judgement:
iminal Appeal No.165 of 1967.
Appeal by special leave from the order dated April 27, 1967 of the Bombay High Court, Nagpur Bench in Criminal Appeal No. 74 of 1967.
W. section Barlingay and A. G. Ranaparkhi, for the appellant.
H. R. Khanna and section P. Nayar, for the respondent.
89 The Judgment of the Court was delivered by Vaidialingam, J.
The appellant, who was the second accused, in Sessions Case No. 9 of 1967, and accused No. 1, were found guilty, under section 195 and section 196 read with section 34, I.P.C. and each of them has been convicted and sentenced to undergo three years ' rigorous imprisonment, for these offences and the sentences have been directed to run concurrently.
The case of the first accused, is not before us, in these proceedings.
The appellant challenged his conviction and sentence, passed against him, before the High Court of Bombay, in Criminal Appeal No. 74 of 1967.
A Division Bench of the High Court has, by its order dated April 27, 1967, summarily dismissed the appeal, in one word 'dismissed '.
The appellant has come up, to this Court, by special leave.
But this Court, by its order dated September 7, 1967, has granted special leave, limited to the question as,to whether the High Court was justified in dismissing the appeal, summarily.
That is the only point, that arises for consideration, in this appeal.
It is necessary, to set out briefly, the circumstances under which the appellant, who was, a police Sub Inspector, along with one Dilawar, who was accused No. 1, came to be charged sheeted and tried, in Sessions Case No. 9 of 1967.
In connection with a dacoity, which is alleged to have taken place, on July 18, 1965, when the Bombay Howrah Mail was stopped, at the outer signal of Nagpur Railway Station, one Ambadas and Deorao, and certain others, were prosecuted before the Additional Sessions Judge, Nagpur, in Sessions Case No. 8 of 1966.
In that trial, the prosecution had to prove certain recoveries made, on the basis of three memos, which have been marked, in the present Sessions Trial, as Exhibits 7, 8 and 14.
Those memos had been attested by two Panch witnesses, Pochanna and Abdul Gani.
Pochanna turned hostile and, therefore, the prosecution tried to establish the recoveries made, under these memos, by the other Panch witness.
Abdul Gani.
The first accused, in the present Sessions trial, gave evidence, on June 10, 1966, in Sessions Case No. 8 of 1966, that he is Abdul Gani and that he has attested the recovery memos.
The appellant, before us, was examined in that trial, on June 11, 1966, and he has stated that the witness, who has spoken to the recovery memos, was Abdul Gani and that he has attested the recovery memos; but, later on, the accused in the dacoity case, appear to have entertained a suspicion that the first accused, in these proceedings, who claim to be Abdul Gani and spoke to having attested the recovery memos, is not the real Abdul Gani, but Dilawar.
This suspicion was brought to the notice of the Sessions Judge, trying the dacoity case, on June 14, 1966.
The Sessions Judge, Sri Waikar, caused the present first accused, to be L10Sup.
CI/68 7 90 brought before him and further examined him, in Sessions Case No. 8 of 1966.
The witness appears to have stated that he was not Abdul Gani, but really Dilwar, and that he had come to the Court, on June 10, 1966, and given evidence, as Abdul Gani, on the compulsion and threat of the present appellant.
On the same day, i.e., June 14, 1966, Mr. Waikar issued a notice to the appellant, to show cause why a complain+ should not be laid against him, for offences under sections 195, 196, and 205, I.P.C. By the said notice, the appellant was directed to appear before the Court, on June 16, 1966.
The appellant appeared and pleaded, on June 16, 1966, that he had not committed any offence and that he bona fide believed that the present 1st accused was Abdul Gani, and that he had never compelled one Dilawar to appear before the Court and give evidence, as Abdul Gani The, appellant was further examined, in the dacoity case, on Juno 17, 1966, and he was also cross examined, by the accused, in the dacoity case, on June 22, 1966, the teamed Sessions Judge, Nagpur, ac quitted all the accused, in the dacoity case.
In the said judgment, the learned Sessions Judge has stated that the present accused No. 1, intentionally gave false evidence, and the appellant intentionally fabricated false evidence with the intent to procure conviction of the accused, in the dacoity case, and that it was highly expedient, in the interest of justice and in the interest of eradication of the evil of perjury and the fabrication of false evidence, that both of them should be prosecuted.
Thereupon, the learned Sessions Judge filed the complaint, against the appellant and Dilawar, on July 8, 19669 in the, Court of the Joint Magistrate, First Class, IV Court, Nagpur.
The Joint Magistrate, by his order dated January 27, 1967, held that a prima facie case, against both the accused, under sections 195 and 196 read with section 34, I.P.C., has been made out; and, accordingly, after framing charges, he committed them to the Sessions Court, to face trial.
The learned Sessions Judge, Nagpur, by his judgment, dated March 31, 1967, has found each of the accused, guilty under section 195 and section 196 read with section 34, I.P.C., and sentenced them, as mentioned earlier.
In view of the, fact that special leave has been limited to the question, as to, whether the, High Court was justified, in dismissing the appeal, summarily, and, as we are satisfied, after hearing arguments, on behalf of the appellant, and the State, that the appeal will have to be remanded, for fresh consideration, by the High Court, we do not propose to deal with the matter very elaborately.
We will only advert to some of the material circumstances, that have been placed, before us, by the learned counsel, 91 for the appellant, to hold that this was certainly not a case in which the, High Court was justified in dismissing the appeal, summarily.
On behalf of the appellant, learned counsel, Dr. Barlingay.
raised two contentions: (i) that the learned Sessions Judge, in convicting the appellant, has relied, mainly, on the evidence, given by Dilawar, on June 14, 1966, in Sessions Trial No. 8 of 1966, and on the statements, made by Dilawar, as first accused, when he was examined, under section 342, Cr.P.C., in the present Sessions Trial; and (ii) that the provisions of section 479A, Cr.
P.C., have not been complied with, when Mr. Waikar filed the complaint, as against the appellant, on July 8, 1966.
Mr. H. R. Khanna, learned counsel, appearing for the State of Maharashtra, on the other hand, submitted that the learned Sessions Judge has considered the question of non compliance with the provisions of section 479A, Cr.
