent had not properly established its claim for return on working capital [234G H, 235 C D] 2 2 9 The Oriental Gas Company Ltd. vs Their Workmen, and Bareilly, Electricity Supply Co. Ltd. vs The Workmen & Ors. ; referred to.
(iv) (a) Even if the claim of the company for rehabilitation is rejected completely, on the basis of the findings, that is, after taking into account the claims of the respondent, allowed and rejected, and the rebate in income tax that may be received by the company, the workmen would still have been paid bonus at a rate which has been accepted as correct by this Court.
[237 C D] (b) On the basis of the education to be made according to the appellants in respect of rehabilitation claim, the respondent will be entitled to some amount at least in that regard.
Even if that lesser amount is taken into account the available surplus will be reduced further, and, the result will be that even the amount paid as bonus already by the respondent will be more than what the workmen will be entitled to according to the decisions of this Court.
[238 E H] (c) The industrial Tribunal, Calcutta, in relation to a claim for bonus for the year 1957 had elaborately discussed the matter and allowed a certain sum as rehabilitation charges.
When once the tribunal had considered a similar claim and had adopted it on the basis of evidence adduced by the parties, normally, the amount so awarded towards rehabilitation should be adopted even though it will not be conclusive for subsequent years.
In the present case, the rehabilitation claim was worked out only on the basis of replacement costs of the year 1958.
If the appellant 's case was that the tribunal, when working out the claim for 1957 had not properly appreciated the evidence they should have elicited from the witnesses who deposed on behalf of the respondent that the figures furnished by the respondent are not correct and could not be accepted.
But the appellants had not objected to the data adduced as well as the documents produced by the company with reference to its rehabilitation claim.
No suggestions had been made to the various witnesses examined on behalf of the respondent that the figures on the basis of which the rehabilitation claim was made were in any way erroneous.
[237G 238D] Therefore, considering the matter from any point of view, there is no question of the workmen being entitled to any additional bonus over and above what has already been paid M/s Gannon Dunkerley and Co. Ltd. vs Their Workmen, A.I.R. followed.


judgement:
Appeal No. 1333 (N) of 1967.
3 05 From the Judgment and Decree dated the 25th November, 1966 of the Delhi High Court in Regular First Appeals Nos.
89 D and 104 D of 1956.
V. section Desai, Ravinder Bana, O. P. Rana and Uma Mehta, for the appellants.
B. Sen, Suresh Sethi, R. K. Maheshwari and B. P. Maheshwari, for the respondent.
The Judgment of the Court was delivered by MATHEW, J.
This appeal by certificate is directed against the Decree of the High Court of Delhi dated November 25, 1966, passed in Regular First Appeals No 89 D of 1956 and No. 104 D of 1956, both arising from Suit No. 282 of 1954 instituted by the plaintiff appellant for a declaration that he continued to be the General Manager of the Fire Insurance Company in question and that the purported termination of his services was inoperative, and claiming a sum of Rs. 37,352.30 from the defendant on account of his arrears of pay, etc., or in the alternative, for a sum of Rs. 1,63,820/ as money due to him by way of bonus, gratuity, etc., as detailed in the plaint.
The respondent Company had filed a suit against the appellant for the recovery of Rs. 1,10,000/ being Suit NO. 306 of 1954 in which the Company was granted a decree for Rs. 5,759/9/6 with proportionate costs.
First Appeal No. 88 D of 1956 before the High Court was the appeal by the Company against the rejection of the rest of its claim in Suit No. 306 of 1954.
We are not concerned with that appeal.
Regular First Appeal No. 89 D of 1956 was the Company 's appeal against the award of decree for Rs. 73,936/15/9 passed in favour of the appellant.
Regular First Appeal No. 104 D of 1956 was the appellant 's appeal against the rejection of his other claims in his suit.
The High Court dismissed First Appeals No. 88 D of 1956 and 104 D, of 1956 but partially allowed First Appeal No. 89 D of 1956.
The appellant was appointed as the Secretary of the respondentCompany on October 16, 1942.
His pay was fixed at Rs. 1,000/p.m. free of income tax.
Later on, he was promoted as the General Manager of the Company.
On November 21, 1953, the appellant sent an application for leave to the Chairman of the Board of Directors but no reply ' was received by him.
He thereafter sent another application for 8 months ' leave on the 16th of December, 1953.
On December 17, 1953, the appellant received a telegram from the Chair man of the Board of Directors stating that the services of the appellant had been terminated by the Company and that he should stop attending the office.
A registered letter to the same effect from the Chairman was also received by him.
The allegation of the appellant in the plaint was that his services had not been validly terminated by the respondent Company and that he still continued.
as the General Manager of the Company and was 30 6 entitled to recover the sum already mentioned from the respondent.
In the alternative, the appellant claimed, among other things, 18 months ' salary as due to him on the basis that he was entitled to 18 months ' notice before terminating his services.
In the written statement, the respondent Company contended that the Chairman validly terminated the services of the appellant on December 17, 1953 in pursuance to a resolution passed by the Board of Directors on the 16th, and that subsequently, that resolution and the action of the Chairman terminating the services had been confirmed by a meeting of the Board of Directors held on December 23, 1953, and, therefore, the services of the appellant were validly termi nated.
The respondent Company also contended that the appellant was in no event etitled to 18 months ' notice as claimed by him but only to one month 's notice and, therefore, he was entitled to get only one month 's salary in lieu of notice under that.
The trial court found that the meeting of the Board of Directors held on December 16, 1953 was valid, that the services of the appellant were validly terminated by telegram and letter of the Chairman dated December 17, 1953 addressed to the appellant, that even if it be assumed that the meeting of the Board of Directors held on December 16, 1953 was irregular, the resolution of the Board of Directors terminating the services of the appellant on the 16th and the action of the Chairman in actually terminating the services were ratified by the Board of Directors_ by its resolution of December 23, 1953, and, therefore, the services of the appellant were legally and validly termi nated.
it further held that the rules framed by the Company, namely, exhibits D 3 and D 4 would govern the appellant and that he was entitled, under clause (6) of exhibit D 3 only to one month 's notice for terminating his services although the Court found that if the appellant was not bound by the rules, he would have been entitled to 12 months ' notice before the termination of his services.
