judgement:
Civil Appeal No. 763 of 963.
Appeal by special leave from the judgment and order dated March 30, 1961 of the Punjab High Court in Civil Appeal Writ No. 1100 of 1959.
Bishan Narain and R. N. Sachthey, for the appellant.
section N. Andley, for the respondent.
The Judgment of the Court was delivered by Gajendragadkar, C.J.
The short question of law which arises in this appeal relates to the construction of section 5(2) of the Punjab Cinemas (Regulation) Act, 1952 (No. 11 of 1952) (hereinafter called 'the Act ').
The respondent, Hari Krishan Sharma, who claims to be the owner of a certain site in the town of Jhajjar, desired to construct a cinema hall at the said place for the purpose of exhibiting cinematography.
On December 16, 1956, he submitted an application to appellant No. 2, the Subdivisions Officer, Jhajjar, for the grant of the licence to construct and run a permanent cinema hall on his site.
On February 22, 1957, appellant No. 2 forwarded the said application to the Tehsildar for inspection of the site.
It appears that on April 24, 1957, the Government of appellant No. 1, the State of Punjab, had issued instructions in regard to the grant of licences under the relevant provisions of the Act.
These instructions required that all requests for the grant of permission for opening all new permanent cinemas should be referred to appellant No. 1 for orders.
On September 26, 1957, the Tehsildar made a report that the site was in accordance with the provisions of the Act and that the respondent was its owner.
On September 30, 1957, another memorandum was issued by appellant No. 1 addressed to all the District Magistrates and the Sub Divisional Officers conveying the decision of appellant No. 1 that when an application for grant of permission to construct a permanent cinema was referred to the Government, it should be accompanied by the particulars enumerated in the memorandum.
Amongst the items thus enumerated were the population of the town where the permanent cinema is proposed to be constructed; whether there are any permanent cinemas already in existence in the town, and if so, how many; whether the applicant/applicants has/have been taking any part in any activity undermining the security of the State; and whether the financial position of the applicant/applicants is/are sound.
These notifications were issued by appellant No.1 8Sup.
CI/66 16 984 while the application made by the respondent was pending co; sideration.
On April 24, 1958, appellant No. 2 informed the respondent that the site proposed by him for the construction of the cinema hall had been approved.
The respondent was required to submit a plan of the building within a month and he was warned not to transfer the ownership of the site without the previous sanction of the licensing authority.
On May 23, 1958, the respondent submitted the building plans.
These plans were forwarded by appellant No. 2 to the Executive Engineer, Provincial Division, Rohtak, for scrutiny.
While forwarding the plans to the Executive Engineer, appellant No. 2 had stated that the respondent had been allowed to construct a permanent cinema hall at Jhajjar and the site plans were being submitted for proper scrutiny and approval at an early date.
Meanwhile, it appears that one Mohan Lal had also applied for grant of a licence for construction of a cinema hall in June, 1958, but he was informed that permission had already been granted to one person, and there was no scope for a second cinema hall.
That is why he was told that his application could not be considered.
Yet another person, Sultan Singh by name, made a similar application on August 26, 1958.
On October 7, 1958, the Provincial Town Planner, Punjab, wrote to the Executive Engineer that the building plans submitted by the respondent had been checked and they appeared to satisfy the rules framed under the Act so far as the structural features of the building were concerned.
On October 6, 1958, however, appellant No. 2 addressed a memorandum to the respondent informing him that the site plans prepared by him for the construction of a permanent cinema hall would be referred to appellant No. 1 for approval "according to the latest instructions".
Then followed a report made by appellant No. 2 to appellant No. 1 on October 31, 1958, mentioning all the relevant facts in regard to the application of the respondent, and adding that the report was forwarded to appellant No. I for its consideration.
On December 20, 1958, appellant No. 2 submitted another report to appellant No. 1 saying, inter alia, that it had been reported by the police that the respondent had been arrested in connection with "Save Hindi Agitation" and was discharged on tendering apology and that he did not pay any income tax.
On March 4, 1959, appellant No. 2 informed the respondent that his application had been rejected by appellant No. as the same did not fulfil the conditions laid down in the memorandum, dated 985 September 3 0, 1957.
It appears that appellant No. I had decided of grant the licence to Sultan Singh, and that probably is the reason why the application of the respondent was rejected.
On receiving this communication from appellant No. 2, the respondent preferred an appeal to appellant No. 1 under section 5(3) of the Act, but his appeal was rejected on April 14, 1959; and that drove the respondent to the High Court of Punjab to seek an appropriate relief under its jurisdiction under Article 226 of the Constitution.
In his petition, the respondent alleged that the order passed by appellant No. I rejecting his application for a licence under section 5 was illegal, arbitrary, capricious, oppressive, and without jurisdiction.
In support of his plea, the respondent had also alleged that in rejecting his application, appellant No. 1 had been influenced by extraneous considerations which had no relevance to the decision of the question as to whether a licence should be granted to him or not.
The suggestion made by the respondent was that appellant No. 1 wanted to prefer Sultan Singh to him for extraneous considerations, and that rendered the impugned order invalid.
On these allegations, the respondent claimed that a writ in the nature of certiorari be issued setting aside the said order, and directing the appropriate authority under section 5 of the Act to deal with the respondent 's application in accordance with law.
The appellants disputed the allegations made by the respon dent in his writ petition.
It was urged that appellant No. I had taken into account the relevant considerations prescribed by the instructions issued by it by virtue of its authority under section 5(2) of the Act, and had come to the conclusion that the respondent 's application could not be granted.
The plea made by the respondent that appellant No. I had been influenced by extraneous considerations, was denied.
On these pleas, the High Court was called upon to consider five issues.
The important ones amongst these issues were about the jurisdiction of appellant No. 1 to pass the order rejecting the respondent 's application for a licence, and about the invalidity of the order resulting from the fact that it was based on extraneous considerations.
The High Court has upheld the respondent 's contention on the first point, and has held that appellant No. I had no jurisdiction to deal with the matter as it has purported to do.
On that view, the High Court did not think it necessary to consider the other issues, particularly because "they involved questions of fact which are more or less disputed and on which 986 it will not be possible to come to any clear conclusion on the factual side".
In the result, the High Court has allowed the writ petition filed by the respondent and has directed the appellants to treat the order made by appellant No. as void, ineffective, invalid and of no binding effect.
In consequence, a writ of mandamus has also been issued requiring the licensing authority to deal with the respondent 's application in accordance with law.
It is against this order that the appellants have come to this Court by special leave and the only question which they have raised before us for our decision is whether the High Court was right in holding that appellant No. I had no jurisdiction to deal with the respondents application in the manner it has done under section 5(2) of the Act.
That is how the question about the construction of section 5(2) falls to be decided in the present appeal.
Before dealing with this question, we may very briefly indicate the effect of the broad provisions of the Act.
The Act was passed in 1952 in order to make provisions for regulating exhibitions by means of cinematography in the Punjab.
Section 3 of the Act provides that no person shall give an exhibition, by means of a cinematography, elsewhere than in a place licensed under this Act or otherwise than in compliance with any condition and restriction imposed by such licence.
Section 4 provides that the licensing authority under the Act shall be the District Magistrate.
The proviso to this section authorises the Government, by notification, to constitute for the whole or any part of the State, such other authority as it may specify therein, to be the licensing authority for the purposes of the Act.
It is common ground that appellant No. 2 has been constituted a licensing authority for the area with which we are concerned in the present appeal.
That takes us to section 5 which must be read "5.
(1) The licensing authority shall not grant a licence under this Act unless it is satisfied that (a) the rules made under this Act have been complied with; and (b) adequate precautions have been taken in the place, in respect of which the licence is to be given, to provide for the safety of the persons attending exhibitions therein.
(2) Subject to the foregoing provisions of this section and to the control of the Government, the licensing authority may grant licences under this Act to such 987 persons as it thinks fit, on such terms and conditions as it may determine.
(3) Any person aggrieved by the decision of the licensing authority refusing to grant a licence under this Act may, within such time as may be prescribed, appeal to the Government or to such officer as the Government may specify in this behalf and the Government or the officer, as the case may be, may make such order in the case as it or he thinks fit".
Sub section
(4) of section 5 authorises the Government to issue directions to licensees generally or to any licensee in particular for the purpose specified by it.