P.C., and he has rejected the appellant 's contention, in that regard.
Counsel also pointed out that, apart from the evidence of Dilawar, in Sessions Case No. 8 of 1966, and his answers, given as co accused, in the present Sessions Case, there is, on record, other evidence, which have also been taken into account, by the learned Sessions Judge, for convicting the appellant.
When the High Court dismissed the appeal, though summarily, it must be presumed that the High Court has agreed with the views, expressed by the learned Sessions Judge, in the present judgment.
Therefore, we understood counsel to urge that the High Court was perfectly justified, in dismissing the appeal, summarily.
There is no controversy, that the appellant, who has been convicted, on trial, by the Sessions Judge, had a right of appeal, to the High Court, under section 410, Cr P.C. The appellant was also entitled, under section 418 Cr.
P.C., to agitate, in his appeal, before the High Court, findings of fact, recorded against him, as also questions of law, available to him.
No doubt, under section 421 Cr.
P.C., the Appellate Court may dismiss an appeal, summarily, if, on a perusal of the petition of appeal, and a copy of the judg ment appealed from, it considers that there is no sufficient ground for interference.
This section, has come up for consideration, before this Court, in Mushtak Hussein vs The State of Bombay(1).
This Court has held, therein, that in a case, which, prima facie, raises no arguable issue, a summary dismissal of the appeal, may be justified, but, in arguable cases, a summary rejection order must give some indication of the views of the High Court, on the point,, raised.
Again, in a case, where the High Court summarily dismissed an appeal, in one word 'dismissed ', this Court, in Shreekantiah Ramayya Munipalli V. The State of Bombay(1) (1) 19.
(2) ; 92 again reiterated the views expressed in the earlier decision, referred to above, and stated that summary rejection of appeals, which raise issues of substance and importance, was not justified.
After adverting to the two decisions, noted above, this Court, again in Chittaranjan Das vs State of West, Bengal(1), laid down that there ,can be no doubt, whatever, that in dealing with criminal appeals, brought before them, the High Courts should not summarily reject them, if they raise arguable and substantial points.
Bearing these principles in view, the question naturally arises as to whether the appeal filed, by the appellant, before the High Court of Bombay, raised any arguable point, or whether the questioned raised were substantial and important.
In support of the first contention, Dr. Barlingay drew our attention to the discussion, contained in the judgment of the learned Sessions Judge, wherein he has placed strong reliance, upon the evidence, given by Dilawar, in Sessions Case No. 8 of 1966.
He has also.
drawn our attention, to the reliance, placed by the learned Sessions Judge, upon the answers given by Dilawar, as co accused, when he was examined, under section 342 Cr.
P.C. The evidence given by Dilawar, in the dacoity case, counsel points out, is inadmissible, in these proceedings.
The answers giver.
by him, as co accused, when examined, under section 342 Cr.
P.C., cannot be taken into account, as against the appellant, whatever the position may be, so far as Dilawar himself, is concerned.
There is no other evidence, counsel points out, on record, which has been taken into account, by the learned Sessions Judge.
In any ;event, counsel urged, after eliminating the evidence, given by Dilawar in the dacoity case, and the answers given by him, in this trial, the High Court had to consider whether there was any other evidence, on record, which would justify the Sessions Court finding the appellant guilty.
By the dismissal of the appeal, sum marily, counsel points out, the High Court has omitted to consider the serious illegality, contained in the judgment of the Sessions Judge, in relying upon the evidence and statement of Dilawar.
The contention of the learned counsel, that a gross illegality has been committed, by the learned Sessions Judge in relying upon the evidence, given by Dilawar, in the dacoity case, and using the answers given by him, as a accused, against the appellant, in our opinion, is well founded.
In paragraph 5 of its judgment, the Session 's Court has referred to the fact that Dilawar, accused No. 1, admits all the facts alleged, by the prosecution, and that he has explained that he gave evidence as Abdul Gani at the instance of the appellant.
In considering, again, the question as to whether the appellant knew accused No. 1 as Dilawar or Abdul Gani, the learned Sessions Judge, in (1) ; 93 paragraph 20, refers to the statement of Dilawar, wherein he.
refers to the circumstances, under which the appellant compelled him to come to, the Court and pose himself as Abdul Gani.
The learned Sessions Judge also refers, in paragraph 21 of his judgment, that Dilawar has made a very clean breast of the whole matter, when he, was examined by Mr. Waikar, on June 14, 1966, in the dacoity case.
The learned Sessions Judge also refers to the fact that Dilawar has given a consistent version throughout, inculpating the appellant, both in his evidence in Sessions Case No,. 8 of 1966, as well as in his statement given, in the present Sessions Trial.
We are not referring to the various other points, adverted to, by the learned Sessions Judge.
We have adverted to the above circumstances, only for the purpose of holding that the learned Sessions Judge, in coming to the conclusion that the appellant is guilty, has placed considerable reliance on the evidence of Dilawar, given in the dacoity case and to his statements, made: under section 342 Cr.
P.C., as co accused, in the present trial.
The legal position is quite clear, viz., that the evidence,, given by Dilawar, in the dacoity case, cannot be used as evidence against the appellant, who, had no opportunity to cross examining Dilawar, in the said case; and the statements of Dilawar, as co accused, made under section 342 Cr.
P.C., in the present trial, cannot be used against the appellant.
We are not certainly inclined to accept the contention of the learned counsel, for the State, that these very serious illegalities, committed by the learned Sessions Judge, must be considered to have been, approved, by the learned Judges of the High Court, when they dismissed the appeal, summarily.
In fact, we are inclined to think, that, by dismissing the appeal summarily, the learned Judges of the High Court have omitted to note these serious illegalities, contained in the judgment of the learned Sessions Judge.
As to whether there is other evidence, on record, which would justify the conclusion that the appellant has been rightly convicted, is not a, matter on which it is necessary for us to embark upon, in this,, appeal.
That is essentially for the High Court, as a Court of appeal, to investigate, and come to a conclusion, one way or the other.
The second contention, urged by the learned counsel, for the appellant, is also, in our opinion, a very substantial one.