The findings of the trial court in these respects were confirmed in appeal by the High Court.
In this appeal only two points were argued by counsel for the appellant : (1) that the services of the appellant were not validly terminated and, therefore, he was entitled to a declaration that be continued to be the General Manager of the Company and to claim the amount specified in the plaint; and (2) that, in any event, the appellant was entitled to 12 months ' notice before his services were terminated and as only one month 's notice was given, he was entitled to 11 months ' pay in addition to what was awarded under this head.
As regards the first point, it was said that the meeting of the Board of Directors dated December 16, 1953 was not properly convened for the reason that notice of the meeting was not given to all the Directors.
The trial court found that one of the Directors, viz., Mr. B. P. Khaitan, was not given notice of the meeting of the Board of Directors held on December 16, 1953, and that he was not present at the meeting when the resolution to terminate the services of the appellant was passed.
307 Now, it cannot be disputed that notice to all the Directors of a meeting of the Board of Directors was essential for the validity of any resolution passed at the meeting and that as, admittedly, no notice was given to Mr. Khaitan, one of the Directors of the Company, the resolution passed terminating the services of the appellant was invalid.
Article 109 of the Articles of Association of the Company provides as follows : "109.
When meeting to be convened A Director may at any time summon meeting of the Directors by serving every Director with at least 72 hours ' notice in writing, through the officer of the Company authorized to receive such notice who shall arrange to convene the meeting".
In Hasbury 's Laws of England, Vol. 9, p. 46, it has been stated that it is essential that notice of the meeting and of the business to be transacted should be given to all persons entitled to participate and that if a member whom it is reasonably possible to summon is not summoned, the meeting will not be duly convened, even though the omission is accidental or due to the fact that the member has informed the officer whose duty it is to serve notice that he need not serve notice on him.
In Volume 6 at p. 315 article 626, it is stated that a meeting of the directors is not duly convened unless due notice has been given to all the directors, and the business put through at a meeting not duly convened is invalid.
To put it in other words, as the meeting of the Board of Directors held on December 16, 1953, was invalid, so the resolution to terminate the services of the plaintiff was inoperative.
Then, the question for consideration is, what is the effect of the confirmation of the minutes of the meeting of the Board of Directors held on December 16, 1953 and the action of the Chairman in terminating the services of the appellant by his telegram and letter dated December 17, 1953, in pursuance to the invalid resolution of the Board of Directors to terminate his services, in the meeting of the Board of Directors held on December 23, 1953 ? The agenda of the meeting of the Board of Directors held on December 23, 1953 shows that one item of business was the confirmation of the minutes of the meeting of the Directors held on December 16, 1953.
The confirmation of the minutes of the meeting of the Directors held on December 16, 1953, would not in any way show that the Board of Directors adopted the resolution to terminate the services of the appellant passed on December 16, 1953.
It only shows that the Board passed the minutes of the proceedings of the meeting held on December 16, 1953.
But the resolution of the Board of Directors to confirm the action of the Chairman to terminate the services of the appellant by his telegram and letter dated December 17, 1953, would show that the Board ratified the action of the Chairman.
Even if it be assumed that the, telegram and the letter terminating the services of the appellant by the Chairman was in pursuance to the invalid resolution of the Board of Directors passed on December 308 16, 1953 to terminate his services, it would not follow that the action of the Chairman could not be ratified in a regularly convened meeting of the Board of Directors.
The point is that even assuming that the Chairman was not legally authorised to terminate the services of the appellant, he was acting on behalf of the Company in doing so, because, he purported to act in pursuance of the invalid resolution.
Therefore, it was open to a regularly constituted meeting of the Board of Directors to ratify that action which, though unauthorised, was done on behalf of the Company.
Ratification would always relate back to the date of the act ratified and so it must be held that the services of the appellant were validly terminated on December 17, 1953.
The appellant was not entitled to the declaration prayed for by him and the trial court as well as the High Court was right in dismissing the claim.
The second point for consideration is whether the appellant was entitled to 18 months ' notice before his services were terminated as claimed by him.
The trial Court found that the rules of the Company, viz., exhibits D 3 and D 4 were binding on the appellant and that rule 6 of exhibit D 3 which provides for one month 's notice in case of termination of services of all employees would apply to the appellant as well.
The High Court confirmed that finding.
The rules expressly purport to bind all the employees of the respondent Company.
There, is no reason to hold that the appellant was not an employee of the respondent Company.
Besides, the appellant himself has relied upon these rules for the purpose of computation of the amount due to him on account of bonus, provident fund, etc.
In these circumstances it is idle to contend that the rules did not bind him.
In this view, it is quite unnecessary to consider the question whether, apart from the rules, one month 's notice was reasonable in the circumstances of the case.
There is no merit in this appeal.
We dismiss it but in the circumstances we make no order as to costs.
G.C. Appeal dismissed.

dataset_name: IN-Abs

summary:
The appellant was appointed Secretary of the respondent company in 1942.
Later he was promoted as General Manager.
By a resolution dated December 16, 1953 the Board of Directors of the company decided to terminate the services ,of the appellant.
By a telegram and a letter dated December 17, 1953 addressed to the appellant the Chairman of the Board of Directors terminated the services of the appellant.
Subsequently at a meeting held on December 23, 1953 the Board of Directors confirmed the minutes of the meeting held on December 16, 1953 and the action of the Chairman in terminating the services of the appellant by his letter and telegram dated December 17, 1953.
The appellant filed a suit challenging his dismissal and also claimed that he was entitled to 18 months ' notice before termination of his services.
The trial Court and the High Court ,decided against the appellant.
In appeal by certificate to this Court the questions for consideration were : (i) whether the termination of the appellant 's service was valid and (ii) whether the appellant was bound by the company 's rules which ,provided for termination of the service of employees after one month 's notice.
Dismissing the appeal, HELD : (i) Notice to all the Directors of a meeting of the Board of Directors was essential for the validity of any resolution passed at the meeting.
As admittedly no notice was given of the meeting on December 16, 1953 to one of the Directors, the resolution passed terminating the services of the appellant was 'invalid.
