judgement:
Civil Appeal No. 52 of 1985.
From the Judgment and Order dated 27.9.1984 of the Andhra Pradesh High Court in Writ Petition No. 7680 of 1979.
F.S. Nariman and K.R. Nambiar for the Appellant.
Gopal Subramanium and R.N. Poddar for the Respondents.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal by certificate is directed against a judgment of a Division Bench of the High Court of Andhra Pradesh upholding a notice issued by the Assistant Collector of Central Excise, Nellore demanding a sum of Rs. 6,96,177.09 representing the 957 amount of differential duty in respect of Mopeds manufactured by the Appellants and cleared from their Factory during the period from 1st October 1975 upto 30th April 1979.
The facts giving rise to the present appeal are few and may be briefly stated as follows: The Appellants manufacture Mopeds under the brand names of Suvega Standard, Suvega Deluxe and Suvega Samrat.
These Mopeds manufactured by the Appellants are liable to excise duty under the Central Excise and Salt Act, 1944, (hereinafter referred to as the Act).
The appellants have 179 dealers all over the country to whom 98% of the Mopeds manufactured by them are sold.
Not more than 2% of the Mopeds are delivered at the Factory gate; the bulk of the mopeds representing about 80% of the manufactures are delivered to the various dealers at the depots maintained by the appellants.
The Appellants have entered into agreements with the dealers in connection with the sale of the Mopeds manufactured by them and these agreements are substantially in the same terms and it will, therefore, be sufficient if we refer to a specimen agreement for the purpose of ascertaining the terms and conditions on which the mopeds are supplied by the appellants to the dealers.
Clause 2 (a) of the agreement provides that the dealer shall keep a deposit of Rs. 6,000 with the appellants as a guarantee for due fulfillment of the agreement and this deposit will carry simple interest at the rate of 4 1/2% per annum and clause 2 (b) declares inter alia that upon termination of the agreement, the balance of the deposit if any, after deducting all amounts due to the Appellants shall be returned to the dealer with interest.
Clause 3 (a) of the agreement is material since considerable reliance has been placed upon it on behalf of the Department.
It reads as follows: "The Dealer will get a commission of Rs. 110 (Rupees one hundred and ten only) for Suvega Moped and Rs. 145(Rupees one hundred and forty five only) per Suvega moped fitted with Shock Absorber which will be introduced shortly.
" The Appellants are entitled to change prices from time to time as per clause 4 of the agreement and that clause proceeds to add the Appellants shall not be bound to execute the order pending execution with the dealer at the old rate and will be entitled to change the 958 price ruling on the date on which the moped leaves the factory or stockyard of the Appellants.
Clauses 5 and 6 are material for the purpose of determination of the controversy between the parties and they reads as follows: 5(a) "Unless otherwise agreed specifically to all deliveries to the dealer shall be ex factory in unpacked condition and the bills/RB/LB/PWB shall be sent through their bankers and all bank charges thereon shall be borne by the dealer.
In case the dealer does not honour the Bills sent through bank immediately on presentation by Bankers, the dealer shall be liable to the Company for all damages/losses and expenses incurred in this connection and the same will be recovered from the deposit lying with the company.
(b) The despatches by the company will be insured by the dealer against all risks, pilferage, non delivery and SRCC including breakage, wherever applicable from the time of leaving of the Company 's factory or stockyard until arrival at dealer 's premises, and all such expenditure incidental to transit shall be to the account of the dealer.
The dealer shall at his own expenditure maintain such organisation for the sale and service of the said vehicles, including showrooms, service stations, repair shops, parts store rooms, salesmen, etc.
The dealer shall train mechanics at their own cost with Company.
The dealer shall give three free services to every vehicle sold by him and the company shall reimburse to the dealer at Rs. 4 per each free service rendered by him." The rest of the clause.
Of the agreement are not relevant but it might be useful to refer to sub clauses (a) & (b) of Clause 10(iii) which provide as follows: "10(iii) (a) The Company upon termination of this agreement may require the dealer to immediately turn over to the company all or any bonafide retail buyers orders 959 that he may have on hand unfulfilled, together with all deposits made thereon by the purchasers and also the list of prospective buyers with the dealer.
(b) In the event of the termination of this agreement, however, the dealer shall not be released from any obligation arising out of any transaction entered into or consummated prior to the date of such termination, either by him or his branches.
There are the material terms and conditions on which mopeds are supplied by the appellants to the dealers.
The Appellants submitted their price lists for approval to the excise authorities and the price lists showed the price charged by the Appellants to the dealers after deducting the so called commission of Rs. 110 in respect of Suvega Standard Moped, Rs. 145 in respect of Suvega Deluxe Moped and Rs. 165 in respect of Suvega Samrat Moped.
These price lists were approved by the excise authorities and excise duty was paid by the Appellants on the basis of these price lists at the time of clearance of the mopeds.
This practice continued right upto 30th April 1979 when the Assistant Collector of Central Excise, Nellore took the view that the appellants were not entitled deduction of the commission of Rs. 110 for Suvega Standard, Rs. 145 for Suvega Deluxe and Rs. 165 for Suvega Samrat mopeds from the price charged to the dealers for arriving at the exciseable value of the mopeds liable to excise duty.
The Assistant Collector of Central Excise, Nellore thereupon issued a notice dated 15 May 1979 to the Appellants demanding a sum of Rs. 6,96, 177.09 representing the amount of differential duty in respect of mopeds manufactured and cleared by the appellants from their factory during the period 1st October 1975 to 30th April 1979.
This demand was purported to be made by the Assistant Collector of Central Excise under clauses (a) and (b) of Rule 10 (1) of the Central Excise Rule 1944.
The appellants thereupon preferred a writ petition in the High Court of Andhra Pradesh contending that the appellants were entitled to deduction of the amount of commission in arriving at the excisable value of the mopeds and the demands made by the Asstt.
Collector of Central Excise was therefore, not justified.
960 The Writ Petition filed by the appellants came to be heard by a Division Bench of the High Court of Andhra Pradesh.
Though it is difficult to ascertain what exactly was the view taken by the Division Bench, it appears that they came to the conclusion that the dealers were related persons vis a vis the appellants and "the discount of Rs. 110, 145 and 165 for the different varieties of mopeds was being given for organising sale and providing facilities and this was clearly an example of the mutual interest which the related person and the appellants are having in the business of each other.
The Division Bench, it seems, mixed up two different points, one relating to the question whether the dealers are related persons and the other relating to the question whether the commission of Rs. 110, 145 and Rs. 165 allowed in respect of different varieties of mopeds to the dealers could be regarded as a trade discount or not.
The ultimate decision however was that the commission of Rs. 110, 145 and Rs. 165 in respect of different varieties of mopeds was not trade discount and, therefore, in any event, it was not liable to be deducted from the price charged to the dealers and the Assistant Collector of Central Excise was consequently right in making a demand of Rs. 6,96,177.09 from the appellants.
The appellants being aggrieved by the decision of the Division Bench preferred the present appeal after obtaining a certificate from the High Court.
Mr. Nariman learned counsel appearing on behalf of the appellants assailed the judgment of the Division Bench of the High Court on both the grounds on which the impugned demand was challenged in the High Court.
He contended that there was absolutely nothing to show that the dealers were related persons vis a vis the appellants and the Division Bench of the High Court was, therefore, clearly in error in taking the view that the dealers were related persons.
Now the concept of related persons was for the first time introduced in the Act by the amending Act 22 of 1973 and the expression 'related person ' came to be defined in clause (c) of sub section (4) of Section 4 to mean a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the asscssee and sub distributor of such distributor.
This definition came up for consideration before this Court in the Union of India vs Bombay Tyre International Ltd. where this Court construing, the definition held: 961 "On a proper interpretation of the definition of 'related person ' in sub section (4) (c) of section 4, the words a relative and a distributor of the assesee" do not refer to any distributor but they are limited only to a distributor who is a relative of the assessee within the meaning of the .
So read, the definition of "related person" is not unduly wide and does not suffer from any constitutional infirmity.
" It is therefore obvious that the dealers vis a vis the appellants under the last part of the definition in sub section (4) (c) of Sec. 4, could not be said to be related persons since they were admittedly not relatives of the appellants within the meaning of the , But the argument urged on behalf of the department was and, that is the argument which found favour with the Division Bench of the High Court, that the dealers were related persons within the meaning of the first part of the definition in sub section 4 (c) of Section 4.