According to the learned counsel, after the judgment was delivered, in the dacoity case, on June 22, 1966, and before the complaint was filed, by Mr. Waikar, on July 8, 1966, against the appellant, the appellant was not given an opportunity of being heard, as required under section 479A, Cr.
This contention has been raised,, even before the Committing Magistrate, as a perusal of the order of that Magistrate, will show.
This objection, was again taken.
before the.
learned Sessions Judge.
The learned Sessions Judge 94 has taken the view that the show cause notice, issued.
by Mr. Waikar, to the appellant, on June 14, 1966, is a sufficient compliance with the provisions of that section.
The learned Sessions Judge is also of the view that, under section 479A, Cr.
P.C., it does not matter whether a notice is given before the finding is recorded in the judgment, or whether the notice is given, after the findings are recorded in the judgment.
The question, as to whether the appellant has been given an opportunity, of being heard, under section 479A, is again, not only in our opinion, an arguable point, but also a substantial and important one.
The discussion, contained above, will clearly show that the appeal, filed by the appellant, before the High Court of Bombay was an arguable one, and it also raised substantial and important questions, for consideration at the hands of the High Court.
We are therefore satisfied that the High Court was not justified, in dismissing the appeal, filed by the appellant, summarily.
In view of this conclusion, the order of the High Court, dated April 27, 1967, dismissing Crl.
Appeal No. 74 of 1967, is set aside, and the said appeal is remanded to the High Court, for fresh disposal, in the light of the observations, contained in this judgment.
This appeal is allowed, accordingly.
V.P.S. Appeal allowed and remanded.

summary:
During the trial for an offence of dacoity one of the witnesses gave false evidence, and stated, on further examination, that he did so at the instance of the Sub inspector who investigated the case.
The Court gave notice to the Sub inspector to show cause why a complaint should not be laid against him for offences under sections 195, 196 and 205 I.P.C. and he appeared and showed cause.
After the trial, and at the time of delivering judgment in the dacoity case the Court found that the witness had intentionally given false evidence and that the Sub inspcctor had intentionally fabricated false evidence, and thereafter filed a complaint against them before the Joint Magistrate.
They were committed to the Sessions Court to take their trial for offences under sections 195, 196 and 34 I.P.C. as first and second accused respectively.
The Sessions Judge found them guilty.
The Sub inspector (second accused) appealed to the High Court and contended that : (1) the Sessions Judge had committed a gross illegality in relying as against the second accused, upon the evidence of the first accused as a witness in the earlier dacoity case, and the statement of the first accused under section 342 Cr.
P.C. before the Sessions Judge; and (2) the show cause notice was not sufficient com pliance with the provisions of section 479A, Cr.
P.C. as the notice should have been given after the judgment in the dacoity case.
The High Court dismissed the appeal summarily in one word 'dismissed ', without discussing the questions of law and without considering whether there was ,.sufficient other evidence to convict the appellant.
In appeal by the Sub inspector to this Court, HELD : The appeal before the High Court, was an arguable one, and it also raised substantial and important questions for consideration by the High Court.
The High Court was therefore not justified in dismissing the appeal summarily.
[94C] Mushtak Hussein vs State of Bombay. ; Shreekantiah Ramyayya Munipalli vs state of Bombay ; and Chittaranjan Das vs State of West Bengal ; followed.


judgement:
Appeal No. 128 of 1965.
Appeal from the judgment and decree dated December 12, 1963 of the Judicial Commissioner 's court, Himachal Pradesh, in Civil Writ Petition No. 19 of 1963.
Vikram Chand Mahajan and R.N. Sachthey, for the appellants.
Rameshwar Nath and Mahinder Narain, for respondents.
The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted by the Judicial Commissioner, Himachal Pradesh, is directed against his judgment allowing a petition filed by the respondents and issuing a writ of mandamus directing the Divisional Forest Officer.
Sarahan Forest Division, and the Chief Conservator of Forests, Himachal Pradesh hereinafter referred to as the appellants to issue or get issued the necessary permission for felling the trees and the transit pass.
in respect of certain khasra numbers.
In order to appreciate.
the points raised by the learned counsel for the appellants, it is necessary to set out the relevant facts.
Land measuring 27 bighas and 16 biswas comprised in khasra Nos. 452/1,453, 453/1, 40, 100 and 440 and situated in village Kadiali, Tehsil Theog, District Mahasu, belonged to Government and was under the tenancy of Moti Ram.
He filed an application under section 11 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953 hereinafter referred to as the Act and was granted proprietary rights in the land by the Compensation Officer by order dated August 30, 1957.
Provisional compensation was assessed at Rs. 62.56 nP.
The Compensation Officer held that "as the applicant is a cultivating tenant over the aforesaid land he is entitled to acquire right, title and interest of the said land owner on payment of Rs. 62.56 as compensation which should be deposited.
" On September 9, 1957, a certificate of ownership was granted to Moti Ram on his depositing Rs. 62.56.
Moti Ram died and the land was mutated in favour of his wife Smt.
Besroo and his daughter Smt.
The respondents applied for permission to sell the trees on their land, and the Divisional Forest Officer by order dated July 18, 1958, permitted them to sell the trees from their land on certain conditions.
On November 15, 1958, the respondents deposited Rs. 1267.13 nP as government fee, but the Divisional Forest Officer failed to give clear orders for felling the trees and taking out the converted timber from the said ]and.
The Chief Conservator Officer, by letter dated July 12, 1961, informed the respondents that the matter was being inquired from the Conservator of 114 Forests, Simla Circle.
Thereupon, not hearing anything further, the respondents flied a petition under article 226 of the Constitution.
It was urged before the Judicial Commissioner, on behalf of the Divisional Forest Officer that the respondents had No. interest in the trees standing on their land as.
the trees were not 'land ' as defined in section 2(5) of the Act, and that the Compensation Officer was not competent to grant, and, in fact, did not grant proprietary rights in the trees to the deceased Moti Ram.
The learned Judicial Commissioner, following Vijay Kumari Thakur vs H. P. Administration (1) held that the appellants were estopped from contending that the respondents had no interest in the trees.