[307 D E] But the resolution of the Board of Directors to confirm the action of the Chairman to terminate the, services of the appellant by his telegram and letter dated December 17, 1953, would show that the Board ratified the action of the Chairman.
Even if it be assumed that the telegram and the letter terminating the services of the appellant by the Chairman was in pursuance to the invalid resolution of the Board of Directors passed on December 16, 1953 to terminate his services, it would not follow that the action of the Chairman could not be ratified in a regularly convened meeting of the Board of Directors.
Even assuming that the Chairman was not legally authorised to terminate the services of the appellant, he was acting on behalf of the Company in doing so, because he purported to act in pursuance of the invalid resolution.
Therefore it was open to a regularly constituted meeting of the Board of Directors to ratify that action which, though unauthorised, was done on behalf of the company.
Ratification would always relate back to the date of the act ratified and so it must be held that the services 'of the appellant were validly terminated on December 17.
1953, [307 G 308 C] (ii) The rules which provided for one month 's notice in case of termination of services of all employees would apply to the appellant as well.
The rules expressly purported to bind all the employees of the respondent company.
There was no reason to hold that the appellant was not an employee of the respondent company.
The appellant had himself relied on the rules.
It was therefore idle to contend that the rules did not bind him.
The contention of the appellant that he was entitled to 18 months ' notice must be rejected.
[308 D E]


judgement:
urt held that there was no consequential relief involved since neither the decree nor the alienation binds the plaintiffs in any manner.
The 1st defendant in the suit has, therefore, filed this appeal.
Before us a preliminary objection was raised based on the observations of this Court in Raihnavaramaraja vs Smi.
Vimla (1) that the present appeal is not competent.
In that case this Court observed that whether proper court fee is paid on a plaint is primarily a question between the plaintiff and the State and that the defendants who may believe and even honestly that proper court fee has not been paid by the plaintiff has still no right to move the superior courts by appeal or in revision against the order adjudging payment of court fee payable on the plaint.
But the observations must be understood in the background of the facts of that case.
This Court was there dealing with an application for revision filed before the High Court under section 115 of the Code of Civil Procedure and pointed out that the jurisdiction in revision exercised by the High Court is strictly conditioned by clauses (a) to (c) thereof and may be invoked on the ground of refusal to exercise jurisdiction vested in the Subordinate Court or assumption of jurisdiction which the court does not possess or on the ground that the Court has acted illegally or with material irregularity in the exercise of its jurisdiction, and the provisions of sections 12 and 19 of the Madras Court Fees Act do not arm the defendant with a weapon of technicality to obstruct the progress of.
the suit by approaching the High Court in revision against an order determining the court fee payable.
The ratio of that decision was that no revision on a question of court fee lay where no question of jurisdiction was involved.
This decision was correctly interpreted by the Kerala High Court in Vasu vs Chakki Mani(2)where it was pointed out that no revision will lie against the decision on the question of adequacy of court fee at the instance of the defendant. unless the question of court fee, involves also the question of jurisdiction of the court.
In the present case the plaint was rejected under Order 7, Rule 1 1 of the C.P.C. Such an order amounts to a decree under section 2(2) and there is a right of appeal open to the plaintiff.
Furthermore, in a case in which this Court has granted special leave the question whether an appeal lies or not does not arise.
Even otherwise a second appeal would lie under section 100 of the C.P.C. on the ground that the decision of the 1st Appellate Court on the interpretation of section 7(iv) (c) is a question of law.
There is thus no merit in the preliminary objection.
As regards the main question that arises for decision it appears to us that while the court fee payable on a plaint is certainly to be decided on the basis of the allegations and the prayer in the plaint and the question whether the plaintiff 's suit will have to fail for failure to ask for consequential relief is of no concern to the court at that stage the court in deciding the question of court fee should look into the allegations in the plaint to see what is the substantive relief that is asked for Mere astuteness in drafting the plaint will not be allowed to stand in the way of the court looking at the substance of the relief asked for.
In this case the relief asked for is on the basis that the property in dispute is a joint Hindu family property and there was no legal necessity (1) A. I. R. (2) A. I. R. 1962 Kerala 84. 325 to execute the mortgage.
It is now well settled that under Hindu Law if the manager of a joint family is the father and the other members are the sons the father may by incurring a debt so long as it is not for an immoral purpose, lay the joint family estate open to be taken in execution proceedings upon a decree for the payment of the debt not only where it is an unsecured debt and a simple money decree for the debt but also to a mortgage debt which the father is personally liable to pay and to a decree for the recovery of the mortgage debt by the sale of the property even where the mortgage is not for legal necessity or for payment of antecedent debt (Faqir Chand vs Harnam Kaur(1).
Consequently when the plaintiffs sued for a declaration that the decree obtained by the appellant against their father was not binding on them they were really asking either for setting aside the decree or for the consequential relief of injunction restraining the decree holder from executing the decree against the mortgaged property as he was entitled to do.
This aspect is brought out in a decision of the Full Bench of the Lahore High Court in Zeb ul Nisa vs Din Mohammad(2)where it was held that : "The mere fact that the relief as stated in the prayer clause is expressed in a declaratory form does not necessarily show that the suit is for a mere declaration and no more.
If the relief so disclosed is a declaration pure and simple and involves no other relief, the suit would fall under article 17(iii).
" In that case the plaintiff had sued for a twofold declaration : (i) that the property described in the plaint was a waqf, and (ii) that certain alienations thereof by the mutwalli and his brother were null and void and were ineffectual against the waqf property.
It was held that the second part of the declaration was tantamount to the setting aside or cancellation of the alienations and therefore the relief claimed could not be treated as a purely declaratory one and inasmuch as it could not be said to follow directly from the declaration sought for in the first part of the relief, the relief claimed in the case could be treated as a declaration with a "consequential relief.
" It was substantive one in the shape of setting aside of alienations requiring ad valorem court fee on the value of the subject matter of the sale, and even if the relief sought for fell within the purview of section 7 (iv) (c) of the plaintiffs in view of sections 8 and 9, Suits Valuation Act, having already fixed the value of the relief in the plaint for purposes of jurisdiction were bound to fix the same value for purposes of court fee.
It was also pointed out that in deciding whether a suit is a purely declaratory, the substance and not merely the language or the form of the relief claimed should be considered.