It was contended on behalf of the department that the dealers were so associated with the appellants that they had interest directly or indirectly in the business of each other.
Now this part of the definition also came up for consideration before this Court in another decision namely, Union of India vs Atic Industries Ltd, ; , and the Court pointed in that case: "What the first part of the definition requires is that the person who is sought to be branded as a "related person" must be a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other.
It is not enough that the assessee has an interest, direct or indirect, in the business of the person alleged to be a related person nor is it enough that the person alleged to be a related person has an interest, direct or indirect, in the business of the assessee.
It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, direct or indirect, in the business of each other.
Each of them must have a direct or indirect interest in the business of the other.
The quality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct, while the interest of the latter 962 in the business of the former may be indirect.
That would not make any difference, so long as each has got some interest direct or indirect, in the business of the other." Here on the facts it is difficult to see how it can at all be contended that the appellants had any interest in the business of the dealers or that the dealers had any interest in the business of the appellants.
We shall presently analyse the terms of the agreement between the appellants and the dealers but one thing is clear from the terms of the agreement that the appellants sold the mopeds to the dealers on principal to principal basis and if that be so it is not possible to say that the appellants had any interest in the business of the dealers.
The dealers were wholesale buyers of the mopeds manufactured by the appellants and since the transactions between them were on principal to principal basis, it is difficult to appreciate how the appellants could possibly be said to have any interest, direct or indirect, in the business of the dealers.
The dealers could not, therefore, be said to be related persons vis a vis the appellants.
We must in the circumstances hold that the Division Bench of High Court was in error in holding that they were related persons.
It is indeed surprising that though the Division Bench of the High Court took the view that the dealers were related person, the Division Bench did not determine the exciseable value of the mopeds on the basis of the price at which the dealers in their terms sold the mopeds to the consumers but took into the account only the price charged by the appellants to the dealers.
If the dealers were related persons, the exciseable value of the mopeds could have been determined only on the basis of the price at which the dealers sold the mopeds to the retailers or the consumers.
But, as we have pointed out it is not possible to hold that the dealers were related persons and hence the excise duty on the mopeds was liable to be determined only on the basis of the wholesale price charged by the appellants to the dealers.
That takes us to the second question, namely, whether the Division Bench was right in taking the view that the Commission of Rs. 110, 145 and 165 per moped in respect of different varieties of mopeds sold to the dealers could not be said to be trade discount.
Mr. Nariman, Learned Counsel appearing on behalf of the appellants contended that this Commission allowed to the dealers was clearly 963 trade discount and was, therefore, liable to be deducted in determining the exciseable value of the mopeds by reasons of sub section (b) (ii) of Section 4 of the Act.
Now it is true that this amount allowed to the dealers has been referred to in the agreement as commission but the level given by the parties cannot be determinative because it is for the court to decide whether the amount is trade discount or not, whatever be the name given to it.
If we look at the terms of the agreement, it is clear that the agreement was between the appellants and the dealers on principal to principal basis.
The clauses of the agreement which we have set out above clearly show beyond doubt that under the agreement, the mopeds were sold by the appellants to the dealers and the dealers did not act as agents of the appellants for the purpose of effecting sales on behalf of the appellants.
It is clear from clause 5 (a) of the agreement that the bills in respect of the mopeds delivered to the dealers were to be sent by the appellants through their bankers and it was the responsibility of the dealers to retire the bills for the purpose of taking delivery of the mopeds.
Clause 5 (b) of the agreement laid an obligation on the dealers to insure the mopeds against all risks, pilferage, non delivery and SRCC including breakage from the time the mopeds left the factory or stockyard of the appellants until they arrived at the premises of the dealer and this again would show that the dealers acted as principal to principal in purchasing the mopeds from the appellants.
The dealers were also liable under Clause 6 of the agreement to maintain adequate organisation for sale and service of the mopeds including service stations, repair shops, spare parts.
salesmen etc.
and the mechanics were also to be trained at the cost of the dealers.
The relationship between the appellants and the dealers was clearly on principal to principal basis and in the circumstances it is difficult to see how the amount of Rs. 11 , 145 and 165 allowed to the dealers.
in respect of different varieties of mopeds could be regarded as anything other than trade discount.
The appellants charged to the dealer the price of the mopeds sold to them less the amount of Rs. 110, Rs. 145 and Rs. 165 in respect of different varieties of mopeds.
These amounts allowed to the dealers were clearly trade discount liable to be deducted from the price charged to the dealers for the mopeds.
purpose of arriving at the exciseable value of the moped.
We therefore, allow the appeal, set aside the Judgment of the Division Bench of the High Court and quash the notice dated 15.5.1979 issued by the Assistant Collector of Central Excise made and the order dated 25.9.79 made in pursuance of that notice.
If any 964 payments have been made by the Appellants under the order dated 25th September 1979, the respondents will refund the same to the appellants within 3 months from the date of receipt of this order.
The Bank Guarantee given by the appellants will stand discharged, There will be no order as to costs.
N.V.K. Appeal allowed.

dataset_name: IN-Abs

summary:
The appellants manufactured Mopeds under three different brand names.
Mopeds were liable to excise duty under the Central Excise and Salt Act, 1944.
The bulk of the Mopeds manufactured were delivered to various dealers at depots maintained by the appellants.
The appellants entered into agreements with these dealers in connection with the sale of the Mopeds.
The agreements provided that the dealer shall keep a deposit with the appellants as a guarantee for due fulfillment of the agreement, that the dealers were entitled to get a commission on each Moped, that the dealers were to insure the Mopeds against all risks of pilferage, non delivery etc.
(Clause 5), and that, the dealers were to maintain adequate organisation for sale and service of the Mopeds including show rooms, service stations, repair shops etc.
(clause 6).
The appellants submitted their price lists for approval to the excise authorities and the price lists showed the price charged by the dealers after deducting the commission of Rs. 110, Rs. 145 and Rs. 165 or the three different brands of the Mopeds.
The price lists were approved by the excise authorities and excise duty was paid by the appellants on the basis of these price lists at the time of clearance of the Mopeds.
This practice continued till 30th April, 1979, when the Assistant Collector of Central Excise took the view that the appellants were not entitled to deduction of the aforesaid commission from the price charged to the dealers for arriving at the excisable value of the Mopeds.
The Assistant Collector thereupon issued a notice of demand under clauses (a) and (b) of Rule 10(1) of the Central Excise Rules, 1944 dated 15th May, 1979 to the appellants demanding a sum of Rs. 6,96,177.09 representing the amount of differential duty in respect of Mopeds manufactured and cleared during the period 1st October 1975 to 30th April, 1979.
955 The appellants assailed the aforesaid notice in a writ petition in the High Court contending, that they were entitled to deduction of the amount of commission in arriving at the excisable value of the Mopeds and that the demands made by the Assistant Collector was not justified.
The Division Bench however dismissed the writ petition and held that the discount of Rs. 110, Rs. 145 and Rs. 165 for the different varieties of Mopeds was being given for organising sale and providing facilities and this was clearly an example of the mutual interest which the 'related person 's and the appellant were having in the business of each other, and that the commission of Rs. 110, Rs. 145 and Rs. 165 in respect of the different varieties of Mopeds was not 'trade discount ' and therefore not liable to be deducted from the price charged to the dealers and the Assistant Collector was right in making the demand from the appellants.
In the appeal to this court it was contended on behalf of the appellants that: (1) there was absolutely nothing to show that the dealers were related persons vis a vis the appellants and that the High Court was clearly wrong in taking that view, and (2) the Division Bench was not right in taking the view that the commission of Rs. 110, Rs 145 and Rs. 165 per Moped in respect of the different varieties of Mopeds sold to the dealers could not be said to be trade discount.
Allowing the appeal, ^ HELD: 1.
The amounts allowed to the dealers by the appellants in respect of different varieties of Mopeds of Rs. 110, Rs. 145 and Rs. 165 were clearly trade discount liable to be deducted from the price charge to the dealers for the purpose of arriving at the excisable value of the Mopeds.
[963G] 2.
The judgment of the Division Bench of the High Court set aside.
The notice dated 15.5.79 issued by the Assistant Collector of Central Excise and the order dated 25.9.79 made in pursuance of that notice are quashed.
The respondents will refund to the appellants any payments made by the appellants under the order dated 25th September, 1979 within 3 months [963H; 964A] 3.