He further held that the respondents were granted permission to sell the trees standing on their land and they had, in fact, entered into an agreement to sell to a third party, and they had deposited Rs. 1267.13 nP and had 'thus acted to their detriment.
As stated already, the learned Judicial Commissioner allowed the petition and issued a writ of mandamus.
With certificate granted by the Judicial Commissioner the appellants have.
flied this appeal.
The learned counsel for the appellants contends that under section 11 of the Act the trees did not vest in the deceased Moti Ram.
He says that what vested under section 11 of the Act was land, and 'land ' is defined in section 2 ( 5 ) as follows: "section 2(3).
Land means land which is not occupied as the site of any building in a town or village and is occupied or has.
been let for agricultural purposes or for purposes subservient to agriculture, or for pasture, and includes (a) the sites of buildings and other structures on such land;.
(b) orchards; (c) ghasnies;" He relies on a number of decisions of the Punjab Chief Court and the Lahore High Court interpreting a similar definition existing in the Punjab Alienation of Land Act (XIII of 1900).
In our opinion those cases are distinguishable inasmuch as they deal with the question whether trees could be sold or assigned under the Punjab Alienation of Land Act without infringing the prohibitions contained in that Act forbidding sale of land by agriculturists in favour of non agriculturists.
For instance, in Achhru Mal vs Maula Bakhsh(2), under a deed of sale the vendee was entitled to cut and remove the trees within a period of ten years, and the plaintiff brought a suit asking for a perpetual injunction (1) A.I.R. 1961 H. P. 32.
(2) 115 to issue to the defendants respondents to restrain them from preventing him from cutting and removing certain trees from the. land belonging to the defendants respondents The lower courts held that the trees growing on agricultural land were "land" within the ' meaning of the expression as defined in section 2(3) of the Punjab Alienation of Land Act, and, therefore, their sale to the plaintiff was unlawful having regard to the provisions of that Act.
The ' Lahore High Court held that the sale did not infringe the provisions of that Act because the sale of trees was not a sale of land.
The High Court was not concerned with the question whether on a transfer of land trees standing on it passed to the transferee or not.
In Nasib Singh vs Amin Chand(1) it was held that the suit for possession of certain mango, shisham and jaman trees was not a suit between a landlord and his tenant under the Punjab Tenancy Act and consequently the Civil Court was competent to try the suit.
There can.
be no doubt that trees are capable of being transferred apart from land, and if a person transfers trees or gives a right to a person to cut trees and remove them it cannot be said that he has transferred land.
But we are concerned with a different question and the question is whether under section 11 of the Act trees are included within the expression "right, title and interest of the land owner in the land of the tenancy".
It seems to us that this expression "right, title and interest of the land owner in ' the ' land" is wide enough to include trees standing on the land.
It is clear that under section 8 of the Transfer of Property Act, unless a different intention is expressed or implied, transfer of land would include trees standing on it.
It seems to us that we should construe section 11 in the same manner.
The learned counsel for the appellants contends that the trees standing on the land transferred to Moti Ram under section 11 of the Act are worth about Rs. 76,000, and it could not have been the ' intention to transfer Rs. 76,000 worth of trees for Rs. 62/56.
He says.
that the trees are really forest trees and it was never the intention of the legislature to vest forest trees in the tenants acquiring land under section 11 of the Act.
But no such contention seems to have been raised in the written statement filed by the appellants.
It might have been different if it had been proved that the portion of the area transferred to Moti Ram was a natural forest.[see Kaju Mal vs Salig Ram(2)].
The learned counsel referring to section 84 of the Act points out that one of the consequences of vesting of land in the State Government under section 83 is that trees expressly vest in the 'State.
He says that if it was the intention to vest trees in the tenant acquiring land (1) A.I.R. 1942 Lah.
152 (2) (1919) Punj.
Rec. 237.
116 under section 11 of the Act, it would have been similarly so expressed.
We are unable to accede to this contention.
Section 84(a)(i) reads as follows: "84.
When a notification under section 83 has been published in the Gazette notwithstanding anything contained in any contract or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter setforth shall, from the beginning of the date of vesting ensue in respect of the land to which the notification applies, namely : (a) all rights, title and interest of all the landowners (i) in every such land including cultivable or barren land, ghasnis, charands, trees, wells, tanks, ponds, water channels, ferries, pathways, hats, bazars and melas;. " If the contention of the learned counsel were.
correct, even cultivable land which is expressly mentioned in section 84(a) (i) would not vest in the tenant under section 11 of the Act.
Section 11 is drafted very simply and under sub s.(6) the tenant becomes the owner of the land comprised in the tenancy on and from the date of grant of the certificate, and it is expressly provided that the right, title and interest of the landowner in the said land shall determine.
In the context the word "owner" is very comprehensive indeed, and it implies that all rights, title and interest of the landowner pass to the tenant.
Further, it seems to.
us that it would lead to utter confusion if the contention of the learned counsel is accepted.
There would be interminable disputes as to the rights of the erstwhile landowners to go on the lands of erstwhile tenants and cut trees or take the fruit.
Moreover, under section 15 of the Act we would, following the same reasoning, have to hold that the trees on the land of the landowner did not vest in the State.
This could hardly have been the intention.
For the aforesaid reasons we must uphold the judgment of the Judicial Commissioner, although for different reasons.
In the result the appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary:
Upon an application filed by a cultivating tenant M under section 11 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, the Compensation Officer held that as such tenant he was entitled to acquire "the right, title and interest" of the owner of the land in question.
After payment by the tenant of a specified amount of compensation, a certificate of ownership was granted to him and, after his death, the land was mutated in favour of his wife and daughter, respondents in this appeal.
The respondents applied to the Divisional Forest Officer for permission to sell the trees of their land and although that Officer granted permission for the sale, he failed to give the necessary orders for felling the trees and taking out the converted timber from the land.
The respondents filed a petition under article 226 of the Constitution for the issue of a writ of mandamus directing the Divisional Forest Officer to issue or get issued the necessary permission for felling the trees and moving the timber.
The Judicial Commissioner, following Vijay Kumari Thakur vs
H.P. Administration.