Section 6 confers powers on Government or local authority to suspend exhibition of films in certain cases; and section 7 prescribes penalties.
Section 8 empowers the State Government or the licensing authority to suspend, cancel or revoke a licence granted under section 5, on one or more of the grounds indicated by clauses (a) to (g) of sub section
The other sub sections of section 8 prescribe the procedure which has to be followed in exercising the powers conferred by sub section
Section 9 confers on the Government the power to make rules by a notification; this power can be exercised for any of the purposes mentioned in clauses (a), (b) & (c) of the said section.
Section 10 gives power to the State Government to exempt any cinematograph exhibition or class of cinematograph exhibitions from the operation of any of the provisions of the Act; and section 1 1 provides that the (No. 11 of 1918) in so far as it relates to matters other than the sanctioning of cinematograph films for exhibition, is hereby repealed.
There is a proviso to this section with which we are not concerned in the present appeal.
That, broadly stated, is the scheme of the Act.
There are two Central Acts dealing with the same subject.
The first one is Act II of 1918 which, as we have seen, is repealed in the manner prescribed by section 1 1 of the Act so far as the Punjab is concerned.
Section 5 of this Act corresponds generally to section 5 of the Act.
The Central Act II of 1918 has been subsequently repealed by Central Act 37 of 1952.
Section 12 of this latter Act corresponds generally to section 5 of the Act.
The question which we have to decide in the present appeal lies within a very narrow compass.
What appellant No. 1 has done is to require the licensing authority to forward to it all applications received for grant of licences, and it has assumed power and authority to deal with the said applications on the merits for itself in the, first instance, Is appellant No. 1 justified in 988 assuming jurisdiction which has been conferred on the licensing authority by section 5(1) and (2) of the Act ? It is plain that section 5(1) and (2) have conferred jurisdiction on the licensing authority to deal with applications for licences, and either grant them or reject them.
In other words, the scheme of the statute is that when an application for licence is made, it has to be considered by the licensing authority and dealt with under section 5(1) and (2) of the Act.
Section 5(3) provides for an appeal to appellant No. 1 where the licensing authority has refused to grant a licence; and this provision clearly shows that appellant No. 1 is constituted into an appellate authority in cases where an application for licence is rejected by the licensing authority.
The course adopted by appellant No. 1 in requiring all applications for licences to be forwarded to it for disposal, has really converted the appellate authority into the original authority itself, because section 5(3) clearly allows an appeal to be preferred by a person who is aggrieved by the rejection of his application for a licence by the licensing authority.
It is, however, urged by Mr. Bishan Narain for the appellants that section 5(2) confers very wide powers of control on appellant No. 1 and this power can take within its sweep the direction issued by appellant No. I that all applications for licences should be forwarded to it for disposal.
It is true that section 5(2) provides that the licensing authority may grant licences subject to the provisions of section 5(1) and subject to the control of the Government; and it may be conceded that the control of the Government subject to which the licensing authority has to function while exercising its power under section 5(1) and (2), is very wide; but however wide this control may be, it cannot justify appellant No. 1 to completely oust the licensing authority and itself usurp his functions.
The Legislature contemplates a licensing authority as distinct from the Government.
It no doubt recognises that the licensing authority has to act under the control of the Government; but it is the licensing authority which has to act and not the Government itself.
The result of the instructions issued by appellant No. 1 is to change the statutory provision of section 5(2) and obliterate the licensing authority from the Statute book altogether.
That, in our opinion, is not justified by the provision as to the control of Government prescribed by section 5(2).
The control of Government contemplated by section 5(2) may justify the issue of general instructions or directions which may be legitimate for the purpose of the Act, and these instructions and directions may necessarily guide the licensing authority in dealing with applications for licences.
The said control may, therefore, take the form of the issuance of general directions and instructions 989 which are legitimate and reasonable for the purpose of the Act.
The said control may also involve the exercise of revisional power after an order has been passed by the licensing authority.
It is true that section 5(2), in terms, does not refer to the revisional power of the Government; but having regard to the scheme of the section, it may not be unreasonable to hold that if the Government is satisfied that in a given case, licence has been granted unreasonably, or contrary to the provisions of section 5(1), or contrary to the general instructions legitimately issued by it may suo moto exercise its power to correct the said order by exercising its power of control.
In other words, in the context in which the control of the Government has been provided for by section 5(2), it would be permissible to hold that the said control can be exercised generally before applications for licences are granted, or particularly by correcting individual orders if they are found to be erroneous; but in any case, Government has to function either as an appellate authority or as a revisional authority, for that is the result of section 5(2) and (3).
Government cannot assume for itself the powers of the licensing authority which have been specifically provided for by section 5(1) and (2) of the Act.
To hold that the control of the Government contemplated by section 5(2) would justify their taking away the entire jurisdiction and authority from the licensing authority, is to permit the Government by means of its executive power to change the statutory provision in a substantial manner; and that position clearly is not sustainable.
Section 5(3) provides for an appeal at the instance of the party which is aggrieved by the rejection of its application for the grant of a licence.
No appeal is provided for against an order granting the licence; but as we have just indicated, in case it appears to the Government that an application has been granted erroneously or unfairly, it can exercise its power of control specified by section 5(2) and set aside such an erroneous order, and that would make the provision as to appeal, or revision self contained and satisfactory.
The scheme of the Act clearly indicates that there are, two authorities which are expected to function under the Act the licensing authority, as well as the Government.
Section 8 is an illustration in point.
It empowers the State Government or the licensing authority to suspend, cancel or revoke a licence on the grounds specified by it; and that shows that if a licence is granted by the licensing authority, it has the power to suspend, cancel or revoke such a licence just as Government has a similar power to take action in respect of the licence already granted.
We are, therefore, satisfied that the High Court was right in coming to the conclusion that appellant No. 1 had no authority or power to 990 require all applications for licences made under the provisions of the Act to be forwarded to it, and to deal with them itself in the first instance.
Section 5 clearly requires that such applications must be dealt with by the licensing authorities in their respective areas in the first instance, and if they are granted, they may be revised by Government under section 5(2); and if they are rejected, parties aggrieved by the said orders of rejection may prefer appeals under section 5(3) of the Act.
The basic fact in the scheme of the Act is that it is the licensing authority which is solely given the power to deal with such applications in the first instance, and this basic position cannot be changed by Government by issuing any executive orders or by making rules under section 9 of the Act.
It appears that this question has been considered by the Andhra Pradesh, and the Rajasthan High Courts and they have taken the view that the Government can, by virtue of the power of control, deal with the applications for licences themselves in the first instance lvide Karnati Rangaiah vs A. Sultan Mohiddin and Brothers, Tadipatri & Ors.(1) and M/s. Vishnu Talkies vs The State & Others(1) respectively.] We are satisfied that this view does not correctly represent the true legal position under the relevant provisions of the Acts prevailing in the two respective States.
In Bharat Bhushan vs Cinama and City Magistrate & Anr.
(3 ) also, the powers of the State Government under section 5(3) of the , have been similarly construed and that again, in our opinion, cannot be said to be right.
In dealing with the question about the scope and effect of the power of control conferred on the State Government, the Allahabad High Court has taken the view that the power of control which has been conferred on the State Government by section 5 (2) is wide enough to enable the State Government to revise an order passed by a licensing authority granting a licence.
This observation, in our opinion, correctly represents the true scope and effect of the power of control conferred on the State Government.
The result is, the appeal fails and is dismissed with costs.
Appeal dismissed.
(1) Al.
R. (2) Raj.
(3) A.I.R. 1956 AU.

summary:
The second appellant the Sub divisional Officer had been constituted as the licensing authority, under section 4 of the Punjab Cinemas (Regulation) Act, 1952, for the area concerned in the present case.
The respondent made an application to him for a licence to construct a permanent cinema hall.
Pending the application, instructions were issued by the first appellant the State Government that all such applications for licence shall be forwarded to the State Government for orders accompanied with certain particulars regarding the applicant.
The second appellant forwarded the respondent 's application with the relevant facts to the first appellant and the first appellant rejected the application.
The respondent 's appeal to the first appellant under section 5(3) of the Act was also rejected.
The respondent then moved the High Court under article 226 and the High Court held that the first appellant had no authority or power to require all applications for licences under the Act to be forwarded to it and to deal with them itself.