The concept of 'related person ' was for the first time introduced in the Central Excise and Salt Act, 1944 by the Amending Act 22 of 1974 and the expression 'related person ' came to be defined in clause (c) of sub section (4) of Section 4.
[960G] 4.
In Union of India vs Bombay Tyre International Ltd it has been held that the definition of 'related ' person in sub section (4) (c) of Section 4 is not unduly wide and does not suffer from any constitutional infirmity and, Union of India vs Attic Industries Ltd, ; that the person who is sought to be branded as a 'related person ' must be a person who is so associated with the assessee that they have interest, directly, or indirectly, in the business of each other.
It is not enough that the assessee has an interest, direct or indirect, in the business of the assesses.
It is essential that the assessee and the person alleged to be a 'related person, must have interest direct or indirect, in the business of each other.
[961A; F G] 956 In the instant case, the terms of the agreement indicate that the dealers where wholesale buyers of the Mopeds manufactured by the appellants and since the transactions between them were on principal to principal basis, the dealers could not, therefore, be said to be related persons vis a vis the appellants.
The excise duty on the Mopeds were hence liable to be determined only on the basis of the wholesale price charged by the appellants to the dealers.
[962 D E] 5.
The amount allowed to the dealers has been referred to in the agreement as 'commission ' but the label given by the parties cannot be determinative because it is for the court to decide whether the amount is trade discount, or not whatever be the name given to it.
[963B] In the instant case, the clauses of the agreement clearly show beyond doulet that under the agreement the Mopeds were sold by the appellants to the dealers and the dealers did not act as agents of the appellants for the purpose of effecting sales on their behalf.
It is clear from clause 5(a) that the bills in respect of the Mopeds delivered to the dealers were to be sent by the appellants through their bankers and it was the responsibility of the dealers to collect the bills for the purpose of taking delivery.
Clauses 5(b) laid an obligation on the dealers to insure the Mopeds against all risks, pilferage, non delivery etc.
and under clause (6) the dealers were liable to maintain adequate organisation for sale and service of the Mopeds.
The Relationship between the appellants and the dealers was clearly on principal to principal basis and in these circumstances the amount of Rs. 110, Rs. 145 and Rs. 165 allowed to the dealers in respect of the different varieties of Mopeds could not be regarded as anything other than 'trade discount '.
[963 B F]


judgement:
Appeal No. 214 of 1954.
Appeal under Article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 17th July 1953 of the, High Court of Rajasthan (Bapna and Ranawat JJ.) in Civil Writ Application No. 128 of 1953.
R. K. Rastogi and Ganpat Rai, for the appellant.
R. C. Prasad, for section L. Chhibber, for respondent No. 2. 1955.
March 22.
The Judgment of the Court was delivered by BOSE J.
The second respondent Bhurey Lal filed an election petition under section 100 of the Representation of the People Act against the appellant Sangram Singh and two others for setting aside Sangram Singh 's election.
The proceedings commenced at Kotah and after some hearings the Tribunal made an order on 11 12 1952 that the further sittings would be at Udaipur from the 16th to the 21st March, 1953.
It was discovered later that the 16th was a public holiday, so on 5 1 1953 the dates were changed to "from the 17th March onwards" and the parties were duly notified.
On the 17th the appellant did not appear nor did any of the three counsel whom he had engaged, so the Tribunal proceeded ex parte after waiting till 1 15 P.m.
The Tribunal examined Bhurey Lal and two witnesses on the 17th, five more witnesses on the 18th and on the 19th the case was adjourned till the 20th.
On the 20th one of the appellant 's three counsel, Mr, Bharat Raj, appeared but was not allowed to 5 take any part in the proceedings because the Tribunal said that it was proceeding ex parte at that stage.
Three more witnesses were then examined.
On the following day, the 21st, the appellant made an application asking that the ex parte proceedings be set aside and asking that he be allowed to cross examine those of Bhurey Lal 's witnesses whose evidence had already been recorded.
The Tribunal heard arguments and passed an order the same day rejecting the application on the ground that the appellant had "failed to satisfy ourselves that there was any just or unavoidable reason preventing the appearance of respondent No. 1 himself or of any of his three learned advocates between the 17th and the 19th of March, 1953", and it added "at all events, when para 10 of the affidavit makes it clear that Shri Bharatraj had already received instructions to appear on 17 3 1953 there was nothing to justify his non appearance on the 18th and 19th of March, 1953, if not, on the 17th as well".
The appellant thereupon filed a writ petition under article 226 of the Constitution in the High Court of Rajasthan and further proceedings before the Tribunal were stayed.
The High Court rejected the petition on 17 7 1953 on two grounds (1) "In the first place, the Tribunal was the authority to decide whether the reasons were sufficient or otherwise and the fact that the Tribunal came to the conclusion that the reasons set forth by counsel for the petitioner were insufficient cannot be challenged in a petition of this nature" and (2) "On the merits also, we feel no hesitation in holding that counsel for the petitioner were grossly negligent in not appearing on the date which had been fixed for hearing, more than two months previously".
Five months later, on 16 12 1953, the High Court granted a certificate under article 133(1) (C) of the Constitution for leave to appeal to this Court.
The only question before the High Court was whether the Tribunal was right in refusing to allow the appellant 's counsel to appear and take part in the proceedings on and after the 20th of March, 1953, and the first question that we have to decide is whether that is sufficient ground to give the High Court jurisdiction to entertain a writ petition under article 226 of the Constitution.
That, in our opinion, is no longer res integra.
The question was settled by a Bench of seven Judges of this Court in Hari Vishnu vs Ahmad Ishaque(1) in these terms: "Certiorari will also be issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an op portunity to the parties to be heard, or violates the principles of natural justice".
That is exactly the position here.
It was urged that that cannot be so in election matters because of section 105 of the Representation of the People Act of 1951 (Act XLIII of 1951), a section which was not considered in the earlier case.
It runs thus: "Every order of the Tribunal made under this Act shall be final and conclusive".
It was argued that neither the High Court nor the Supreme Court can itself transgress the law in trying to set right what it considers is an error of law on the part of the Court or Tribunal whose records are under consideration.
It was submitted that the legislature intended the decisions of these tribunals to be final on all matters, whether of fact or of law, accordingly, they cannot be said to commit an error of law when, acting within the ambit of their jurisdiction, they decide and lay down what the law is, for in that sphere their decisions are absolute, as absolute as the decisions of the Supreme Court in its own sphere.
Therefore, 'it was said, the only question that is left open for examination under article 226 in the case of an Election Tribunal is whether it acted within the scope of its jurisdiction.
(1) ; ,1121, 7 But this, also, is no longer open to question.
The point has been decided by three Constitution Benches of this Court.
In Hari Vishnu vs Ahmad Ishaque(1) the effect of section 105 of the Representation of the People Act was not considered, but the Court laid down in general terms that the jurisdiction under article 226 having been conferred by the Constitution, limitations cannot be placed on it except by the Constitution itself: see pages 238 and 242.
Section 105 was, however, considered in Durga Shankar Mehta vs Raghuraj Singh(1) and it was held that that section cannot cut down or affect the overriding powers of this Court under article 136.
The same rule was applied to article 226 in Rai Krushna Bose vs Binod Kanungo and others(1) and it was decided that section 105 cannot take away or whittle down the powers of the High Court under article 226.
Following those decisions we hold that the jurisdiction of the High Court under article 226 is not taken away or curtailed by section 105.
The jurisdiction which articles 226 and 136 confer entitles the High Courts and this Court to examine the decisions of all Tribunals to see whether they have acted illegally.
That jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally by enacting a statute that its illegal acts shall become legal the moment the tribunal chooses to say they are legal.
The legality of an act or conclusion is something that exists outside and apart from the decision of an in ferior tribunal.
It is a part of the law of the land which cannot be finally deter mined or altered by any tribunal of limited jurisdiction.
The High Courts and the Supreme Court alone can determine what the law of the land is vis a vis all other courts and tribunals and they alone can pronounce with authority and finality on what is legal and what is not.
All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under Articles 226 and 136.
Therefore, the jurisdiction of the High Courts under article 226 with that of the Supreme Court above them remains to its fullest extent despite section 105.
That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law.
The High Courts do not, and should not, act as Courts of appeal under article 226.
Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognised lines and not arbitrarily; and one of the limitations imposed by the Courts on, themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ensue.