The court also observed : "It seems to me that neither the answer to the question whether the plaintiff is or is not a party to the decree "or the deed sought to be declared as null and void, nor to the ques tion whether the declaration sought does or does not fall within the purview of section 42, Specific Relief Act, furnishes a satisfactory or conclusive test for determining the court fee payable (1) ; (2) A. I. R. [1941] Lahore 97. 326 in the suit of this description.
When the plaintiff is a party to the decree or deed, the declaratory relief, if granted, neces sarily relieves the plaintiff of his obligations under the decree or the deed and, hence it seems to have been held in such cases, that the declaration involves a consequential relief.
In cases where the plaintiff is not a party to the decree or the deed.
tile declaratory relief does not ordinarily include any such consequential relief.
But there are exceptional cases in which the plaintiff though not a party to the deed or the decree is nevertheless bound thereby.
For instance, when a sale or mortgage of joint family property is effected by a manager of a joint Hindu family, the alienation is binding on the other members of the family (even if they are not parties to it) until and unless it is set aside.
Similarly, a decree passed against the manager will be binding on the other members of the If therefore a copartner sues for a declaration that such an alienation or decree is null and void, the declaration must I think be held to include consequential relief in the same may as in those cases in which the plaintiff is himself a party to the alienator, or the decree, which is sought to be, declared null and void.
The case dealt with in AIR 1936 Lah 166 seems to have been of this description.
The case of an alienation by a mutwalli of waif property would also ap pear to stand on a similar footing.
In the case of waif property, it is only the trustee or the mutwalli who can alienate the property.
If he makes an alienation it is binding on all concerned, until and unless it is set aside.
If therefore a person sues to get such an alienation declared null and void, lie can only do so by getting the deed invalidated.
The relief claimed in such cases also may therefore be found to include a consequential relief.
" The decision of the Lahore High Court in Prithvi Raj vs D. C. Ralli (1) is exactly in point.
It was held that in a suit by the son for a declaration that the mortgage decree obtained against his father was not binding upon him it is essential for the son to ask for setting aside of the decree as a consequence of the declaration claimed and to pay ad valorem court fee under section 7(iv)(c).
It was pointed out that a decree against the father is a good decree against the, son and unless the decree is set aside it would remain executable against the son, and it was essential for the, son to ask for setting aside the decree.
In Finayakrao vs Mankunwarbai(2) it was held that in a suit by the son for a declaration that decree against the father does not affect his interests in the family property, consequential relief is involved and ad valorem court fee would be necessary.
We should now refer to certain decisions relied upon by the respondents.
We do not consider that the decision of the learned Single Judge of the Madras High Court in Venkata Ramani vs Mravanaswami(3) lays down the correct law.
It proceeds on the basis that (1) A.I.R. 1945 Lahore 13.
(2) A.I.R. 1943 Nagpur 70.713.
(3) A.I.R. 1925 327 the plaintiffs not being parties to the document they were not bound to get rid of it by having it actually cancelled, but it ignores the effect of Hindu Law in respect of a mortgage decree obtained against the father.
As pointed out by the Lahore High Court, in such cases in suing for declaration that the decree is not binding on him the son is really asking for a cancellation of the decree.
This aspect does not seem to have been taken into consideration by the learned Single Judge.
The decision of a learned Single Judge of the Nagpur High Court in Pandurang Mangal vs Bhojalu Usanna(1) suffers from the same error.
Though it refers to the decision of the Full Bench of the Lahore High Court as well as the same High, Court 's decision in Prithvi Raj vs D. C. Ralli(2) it does not seek to distinguish them for holding otherwise.
The learned Judge gives no reason whether and if so why he dissents from the view taken in the latter case.
This decision also suffers from the learned Judge 's misapprehension that there is a difference between a simple money decree and a mortgage decree.
obtained against a Hindu father when it is questioned by the son and its view that in execution of a simple money decree the entire joint family property, inclusive of the interest of the sons, is liable to be sold in execution of the decree, but that in the case of a mortgage decree it is not necessary for a son to allege or prove that the debt was incurred for an illegal or an immoral purpose and he can succeed if it is proved that the mortgage was not for legal necessity or for the payment of antecedent debt.
We have already referred to the decision of the Court on this point.
We must also hold in view of the reasons already set forth that the decision of the Allahabad High Court in Ishwar Dayal vs Amba Prasad (3) is not a good law.
As regards the decision of the Full Bench of the Allahabad High Court in Bishan Sarup vs Musa Mal(4) there is nothing to show whether the alienation was made by the manager of a joint Hindu family and therefore the decision is not in point.
We, therefore, hold that the decision of the High Court was not correct and allow this appeal with costs.
The plaintiffs would be given a month 's time for paying the necessary court fee.
Appeal allowed.
(1) A.I.R. 1949 Nagpur 37.
(2) A.T.R. 1945 Lahore 13.
(3) A.T. R. 1935 Allahabad 667.
(4) A.I.R. 1935 Allahabad.

summary:
There was a mortgage of a property in favour of the appellant for a sum of Rs. 15,000/ .
The mortgagee filed a suit and obtained a decree.
When he tried to take out execution proceedings for the sale of the mortgaged property, respondents 1 and 2 filed a suit for a declaration that the mortgage executed by their father was null and void as against them.
as the property was a joint Hindu family property and the mortgage had been effected without consideration and family necessity.
The plaintiffs (Respondent 1 and 2) paid a Court Fee of Rs. 19.50 and the value of the suit for purposes of jurisdiction was given as Rs. 16,000/ .
A preliminary objection was raised by the Appellant that the suit was not properly valued for purposes of Court Fee and jurisdiction.
The Subordinate Judge held that although the case is 'covered by S.7(iv)(c) of the Court Fee Act, the proviso to that Section applied and directed the plaintiffs to pay Court.
Fee on the value of Rs. 16,000/ .
Thereafter, the Court Fee not having been paid, the plaint was rejected.
The plaintiff appealed before the High Court against that decision.
The High Court held against the defendants taking the view that the plaintiffs were not at all bound by the mortgage in dispute since it was a joint family property.
The first defendant appealed before this Court.