In appeal to this Court, the first appellant contended that it had jurisdiction to deal with the application because section 5(2) of the Act conferred very wide powers of control on it and that the power took within its sweep the directions issued by it.
HELD : The scheme of the Act indicates that there are two authorities which are expected to function under the Act the licensing authority as well as the State Government.
The basic fact in the scheme is that it is the licensing authority which is solely given the power to deal with the applications for licence in the first instance, and this basic position cannot be changed by the State Government by issuing any executive orders or by making rules under section 9 of the Act.
[989 G; 990 B C] The control of the State Government under section 5(2) subject to which the licensing authority has to function is very wide; but however wide this control may be, it cannot justify the State Government to completely oust the licensing authority and itself usurp its functions.
The licensing authority has to act under the control of the State Government, but it is the licensing authority which has to act and not the Government itself.
The said control can be exercised generally before applications are granted by issuing general instructions which are legitimate and reasonable for the purpose of the Act, or particularly by correcting individual orders granting licences if they are found to be erroneous, but in any case the State Government has to function either as an appellate authority under section 5(3) or as a revisional authority under section 5(2), but it cannot assume for itself the powers of the licensing authority.
[988 H 989 E] Karnati Rangaiah vs A. Sultan Mohiddin, A.I.R. 1957 A.P. 513, M/s.
Vishnu Talkies vs The State, Rai.
14 and Bharat Bhushan vs Cinema and City Magistrate, A.I.R. 1956 All.
99, overruled.


judgement:
Appeal No. 804 of 1963.
Appeal by special leave from the judgment and decree, dated January 3, 1961 of the Orissa High Court in Appeal under Orissa High Court Order No. 3 of 1959.
25 K. R. Chaudhuri, for the appellant.
C. B. Aggarwala, B. Parthasarathy, J. B. Dadachanji, O.C. Mathur, and Ravinder Narain, for respondent No. 1.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by special leave on behalf of the judgment debtor against the judgment of the Orissa High Court, dated January 3, 1961 in Letters Patent Appeal No. 3 of 1959.
The deceased plaintiff filed Original Suit No. 500 of 1941 against the appellant defendant in the Court of the Additional Munsif, Aska claiming Rs. 970 on the basis of a promissory note.
The suit was dismissed on August 17, 1942.
The plaintiff preferred an appeal No. 178 of 1942 before the District Judge who allowed the appeal and set aside the decree of the Munsif and decreed the suit ex parte on March 9, 1943.
Against this decree of the appellate Court, the appellant filed Second Appeal No. 100 of 1943 in the Orissa High Court which set aside the decree of the District Judge on November 11, 1946 and remanded the suit to the lower appellate court for disposal.
The lower appellate court in its turn remanded the suit to the trial court by its judgment, dated April 11, 1947.
In the meantime the original plaintiff died and the present respondents were brought on record as his legal representatives.
The suit was again dismissed by the trial court on November 29, 1947 but on appeal the Additional Subordinate Judge set aside the judgment and decree of the Munsif on November 30, 1948.
The appellant carried the matter in Second Appeal No. 12 of 1949 to the Orissa High Court which dismissed the appeal on August 27, 1954.
After the ex parte decree was passed inappeal No. 178 of 1942 by the District Judge on March 9,1943, the plaintiff executed the decree, attached the propertiesin dispute and himself purchased the properties in Court auction.
The plaintiff also took delivery of the properties on May 17, 1946 and since that date the respondents have been in possession of the properties and enjoying the usufruct.
After the decree of the High Court, dated November 11.
1946 in Second Appeal No. 100 of 1943 the appellant made an application for restitution in the Court of the Additional Munsif in Miscellaneous Judicial Case No. 34 of 1947.
The plaintiff obtained a stay of the hearing of the Miscellaneous Judicial Case from the Court of the Additional District Judge but on March 30, 1948 the order of stay was discharged.
In Civil Revision No. 75 sup, Cl/66 3 2 6 of 1948 the High Court also granted interim stay in the proceedings in the Miscellaneous Judicial Case at the instance of the plaintiff but the order of stay was vacated by the High Court on April 28, 1949.
Thereafter the present appellant got the Miscellaneous Judicial Case stayed till disposal of his Second Appeal after remand.
On July 12, 1956 the Miscellaneous Judicial case was allowed by the Munsif and an order of restitution was made in favour of the appellant.
The respondents filed an appeal before the Subordinate Judge of Berhampur who allowed the appeal and set aside the order of restitution.
The appellant took the matter before the High Court in Miscellaneous Appeal No. 24 of 1958 which was allowed by P. V. Balakrishna Rao, J. on October 3, 1958 and it was ordered that the restitution of the properties should be made to the appellant subject to the condition that he must deposit the amount decreed in favour of the plaintiff decree holder.
The order of the learned Single Judge was, however, set aside in Letters Patent appeal by a Division Bench which held that the appellant was not entitled to restitution of properties sold in the execution case.
The question presented for determination in this case is whether the appellant was entitled to restitution of his properties purchased by judgment debtor in execution of the decree passed by the District Judge on the ground that the decree was set aside by the High Court and the suit was remanded for rehearing and fresh disposal under the provisions of section 144 of the Civil Procedure Code which states as follows 144 (1) Where and in so far as a decree or order is varied or reversed, the Court of first instance shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree or such part thereof as has been varied or reversed; and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation or reversal.
" On behalf of the responds Mr. aggarwala made the submission that after the suit was re heard a decree was passed in favour of the respondents and that decree was eventually affirmed by the High Court., and the appellant was, therefore, not entitled to 27 restitution under the provisions of this section.
We are unable to accept this argument as correct.
The properties of the appellant were sold in execution at the instance of the respondents who were executing the ex parte decree passed by the District Judge on March 9, 1943.
In this execution case, the properties of the appellant were sold and the respondents got delivery of possession on May 17, 1946.
It is true that the suit was eventually decreed after remand on August 27, 1954 by judgment of the High Court, but we are unable to accept the argument of the respondents that the execution sale held under the previous ex parte decree which was set aside by the High Court, is validated by the passing of the subsequent decree and therefore the appellant is not entitled to, any restitution.
It is evident that the application for restitution was filed by the appellant in 1947 in Miscellaneous Judicial Case, No. 34 of 1947 before the passing of a fresh decree by the High Court in the Second Appeal.
At the time of the application for restitution, therefore, the appellant was entitled to restitution,.
because on that date the decree in execution of which the properties.
were sold had been set aside.
We are of the opinion that the appellant is entitled to restitution notwithstanding anything which happened subsequently as the right to claim restitution is based upon the existence or otherwise of a decree in favour of the plaintiff ' at the time when the application for restitution was made.
The principle of the doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost.
This obligation arises automatically on the reversal or modification of the decree and ' necessarily carries with it the right to restitution of all that has been done under the erroneous decree; and the Court in making restitution is bound to restore the parties, so far as they can berestored, to the same position they were in at the time when the Court by its erroneous action had displaced them from.
It should be noticed, in the present case, that the properties were purchased ' by the decree holder himself in execution of the ex parte decree and not by a stranger auction purchaser.
After the ex parte decree was set aside in appeal and after a fresh decree was passed on remand, the sale held in execution of the ex parte decree becomes invalid and the decree holder who purchased the properties in executions of the invalid decree is bound to restore to the judgment debtor what he had gained under the decree which was subsequently set aside.
The view that we have expressed is borne out by the decision of the Judicial Committee in Zain Ul Abdin Khan vs 28 Muhammad Asghar Ali Khan(1) in which a suit was brought by the judgment debtor to set aside the sale of his property in execution of the decree against him in force at the time of the sales, but afterwards so modified, as the result of an appeal to Her Majesty in Council, that, as it finally stood, it would have been satisfied without the sales in question having taken place.
The judgmentdebtor sued both those who were purchasers at some of the sales, being also holders of the decree to satisfy which the sales took place, and those who were bona fide purchasers at other sales, under the same decree, who were no parties to it.
The Judicial Committee held that, as against the latter purchasers, whose position was different from that of the decree holding purchasers, the suit must be dismissed.