A.I.R. 1961 H.P. 32, held that the appellants were estopped from contending that the respondents had no interest in the trees and allowed the petition.
In appeal to the Supreme Court it was contended on behalf of the appellants that under section 11 of the Act the trees did not vest in the deceased tenant but only the 'land ' as defend in section 2(5) of the Act, and that the Compensation Officer was not competent to grant and, in fact, did not grant proprietary rights in the trees to the deceased tenant.
HELD : dismissing the appeal: Under sub section
(6) of section 11, the tenant becomes the owner of the land comprised in the tenancy on and from the date of gram of the certificate, and it is expressly provided that the right, title and interest of the landowner in the said land shall determine.
In the context the word 'owner ' is very comprehensive and implies that all rights, title and interest of the land owner passed to the tenant.
[116E F] Furthermore, the expression "right, title and interest of the landowner in the land" is wide enough to include trees standing on the land.
Under section 8 of the Transfer of Property Act, unless a different intention is expressed or implied, transfer of land would include trees standing on it; and section 11 of the Himachal Pradesh Act should be construed in the same manner.
[115 E] Achhru Mal vs Maula Bakhsh, and Nasib Singh vs Amin Chand, A,I.R. , distinguished.
Kaju Mal vs Salig Ram, [1919] Punj.
Rec. 237, referred to. 113


judgement:
135 of 1950.
Application under article 32 of the Constitution for a writ in the nature of a writ of certiorari and prohibition.
Dr. Tek Chand (Hardayal Hardy and Jindra Lal, with him) for the petitioner.
M.C. Setalvad, Attorney.
General for India, (section M. Sikri, with him) for the respondent.
january 12.
This is said to be a test case, for, on its decision, we are told, depend the rights of numerous other persons whose interests are similar to those of the petitioner.
There is no serious controversy as to the facts material for the purposes of this application.
They are shortly as follows: On May 5, 1948, the then Rulers of eight Punjab States including.
Patiala and Nabha with the concurrence and guarantee of the Government of India entered into a covenant agreeing to unite and integrate their territories in one State with a common executive, legislature and judiciary by the name of Patiala and East Punjab States Union, hereinaf ter compendiously referred to as the Pepsu.
By article III (6) of the covenant the then Ruler of Patiala became the first President or Raj Pramukh of the Council of Rulers and he is to hold the office during his lifetime.
Article VI of the covenant is as follows : "(1) The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event not later than the 20th of August, 1948, make over the administration of his State to the Raj Pramukh, and thereupon, (a) all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Govern ment of the Covenanting State shall vest in 130 the Union and shall thereafter be exercisable only as pro vided by this Covenant or by the Constitution to be framed thereunder; (b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the Union, and (d) the military forces, if any, of the Covenanting State shall become the military forces of the Union.
" Article X provides for the formation of a Constituent Assembly to frame a constitution of a unitary type for the Union within the framework of the Covenant and the Constitu tion of India.
This Constituent Assembly was also to func tion as the interim Legislalature of the Union until an elected legislature came into being.
The proviso to clause (2) of that Article runs as follows : "Provided that until a Constitution framed by the Con stituent Assembly comes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinances for the peace and good government of the Union or any part thereof, and any Ordi nance so made shall, for the space of not more than six months from its promulgation have the like force of law as an Act passed by the Constituent Assembly;but any such Ordinance may be controlled or superseded by any such Act.
" This Union was inaugurated on July 15, 1948, and the Raj Pramukh thereafter took over the administration of the different Covenanting States.
The Administration of Nabha State was taken over by the Raj Pramukh on August 20, 1948.
On the same day the Raj Pramukh, in exercise of the powers vested in him, promulgated an Ordinance (No. 1 of 2005) called the Patiala and East Punjab States Union (Administra tion) 131 Ordinance, 2005.
The following provisions of this Ordi nance are relevant for our purpose: "1.
(2) It shall extend to the territories included in the Covenanting States on and from the date on which the administration of any of the said State or States has been or is made over to the Raj Pramukh.
* * 3.
As soon as the administration of any Covenanting State has been taken over by the Raj Pramukh as aforesaid, all laws, Ordinances, Acts, Rules, Regulations, Notifica tions, Hidayats and Firrnans i Shahi having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the Courts or offices of any such Covenanting State shall, notwithstanding anything contained in this Ordinance or any other Ordinance, be disposed of in accordance with the laws governing such proceedings in force for the time being m any such Covenanting State.
" Section 6 provides for the adaptation of the laws etc.
enforced under section 3 and, amongst other things, any reference in these laws etc.
to the Patiala State and the like was to be construed as a reference to the State of the Union.
A notification (No.35 dated 27 5 05/11 9 1948) was issued over the signature of the Revenue Secretary notifying that the Patiala Income tax Act of 2001 and the Rules there under had come into force in the various Covenanting States from August 20, 1948, thereby repealing the law or laws in force in that behalf in those States before that date, except as to pending proceedings.
It may be mentioned here that prior to that date there was no law in the Nabha State imposing income tax on the subjects of that State.
On November 14, 1948, the Commissioner of Income tax issued a Notification (No. 4, dated 132 29 7 2005) intimating that persons belonging to the Cove nanting States of Nabha and Nalagarh would be assessed to income tax under the Patiala Income Tax Act, 2001.
It was mentioned that persons of those States whose income reached the taxable limit ' 'should henceforward keep regular and proper accounts for purposes of audit by the Income Tax Department" on February 2, 1949, Ordinance 1 of 2005 was repealed and replaced by Ordinance No. XVI of 2005 promul gated by the Raj Pramukh and called the Patiala and East Punjab States Union General Provisions (Administration) Ordinance, 2006.
Section 3 (1) runs as follows: "3.
(1) As from the appointed day, all laws and rules, regulations, bye laws and notifications made thereunder, and all other provisions having the force of law, in Patiala State on the said day shall apply mutatis mutandis to the territories of the Union and all laws in force in the other Covenanting States immediately before that day shall cease to have effect; Provided that all suits, appeals, revisions applica tions, reviews, executions and other proceedings, or any of them, whether Civil or Criminal or Revenue, pending in the Courts and before authorities of any Covenanting States shall, notwithstanding anything contained in this Ordinance, be disposed of in accordance with the laws governing such proceedings in force in any such Covenanting State immedi ately before the appointed day.