In this Court, preliminary objection were raised that the present appeal is not competent and secondly, the plaintiffs were not bound by the mortgage ,of the joint Hindu family property where there was no legal necessity to execute the mortgage.
Allowing the appeal, HELD (i) in the present case, the plaint was rejected under Order 7, Rule 11 of the C.P.C. Such an order amounts to a decree under S.2(ii) and there is a right to appeal open to the plaintiff.
Furthermore, in a case in which.
this Court has granted special leave, the question whether an appeal lies or not, does not arise.
Even otherwise, a second appeal would lie under S.100 of the C.P.C. on the ground that the decision of the 1st appellate Court on the interpretation of S.7(iv)(c) is a question of law.
There is thus no merit in the preliminary objection.
[324E G] Vasu vs Chakki Mani (A.I.R. 1962 Kerala 84 referred to).
Rathnavarmaraja vs Smt.
Vimla, ; referred to and distinguished.
(ii) While the Court Fee payable on a plaint is certainly to be decided on the basis of the allegations and the prayer in the plaint and the question whether the plaintiff 'section suit will have to fail for failure to ask for consequential relief is of no concern to the Court question of Court Fee, should look into at that stage, the Court in deciding the allegations in the plaint to see what the substantive relief that is asked for Mere cleverness in drafting the plaint will not be allowed to stand in the way of the Court looking at the substance of the relief asked for.
In the present case, the relief asked for is on the basis that the property in dispute is a joint Hindu family property and there was no legal necessity to execute the mortgage.
It is now well settled that under Hindu Law, if the manager of a joint family is the father and the ,other members are sons, the father may, incur a debt, so long as it is not for immoral purposes and the joint family estate is open to be taken in execution ,of proceedings upon a decree for the payment of the debt.
[324G 3250] Fakir Chand vs Harnam Kaur ; , referred to.
323 (iii) In the present case, when the plaintiffs sued for a declaration that the decree obtained by the appellant against their father was not binding on them, they were really asking for setting aside the decree or for the consequential relief of injunction restraining the decree holder from executing the decree against the mortgaged property.
[325B C] In deciding whether a suit is purely declaratory, the substance and not merely the language or the form or relief claimed should be considered.
[325G] Zeb ul Nisa vs Din Mohammad, A.I.R. 1941 Lahore 97 referred to.
(iv) In a suit by the son for a declaration that the mortgage decree obtained against his father is not binding upon him.
it is essential for the son to ask for setting aside the decree as a consequence of the declaration claimed and to pay ad velorem Court fee under section 7(iv)(c).
A decree against the father is a good decree against the son and unless the decree is set aside, it will remain executable against the son and it is essential for the son to ask to set aside the decree.
Further, in a suit by the son for a declaration that a decree against the father, does not affect his interest in the family property, consequential relief is involved and ad velorem Court fee is necessary.
[326F G] Prithvi Rai vs D. C. Ralli, A.I.R. 1945 Lahore 13, and Vinayakrao vs Mankunwar Bai, A.I.R. 1943 Nagpur 70, referred to The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This appeal raises the, question of the court fee payable in the suit filed by the 1st respondent and his minor brother the 2nd respondent against their father the 3rd respondent and the alienee from him the appellant.
On 13 7 1962 the father executed a mortgage deed in favour of the appellant of a property of which he claimed to be the sole owner for a sum of Rs. 15,000/ .
The mortgagee, the appellant filed a suit on the foot of this mortgage and obtained a decree.
When he tried to take out execution proceedings for the sale of the mortgaged property, respondents 1 and 2 filed a suit for a declaration that the mortgage executed by their father in favour of the appellant is nun and void and ineffectual as against them as the property was a joint Hindu family property, and the mortgage had been effected without consideration and family necessity.
On this plaint the plaintiffs _paid a fixed court fee of Rs. 19.50 and the value of the suit for purposes of jurisdiction was given as Rs. 16,000.
A preliminary objection having been raised by the appellant that the suit was not properly valued for purposes of court fees and jurisdiction, the Subordinate Judge tried it as a preliminary issue.
He held that although the case is covered by section 7(iv) (c) of the Court Fees Act, the proviso to that section applied and directed the plaintiffs to pay court fee on the value of Rs. 16,000 which was the amount at which the plaintiff , valued the suit for the purposes of jurisdiction.
The court fee not having been paid the plaint was rejected.
The plaintiffs thereupon carried the matter up on appeal before the High Court of Punjab & Haryana.
Before that Court the plaintiffs did not seriously contest the position that the consequential relief of setting aside the decree within the meaning of Section 7 (iv) (c) of the Court Fees Act was inherent in the declaration which was claimed with regard to the decree.
But taking the view that the plaintiffs were not at all bound by the mortgage in dispute or the decree, the High 324


judgement:
minal Appeal No. 223 of 1972.
Appeal by special leave from the judgment and order dated February 10 & 11, 1972 of the Bombay High Court at Bombay in Cr. A. No. 1416 of 1971.
M. L. Srivastava, for the appellant.
H. R. Khanna and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by KHANNA, J.
Khashaba Maruti Shelke (33) along with eight others was tried in the court of Sessions Judge Sangli for offences under section 302/34, 307/34, 324/34 and 333/34 Indian Penal Code, section 25 of Arms Act read with section 34 Indian Penal Code, section 27 Arms Act read with section 34 Indian Penal Code, section 3 Explosive Substances Act read with section 34 Indian Penal Code, section 4 Explosive Substances Act read with section 34 Indian Penal Code, section 5 Explosive Substances Act read with section 34 Indian Penal Code and section 6 Explosive, Substances Act read with section 34 Indian Penal Code.
In the alternative, there were charges against the accused for the above offences read with section 149 Indian Penal Code.
Learned Sessions Judge acquitted the other eight accused and convicted the appellant for offences under section 3102 Indian Penal Code on two counts for causing the death of Head Constable Yesade (45) and Smt.
Balkabai (70) and sentenced him to death on each count.
The appellant was further convicted under section 307 Indian Penal Code for attempt to murder PSI Mardur and was sentenced to undergo rigorous imprisonment for a period of seven years.
The ap pellant was also convicted under section 333 Indian Penal Code for causing injuries to police constable Madane and was sentenced to undergo rigorous imprisonment for a period of three years.