They will not allow themselves to be turned into Courts of appeal or revision to set right mere errors of law which do not occasion injustice in a broad and general sense, for, though no legislature can impose limitations on these constitutional powers it is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about these special rights decided as speedily as may be.
Therefore, writ petitions should not be lightly entertained in this class of case.
We now turn to the decision of the Tribunal.
The procedure of these tribunals is governed by section 90 of the Act.
The portion of the section that is relevant here is sub section (2) which is in these terms: "Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the Tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 (Act V of 1908) to the trial of suits".
We must therefore direct our attention to that portion of the Civil Procedure Code that deals with the trial of suits.
Now a code of procedure must be regarded as such.
It is procedure, something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up.
Too technical a construction of sections that leaves no room for reasonable elasticity of inter 9 pretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.
Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.
Of course, there must be exceptions and where they are clearly defined they must be given effect to.
But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle.
The existence of such a principle has been doubted, and in any event was condemned as unworkable and impractical by O 'Sullivan, J. in Hariram vs Pribhdas(1).
He regarded it as an indeterminate term "liable to cause misconception" and his views were shared by Wanchoo, C. J. and Bapna, J. in Rajasthan: Sewa Ram vs Misrimal(1).
But that a law of natural justice exists in the sense that a party must be heard in a Court of law, or at any rate be afforded an opportunity to appear and defend himself, unless there is express provision to the contrary, is, we think, beyond dispute.
See the observations of the Privy Council in Balakrighna Udayar vs Vasudeva Ayyar(3), and especially in T. M. Barret vs African Products Ltd.(1) where Lord Buckmaaster said "Do forms or procedure should ever be permitted to exclude the presentation of a litigant 's defence".
Also Hari Vishnu 's case which we have just quoted.
In our opinion, Wallace, J. was right in VenkataSubbiah vs Lakshminarassimham(5) in holding that "One cardinal principle to be observed in trials by a Court obviously is that a party has a right to appear and plead his cause on all occasions when that cause comes on for hearing", and that "It follows that a party should not be deprived of that right and in fact the Court has no option to refuse that right, unless the Code of Civil Procedure deprives him of it".
Let us now examine that Code; and first, we will turn to the body of the Code.
Section 27 provides that "Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim".
Section 30 gives the Court power to "(b) issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid".
Then come the penalties for default.
They are set out in section 32 but they are confined to cases in which a summons has been issued under section 30.
There is no penalty for a refusal or an omission to appear in response to a summons under section 27.
It is true certain consequences will follow if a defendant does not appear and, popularly speaking, those consequences may be regarded as the penalty for nonappearance, but they are not penalties in the true sense of the term.
They are not punishments which the Court is authorised to administer for disregard of its orders.
The antithesis that section 32 draws between section 27 and section 30 is that an omission to appear in response to a summons under section 27 carries no penalty in the strict sense, while disregard of a summons under section 30 may entail punishment.
The spirit of this distinction must be carried over to the First Schedule.
We deprecate the tendency of some Judges to think in terms of punishment and penalties properly so called when they should instead be thinking of compensation and the avoidance of injustice to both sides.
We turn next to the Rules in the First Schedule.
It is relevant to note that the Rules draw a distinction between the first hearing and subsequent hearings, 11 and that the first hearing can be either (a) for settlement of issues only., or (b) for final disposal of the suit.
First, there is Order V. rule 1: ". . . . . . a summons may be issued to the defendant to appear and answer the claim on a. day to be therein specified".
This summons must state whether the hearing is to be for settlement of issues only or for final hearing (rule 5).
If it is for final hearing, then (rule 8): "it shall also direct the defendant to produce, on the day fixed for his appearance, all witnesses upon whose evidence he intends to rely in support of his case".
Then comes Order VIII, rule 1 which expressly speaks of "the first hearing".
Order IX follows and is headed "Appearance of parties and consequence of non appearance".
Now the word "consequence" as opposed to the word "penalty" used in section 32 is significant.
It emphasises the antithesis to which we have already drawn attention.
So also in rule 12 the marginal note is "Consequence of non attendance" and the body of the rule states that the party who does not appear and cannot show sufficient cause "shall be subject to all the provisions of the foregoing rules applicable to plaintiffs and defendants, respectively, who do not appear".
The use of the word "penalty" is scrupulously avoided.
Our attention was drawn to rule 6(2) and it was argued that Order IX does contemplate the imposition of penalties.
But we do not read this portion of the rule in that light.
All that the plaintiff has to do here is to pay the costs occasioned by the postponement which in practice usually means the cost of a fresh summons and the diet money and so forth for such of the witnesses as are present; and these costs the plaintiff must pay irrespective of the result.
Rule I of Order IX starts by saying "On the day fixed in the summons for the defendant to appear and answer. . . . . . . . ." 12 and the rest of the rules in that Order are consequential on that.
This is emphasised by the use of the word "postponement" in rule 6 (1)(c), of "adjournment" in rule 7 and of "adjournment" in rule 1.
Therefore, we reach the position that Order IX, rule 6 (1) (a), which is the rule relied on, is confined to the first hearing of the suit and does not per se apply to subsequent hearings: see Sahibzada Zeinulabdin Khan vs Sahibzada Ahmed Raza Khan(1).
Now to analyse rule 6 and examine its bearing on the first hearing.
When the plaintiff appears and the defendant does not appear when the suit is called on for hearing, if it is proved that the summons was duly served "(a). . . . . . . . . the Court may proceed ex parte".
The whole question is, what do these words mean? Judicial opinion is sharply divided about this.
On the one side is the view propounded by Wallace, J. in Venkatasubbiah vs Lakshminarasimham(2) that ex parte merely means in the absence of the other party, and on the other side is the view of O 'Sullivan, J., in Hariram vs Pribhdas(3) that it means that the Court is at liberty to proceed without the defendant till the termination of the proceedings unless the defendant shows good cause for his non appearance.
The remaining decisions, and there are many of them, take one or the other of those two views.
In our opinion, Wallace, J. and the other Judges who adopt the same line of thought, are right.
As we have already observed, our laws of procedure are based on the principle that, as far as possible, no proceeding in a Court of law should be conducted to the detriment of a person in his absence.
There are of course exceptions, and this is one of them.
When the defendant has been served and has been afforded an opportunity of appearing, then, if he does not appear, the Court may proceed in his absence.
But, be it noted, the Court is not directed to make an exparte order.
Of course the fact that it is proceeding ex parte will be recorded in the minutes of its proceedings but that is merely a statement of the fact and is not an order made against the defendant in the sense of an ex parte decree or other ex parte order which the Court is authorised to make.
All that rule 6 (1) (a) does is to remove a bar and no more.
It merely authorises the Court to do that which it could not have done without this authority, namely to proceed in the absence of one of the parties.
The contrast in language between rules 7 and 13 emphasises this.
Now, as we have seen, the first hearing is either for the settlement of issues or for final hearing.
If it is only for the settlement of issues, then the Court cannot pass an ex parte decree on that date because of the proviso to Order XV, rule 3(1) which provides that that can only.
be done when "the parties or their pleaders are present and none of them objects".
On the other hand, if it is for final hearing, an ex parte decree can be passed, and if it is passed, then Order IX, rule 13 comes into play and before the decree is set aside the Court is required to make an order to set it aside.
Contrast this with rule 7 which does not require the setting aside of what is commonly, though erroneously, known as "the ex parte order".
No order is contemplated by the Code and therefore no order to set aside the order is contemplated either.
But a decree is a command or order of the Court and so can only be set aside by another order made and recorded with due formality.
Then comes rule 7 which provides that if at an adjourned hearing the defendant appears and shows good cause for his "previous non appearance", he can be heard in answer to the suit "as if he had appeared on the day fixed for his appearance".
This cannot be read to mean, as it has been by some learned Judges, that he cannot be allowed to appear at all if he does not show good cause.
All it means is that he cannot be relegated to the position he would have occupied if he had appeared, 14 We turn next to the adjourned hearing.
That is dealt with in Order XVII.
Rule I (1) empowers the Court to adjourn the hearing and whenever it does so it must fix a day "for the further hearing of the suit", except that once the hearing of the evidence has begun it must go on from day to day till all the witnesses in attendance have been examined unless the Court considers, for reasons to be recorded in writing, that a further adjournment is necessary.
Then follows rule 2 "Where., on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit".
Now rule 2 only applies when one or both of the parties do not appear on the day fixed far the adjourned hearing.