At page 172 of the Report, Sir B. Peacock observed as follows "It appears to their Lordships that there is a great distinction between the decree holders who came in and purchased under their own decree, which was afterwards reversed on appeal, and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, and at a time when that decree was a valid decree, and when the order for the sale was a valid order." The same principle has been laid down by the Calcutta High Court in Set Umedmal and another vs Srinath Ray and another (2 ) where certain immovable properties were sold in execution of an exparte decree and were purchased by the decree holder himself.
After the confirmation of the sale, the decree was set aside under section 108 of the Civil Procedure Code, 1882 at the instance of some of the defendants in the original suit.
On an application unders.
244 of the Civil Procedure Code, 1882 having been made by adecree, to set aside the sale held in execution of the ex parte decree the defence was that the application could not come under section 244 of the Civil Procedure Code, 1882, and that the sale could not be set aside, as it had been confirmed.
It was held by the Calcutta High Court that the ex parte decree having been set aside the sale could not stand, inasmuch as the decree holder himself was the purchaser.
At page 813 Maclean, C.J. stated : "As regards the second point, viz., whether, notwithstanding the confirmation, the sale ought to be set aside, (1) I.L,R. 10 All, 166.
(2) I.L.R. 29 the fact that the decree holder is himself the auction purchaser is an element of considerable importance.
The distinction between the case of the decree holder and of a third party being the auction purchaser is pointed out by their Lordships of the Judicial Committee in the case of Nawab Zainal abdin Khan vs Mahommed Asghar Ali (I.L.R. 10 All., 166), and also in the case of Mina Kumari Bibee vs Jagat Sattani Bibee (I.L.R. , which is a clear authority for the proposition that where the decree holder is himself the auction purchaser, the sale cannot stand, if the decree be subsequently set aside.
I am not aware that this decision, which was given in 1883, has since been impugned.
" The same view has been expressed in Raghu Nandan Singh vs Jagdish Singh(1) where it was held that if an ex parte decree has been set aside, it cannot by any subsequent proceeding be revived and if a decree is passed against judgment debtors on re hearing, it is a new decree and does not revive the former decree.
The same opinion has been expressed in Abdul Rahaman vs Sarafat Ali(2) in which it was pointed out that as soon as an ex parte decree was set aside, the sale, where the decree holder was the purchaser, falls through and was not validated by a fresh decree subsequently made.
The same principle was reiterated by the Bombay High Court in Shivbai Kom Babya Swami vs Yesoo.(3).
In that case, an ex parte decree was passed against the defendant, in execution of which the defendant 's house was sold and purchased by the plaintiff decree holder.
The ex parte decree was subsequently set aside; but at the retrial, a decree was again passed in plaintiffs favour.
In the meanwhile, the defendant applied to have the sale of the house set aside.
It was held, in these circumstances, by the Bombay High Court that the previous sale of the house in execution under the previous decree which had been set aside should itself be set aside as being no longer based on any solid foundation; but subject in all the circumstances to the condition that the defendant should pay up the amount due under the second decree within a specified time.
On behalf of the respondents reference was made to the decision of this Court in Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das.
(4 ) But the ratio of that case has no application to the present case.
It should be noticed that the decree in that case was affirmed at all stages of the litigation except that the amount of (1) 14 Calcutta Weekly Notes, 182.
(3) I.L.R. (2) 20 Calcutta Weekly Notes, 667.
(4) 30 the decree was slightly altered from Rs. 3,38,300 and odd to Rs. 3,76,790 and odd which amount was ultimately decreed by the Privy Council in the appeal which the judgment debtor preferred from the decision of the Oudh Chief Court which restored the decree of the trial Judge who decreed a sum of Rs. 3,88,300.
It was held by this Court that the Privy Council had merely restored the amended decree without altering the provisions as to payment by instalments or extending the time for payment by instalments and its decree did not in any way alter the position of the parties as it stood under the amended decree, and, the sale was not in consequence of any error in a decree which was reversed on appeal by the Privy Council and so the judgment debtor was not entitled to restitution.
In the present case the material.facts are manifestly very different.
For the reasons expressed, we are satisfied that the appellant is entitled to restitution of the properties sold in execution of the export decree subject to equities to be adjusted in favour of the respondent decree holders.
We order that the appellant should be restored back to possession of the properties sold in the execution case subject to the condition that he deposits the amount of Rs. 970 in the Court of the Munsif, Aska within two months from this date.
If no deposit is made within this time this appeal will stand dismissed with costs.
But if the appellant makes the deposit within the time allowed the sale of the properties in the execution case will be set aside and the respondents will make over the possession of the properties sold to the appellant.
The appellant will not be entitled to any past mesne profits but if the respondents do not deliver the possession of the properties the appellant will be entitled to the future mesne profits from the respondents from the date of deposit till the actual date of delivery of possession.
Learned Counsel for the appellant has informed us that the deposit has already been made by the appellant in pursuance of the order of the learned Single Judge of the High Court, dated October 3, 1958.
If the deposit has already been made the appellant will be entitled to take possession of the properties through the executing court and to future mesne profits from the date of this judgment till the actual date of delivery of possession.
We accordingly allow the appeal to the extent indicated above.
In the circumstances of the case we do not propose to make any order as to costs.
Appeal allowed in part.

dataset_name: IN-Abs

summary:
A money suit against the appellant was dismissed by the trial court but the first appellate court passed an ex parte decree against him.
The appellant 's property was sold in execution and purchased by the decreeholder.
The appellant went to the High Court which set aside the exparte decree and remanded the suit.
The appellant then filed an appli cation for restitution under section 144 of the Code of Civil Procedure.
It was stayed pending proceedings in the main suit. 'Me suit was finally decided against the applicant, by the High Court.
Thereafter the trial court allowed the appellant 's application for restitution.
After intermediate proceedings the High Court decided in Letters Patent Appeal that the appellant was not entitled to restitution.
He appealed to this Court by special leave.
HELD: The application for restitution was filed by the appellant before the passing of a fresh decree by the High Court in second appeal.
At the time of the application therefore the appellant was entitled to restitution because on that date the decree in execution of which the properties were sold had been set aside.
The appellant was therefore entitled to restitution notwithstanding anything which happened subsequently.
[27 C E] The principle of the doctrine of restitution is that on the reverse of a decree the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost.
The Court in making restitution is bound to restore the parties so far as they can be restored to the same position they were in at the time when the Court by its erroneous action had displaced them from.
[27 E F] Zainal Abdin Khan vs Muhammad Asghar All Khan, I.L.R. 10 All 166, relied on.
Set Umedmal & Anr.
vs Srinath Ray & Anr.
I.L.R. 27 Cal.
810, Raghu Nandan Singh vs Jagdish Singh, , Abdul Rahaman vs Sarafat Ali, and Shivbai Kom Babya Swam vs Yesoo, I.L.R. , referred to.
Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das, , distinguished.


judgement:
Appeal Nos.
86 to 89 of 1965.
Appeals by special leave from the judgment and order, dated October 17, 1963 of the Allahabad High Court in section T. Ref.
No. 109 of 1956.
A. V. Viswanatha Sastri and B. N. Kripal, for the appellant.
N. D. Karkhanis and O. P. Rana, for the respondent, K. K. Jain, for intervener.
The Judgment of the Court was delivered by Sikri, J.
These four appeals by special leave are directed against the judgment of the Allahabad High Court in a Sales Tax Reference made by the Judge (Revisions), Sales Tax, Uttar Pradesh, Lucknow, on being directed to do so by the High Court under section 11 of the Uttar Pradesh Sales Tax Act, 1948, hereinafter referred to as the Act.
The question referred was as follows : "Whether in law the revising authority was right in holding that the sales in dispute were not for delivery outside Uttar Pradesh and that the applicant Was not entitled to a rebate under sec.
5 of the Act.
" The question was referred in the following circumstances.
The appellant, hereinafter referred to as the assessee mills, carries on the business of manufacturing and selling sugar and is registered as a dealer under the provisions of the Act.
During the previous year relevant to the Assessment Year 1948 49, the assessee company had sold sugar to parties who carried on business outside Uttar Pradesh and also delivered the same outside Uttar Pradesh.
It also sold sugar to parties who carried on business inside Uttar Pradesh but the sugar was despatched to stations outside Uttar Pradesh in compliance with the instructions issued by the buyers.