Conviction was also recorded against the appellant under section 332 Indian Penal Code for causing injuries to police constable Huzare, Havaldar.
Savant and More and he was sentenced to undergo rigorous imprisonment for a period of two years on that count.
The appellant was convicted under sections 25 and 27 of the Arms Act and was sentenced to undergo rigorous imprisonment for a period of one year on each count.
Conviction *as also recorded against the appellant under sections 3 and 4(b) of the Explosive Substances Act and he was sentenced to undergo imprisonment for life on each count.
In addition to that, the appellant was convicted under section 5 of the Explosive Substances Act and he was sentenced to undergo rigorous imprisonment for a period of three years.
The sentences of imprisonment, if necessary, were ordered to run concurrently with the sentence imposed upon the appellant in another case under section 307 Indian Penal Code.
On appeal and reference to the High Court, the judgment of the learned Sessions Judge was affirmed.
The appellant thereafter has I come up in appeal to this Court by special leave.
The prosecution case is that the appellant was wanted in two murder cases of 1962 and 1966 but he could not be apprehended as he was absconding from 1962.
From March 1967 to May 1971 Sub 268 Inspector Ramchandra Mardur (PW 58) was posted in Sangli District and his main duty was to trace the absconding accused and to detect the offenders involved in property offences.
On July 24, 1970, it is stated, an informant informed Sub Inspector Kumbhar of police, station Radhanagari in Kolhapur District that the appellant, who is a resident of village Kameri, was present in village Kavathe Piran in District Sangli.
Kavathe Piran is seven miles, from Sangli.
Sub Inspector Kumbhar thereupon left for Sangli to inform the Superintendent of Police.
On July 25 Head Constable Naik (PW 18) of Police station Radhanagari along with three others went to village Kavathe Piran and met the informant there.
They concealed themselves inside a house and through the chinks of a door saw the appellant going on the road.
The appellant was then carrying a gun and a bandoleer containing cartridges.
Head Constable Naik and others thereafter went to Sangli and informed Superintendent of Police Krishna about the, whereabouts of the appellant.
On July 26, 1970 Sub Inspector Mardur was directed by Superintendent of Police Krishnan to arrange a raid party for the apprehension of the appellant.
A party of 30 armed constables along with a tear gas squad of three constables then went to the outskirts of village Kavathe Piran and reached there at 9 p.m.
At about 10 p.m. the members of the police party.
were informed that the appellant had fired at Jaising Patil (PW 21) of village Kavathe Piran at the latter 's house and thereafter had run away.
Superintendent of Police Krishnan then split the police party into three groups.
Two groups were sent in other directions, while the third group headed by Sub Inspector Mardur proceeded towards the house of Ananda in village, KavathePiran.
Ananda too was arraigned as an accused at the trial along with the appellant but was acquitted.
The group headed by Sub Inspector Mardur contained Head Constables Yesade deceased, Naik (PW 18) and Lavate (PW 55) and 10 Police constables, including Madane (PW 30),, Huzare (PW 29), Savant (PW 47), Havaldar (PW 44) and Pimpri (PW 45).
Head Constable Lavate was directed to keep a watch on the back door of Ananda 's house.
Sub Inspector Mardur went to the cattle shed of the house of Ananda and called out Ananda.
Ananda came out and soon thereafter the door of the house was closed from inside.
On Sub Inspector Mardur 's enquiry, Ananda replied that his mother only was inside the house,.
Sub Inspector Mardur, however.
heard some foot steps and a whispering sound from inside.
This aroused the suspicion of Sub Inspector Mardur.
He accordingly after alerting the other members of the police party kicked open the door.
As soon as the door ' was opened Sub Inspector Mardur heard the sound of firing from inside the house.
It was dark inside The Sub Inspector had a torch in his left hand and he flashed it while holding a revolver in the right hand.
Head Constable Yesade then entered a" room of the house.
Sub Inspector Mardur was following Head Constable Yesade when there was an explosion and the Sub Inspector.
saw huge flames.
The Sub Inspector felt that he had been injured.
He accordingly returned to the cattle shed and asked the police party to lire, The members of the police party then fired two 269 rounds into the house.
The Sub inspector also heard reports of firing from inside.
Blood then started, coming out of the injuries of Sub Inspector Mardur and he also felt giddy.
The Sub Inspector then came out of the house and took shelter behind a wall.
As the Sub Inspector was seriously injured, he directed the members of the party to stop firing and to watch if some one came out of the house of Ananda.
During the course of this occurrence, Head Constable Lavate, who had been posted on the backside of the house, saw one man emerging out of the house from the back door.
Head Constable Lavate, directed a police cotistable to fire at that man, but that man escaped without being hit.
Another man thereafter emerged from the back door of Ananda 's house and escaped.
Superintendent of Police Krishnan then arrived at the house of Ananda and took steps to send Sub Inspector Mardur to the hospital for medical treatment.
The police constables,, who too were injured, were also sent along with Sub Inspector Mardur.
Under the directions of Superintendent of Police Krishnan teargas shells were burst out inside the, house of Ananda for flushing out inmates.
Ananda and one other person then came out of the house.
Superintendent of Police then entered Ananda 's house and saw Head Constable Yesade lying injured in a small room adjoining the cattle shed of the house.
Yesade was brought out for Medical treatment but he breathed his last in a short while.
Balkabai, mother of Ananda accused, was also found lying dead in a room of the house.
On the following morning at about 9 a.m. Head Constable Naik made report exhibit 52 at the police station regarding the present occurrence.
On the night of occurrence Appa Kesre (PW 23) was present in his house.
Appa Kesre 's house is at a distance of two houses from that of Ananda in village Kavathe Piran.
At about 1 1 or 1 1.30 p.m. Appa Kesre heard some tumult and got up.
After the tumult had subsided, Appa Kesre saw the appellant and Ramchandra who too was an accused in the. case, come inside the house of Appa Kesre.
The appellant on arrival disclosed his identity and told Appa Kesre not to make noise.
The appellant and Ramchandra thereafter con cealed themselves inside the house of Appa Kesre.
On the following morning Appa Kesre went out to ease himself.
His wife also went out from the house.