In that event, the Court is thrown back to Order IX with the additional power to make "such order as it thinks fit".
When it goes back to Order IX it finds that it is again empowered to proceed ex parte on the adjourned hearing in the same way as it did, or could have done, if one or other of the parties had not appeared at the first hearing, that is to say, the right to proceed ex parte is a right which accrues from day to day because at each adjourned hearing the Court is thrown back to Order IX, rule 6.
It is not a mortgaging of the future but only applies to the particular hearing at which a party was afforded the chance to appear and did not avail himself of it.
Therefore, if a party does appear on "the day to which the hearing of the suit is adjourned", he cannot be stopped from participating in the proceedings simply because he did not appear on the first or some other hearing.
But though he has the right to appear at an adjourned hearing, he has no right to set back the hands of the clock.
Order IX, rule 7 makes that clear.
Therefore, unless he can show good cause, he must accept all that has gone before and be content to proceed from the stage at which he comes in.
But what exactly does that import?
To determine that it will be neces 15 sary to hark back to the first hearing.
We have already seen that when a summons is issued to the defendant it must state whether the hearing is for the settlement of issues only or for the final disposal of the suit (Order V, rule 5).
In either event, Order VIII, rule I comes into play and if the defendant does not present a written statement of his defence, the Court can insist that he shall; and if, on being required to do so, he fails to comply "the Court may pronounce judgment against him, or make such order in relation to the suit as it thinks fit".
This invests the Court with the widest possible discretion and enables it to see that justice is done to both sides; and also to witnesses if they are present: a matter on which we shall dwell later.
We have seen that if the defendant does not appearat the first hearing, the Court can proceed exparte, which means that it can proceed without a written statement; and Order IX, rule 7 makes it clear that unless good cause is shown the defendant cannot be relegated to the position that he would have occupied if he had appeared.
That means that he cannot put in a written statement unless he is allowed to do so, and if the case is one in which the Court considers a written statement should have been put in, the consequences entailed by Order VIII, rule 10 must be suffered.
What those consequences should be in a given case is for the Court, in the exercise of its judicial discretion, to determine.
No hard and fast rule can be laid down.
ID some cases an order awarding costs to the plaintiff would meet the ends of justice: an adjournment can be granted or a written statement can be considered oil the spot and issues framed.
In other cases, the ends of justice may call for more drastic action.
Now when we speak of the ends of justice, we mean justice not only to the defendant and to the other side but also to witnesses and others who may be inconvenienced.
It is an unfortunate fact that the convenience of the witness is ordinarily lost sight of in this class of case and yet be is the one that deserves 16 the greatest consideration.
As a rule, he is not parti cularly interested in the dispute but he is vitally interested in his own affairs which he is compelled to abandon because a Court orders him to come to the assistance of one or other of the parties to a dispute.
His own business has to suffer.
He may have to leave his family and his affairs for days on end.
He is usually out of pocket.
Often he is a poor man living in an out of the way village and may have to trudge many weary miles on foot.
And when he gets there, there are no arrangements for him.
He is not given accommodation; and when he reaches the Court, in most places there is no room in which he can wait.
He has to loiter about in the verandahs or under the trees, shivering in the cold of winter and exposed to the heat of summer , wet and miserable in the rains: and then, after wasting hours and sometimes days for his turn, he is brusquely told that he must go back and come again another day.
Justice strongly demands that this unfortunate section of the general public compelled to discharge public duties, usually at loss and inconvenience to themselves, should not be ignored in the over all picture of what will best serve the ends of justice and it may well be a sound exercise of discretion in a given case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross examine them, still less to adduce his own evidence.
It all depends on the particular case.
But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford litigants a real opportunity of fighting out their cases fairly and squarely.
Costs will be adequate compen sation in many cases and in others the Court has almost unlimited discretion about the terms it can impose provided always the discretion is judicially exercised and is not arbitrary.
In the Code of 1859 there was a provision (section 119) which said that "No appeal shall lie from a judgment passed exparte against a defendant who has not appeared".
The Privy Council held in Sahibzada Zeinulabdin Khan vs Sahibzada Ahmed Raza Khan( ' ) that this only applied to a defendant who had not appeared at all at any stage, therefore, if once an appearance was entered, the right of appeal was not taken away.
of the grounds of their decision was that "The general rule is that an appeal lies to the High Court from a decision of a civil or subordinate Judge, and a defendant ought not to be deprived of the right of appeal, except by express words or necessary implication".
The general rule, founded on principles of natural justice, that proceedings in a Court of justice should not be conducted behind the back of a party in the absence of an express provision to that effect is no less compelling.
But that apart.
It would be anomalous to hold that the efficacy of the so called ex parte order expends itself in the first Court and that thereafter a defendant can be allowed to appear in the appellate Court and can be beard and can be permitted to urge in that Court the very matters he is shut out from urging in the trial Court; and in the event that the appellate Court considers a remand necessary he can be permitted to do the very things he was precluded from doing in the first instance without wetting the exparte order set aside under Order IX, rule 7.
Now this is not a case in which the defendant with whom we are concerned did not appear at the first hearing.
He did.
The first hearing was on 11 12 1952 at Kotah.
The appellant (the first defendant) appeared through counsel and filed a written statement.
Issues were framed and the case was adjourned till the 16th March at Udaipur for the petitioners evidence alone from the 16th to the 21st March.
Therefore, Order IX, rules 6 and 7 do not apply in terms.
But we have been obliged to examine this order at length because of the differing views taken in the various High Courts and because the contention is that Order XVII, rule 2 throws one back to the position under Order IX, rules 6 and 7, and there, according to one set of (1) 5 I.A. 233.
3 18 views, the position is that once an ex parte "order" is "Passed" against a defendant he cannot take further part in the proceedings unless he gets that 'corder" set aside by showing good cause under rule 7.
But that is by no means the case.
If the defendant does not appear at the adjourned hearing (irrespective of whether or not he appeared at the first hearing) Order XVII, rule 2 applies and the Court is given the widest possible discretion either "to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit".
The point is this.
The Court has a discretion which it must exercise.
Its hands are not tied by the so called ex parte order; and if it thinks they are tied by Order IX, rule 7 then it is not exercising the discretion which the law says it should and, in a given case, interference may be called for.
The learned Judges who constituted a Full Bench of the Lucknow Chief Court (Tulsha Devi vs Sri Krishna(1) ) thought that if the original ex parte order did not enure throughout all future hearings it would be necessary to make a fresh ex parte order at each succeeding hearing.
But this proceeds on the mistaken assumption that an ex parte order is required.
The order sheet, or minutes of the proceedings, has to show which of the parties were present and if a party is absent the Court records that fact and then records whether it will proceed ex parte against him, that is to say, proceed in his absence, or whether it will adjourn the hearing; and it must necessarily record this fact at every subsequent bearing because it has to record the presence and absence of the parties at each hearing.
With all due deference to the learned Judges who hold this view, we do not think this is a grave or a sound objection.
A much weightier consideration is that the plaintiff may be gravely prejudiced in a given case because, as ,the learned Rajasthan Judges point out, and as O 'Sullivan, J. thought, when a case proceeds ex parte,the plaintiff does not adduce as much evidence as he would have if it had been contested.
He contents himself with leading just enough to establish a prima facie case.
Therefore, if he is suddenly confronted with a contest after he has closed his case and the defendant then comes forward with an army of witnesses he would be taken by surprise and gravely prejudiced.
That objection is, however, easily met by the wide discretion that is vested in the Court.
If it has reason to believe that the defendant has by his conduct misled the plaintiff into doing what these learned Judges apprehend, then it might be a sound exercise of discretion to shut out cross examination and the abduction of evidence on the defendant 's part and to allow him only to argue at the stage when arguments are heard.
On the other hand, cases may occur when the plaintiff is not and ought not to be, misled.
If these considerations are to weigh, then surely the sounder rule is to leave the Court with an unfettered discretion so that it can take every circumstance into consideration and do what seems best suited to meet the ends of justice in the case before it.
In the present case, we are satisfied that the Tribunal did not exercise its discretion because it considered that it had none and thought that until the ex parte order was set aside the defendant could not appear either personally or through counsel.
We agree with the Tribunal, and with the High Court, that no good cause was shown and so the defendant had no right to be relegated to the position that he would have occupied if he had appeared on 17 3 1953, but that he had a right to appear through counsel on 20 3 1953 and take part in the proceedings from the stage at which they had then reached, subject to such terms and conditions as the Tribunal might think fit to impose, is we think, undoubted.