The assessee mills submitted an application.under section 5 of the Act in form VII, prescribed by, the Uttar Pradesh Sales Tax (Temporary) Rules, 1948, claiming 50% rebate on the sales of sugar delivered outside Uttar Pradesh.
The Sales Tax Officer allowed rebate in respect of the sales of sugar to parties who carried on business outside Uttar Pradesh but rejected the claim for the sales which were made to parties carrying on business inside Uttar Pradesh.
In respect of the assessment year 1948 49 there were four assessment orders covering each quarter of the year,, the, 47 first quarter being April 1948 to July 1948.
Section 5 of the Act reads as follows "Sales of certain goods for delivery outside the State In respect of such manufactured goods as may be notified by the State Government and subject to such restrictions and conditions as may be prescribed, a rebate of one half of the tax levied on sales of such goods for delivery outside the Uttar Pradesh shall be allowed if such goods are actually so delivered.
" In exercise of the powers conferred by section 5 of the Act, the Governor was pleased to order that rebate of one half of the tax levied on sales of certain goods including sugar manufactured in Uttar Pradesh for delivery outside Uttar Pradesh shall be allowed if such goods were actually so delivered.
It appears that this notification was modified on March 30, 1949, but we are not concerned with this modification.
The Sales Tax Officer dealt with the question at issue in his order in respect of the quarter ending March 31, 1949, in detail and he was of the view that if property passed from the seller to the purchaser in Uttar Pradesh, section 5 and the notification issued under it could not apply.
The assessee mills then filed four revision applications before the Judge (Revisions) Sales Tax.
The Judge (Revisions) disposed of the four applications by two orders, first dated February 1, 1950, and the second dated December 5, 1950.
He held that "the words 'sales of such goods for delivery outside U.P. clearly show that the intention of the framers of the act was to allow a rebate only in cases in which the goods are sold subject to the condition that they would be delivered outside U.P.
It is also clear that section 5 contemplates only one buyer who purchase the goods and also take their delivery outside U.P.
In other words the party who buys the goods and the party who takes the delivery must be one and the same.
It is not disputed that the sales of sugar in respect of which the claim has been disallowed were in favour of one party and delivery was taken by another party outside U.P.
The party after buying the sugar under a contract of sale had the goods despatched outside U.P. by the Mills to another party outside U.P." He added later that "on a true construction of section 5 rebate will be permissible only if delivery is taken outside U.P. by the same party which purchased the sugar from the mills." Then 48 on the facts he held that the selling agents, Tandon Bros., who entered into a contract with the assessee mills for sale of the goods were really the buyers and although the goods were despatched outside Uttar Pradesh in accordance with the despatch instructions of some contract arrived at between Tandon Bros., and the party to which the goods were ultimately delivered, the assessee mill had not entered into the contract with the parties to which the goods were despatched outside Uttar Pradesh.
He further repelled the argument that despatch instructions formed part of the contract.
The assesses mills then filed four applications under section 1 of the Act, but the Judge (Revisions) Sales Tax rejected the applications on the ground that no question of law arose.
The High Court, however, directed the Judge (Revisions) to state a case under section 11 of the Act.
A consolidated statement of the case was referred.
The Judge (Revisions) drawing up the statement of the case was not the Judge (Revisions) who had disposed of the revision applications.
In the statement of the case certain further facts were given and those are as under "The applicants (assessee mills) were members of the Indian Sugar Syndicate Ltd., and they were entitled to send sugar under the orders of the Syndicate through some selling agents of their own.
M/s. Tandon Bros., were the selling agents of the Mills.
It was through them that the sales had been made to buyers outside U.P.
The goods were despatched outside U.P. under the instructions received from the buyers through the selling agents.
The delivery of the goods was made outside U.P.
It is on the basis of these facts that the applicants (assessee mills) claimed that the sales had been made for delivery outside U.P." The standard contract form prescribed by the Indian Sugar Syndicate has been annexed to the case and the following terms are relevant : "AN AGREEMENT made this Sixteenth day of October 1948 between the AMRITSAR SUGAR MILLS CO. LTD.
ROHANA KALAN (hereinafter called "the Seller") and Tandon Brothers New Mandi Muzaffarpur (hereinafter called "the Buyee") for the sale of the following goods by the Seller to the Buyer upon the following terms and conditions 49 A B C D E F Factory Description Price per Md. ofQuantity Period(s) Re (short) of quality 40 Srs.
82 2/7 lb. of marks Name F.O.R. Factory delivery Station Ex Factory.
Rohana Average colour Rs. Thirty Six Bags 4,000 Ready Mills.
not lower than annas two & I.S.S. No. 127 pies three only.
Average grain not Each of pack finer than I.S.S. ing 2/30.
No. D. or I. 36/2/3 2.
Delivery is to be made F.O.R. Rohana Kalan station, all terms and conditions of the Railway (torn) to be binding on the Buyer.
The goods shall be deemed to have been delivered (a) when tendered Ex Factory godown, (b) when put on F.O.R. at Factory Station or (c) when tendered for carriage by rail at the said station, and in case of delay in accept (torn) by the Railway after such tender the said goods shall be deemed to be held by the Seller on account of the Buyer until they are put on rail.
When the goods are received by Railway, all the terms and conditions of the Railway shall be deemed to be accepted by the buyer.
Tender to the Railway for carriage shall be deemed to have been made when a (torn) carriage or a Forwarding Note has been given to the Station Master of the Station.
The seller shall not, (torn) circumstances whatsoever, be responsible for non despatch, or refusal to despatch or delay in despatch or any (torn) mistake in despatch by the Railway.
Where (after tender as aforesaid) any delay in despatch occurs, the Buyer shall (torn) delivery of the goods without any claim against the Seller on account of such delay or the consequence thereof (torn) delay in despatch is due to non supply of wagons or due to booking restrictions, the Seller, shall, if required by the (torn) obtain from the factory a letter stating the cause of the delay.
Where owing to restriction of whatsoever nature imposed by Carriers on despatches, Seller is unable to despatch according to the route requested by the Buyer, then Seller shall have the right, after giving to the Buyer 50 three days time to despatch by the cheapest available route at Seller 's sole discretion to the destination required by the original despatch instructions.
Within the period of three days above mentioned, Buyer may change the destination provided the (torn) despatching instructions are capable of immediate execution.
In the case of despatch by road, river or other transport any combination thereof, all the terms and conditions of the Carriers are be a binding on the Buyer, and tender to Carrier shall be a good delivery within the meaning of the clause.
The buyer is to give the Seller despatching instructions in accordance with the above schedule, in the case (torn) ready sales within ten days from the date hereof when the quantity is less than 1500 bags, and within fifteen days when quantity is 1500 bags or more; and in the case of forward sales, not less than fourteen days prior to the expiry of the (torn) for delivery of the goods as provided in the above Schedule.
When goods are for delivery in instalments the times (torn) clause provided shall apply to the despatching instructions for each instalment.
The sugar will be despatched at (torn) Risk unless the buyer shall give to the Seller instructions to the contrary in the Despatching Instructions.
The despatching instructions to be given as aforesaid shall be such as the Seller will then be in a position to carry (torn) having regard to restrictions on booking, availability of wagons, transshipment difficulties and other matters.
The despatch (torn) instructions once given shall not ordinarily be amended or altered and they can be altered or amended only with the consent of the seller and before the goods have left the factory, the Seller is not in any way responsible for any delays that may arise through error or mistake in the despatching instructions sent by the buyer.
If the Buyer fails to give despatching instructions within the time and in the manner aforesaid he will be deemed not to have given any despatching instructions at all.
No complaint as regards description, quality or condition of any consignment will be admitted unless the Buyer has complied with Clause 3 thereof and has paid to the Seller the full price and all overdue or other 51 charges and unless the complaint is made in writing to the Seller within three days from the arrival of such consignment at destination, the date of such arrival being deemed to be the date of arrival entered in the Books of the Railway Co., Steamer Co., Carrier or Port Authorities.
The completion of Risk Note form A as required by the Railway authorities at certain seasons of the year shall not be construed as adverse remarks as to the condition of the goods or its packing.
If any complaint, as to quality condition quantity or weight is referred to arbitration and an allowance is awarded in thereof, the Buyer shall retain the goods and such allowance shall be deducted from the price and be refunded by the Seller.