Enquiries were made by the police from Appa Kesre regarding the whereabouts of the appellant but when Appa Kesre pleaded ignorance, he was detained.
The appellant and Ramchandra were later appre hended from the house of Appa Kesre at about 1.30 p.m.
The appellant was found to have abrasions on his person and his underwear had stains of blood.
The underwear was taken into possession.
Sub Inspector Sadashiv (PW 64), who investigated this case, found that some tiles of the roof of the central room of Ananda 's house had been removed in the south east corner.
A 303 rifle exhibit article 9 was found dangling in the roof.
Its butt was broken.
Three empty cartridges were also found in the room.
An iron pin too was seen lying in one of the rooms.
The house of Ananda was examined by Senior Inspector of Ex plosives Birendranath De (PW 53) on July 30.
The Senior Inspector 270 of Explosives took into possession the various articles lying there and, came to the conclusion that a handgrenade had been exploded there. ' The handgrenade was of service origin and was of fragmentation type used by service people only.
It had been manufactured in 1964.
Post mortem examination of the dead bodies of Head Constable Yesade and Balkabai was performed by Dr. Govind Jathar (PW 48) on July 27, 1970.
Balkabai was found to have 12 lacerated wounds besides a large number of abrasions on the various parts of her body.
There was blackening at the site of the different injuries.
The injuries, in the opinion of the doctor, could have been caused by material flying as a result of the explosion of a hand grenade.
Yesade had three lacerated wounds besides a large number of abrasions.
The doctor extracted one metal piece from the cavity of the chest of Yesade.
Aorta of Yesade was found to have been punctured.
The injuries of Yesade could be caused by hard and blunt substance flying with velocity.
There was no bullet injury on the bodies of Balkabai and Yesade.
Dr. Chokakakar (PW 52) examined the injuries of Sub Inspector Mardur as well as those of police constables Madane, Huzare, Savant, Havaldar and More.
Those injuries, in the opinion of the doctor, were the result of an explosion.
Five of the injuries of Sub Inspector Mardur were found to be dangerous to life.
The appellant and Ananda accused were also examined by Dr. Chokakakar.
The appellant had seven abrasions on the different parts of his body.
The above injuries could be caused by a hard and blunt substance.
Ananda had four punctured wounds which could be caused by splinters in an explosion.
At the trial the plea of the appellant was denial simpliciter.
According to the appellant, he had left his village because be was afraid of one Shankar Bhima Patil.
Shankar Bhima Patil was stated to be a relation of an accused in a murder case and the father of the appellant had appeared as a prosecution witness against that accused.
As regards the injuries on his person, the appellant stated that he was apprehended by the police in a field at about noon time on July 27, 1970.
It was stated that the injuries on the person of the appellant had been received by him during the course of.
grappling with the police officials.
No evidence was"produced in defence, The trial court convicted the appellant as mentioned above because it was of the view that the appellant had exploded the hand.
grenade and had caused the different injuries.
The High Court on appeal and reference substantially agreed with the trial court.
We have heard in appeal Mr. Srivastava on behalf of the appellant and Mr. Khanna on behalf of the State, and are of the view that the case has not been proved against the appellant beyond all reasonable doubt.
The fact that a hand grenade was exploded in the house of Ananda when the police party headed by Sub Inspector Mardur arrived there with a view to apprehend the appellant cannot be disputed.
Likewise, it cannot be disputed that Yesade and Balkabai received fatal injuries and Sub Inspector Mardur and other police officials received serious injuries as a result of that explosion.
The 271 crucial question which arises for determination in the present case is whether the appellant possessed the, hand grenade in question and exploded the same, as a result of which injuries were caused to the two deceased persons and the different police officials.
There is no direct evidence on this point as none of the witnesses has deposed about his having seen the appellant carrying a hand grenade or about his having exploded the hand grenade.
The High Court in maintaining, the conviction of the appellant has relied upon the following pieces of circumstantial evidence (1) The fact that the appellant was absconding before the occurrence in two murder cases.
(2) The fact that the appellant was seen carrying a gun and cartridges in village Kavathe Piran by Head Constable Naik on July, 25, 1970.
(3) The fact that the appellant fired at Jaising at 9 p.m. on July 26, 1970 in village Kavathe Piran.
(4) The fact that the appellant sought shelter in The house of Appa Kesre at about mid night hour after the explosion of the handgrenade.
(5) The fact that the appellant had abrasions on his person at the time of his arrest and his underwear was found to be stained with blood.
In our opinion, the circumstances enumerated above taken singly or cumulatively do not go to show that it was the appellant who exploded the hand grenade.
It is in the evidence of Jaising (PW 21) that the appellant on the night of occurrence was accompanied by four other persons, namely, Ramchandra, Mane Shankar and Sadashiv.
Out of them, Shankar and Sadashiv were strangers.
Ramchandra and Mane were also charged for the various offences for which the appellant was charged, but they were acquitted.
There is nothing to rule out the possibility of the hand grenade having been exploded not by the appellant but by one of his companions.
The fact that the appellant was an absconder in two earlier cases would not necessarily show that it was the appellant who exploded the hand grenade and not one of his companions.
For even the appellant was interested in preventing his apprehension and might have for that object exploded the hand grenade, it is equally possible that the explosion ' of the handgrenade might have been the work of one of the companions of the appellant with a view to prevent the apprehension of the appellant and facilitate his escape.
The presence of abrasions on the person of the appellant or of the blood stains on his underwear would not also show that it was the appellant and not one of his companions who had exploded the hand grenade.
The further fact that the appellant and Ramchandra accused later sought shelter in the house of Appa Kesre would not also lead to the inference that it was the appellant and not one of big companions who had exploded the hand grenade.
Likewise, no inference can be drawn from the fact that the appellant had fired at Jaising earlier on that night, that the hand grenade too was exploded by him, 272 Reference has been made by Mr. Khanna to the fact that Jallandar, brother of the appellant, was previously employed in the army and that Jallandar is untraceable since July 26, 1970 when the present occurrence took place.
It is pointed out that the hand grenade was of service origin. 'Ibis circumstance, in our opinion, is far from showing that the appellant alone could be in possession of the handgrenade and that it was he who exploded.
the same.