Whether he should have been allowed to cross examine the three witnesses who were examined after the appearance of his counsel, or whether he should have been allowed to adduce evidence, is a matter on which we express no opinion, for that has to depend on whatever view the Tribunal in a sound exercise of judicial discretion will 20 choose to take of the circumstances of this particular case, but we can find no justification for not at least allowing counsel to argue.
Now the Tribunal said on 23 3 1953 "The exact stage at which the case had reached before us on the 21st of March 1953 was that under the clear impression that respondent No. 1 had failed to appear from the very first date of the final hearing when the ex parte order was passed, the petitioner must have closed his case after offering as little evidence as he thought was just necessary to get his petition disposed of exparte.
Therefore, to all the respondent No. 1 to step in now would certainly handicap the petitioner and would amount to a bit of injustice which we can neither contemplate nor con done".
But this assumes that the petitioner was misled and closed his case "after offering as little evidence as he thought was just necessary to get his petition disposed of ex parte".
It does not decide that that was in fact the case.
If the defendant 's conduct really gave rise to that impression and the plaintiff would have adduced more evidence than he did, the order would be unexceptional but until that is found to be the fact a mere assumption would not be a sound basis for the kind of discretion which the Court must exercise in this class of case after carefully weighing all the relevant circumstances.
We, therefore, disagreeing with the High Court which has upheld the Tribunal 's order, quash the order of the Tribunal and direct it to exercise the discretion vested in it by law along the lines we have indicated.
In doing so the Tribunal will consider whether the plaintiff was in fact misled or could have been misled if he had acted with due diligence and caution.
It will take in to consideration the fact that the defendant did enter an appearance and did file a written statement and that issues were framed in his presence; also that the case was fixed for the "Petitioner 's" evidence only and not for that of the appellant; and that the petitioner examined all the witnesses he had present on the 17th and the 18th and did not give up any of them; that he was given 21 an adjournment on 19 3 1953 for the examination witnesses who did not come on that date and that the examined three more on 20 3 1953 after the defendant had entered an appearance through counsel an( claimed the right to plead; also whether, when the appellant 's only protest was against the bearings a Udaipur on dates fixed for the petitioner 's evidence alone, it would be legitimate for a party acting with due caution and diligence to assume that the other side had abandoned his right to adduce his own evidence should the hearing for that be fixed at some other place or at some other date in the same place.
The Tribunal will also consider and determine whether it will be proper in the circumstances of this case to allow the appellant to adduce his own evidence.
The Tribunal will now reconsider its orders of the 20th, the 21st and the 23rd of March 1953 in the light of our observations and will proceed accordingly.
The records will be sent to the Election Commission with directions to that authority to reconstitute the Tribunal, if necessary, and to direct it to proceed with this matter along the lines indicated above.
There will be no order about costs.

summary:
Notwithstanding the provision in section 105 of the Representation of the People Act (Act XLIII) of 1951 that every order of an Election Tribunal made under the Act shall be final and conclusive, the High Court and the Supreme Court have unfettered jurisdiction to examine whether the tribunal, in the exercise of its undoubted jurisdiction, has acted legally or otherwise, This jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally.
The legality of an act or conclusion is something that exists outside and apart from the decision of an inferior tribunal.
It is a part of the law of the land which cannot be finally determined or altered by any tribunal of limited jurisdiction.
The High Courts and the Supreme Court alone can determine what the law of the land is vis a vis all other Courts and tribunals and they alone can pronounce with authority and finality on what is legal and what is not.
All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under Articles 226 and 136 of the Constitution.
The jurisdiction of the High Courts under Article 226, with that of the Supreme Court above them, re main it , fullest extent despite section 105 of the Representation 2 of the People Act.
Limitations on the exercise of, such jurisdiction can only be imposed by the Constitution.
The powers of the High Courts under Article 226 of the Constitution are discretionary and, though no limits can be placed upon that discretion, it must be exercised along recognised lines and not arbitrarily.
In the exercise of their jurisdiction under Article 226, the High Courts should not act as Courts of Appeal or revision to correct mere errors of law which do not occasion injustice in a broad and general sense.
It is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about special rights, as in election cases, decided as speedily as may be.
The High Courts should not therefore entertain petitions for prerogative writs lightly in this class of case.
The appellant filed an election petition under section 100 of the Representation of the People Act.
He appeared on the first and 'Subsequent hearing at Kotah.
The proceedings were then adjourned for certain hearings at Udaipur.
The appellant did not appear on the first three hearings at that place so the tribunal proceeded ex parte.
His counsel appeared on the fourth hearing but was not allowed to take any further part in the proceedings because no good cause was shown for the earlier non appearance and so the tribunal refused to set aside its "ex parte order".
Held, (1) Under section 90(2) of the Representation of the People Act the procedure for the trial of election petitions is to be, as near as may be, the same as in the trial of suits under the Civil Procedure Code; (2) under the Civil Procedure Code there is no such thing as an ex parte order for non appearance" which precludes further appearance at an adjourned hearing until the Order is set aside.
If a party appears at an adjourned hearing the court has a discretion (which must be exercised judicially) either to allow him to appear oil such terms as it thinks fit, or to disallow further appearance; but (3) if he is allowed to appear then, unless good cause is shown under Order 9, rule 7 for the earlier non appearance the proceedings must continue from the stage at which the later appearance is entered and the party so appearing cannot be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings; also, (4) in exercising its discretion the court must see that justice is done to all concerned, including the witnesses Rule 6 (1) (a) of Order 9 of the Civil Procedure Code is confined to the first hearing of the suit and does not apply, per se to subsequent hearings.
0. 9, r. 7 gives a party a right to be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings if he shows good cause.
It does not per se prevent further appearance when no good cause is shown.
O. 17, r. 2 applies at the adjourned hearing and there, the Court is given a wide discretion to make such order as it thinks fit.
3 A code of procedure is a body of law designed to facilitate justice and further its ends, and should not be treated as an enactment providing for punishments and penalties.
The laws of procedure are grounded on the principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.
Subject to clearly defined exceptions the laws of procedure should be construed wherever reasonably possible, in the light of that principle.
The court is invested with the widest possible discretion to see that justice is done to all concerned.
No hard and fast rule can be laid down; and the court in the exercise of its judicial discretion will have, in a given case, to determine what consequences are to follow from non appearance.
An order awarding costs, or an adjournment, or the consideration of the written statement and the framing of the issues on the spot, can in some cases meet the ends of justice.
In other cases, more drastic action may be called for.
By "ends of justice" is meant not only justice to the parties but also to witnesses and others who may be inconvenienced.
The convenience of the witnesses, which deserves the greatest consideration, is ordinarily lost sight of in this class of case.
Justice strongly.
demands that this unfortunate section of the general public com pelled to discharge public duties, usually at loss and inconvenience to themselves should not be ignored in the over all picture of what will best serve the ends of justice; and it may well be a sound exercise of discretion in a particular case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross examine them.
But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford the parties a real opportunity of fighting out their cases fairly squarely.
The Court must in every case exercise the discretion given to it.
Its hands are not tied by a so called "ex parts order", and, if it thinks they are tied by rule 7 of Order 9 of the Code, then it is not exercising the discretion which the law says it should, and in a given case interference may be called for.
Held, that the Election Tribunal did not exercise the discretion given to it by law because of a misapprehension that it had none.
It was directed to do so now and to proceed with the further hearing of the case in accordance with law.
Hari Vishnu vs Ahmed Ishaque ([1955] 1 S.C.R. 1104), Darga Shankar Mehta vs Thakur Raghuraj Singh ([1955] 1 S.C.R. 267), and Raj Krushna Bose vs Binod Kanungo ([1954] S.C.R. 913, 918), applied.
Hariram vs Pribhdas (A.I.R. 1945 Sind 98, 102), distinguished.
Sewaram vs Misrimal (A.I.R. , 14), overruled.
Venkatasubbiah vs Lakshminarasimham (A.I.R. , approved Balakrishna Udayar vs Vasudeva Ayyar (I.L.R. , 4 T. M. Barret vs African Products Ltd. (A.I.R. 1928 P.C. 261, 262) and Sahibzada Zeinitlabdin Khan vs Sahibzada Ahmed Baza Khan (5 I.A. 233, 236), applied.