" The High Court, in view of its finding that the delivery was contracted to be made ex factory, the factory being within the State of Uttar Pradesh and the contract not containing any condition requiring the assessee to deliver the goods outside Uttar Pradesh, held that rebate was not admissible under section 5.
The High Court said that its detailed reasons were contained in its, judgment in Lord Krishna Sugar Mills vs Commissioner Sales Tax, II.P.(1) In that case Desai, C.J., held that the obligation to deliver goods outside Uttar Pradesh must arise only from a term in the contract, and in the absence of such a term it could, not be said that the goods were to be delivered outside Uttar Pradesh.
The learned Chief Justice further observed as follows A term in a contract that despatch instructions would be furnished later necessarily means that the seller undertakes to comply with them.
If under a contract itself something is to be settled later, what is settled later becomes as much binding under the contract itself as the terms already settled under the contract.
Still, I do not think that the sales in those cases in which the contracts provided for despatch instructions to be given later became sales for delivery outside Uttar Pradesh merely because the despatch instructions were that they should be despatched outside Uttar Pradesh.
All that can be said is that the sales were for "delivery in accordance with despatch instructions" and a sale for "delivery in accordance with despatch instructions" is not necessarily a sale for "delivery outside Uttar Pradesh." (1) Sales Tax Reference No. 263 of 1954 judgment delivered on, March 19, 1963. 52 He seemed to be of the view that in order to come within the expression "delivery outside Uttar Pradesh ' it must be one of the terms settled at the time of the formation of the contract itself that the goods will be delivered outside Uttar Pradesh, and if this is not so settled and all that is settled is that they will be delivered in accordance with despatch instructions, the sale would neither be a sale for delivery outside Uttar Pradesh nor a sale for delivery inside Uttar Pradesh.
He was clearly of the view that despatch instructions were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given.
Pathak, J., in a concurring judgment, was of the view that it must be in the contemplation of the parties at the time of entering into the contract that the goods which were the subject of sale must be delivered outside Uttar Pradesh.
He observed that "there is a distinction between settling and determining the terms of a contract and complying with the terms 'of that contract.
The former relates to the formation of the contract, the latter to its execution.
" The first question which arises in these appeals is whether the word "delivery" in the expression "sales of such goods for delivery outside Uttar Pradesh" occurring in section 5 of the Act means actual delivery or constructive delivery.
If it means constructive delivery then there is no doubt that on the facts as stated by the Judge (Revisions) the contract provided for constructive delivery inside Uttar Pradesh and the assessee mills would not be entitled to rebate under section 5.
The Madras High Court had occasion to consider a similar question in India Coffee and Tea Distributing Co. Ltd., vs The State of Madras.(1) It held that the word "delivery" in section 5 of the Madras General Sales Tax Act, 1939, which exempts from taxation sales of tea "if the sale is for delivery outside the State and delivery actually was made" did not include anything which the law deemed "delivery" but was restricted to physical delivery of the thing sold.
In coming to this conclusion, Subrahmanyam, J., observed : "In deciding whether the word "delivery" in section 5 (v) includes delivery in law, we have to have regard to the objects of the Legislature in enacting section 5 (v).
The object obviously was the promotion of the export of tea.
The Legislature intended that where tea was (1) 10 S.T.C. 359.
53 exported from the State for being delivered outside the State, the sale which resulted in such export should be exempt from taxation. 'Mat object would not be wholly achieved if we hold that delivery of documents of title in the State of Madras would make the sale liable to taxation.
" We agree with the view expressed by the Madras High Court.
It seems to us that the object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5.
The course of trade adopted by the Indian Sugar Syndicate Ltd. and the assessee mills shows that if the word "delivery" is interpreted to mean 'constructive delivery ' very few 'export sales ', if we may use the expression, would enjoy rebate under section 5.
As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the Legislature to ensure that only real 'export sales ' enjoy the rebate would be fulfilled.
It seems to us that in the context of section 5 the word 'delivery ' occurring in section 5 means 'actual delivery '.
The next question that arises is whether the sales by the assessee mills were for actual delivery outside Uttar Pradesh.
The answer to this problem depends on the answer to the question whether despatch instructions contemplated by clause 2 and clause 3 of the contract were part of the contract entered into by the assessee mills.
It seems to us that they were.
The contract by the assessee mills was to actually deliver at a place to be communicated.
This view is reinforced by what is contained in clause 11 of the contract.
This clause contemplated a destination in spite of constructive delivery having been contracted to be made at Rohana Kalan Station.
Further, the contract was not to actually deliver at some place to be chosen or assented to by the assessee mills but at any place without restrictions.
The contract required nothing more for completion than a mention of the place.
When the despatch instructions were given, it was not a case of performing the contract but specifying a term of the contract.
If the place of actual delivery had been specified and it was a question merely of communicating the route by which the goods were to be delivered this would perhaps related the mode of performance of the contract.
But communication of the place where actual delivery is to be given does not relate to the mode of performance but formation of the contract.
It seems to us, with respect, that the High Court reared in relating despatch instructions to the mode of performance of the contract.
54 In the result we hold that the assessee mills is entitled to rebate under section 5.
We set aside the judgment of the High Court and answer the question as follows : "The revising authority was not right in holding that the sales in dispute were not for delivery outside Uttar Pradesh.
Further, the applicant was entitled to rebate under section 5 of the Act.
" The appellant will have his costs incurred in the High Court and here.
One hearing fee.
Appeal allowed.

summary:
The assessee sugar mill sold sugar to parties who carried on business inside the State of Uttar Pradesh, but the sugar was despatched to stations outside the State of Uttar Pradesh and delivered to another party in compliance with the instructions issued by the buyers.
Under the contract entered between the assessee and the buyer, the assessee was to deliver the sugar at places to be communicated by the buyer.
The assessee mill claimed rebate on these sales under section 5 of the Uttar Pradesh Sales Tax Act, 1948.
The Sales Tax authorities rejected the claim. 'Me High Court held that the rebate was not admissible under section 5 because the contract did not contain any condition requiring the assessee to deliver goods outside Uttar Pradesh and because the despatch instructions.were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given.
In appeal to this Court.
HELD : (i) In.
the context of section 5 of the Act the word 'delivery ' occurring therein means 'actual delivery '.
The object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5.
The course of trade adopted by the buyers and the assessee shows that if the word 'delivery ' is interpreted to mean 'constructive delivery ' very few 'export sales ' would enjoy rebate under section 5.
As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the legislature to ensure that only real 'export sales ' enjoy the rebate would be fulfilled.
[53 B D] Lord Krishna Sugar Mills vs Commissioner of Sales Tax, U.P. S.T. reference No. 263/54 dated March 19, 1963, disapproved.
India Coffee and Tea distributing Co. Ltd. vs The State of Madras 10 S.T.C. 359, approved.
(ii)The sales by the assessee were for actual delivery outside Uttar Pradesh.
The despatch instructions contemplated by the contract entered into by the assessee, were part of the contract.
The contract contemplated a destination in spite of constructive delivery having been contracted to be made at the station where the assessee mill was situated.
Further the contract was not to actually deliver at some place to be chosen or assented to by the assessee mill but at any place without restrictions.
The contract required nothing more for completion than a mention of the place.
when the despatch instructions were given, it was not a case of performing the contract but specifying a term of contract.
[53 EG] 4 6


judgement:
APPEAL No. 757 of 1964.
Appeal by Special Leave from the Judgment and Order, dated the 28th May, 1963 of the Gujarat High Court in Special Civil Application No. 419 of 1963.
R. Gopalakrishnan, for the appellant.
N. section Bindra and B. R. G. K. A char, for the respondent.
The Judgment of the Court was delivered by Satyanarayana Raju, J.
This appeal, by special leave, is against the judgment and order of the High Court of Gujarat at Ahmedabad, dated May 28, 1963, dismissing in limine an application filed by the appellant under article 226 of the Constitution.
The facts material for the purposes of this appeal may be briefly stated. 'Me appellant was a permanent employee of the State Transport Corporation, Gujarat, hereinafter referred to as the Corporation.
At the material time he was employed as a Writer in the Visnagar Depot of the Corporation in Mahasana District.
On January 15, 1962, the appellant applied to the Divisional Controller, State Transport, Mahasana, for leave for 15 days on the ground that he had to attend to his 'personal work.