If one was out to procure a service hand grenade by illegal means, it was not necessary for one to have a brother in the army to secure such a handgrenade.
One might as well have obtained such a hand grenade through other sources.
Reference has also been made by Mr. Khanna to police entry exhibit 139 and entry in crime handbook exhibit 162, according to which intelligence had been collected that the appellant carried a handgrenade.
The contents of these documents cannot be of much value as there is nothing to show that the person who made these entries had any direct knowledge of the possession of hand grenades by the appellant.
On the contrary, the entries show that the above information had been derived from some other persons.
Those persons have not been exanuned as witnesses in the case.
There is no substantive evidence of any one on the record that he had seen the appellant carrying a hand grenade.
The two documents referred to above, in our opinion, can be no substitute for the substantive evidence of witnesses on the point that the appellant had in his possession a hand grenade.
The appellant was convicted on August 23, 1971 by Additional Sessions Judge Sangli for an offence under section 307 Indian Penal Code in connection with the incident relating to the firing at Jaising on the night of July 26, 1970.
A sentence of rigorous imprisonment for a period of seven years was awarded to the appellant on that count.
The appellant was also convicted for offences under sections 25 and 27 of the Arms Act in that connection and was sentenced to undergo rigorous imprisonment for a period of one year and three years for those offences.
As the appellant has already been convicted for the offences under the Arms Act for being in possession of the rifle and the cartridges, he cannot be convicted again for being in possession of the same rifle and cartridges on that day.
It also cannot be said that the appellant caused any injury with the, rifle to the two deceased persons or the other police officials because no bullet injury was found on any one of them.
It may be mentioned that though the prosecution seeks the conviction of the appellant on the allegation that he exploded a handgrenade, in the first information report relating to the present occurrence which was lodged by Head Constable Naik there is no reference to a hand grenade much less to the explosion of a hand grenade by the appellant, although there is a reference in it to the bursting of tear gas shells by the police party.
It appears that the police party was taken by surprise when the hand grenade exploded and no one realised as to what had happened and how the different persons had been injured.
This apparently accounts for the fact that there is no mention 273 of the explosion of a hand grenade or a bomb in the first information report lodged by Head Constable Naik.
AR that was mentioned in the said report was that there was firing from inside even though me at evidence reveals that there was no bullet injury on any of the injured persons.
It 'is rather unfortunate that in a case like the present wherein two persons were killed and a number of others were injured, no, direct evidence could be produced as to who had exploded the handgrenade which caused the injuries to the deceased persons and other members of the police party.
The difficulty in procuring the direct evidence can be traced to the fact that the police chose to arraign as accused the different inmates of Ananda 's house.
None of them could consequently be examined as a witness although those inmates could be in a position to depose as to who had exploded the hand grenade.
In order to base the conviction of an accused on circumstantial evidence the court must be certain that the circumstantial evidence is, of such a character as is consistent only with the guilt of the accused.
If, however, the circumstantial evidence admits of any other rational explanations, in such an event an element of doubt would creep in and the accused must necessarily have the benefit thereof.
The circumstances relied upon should be of a conclusive character and should exclude every hypothesis other than that of the guilt of the accused.
In other words, there must be a chain of evidence so far complete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused.
The circumstances must show that within all reasonable probability the impugned act must have been done by the accused.
If two inferences are possible from the circum stantial evidence, one pointing to the guilt of the accused, and the other, also plausible, that the commission of the crime was the act of someone else, the circumstantial evidence would not warrant the conviction of the accused.
In case the circumstantial evidence relied upon by the High Court for maintaining the conviction of the accused for an offence entailing capital punishment does not satisfy the above requirement, an interference would be called for by this Court.
It would be apparent from what has been discussed above that the circumstantial evidence relied upon by the 'prosecution in this case is not of such a character as can be held to be consistent only with the guilt of the appellant.
We, therefore, accept the appeal, set aside the conviction of the appellant and acquit him.
S.C. Appeal allowed.

summary:
The appellant was convicted by the Sessions Judge for offences under section 302 I.P.C. on two counts for causing the death of a Head Constable and another and sentenced to death on each count.
The appellant was further convicted under section 307 I.P.C. for attempt to murder a P.S.I. and was sentenced to undergo rigorous imprisonment for a period of 7 years.
He was also convicted under sections 333, 332 I.P.C. and sections 25 and 27 of the Arms Act and sections 3, 4 (b) and 5 of the Explosive Substances Act and separate sentences were passed, On appeal and reference to the High Court, the judgment of the learned Sessions Judge was affirmed.
The High, Court maintained the conviction of the appellant relying upon circumstantial evidence.
The appellant came before this Court by special leave.
The prosecution case was that a hand grenade was exploded in the house of one A when the police party headed by a Sub Inspector arrived there with a view to apprehend the appellant and as a result of the explosion two persons, including a Head Constable, received fatal injuries and other police officials received serious injuries.
The question was whether the appellant possessed the hand grenade in question and exploded the same.
as a result of which, injuries were caused to the two deceased persons and the different police officials.
Allowing the appeal, HELD : (i) The case against the appellant had not been proved by the prosecution beyond all reasonable doubt and the conviction of the accused, therefore, must be set aside.
(ii) There is no direct evidence as to the fact that the appellant was seen carrying a hand grenade or that he exploded the hand grenade.
The circumstances relied upon by the High Court in convicting the appellant do not singly or cumulatively show that it was the appellant who exploded the handgrenade.
From the evidence, there is nothing to rule out the possibility of the hand grenade having been exploded not by the appellant but by one of his companions.
There is no direct evidence as to who exploded the hand grenade.
(iii) Further, in the F.I.R. there was no mention of a hand grenade.
All that was mentioned in the said report was that there was firing from inside; but the medical evidence revealed that there was no bullet injury on any of the injured persons.
(iv) In order to base the conviction of an accused on circumstantial evidence, the Court must be certain that the circumstantial evidence is of such a character as is consistent only with the guilt of the accused.
The circum stances must show that within all reasonable probability, the impugned act must have been done by the accused.
If two inferences are possible from the circumstantial evidence The pointing to the guilt of the accused and the other, also plausible, that the commission of the crime was the act of someone else the circumstantial evidence would not warrant the conviction of the accused.
[273D] 267