" By section 2 (a) the "appointed day" was defined as meaning the 5th day of Bhadon, 2005, corresponding to August 20, 1948.
There was a section providing for adaptation similar to section 6 of the Ordinance 1 of 2005.
There was another Ordinance to which reference has to be made, namely, Ordinance No. 1 of 2006 called the Finance Ordinance promul gated on April 13, 1949, which came into force on that very date.
Section 5 of that Ordinance introduced several amend ments to the Patiala Income Tax Act, 2001.
It recast 133 sections 3 and 34 of that Act and introduced a new section as section 23B. Section 6 of that Ordinance runs thus: "6.
For the assessment year beginning on the 1st day of Baisakh, 2006, that is to say, in respect of the accounting the income, profits and gains of the previous year ending on the last day of Chet, 2005, (a) income tax shall be charged at the rates specified in Part I of the Second Schedule to this Ordinance, and (b) rates of super tax shall, for the purposes of sec tion 55 of the Patiala Income Tax Act, 2001, be specified in Part II of the Second Schedule to this Ordinance.
" It is in this setting that the facts leading to the present petition have to be considered.
The petitioner is a resident of Ateli in the district of Mohindargarh now in Pepsu but which formerly formed part of the Nabha State.
The petitioner has been carrying on his business at Ateli for a number of years under the ' name and style of Raghunath Rai Ram Parshad.
He never paid any income tax as no such tax was imposed by any law in the Nabha State.
On October '20, 1949, the petitioner was served with a notice under sections 22(2) and 88 of the Patiala Income Tax Act, 2001, requiring him to submit a return for the Income Tax year 2006 (13 4 1949 to 12 4 1950) disclosing his income during the previous year (13 4 1948 to 12 4 1949).
The petitioner, on December 4, 1949, filed his return for the year 2006 and on February 14, 1950, he was assessed to income tax.
On May 23, 1950, the petitioner received a notice under section 34 calling upon him to file his return for the year ending the last day of Chet 2005, i.e., for the year 13 4 1948 to 12 4 1949.
In this return he had to specify his income of the previous year, namely, 2004 (i.e., 13 4 1947 to 12 4 1948).
It ap pears that the petitioner along with other assessees of Ateli and Kanina submitted a petition before the Income Tax Officer on July 9, 1950, asking him not to 134 proceed with the assessment for the year 2005 but on July 13, 1950, the Income Tax Officer assessed him to the best of his judgment under section 34(4) read with section 22(4) of the Income Tax Act.
The petitioner along with other asses sees similarly situated moved the Income Tax Commissioner and the Central Board of Revenue, New Delhi, but without any success.
No formal appeal under the Patiala Income Tax Act appears to have been filed by the petitioner against assess ments for either of the two years 2005 and 2006.
On August 10, 1950, the petitioner filed his present petition before this Court under article 32 of the Constitution praying that a writ in the nature of a writ of certiorari be issued for quashing the assessments of the petitioner 's income accrued in the years 2004 and 2005 and other ancillary reliefs.
During the pendency of this petition the income tax authori ties have issued a notice under section 46 intimating that penalty will be imposed if the tax was not paid up.
The contention of the petitioner in the first place is that he has been denied the fundamental right of equality before the law and the equal protection of the laws guaran teed to him by article 14 of the Constitution.
His griev ances are formulated in paragraphs 10 and 11 of his peti tion.
It is said that while the people of Kapurthala which is included in Pepsu have been asked to pay income tax for the period prior to August 20, 1948, at the old rate fixed by the Kapurthala Income Tax Act which was lower than the rate fixed by the Patiala Income Tax Act, 2001, the people of Nabha who had not to pay any income tax prior to August 20, 1948, at all have been made liable to pay at the higher Patiala rate and that such discrimination offends against the provisions of article 14.
This charge is refuted by paragraph 10 of the affidavit of Sardar Gurbax Singh, the Additional Director of Inspection (income Tax), New Delhi, who was formerly the Commissioner of Income Tax, Punjab and Pepsu, which has been filed in opposition to the present petition.
It is there stated that for the assessment year 2005, in Kapurthala the assessees whose cases were pending on 135 August 20, 1948, were assessed under the Kapurthala Income Tax Act at rates fixed thereunder but that for the assess ment year 2006 the provisions of the Patiala Income Tax Act and the rates prescribed thereunder were uniformly applied in all areas of the Pepsu, including Kapurthala This alle gation which is not denied in the affidavit filed by the petitioner in reply must be taken as correct.
The assess ment of Kapurthala assessees for the year 2005 at the old Kapurthala rate was obviously made under the proviso to section 3 of Ordinance No. 1 of 2005, which was reproduced in the proviso to section 3(1)of the Ordinance No. XVI of 2006 and both of which required all pending proceedings to be completed according to the law applicable to those pro ceedings when they were initiated.
No case of assessment was pending as against any Nabha assessee on August 20, 1948, for there was no Income Tax Act in Nabha prior to that date and, therefore, there could be no occasion for completing any pending proceedings against any of such assessees.
In the premises, there can be no grievance by them on the score of discrimination.
The discrimination, if any, was not brought about by the two Ordinances, but by the circumstance that there was no Income Tax Act in Nabha and consequently there was no case of assessment pending against any Nabha assessees.
In any case the provision that pending proceed ings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceedings commenced is a reasonable law rounded upon a reasonable classification of the assessees which is permis sible under the equal protection clause and to which no exception can be taken.
In our opinion the grievance of the alleged infringement of fundamental right under Article 14 is not well founded at all.
Dr. Tek Chand appearing in support of the petition next contends that the administration of Nabha State having been taken over by the Raj Pramukh only on August 20, 1948, and the Patiala law including the Patiala Income Tax Act, 2001, having been brought 136 into operation on and from August 20, 1948, the assessment of the tax on the petitioner 's income which accrued prior to August 20, 1948, was wholly illegal and not authorised by the said Ordinances and the State by insisting on collecting the tax so illegally assessed was threatening to invade the petitioner 's fundamental right to property guaranteed by article 31(1) of the Constitution.