Case remitted to, the Tribunal:


judgement:
ivil Appeal No. 617 (NL) of 1975.
From the Judgment and Order dated 4.12.1973 of the Madhya Pradesh High Court in Misc.
Petition No. 713 of 1971.
M.K. Ramamurthy, Vineet Kumar and N.D.V. Raju for the Appellant.
G.B. Pai, S.K. Gambhir, Ashok Mahajan and Ms. section Kirpalani for the Respondents.
The Judgment of the Court was delivered by KHALID, J.
This is an appeal by certificate, issued by the High Court of Madhya Pradesh under Article 133(1) of the Constitution of India against the Judgment of a Division Bench of that Court setting aside the Order passed by the Labour Court, Ujjain, confirmed in revision by the Industrial Court, Madhya Pradesh, allowing an application filed by the appellant under Section 31 of the Madhya Pradesh Industrial Relations Act, 1960 (hereinafter referred to as the Act) in which he had challenged his termination which challenge was accepted and his reinstatement was ordered.
The facts in brief, necessary for disposal of this appeal are as follows: 2.
The appellant was appointed as Store Keeper Cum Accountant on 14.2.1957, in the Madhya Pradesh Khadi and Village Industries Board, Budhwara, Bhopal.
This Board is a body corporate constituted under the M.P. Khadi and Village Industries Act 1959 and is engaged among others, in activities of encouraging production of Khadi and helping other village industries.
It has 644 different branches in the State of Madhya Pradesh.
One such centre was established at Berdi in Chhindwara district.
The Board supplied raw wool to the Co optative Societies and after getting them woven by the societies into blankets, received back blankets as finished goods.
m e services of the appellant were terminated as per Order dated 23.9.1964, after giving one month 's notice.
He challenged this Order of termination as one amounting to retrenchment, and having been passed without complying with the provisions of the Act that govern his relationship with the Board.
He stated that a charge sheet was given to him on 27.4.1964, based on false and baseless grounds and that there was no enquiry held into the said charges before his removal.
The appellant thereupon moved the Labour Court at Ujjain on 7.6.1975, for his reinstatement with full wages.
The Board contested the application contending inter alia that the Board was not an industry and that neither the M.P. Industrial Relations Act, 1960 nor the applied to it.
The Labour Court, Ujjain framed necessary issues on the rival contentions and after recording evidence, held that the termination of the appellant amounted to retrenchment, set aside the Order of termination and directed the Board to reinstate him with half salary front the date of the Order till reinstatement.
Aggrieved by this Order the Board preferred a revision before the Industrial Court in Madhya Pradesh, Indore, repeating the contentions raised before the Labour Court.
m e Industrial Court by its order dated 3.2.1967, affirmed the order of the Labour Court and dismissed the revision petition.
The Board pursued the matter further by moving the Madhya Pradesh High Court by a petition under Article 226 and 227 of the Constitution of India.
The High Court by its order dated 19.12.1969, allowed the Writ Petition, quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh with due regard to the relevant provisions of the M.P. Industrial Relations Act, 1960.
After remand, the Industrial Court proceeded to decide the question itself after taking fresh evidence and again held in favour of the appellant and against the Board, reaffirming its previous decision to reinstate the appellant.
The matter was taken to the High Court again by the Board by means of a Writ Petition.
The High Court set aside the orders of the Industrial Court and the Labour Court, on the ground that they acted without jurisdiction.
However, since the 645 High Court felt that the matter was not free from doubt and was debatable, granted certificate to the appellant to appeal to this Court.
It is thus that the matter is before us.
In the State of Madhya Pradesh there is a separate Act to regulate the relations of employees in certain matters and to make provisions for settlement of industrial disputes and other connected matters.
mis Act is called the Madhya Pradesh Industrial Relations Act, 1960.
Section 2 (19) defines Industry as under: Industry means (a) any business, trade, manufacture, undertaking or calling of employers; (b) any calling, service, employment, handicraft or industrial occupation or a vocation of employees; and Includes (i) agriculture and agricultural operations; (ii) any branch of any industry or group of industries which the State Government may, by notification, declare to be an industry for the purposes of this Act.
Section 2 (33) defines undertaking as follows: "Undertaking means a concern in any industry .
Thus, any concern, to become an industry, has to satisfy the above definitions to attract the Provisions of the Act.
Such concerns have to satisfy another condition to attract the provisions of the Act and that is about the number of employees the concern employs.
This is provided in a Notification issued under the Act which reads as follows: No. 9952 XVI, dated 31st December, 1960.
In exercise of the powers conferred by `Sub Section (3) of Section 1 of the Madhya Pradesh Industrial Relations Act 1960 (No. 27 of 1960), the State Government hereby directs that all the provisions of the said Act other than section 1 and 112 thereof shall be into 646 force on 31st December, 1960, in respect of undertaking in the industries specified in the schedule below wherein the number of employees on any date during twelve months preceding or on the date of this notification or any day thereafter was or is more than one hundred : SCHEDULE 1.
Textile including cotton, silk, artificial silk staple fibre, jute and carpet.
. . . . . . . . . . . . . . . . . . . . " This notification, thus, makes the provisions of the Act applicable only to undertaking in the industries specified in the schedule, where the number of employees, on the date mentioned therein was or is more than 100.
We are concerned here only with item No. 1 in the schedule and therefore, have left out the other items.
Before considering the rival contentions raised before us, we may extract the relevant sections of the Act under which the Board was constituted, to understand the functions and duties of the Board.
For our purpose it is enough to quote Sections 14 (1) & 14 (2) (a) alone, Clause (b) to (m) are not necessary for the resolution of the dispute involved in this case and hence are omitted.
Functions of Board.
(1) It shall be the duty of the Board to organise, develop and regulate Khadi and Village Industries and perform such functions as the State Government may prescribe.
(2) Without prejudice to the generality of the provisions of the sub section (1) the Board shall also in particular discharge and perform all or any of the following duties and functions namely; (a) To start, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business." 647 With this background we will advert to the facts of the case.
8.The Board resisted the appellant 's case on two grounds (i) that it is not an industry within the meaning of the Act and (ii) that it does not employ more than 100 persons.
It is necessary to note at this stage that the Board had not originally urged any plea that it did not employ sufficient employees to attract the Act.
It was during the course of argument that this plea about the number of appointees was urged by the Board.
However, both the Labour Court and the Industrial Court considered the two jurisdictional questions as to whether the Board was an industry and as to whether it had employed more than 100 persons.
We have gone through the orders passed by the labour Court and the Industrial Court, carefully.
According to us a close examination of the evidence adduced in the case and the discussions bearing on them by the Labour Court in particular and the Industrial Court, admits of no doubt that the Board employed more than 100 persons.
For this purpose, we content ourselves by extracting the following paragraph from the order of the Labour Court while considering the first point namely whether the provisions of the Act are applicable to the Board. "Thus the applicant 's contention that the Parishad 's cloth weaving centres were in existence till 2 years before and his contention in respect of the number of workers engaged at Mandsaur, Gwalior, Anjad entries etc. have not been refuted by the nor applicant.
It is therefore concluded them at (sic) 60, 40, 4 & 3 workers were working at Parishad 's centres situated at Mandsaur, Gwalior, Anjad and Parsinga.
Besides this there were officials working at Chanderi & Maneshwar weaving centres.
The non applicant who is in possession of the records of appointment and who is also not disclosing the exact figures (of the workers), therefore the conclusions go against the non applicant.
This finding on the appreciation of the evidence given by the witnesses concludes the parties according to us, regarding the number of the employees employed by the Board.
Even so, when the matter went before the High Court, the High Court felt that the jurisdictional question was not properly considered by the Labour Court.
Therefore, in the first round the matter was remanded by the High Court, and the High Court made the following observations: 648 "The relevant notification applied the provisions of the Act to undertaking in the industries specified in the schedule wherein the number of employees, was or is more than one hundred.
Evidently, it had no application to smaller establishments of notified industries that employed less than 100 persons.
That being so, it is plain enough that the Courts below misdirected themselves by taking into account the total number of the employees of the Board without regard to the consideration whether they were employed or not in the establishment relating to textiles and the findings recorded by them on the jurisdictional facts do not bear examination and cannot be sustained.
Since the facts bearing on the question have not been properly ascertained it would be right to set aside the order of the Industrial Court and leave it to that Court to decide these facts afresh with due regard to all the relevant provisions of the M.P. Industrial Relations Act, 1960 and then to dispose of the claim made by the respondent 3 on merits.