On January 16, 1962, he was transferred from Visnagar to Ambaji where there was a vacancy in the office of the Depot Manager.
On January 31, 1962, a formal order transferring the appellant from Visnagar to Ambaji was passed, and he was directed to join duty at Ambaji.
On that date, the appellant applied for extension of leave on medical grounds but his request was refused by an order, dated February 15, 1962.
He was directed to report for duty at Ambaji within 48 hours of the receipt of notice failing which, he was warned, he would be removed from service.
On March 3, 1962, the appellant wrote a letter to the Divisional Controller intimating him of his inability to join duty as he was still not well.
To this letter, he enclosed a medical certificate.
By an order, dated March 9, 1962, the services of the appellant were terminated with effect from January 16, 1962, on the ground of long absence.
The appellant made a representation to the Divisional Controller on March 17, 1962 and thereafter preferred an appeal to the General Manager of the Corporation.
Both of them were rejected.
A further appeal preferred by him to the L9SUPCI/66 4 4 2 appellate Committee was also unsuccessful.
The Committee held that the leave applications of the appellant were made only with a view to evade joining duty at Ambaji.
The appellant applied to the High Court of Gujarat under articles 226 and 227 of the Constitution, impleading the Divisional Controller as respondent, for the issue of a writ of certriorari to quash the order of dismissal.
His petition was dismissed in limine on May 28, 1963.
On June 17, 1963, the appellant applied for a certificate to appeal to this Court but it was refused.
Thereafter he applied for special leave and that was granted by this Court.
It may be stated at the outset that the respondent is an autonomous statutory Corporation formed under the provisions of the .
It is not disputed that the appellant could not invoke the provisions of article 311 of the Constitution.
The short question for determination in the appeal is whether the appellant was entitled to an opportunity to show cause against the proposed punishment as required by regulation No. 61 of the Regulations which govern the service conditions of the employees of the Corporation.
It is admitted that no charge was framed against him nor was he given an opportunity to show cause.
It is contended for the respondent that though the order of termination referred to long absence as the cause of termination, the termination itself was not by way of punishment and the only right of the appellant was to two months ' pay in lieu of notice under regulation No. 61, that assuming that the termination was by way of punishment, the appellant, as would be evident from the correspondence and the circumstances of the case, had been given an opportunity to show cause and that there was in fact and in substance compliance with the rules of natural justice.
We may, at this stage, read the relevant regulations which admittedly govern the service conditions of the employees of the G Corporation.
Regulation No. 61 provides as follows : "The service of an employee, who does not hold a permanent appointment in State Transport or a lien on a permanent appointment in any Government Department from which he is transferred, are liable to be terminated by the Competent Authority by giving a calendar month 's notice or a calendar month 's pay in lieu : 43 Provided that the services of casual workers and part time workers may be terminated without any notice; Provided further that a permanent employee of State Transport shall be entitled to 60 days ' notice or 60 days ' pay in lieu.
" Clauses 3 8, 40 and 4 (b) of Schedule A to the Regulations provide: "38.
Irregular attendance, absence without leave and without reasonable cause and absence without permission.
" 40.Failure, without sufficient cause, to report, when directed, for duty, on the part of an employee to whom the leave he has applied for is refused." "4(b).
A person against whom action is proposed to be taken for any act of misconduct, shall be provided with a copy of the charge or charges as well as a statement of allegations that have been made against him, and over which enquiry is being held.
" Clause 3 defines two classes of offences named acts of misconduct and minor lapses and delinquencies, respectively and sub cl.
(ii) of cl.
3 states inter alia that the misconducts are those specified in Schedule A. Regulations 38 and 40 provide that irregular attendance, absence without leave and without reasonable cause and failure, without sufficient cause, to report, when directed, for duty amount to acts of misconduct.
Clause 4(b) is specific and clear.
Under that clause, it is obligatory on the part of the respondent, to give the appellant a reasonable opportunity to show cause, by providing him with a copy of the charge or charges, as well as the statement of the allegations that have been made against him.
Admittedly, the respondent did not frame a charge against the appellant nor conduct any enquiry.
It is true that the respondent may visit the punishment of discharge or removal from service on a person who has absented himself without leave and without reasonable cause, but this cannot entail automatic removal from service without giving such person reasonable opportunity to show cause why he be not removed.
The appellant is entitled to a reasonable opportunity to show cause which includes an opportunity to deny his guilt and establish his innocence which he can do, only when he knows what the charges levelled against him are and the allegations on 44 which such charges are based.
In our judgment the appellant was entitled to an opportunity to show cause against the action proposed to be taken against him.
The order of termination passed against the appellant is bad in law since it contravenes the provisions of cl. 4(b) of the Regulation and also the principles of natural justice.
In all the circumstances of the case, we are satisfied that the impugned order must be quashed.
A writ of certiorari will accordingly issue quashing the order of dismissal, but this will not preclude the respondent from making a fresh enquiry against the appellant after giving him reasonable opportunity to show cause as provided under cl.
4(b) of the regulations.
The appeal is accordingly allowed, but there will be no order as to costs.
Appeal allowed.

summary:
The appellant, who was a permanent employee of the respondent State Transport Corporation, proceeded on 15 days ' leave on January 15, 1962 and thereafter applied for an extension of his leave on medical grounds.
This extension was refused and although the appellant was directed to report for duty immediately, he continued to be absent and wrote to the respondent on March 3, 1963, intimating him of his inability to join duty as he was still not well.
By an order of the respondent dated March 9, 1962, the appellant 's services were terminated with effect from January 16, 1962 on the ground of long absence.
After his representations and an appeal to higher authorities in the ;Corporation had been rejected, the appellant filed a petition for a writ of Certiorari to quash the dismissal order, but this petition was dismissed in limine.
It was contended on behalf of the appellant that in accordance with Clauses 4(b), 38 and 40 of Schedule A to the Regulations governing his service conditions, a charge should have been framed against him and that be was entitled to an opportunity to show cause against the proposed 'punishment.
On the other hand it was the respondents ' contention that though the order of dismissal referred to long absence as the cause of termination, the termination itself was not by way of punishment and the only right of the appellant under Regulation 61 was to two months ' notice in lieu of pay; and that an examination of the correspondence and the circumstances of the case showed that the appellant had been given to opportunity to show cause and that there was in fact and in substance compliance with the rules of natural justice.
HELD : The order of termination passed against the appellant must be quashed as it was bad in law since it contravened the provisions of cl. 4(b) of the Regulations and also the principles of natural justice.
[44 B] Clauses 38 and 40 provided that absence without leave and without reasonable cause, and failure, without sufficient cause. to report for duty when directed amount to acts of misconduct.
Under clause 4(b) it was therefore obligatory on the part of the respondent to give the appellant a reasonable opportunity to show cause, by providing him with a copy of the charge or charges as well as the statement of the allegations that had been made against him.


judgement:
Appeals Nos.
90 andand 91 of 1965.
Appeals by special leave from the judgment and order dated September 4, 1963 of the Madras High Court in Tax Cases Nos. 120 and 121 of 1963.
80 A. Ranganandhan Chetty and A. V. Rangam, for the appel lant.
T. A. Ramachandran and O. C. Mathur for the respondent.
The Judgment of the Court was delivered by Subba Rao, J.
These appeals, by special leave, raise the question of the true construction of the provisions of r. 5(1) (i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, hereinafter referred to as the Rules.
The facts are not in dispute and they may be briefly stated.
The respondent, Messrs Swastik Tobacco Factory, is a dealer in tobacco.
It purchased raw tobacco; by processing it in a prescribed manner, converted it into chewing tobacco and sold it as such in small paper packets.
The said process has been described by a Division Bench of the Madras High Court in Bell Mark Tobacco Co. vs Government of Madras(1) thus : "Taking, however, the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it is clear that what was eventually sold by the assessee was a manufactured product, manufactured from the tobacco that the assesses had purchased.
Soaking in jaggery water is not the only process to be considered.
The addition of flavouring essences and shredding of the tobacco should establish that what the assesses sold was a product substantially different from what he had purchased." for the purpose of these appeals, it was not disputed that the respondent purchased raw tobacco, converted it by a manufacturing process into chewing tobacco and sold it in small paper packets.
The respondent paid excise duty in respect of the raw tobacco purchased by it.