Article 31(1) runs as follows: "(1) No person shall be deprived of his property save by authority of law.
" It will be noticed that clause (1) reproduces subsection (1) of section 299 of the Government of India Act, 1935, without the words "in British India.
" Reference has 'next to be made to article 265 which is in Part XII, Chapter I, dealing with "Finance." That article provides that no tax shall be levied or collected except by authority of law.
There 'was no similar provision in the corresponding chapter of the Government of India Act, 1935.
If collection of taxes amounts to deprivation of property within the meaning of article 31(1), then there was no point in making a sepa rate provision again as has been made in article 265.
It, therefore, follows that clause (1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, for otherwise article 265 becomes wholly redundant.
In the United States of America the power of taxation is regarded as distinct from the exercise of police power or eminent domain.
Our Constitution evidently has also treated taxation as distinct from compulsory acquisition of property and has made inde pendent provision giving protection against taxation save by authority of law.
When Dr. Tek Chand was asked if that was not the correct position, he did ,not advance any cogent or convincing answer to refute the conclusion put to him.
In our opinion, the protection against imposition and collec tion of taxes save by authority of law directly comes from article 265, and is not secured by clause (1) of article 31.
Article 265, 137 not being in Chapter IIi of the Constitution, its protection is not a fundamental right which can be enforced by an application to this court under article 32.
It is not our purpose to say that the right secured by article 265 may not be enforced.
It may certainly be enforced by adopting proper proceedings.
All that we wish to state is that this application in so far as it purports to be rounded on arti cle 32 read with article 31(1) to this Court is misconceived and must fail.
The whole of Dr. Tek Chand 's argument was rounded on the basis that protection against imposition and collection of taxes save by authority of law was guaranteed by article 31(1) and his endeavour was to establish that the Pepsu Ordinances could not, in law, and did not, on a correct interpretation of them, impose any income tax retrospective ly; that the Income Tax Officer on an erroneous view of the law had wrongly assessed the tax on income accrued prior to August 20, 1948, and that consequently the petitioner was being threatened with deprivation of property otherwise than by authority of law.
In the view we have taken, namely, that the protection against imposition or collection of taxes save by authority of law is secured by article 265 and not by article 31(1), the questions urged by Dr. Tek Chand do not really arise and it is not necessary to express any opinion on them on this application.
Those questions can only arise in appropriate proceedings and not on an applica tion under article 32.
In our judgment this application fails on the simple ground that no fundamental right of the petitioner has been infringed either under article 14 or under article 31(1) and we accordingly dismiss the petition with costs.
Petition dismissed.

summary:
Section 3 (1) of the Patiala and East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2005) which came into force on February 2, 1949, and re enacted section 3 of an earlier Ordinance which was in force from August 20, 1948, provided that as from the appointed day (i.e., August 20, 1948) all laws in force in the Patiala State shall apply muutatis mutandis to 17 128 the territories of the said Union, provided that all pro ceedings pending before courts and other authorities of any of the Covenanting States shall be disposed of in accordance with the laws governing such proeeedings in force in such Covenanting State immediately before August 20, 1948.
In one of the Covenanting States, viz., Kapurthala, there was a law of income tax in force on the said date, the rate of tax payable under which was lower than that payable under the Patiala Income tax Act, and in another Covenanting State, Nabha, there was no law of income tax at all.
For the ac counting year ending April 12, 1948, assessees of Kapurthala State were assessed at the lower rates fixed by the Kapur thala Income tax Act, in accordance with the proviso in section 3 of the Ordinance relating to pending proceedings, and the assessees of Nabha were assessed at the higher rates fixed by the Patiala Act as there was no income tax law in Nabha on August 20, 1948, and no income tax proceedings were therefore pending in Nabha.
The petitioner who was an asses see residing in Nabha and who was assessed under the Patiala Act applied under article 32 of the Constitution for a writ in the nature of a writ of certiorari quashing the assessment on the ground (i) that he had been denied the fundamental right of equality before the law and equal protection of the laws guaranteed by article 14 of the Constitution inasmuch as he was assessed at a higher rate than that at which asses sees of Kapurthala were assessed, (ii) that, as the Ordi nance bringing the Patiala Income tax Act into force in Nabha was enacted only on August 20, 1948, it cannot operate retrospectively and authorise the levy of tax on income which had accrued in the year ending April 12, 1948, and therefore he was threatened with infringement of the funda mental right guaranteed by article 31 (1) of the Constitution that no one shall be deprived of his property save under authority of law: Held, (i) that the discrimination, if any, between the assessees of Kapurthala and Nabha was not brought about by the Ordinance but by the circumstance that there was no income tax law in Nabha and consequently there was no case of assessment pending against any Nabha assessees; and in any case the provision that pending proceedings should be concluded according to the applicable at the time when the right is or liabilities accrued and the proceedings com menced, was a reasonable law rounded upon reasonable classi fication of the assessees which is permissible under the equal protection clause; (ii) that, as there is a special provision in article 965 of the Constitution that no tax shall be levied or collected except by authority of law, cl.
(1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, and inasmuch as the right conferred by article 265 not a right conferred by Part III of the Constitution, it could not be enforced under article 129


judgement:
Appeals Nos. 292 and 312 of 1950.
Appeals from the Judgment and Order of the High Court of Judicature at Hyderabad (Ansari, Qamar Hasan and Manohar Pershad JJ.) in Cases Nos. 180 181 of 1954 F. Ved Vyas, (section K. Kapur and Ganpat Rai, with him) for the appellant.
M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondent.
April 1.
The Judgment of the Court was delivered by BHAGWATI J.
These are two appeals from the judgment and decision of the High Court of Judicature at Hyderabad answering certain questions referred at the instance of the appellants by the Commissioner of Excess Profits Tax, Hyderabad, and adjudging the liability of the appellants for excess profits tax in regard to the amounts recieved by them as remuneration from the Dewan Bahadur Ramgopal Mills Com pany Ltd. as its Agents.