We may, even at this stage, point out that the High Court could have set aside the order of the Labour Court and the Industrial Court, on the ground that the Board did not, according to it, satisfy the definition of industry without remanding the case to the Industrial Court to determine the number of employees.
We are making this statement in view of an objection taken by the appellant 's counsel before us that the respondent cannot, in this appeal, reagitate that question, he having been concluded by the remand order which was restricted only to the number of employees in the Board.
After remand, the Industrial Court considered the question again.
The Industrial Court understood the remand order and, according to us, rightly, as follows: "After the remand the parties have adduced evidence which is common in both cases.
The exact question I am called upon to answer is, the number of employees employed by the parishad in its textiles activity and not all other activities such as Oil, Paper Carpentry, Gur Tannery, Pottery etc.
me best evidence will be the record kept with the parishad.
The oral evidence will not be of much help, though it may have some additional value.
649 13.
After discussing the evidence in detail, the Industrial Court came to the conclusion thus: "For all these reasons, I hold that in the textile activity of the Board (parishad) the number of employees is or has been over and more than 100 from 1.12.59 to 31.12.60, vide Ex D/1 and, therefore the employees had a right to file the application under the Act.
The Industrial Court again held in favour of the appellant The matter went to the High Court again in the Second round, at the instance of the Board.
On the question of number of employees in the Board, in paragraphs 10 & 11 of the Judgment, the High Court observed thus: ".
Thus from the statement of this witness, there can be no doubt that there were more than 100 persons in all at the wool weaving centres in the State and at some of the centres the number was more than 100.
The witness further stated that there are 16 industries under the Board, such as Paper Industry, Soap Industry, Khadi Industry, Wool Industry and so on.
Similarly, in the connected case, namely M.P. No. 713 of 1971, in pursuance of the remand order, the statement of Gunadeo Patil (Petitioner 's Annexure F) and the other witness, Sadashiv Patil (Petitioner 's Annexure f/1) were recorded.
The statements of these two witnesses were similar to the statements in the main case.
(The High Court was dealing with the case of two employees in Misc.
Petition No. 712/1971 and 713/1971 and that is why mention is MADE about the connected case.) 15.
After holding thus, the High Court spent considerable part of the Judgment for considering the kindred question whether the board was an industry or not.
The appellant 's counsel raised an objection that it was not open to raise this question as it was covered by the remand order (which was confined only to the number of employees).
In our view, this objection is well founded and has to be upheld.
According to us, the appellant is entitled to succeed on this ground alone.
However, we would like to answer 650 the other question also for the purpose of completion of this Judgment and to set at rest possible future controversies on the subject .
The definition clause in the Act is far from satisfactory.
The definition of word 'industry ' in Section 2(19) and the word 'undertaking ' in Section 2(33) does not make happy reading but this unhappy phraseology need not vex us.
If from the evidence available, we can say, that the Board carries on trade or business, it would straightaway become an industry under the Act.
We have already seen that one of the functions of the Board is to support, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or BUSINESS.
What the Board does is to supply raw wool to Cooperative Societies, so that the Societies can engage themselves in useful work.
The Societies after weaving raw wool, convert them into spun blankets and supply them to the Board.
The blankets so spun are not the properties of the Societies.
They have to be given back to the Board.
The blankets so supplied from various centres to the Board, have necessarily to be sold in the open market.
This act of sale would clearly come within the definition of the word trade or business as contemplated in Section 2 (19) of the Act.
This finding of ours is supported by the evidence in the case also.
The appellant in his evidence stated that at the centre where he was posted, weaving of woolen blankets was done by the Societies and other centres constituted at various places and the woven blankets were supplied back to the Board.
Three witnesses were examined on behalf of the Board.
Choudhary, the first witness and Sh.
Patil the next witness, admitted that the spinning and weaving work of cotton and woolen cloth was got done by the Board through various Societies.
These two said witnesses admitted that the looms belonged to the Board and the Board supplied wool and other materials and implements and sold manufactured goods after obtaining them from the Societies.
They also made an important admission that the Society could not sell the goods prepared out of the wool supplied by the Board to anybody else.
The third witness also supported this case though differed from the second witness and stated that the Board extended marketing facilities to the Societies.
We thought it necessary to refer to the evidence in the case to disabuse an impression attempted to be created that the Board did not sell the blankets it got from the various societies spun out of the wool supplied to them.
There is a clear admission by one witness that the Societies cannot sell the blankets 651 prepared out of the wool supplied by the Board to any one else.
No argument is necessary to hold that the blankets received by the Board from various centres have only to be sold and not used by the Board for its own purpose.
this evidence the conclusion is irresistible that the Board engages itself in the business of selling blankets.
It has therefore to be held that the Board is an industry within the meaning of the Act.
The appellant is entitled to succeed on both the grounds.
We set aside the order passed by the High Court and restore the orders passed by the labour Court and the Industrial Court.
The appellant will get his cost from the first Respondent quantified at Rs. 2,500.
A.P.J. Appeal allowed.

summary:
The appellant was appointed as Store Keeper cum Accountant in one of the branches of the Madhya Pradesh Khadi and Village Industries Board, a body corporate constituted under the M.P. Khadi and Village Industries Act, 1959.
His services were terminated by an Order dated 23.9.1964 after giving one month 's notice.
The termination Was challenged before the Labour Court as amounting to retrenchment because it hat been passed without complying with provisions of the M.P. Industrial Relations Act, 1960, the charge sheet that was given to him on 27.4.1964 was based on false and baseless grounds and no enquiry was held prior to removal.
The appellant claimed reinstatement with full wages.
The Respondent Board contested the application contending that the Board was not an industry and that neither the M.P. Industrial Relations Act, 1960 nor the applied to it.
The Labour Court held that the termination of the services of the appellant amounted to retrenchment, set aside the Order of termination and directed reinstatement with half salary from the date of the Order till reinstatement.
The Board preferred a revision.
The Industrial Court affirm ed the order of the Labour Court and dismissed the revision petition.
642 The Board filed a petition under article 225 and 227.
The High Court allowed the writ petition, quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh.
The Industrial Court after taking fresh evidence, again held in favour of the appellant, reaffirming its previous decision to reinstate the appellant.
The Board again moved the High Court, which set aside the orders of the Industrial Court and the Labour Court on the ground that they acted without jurisdiction.
The appellant appealed to this Court by certificate which was resisted by the Board on two grounds: (i) that it is not an industry within the meaning of the Act and (ii) that it does not employ more than 100 persons.
Allowing the appeal of the appellant employee, ^ HELD: 1.
The order passed by the High Court is set aside and that of the Labour Court and the Industrial Court are restored.
[651 B C] 2.
The M.P. Industrial Relations Act, 1960 is a separate Act in the State of Madhya Pradesh to regulate the relations of employees in certain matters and makes provisions for settlement of Industrial disputes.
Any concern, to become an industry, has to satisfy the definitions of "industry" and "undertaking" as contained in sections 2(19) and 2(33) thereof.
Such concerns have to satisfy yet another condition to attract the provisions of the said Act which relates to the number of the employees the concern employs.
Notification No. 9952 XVI dated 31st December, 1960 issued under sub 8.
(3) of 8. 1 of the Act, makes the provisions of the Act applicable only to an undertaking in the industries specified in the Schedule wherein the number of the employees on any date during Twelve months preceeding or on the date of the notification or any day thereafter was or is more than one hundred.
In the instant case, the evidence on record admits of no doubt that the Board employed more than 100 persons.
[645 A H; 646 A 4; 647 C] 3.
One of the functions of the Board under 8.
14 of the M.P. Khadi and Village Industries Act 1959 is "to support, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business".
The evidence shows that the Board supplies raw wool to Co operative Societies, so 643 that the Societies can engage themselves in useful work.
The Society after weaving raw wool, convert them into spun blankets and supply them to the Board.
The blankets so spun are not the properties of the Societies.
They have to be given back to the Board.
The blankets so supplied from various centres to the Board, have necessarily to be sold in the open market.
This act of sale would clearly come within the definition of the word 'trade ' or 'business ' as contemplated in Section 2(19) of the Act.
m e conclusion is, therefore, irresistible that the Board engages itself in the business of selling blankets.
It has, therefore, to be held that the Board is an 'industry ' within the meaning of the Act.
[650 B D; 651 A B]