For the assessment years 1955 56 and 1956 57, the Assistant cum Deputy Commercial Tax Officer assessed the respondent to sales tax on the turnover of Rs. 10,67,923 10 9 and Rs. 7,71,661 11 0 respectively.
The respondent, claimed that the excise duty paid by it to the Central ' Government in respect of the raw tobacco should be deducted from the turnover ascertained by the said Officer.
But his conten tion was rejected.
On appeal, the order of the said Officer was confirmed by the Appellate Assistant Commissioner of Commercial Taxes.
On a further appeal to the Sales Tax Appellate Tribunal, the assessee, in addition to the question of deduction, raised (1) (1961) 12 S.T.C. 126,132.
81 an additional ground that the entire turnover of the sales on chewing tobacco was not liable to be assessed.
The Tribunal set aside the order of the Appellate Assistant Commissioner.
The State carried the matter in two revisions to the High Court of Madras.
A Division Bench of the said High Court agreed with the view expressed by the Tribunal and dismissed the revisions.
Hence the present appeals.
Mr. A. V. Rangam, learned counsel for the State, argued that the raw tobacco was converted by a manufacturing process into, chewing tobacco, a different commodity and that, therefore, under r. 5(1) of the Rules, as excise duty was paid only in respect of the raw tobacco and not chewing tobacco, the said duty was not deductible from the turnover of the assessee.
He did not contest the correctness of the decision of the High Court on the question of the taxability of the chewing tobacco under section 5(vii) of the Act.
Mr. T. A. Ramachandran, learned counsel for the respondent, contended that the said rule was couched in a comprehensive language so as to take in excise duty paid on raw tobacco converted by a manufacturing process into chewing tobacco.
The relevant rule reads thus : "Rule 5.
(1) The tax or taxes under section 3 or 5 or 5A or the notification or notifications under section 6(1) shall be levied on the net turnover of the dealers.
In determining the net turnover the amounts specified in the following clauses shall, subject to the condition specified therein, be deducted from the gross turnover of a dealer : (i) the excise duty, if any, paid by the dealer to the Central Government in respect of the goods sold by him; Both the advocates argued, on the basis of the factual position,.
that packets of chewing tobacco were goods different from tobacco from which the said goods were manufactured.
While the learned counsel for the State laid emphasis on the words "goods sold by him", the learned counsel for the respondent relied upon the expression "in respect of" preceding the said words.
If, instead of the expression "in respect of ', the word "on" were there, the intention of the rule would be manifest and the answer to the question raised would be obvious.
The excise duty paid by the respondent was only on the raw tobacco and not on the goods ' sold by it and, therefore, the said duty was not deductible thereunder.
So far there is no dispute.
But it was said that the 82 expression "in respect of" made all the difference.
The words "in respect of", it was said, meant "attributable" and, therefore, the argument proceeded, the excise duty paid on the tobacco, though it was not paid on the goods sold by the respondent, was attributable to the said goods sold.
The object of the concession is presumably to avoid payment of tax on tax in respect of the same goods.
If excise duty was paid by a dealer on certain goods, it would be deducted from the gross turnover of the dealer in regard to the said goods, as otherwise, in effect, sales tax would have to be paid on the amount paid towards excise duty.
This concession could have no relevance if the goods subjected to excise duty were different from the goods sold.
Raw tobacco, when converted by a process of manufacture into chewing tobacco, be comes a different marketable product.
There will be no comparison between the raw tobacco and the chewing tobacco in the matter of demand or even price.
Duty on raw tobacco may have some effect on the cost of the manu factured product, but it cannot possibly be said that the said duty is paid in respect of the manufactured product.
Rule 5(1)(i) of the Rules, therefore, permits deduction from the gross turnover of the dealer only the excise duty paid by him in respect of the same goods sold by him.
Learned counsel for the :respondent cited some English deci sions in support of his contention that the expression "in respect of the goods" was very wide and that it took in the raw material out of which the goods were made.
The House of Lords in Inland Revenue Commissioners vs Courts & Co.(1), in the context of payment of estate duty, con strued the words "in respect of" in section 5(2) of the Finance Act, 1894 (57 & 58 Vict.
c. 30) and observed that the phrase denoted some imprecise kind of nexus between the property and the estate duty.
The House of Lords in Asher vs Seaford Court Estates Ltd. (2) in construing the provisions of section 2, sub section
(3) of Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (10 & 11 Geo. 5, c. 17), held that the expression "in respect of ' must be read as equivalent to "attributable".
The Privy Council in Bicber, Ltd. vs Commissioners of Income tax(1) observed that the said words could mean more than "consisting of" or "namely".
It is not necessary to refer to other decisions.
It may be accepted that the said expression received a wide interpretation, (1) , 732.
(3) (2) 83 having regard to the object of the provisions and the setting in which the said words appeared.
On the other hand, Indian tax laws use the expression "in respect of" as synonymous with the expression "on" : see article 288 of the Constitution of India; section 3 of the Indian Income tax Act, 1922; sections 3(2) and 3(5), Second Proviso, of the Madras General Sales Tax Act, 1939; section 3(1A) of the Central Excise and Salt Act, 1944; and sections 9 of the Kerala Sales Tax Act.
We should not be understood to have construed the said provisions, but only have referred to their to state the legislative practice.
Consistent with the said practice, r. 5(1)(i) of the Rules uses the same expression.
When the said rule says "excise duty paid in respect of the goods", the excise duty referred to is the excise duty paid under section 3(1), read with the Schedule, of the (1 of 1944).
Under the, said section, read with the Schedule, excise duty is levied on the goods described in the Schedule.
Therefore, when r. 5(1)(i) of the Rules refers to the duty paid in respect of the goods to the Central Government, it necessarily refers to the duty paid on the goods mentioned in the Schedule.
As the duty exempted from the gross turnover is the duty so paid under the Central Act, read with the Schedule, the expression "in respect of" in the context can only mean excise duty paid on goods.
In our view, the expression "in respect of the goods" in r. 5(1)(i) of the Rules means only "on the goods".
Even if the word "attributable" is substituted for the words "in respect of", the result win not be different, for the duty paid shall be attributable to the goods.
If it was paid on the raw material it can be attributable only to the raw material and not to the goods.
We, therefore, hold that only excise duty paid on the goods sold by the assessee is deductible from the gross turnover under r. 5(1)(i) of the Rules.
We cannot, therefore, agree with the construction of r. 5(1)(i) of the Rules accepted by the High Court.
No other question was raised before us.
In the result, we modify the order of the High Court accordingly.
In the circumstances, we direct the parties to bear their respective costs.
Order modified.

summary:
The respondent factory used to purchase raw tobacco and after processing it, sell it as chewing tobacco.
Excise duty was paid by the factory in respect of raw tobacco purchased by it.
In sales tax proceedings the factory contended that the excise duty so paid to the Central Government must be deducted to arrive at the net turnover under r. 5(1)i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939.
The assessing officer as well as the Appellate Assistant Commissioner rejected the contention but it was accepted by the Tribunal.
The revision filed by the.
State in the High Court was dismissed, whereupon the State appealed to this Court by special leave.
It was contended on behalf of the appellant that the raw tobacco was converted by a manufacturing process into chewing tobacco, a different commodity and that, therefore, under r. 5(1)(i) of the Rules, as excise duty was paid only in respect of raw tobacco and not chewing tobacco the said duty was not deductible from the turnover of the assesses.
HELD : 'Me object of the concession in r. 5(1)(i) is presumably to avoid payment of tax on tax in respect of the same goods.
This concession would have no relevance if the goods subjected to excise duty were different from the goods sold.
Tobacco when converted by a process of manufacture into chewing tobacco becomes a different marketable product.
Duty on raw tobacco cannot therefore be said to be paid in respect of the manufactured product.
[82 B D] The expression "in respect of the goods" in r. 5(1)(i) means only on the goods", and cannot take in the raw material out of which the goods were made.
[83 E] Inland Revenue Commissioners vs Court & Co. [1963] 2 All.
E.R. 722 and Asher vs Seaford Court Estates Ltd., L.R. , considered.
The excise duty paid by the respondent was only on the raw tobacco and not on the goods sold by it, and therefore, the said duty could not be deducted from its turnover under r. 5(1) (i).
[83 E F]