The Mills Company was registered on the 14th February, 1920, at Hyderabad in the then territories of His Exalted Highness the Nizam.
The appellants were registered as a private limited company at Bombay on 395 agreement was entered into between the Mills Company.
and the appellants appointing the appellants its Agents for a period of 30 years on certain terms and conditions therein recorded.
The appellants throughout worked only as the Agents of the Mills Company and for the Fasli years 1351 and 1352 they received their remuneration under the terms of the Agency agreement.
A notice was issued under section 13 of the Hyderabad Excess Profits Tax Regulation by the Excess Profits Tax Officer calling upon the appellants to pay the, amount of tax appertaining to these chargeable account , ing periods.
The appellants submitted their accounts and contended that the remuneration received by them from the Mills Company was not taxable on the ground that it is was not income, profits or gains from business and was outside the pale of the Excess Profits Tax Regulation.
This contention of the appellants was negatived and on the 24th April, 1944, the Excess Profits Tax Officer made an order assessing the income of the appellants for the accounting periods 1351 and 1352 Fasli at Rs. 8,957 and Rs. 83,768 respectively and assessed the tax accordingly.
An appeal was taken by the appellants to the Deputy Commissioner of Excess Profits Tax who disallowed the same.
An application made by the appellants under section 48(2) for statement of the case to the High Court was rejected by the Commissioner and the appellants filed a petition to the High Court under section 48(3) to compel the Commissioner to state the case to the High Court.
An order was made by the High,Court on this petition directing the Commissioner to state the case and the statement of the case was submitted by the Commis sioner on the 26th February, 1946.
Four questions were referred by the Commissioner to the High Courts as under: (1) Whether the Petitioner Company is a partnership firm or a registered firm ? (2) Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business ? 396 (3)Whether the remuneration received from the MILLs is on account of service or is the remuneration for business ? (4)Whether the principle of personal qualification referred to in section 2, clause (4), of the Excess Profits Regulation is applicable to the Petitioner Company ? These questions were of considerable importance and were referred for decision to the Full Bench of the High Court.
The Full Bench of the High Court delivered their judgment the majority deciding the questions (2) and (3) which were the only questions considered determinative of the reference against the appellants.
The appellants appealed to the Judicial Committee.
But before the Judicial Committee heard the appeals there was a merger of the territories of Hyderabad with India.
The appeals finally came for hearing before the Supreme Court Bench at Hyderabad on the 12th December, 1950, when an order was passed transferring the appeals to this Court at Delhi.
These appeals have now come for hearing and final disposal before us.
The questions (1) and (4) which were referred by the Commissioner to the High Court at Hyderabad have not been seriously pressed before us.
Whether the appellants are a partnership firm or a registered company the principle of exclusion of the income from the category of business income by reason of its depending wholly or mainly on the personal qualifications of the assessee would not apply because the income could not be said to be income from profession and neither a partnership firm nor a registered company as such could be said to be possessed of any personal qualifications in the matter of the acquisition of that income.
The principal questions which were therefore argued before the High Court at Hyderabad and before us were the questions (2) and (3) which involved the determination of the position of the appellants whether they were servants or agents of the Mills Company and the determination of the character of their remuneration whether it was wages or salary or income, profits or gains from business.
397 The appellants were registered as a private limited company having their registered office in Bombay and the objects for which they were incorporated were the following: (1)To act as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business.
(2)To carry on in India and elsewhere the trade or business of merchants, importers exporters in all ', their branches etc.
etc. .
Under Article 115 of the Articles of Association of the Mills Company the appellants and their assigns were ' appointed the agents of the Company upon the terms, provisions and conditions set out in the Agreement referred to in clause 6 of the Company 's Memorandum of Association.
Article 116 provided that the general management of the business of the Company subject to the control and supervision of the Directors, was to be in the hands of the Agents of the Company, who were to have the power and authority on behalf of the Company, subject to such control and supervision, to enter into all contracts and to do all other things usual, necessary and desirable in the management of the, affairs of the Company or in carrying out its objects and were to have power to appoint and employ in, or.
for the purposes of the transaction and managment of the affairs and business of the Company, or otherwise for the purposes thereof, and from time to time to remove or suspend such managers, agents, clerks and other employees as they thought proper with such powers and duties and upon such terms as to duration of employment, remuneration or otherwise as they thought fit and were also to have powers to exercise all rights and liberties reserved and granted to them by the said agreement referred to in clause 6 of the Company 's Memorandum of Association including the rights and liberties contained in clause 4 of the agreement.
Article 1 18 authorised the agents to sub delegate all or any of the powers, authorities and discretions for the time being vested in them, and in particular 398 from time to time to provide by the appointment of an attorney or attorneys, for the management and transaction of the affairs of the Company in any specified locality, in such manner as they thought fit.
The Agency agreement which was executed in pursuance of the appointment under Article 115, provided that the appellants and their assigns were to be the Agents of the Company for a period of 30 years from the date of registration of the Company and they were to continue to act as such agents until they of their own will resigned.
The remuneration of the appellants as such Agents was to be a commission of per cent on the amount of sale proceeds of all yarn cloth and other produce of the Company (including cotton grown) which commission was to be exclusive of any remuneration or wages payable to the bankers, Solicitors engineers, etc., who may be employed by the appellants for or on behalf of the Company or for carrying on and conducting the business of the Company.
The appellants were to be paid in addition all expenses and charges actually incurred by them in Connection with the.
business of the Company and supervision and management thereof and the appelants were entitled to appoint any person or persons in Bombay to act as their Agents in Bombay and any other places in connection with the business if the Company.
Clauses 3 and 4 of the agency agreement are important and may be set out in extenso : 3.
Subject to the control and supervision of the Directors, the said Lachminaravan Ramgopal and Son Limited shall have the general conduct and management of the business and affairs of the company and shall have on behalf of the company to acquire by purchase lease or otherwise lands tenements and other Buildings and to erect maintain alter and extend factores ware houses, engine house and other buildings in Hyderabad and ' elsewhere in the territories of His Exalted Highness the Nizam and in India and to purchase, pay for, sell, resell, and repurchase machinery, engines, plant, raw cotton, waste, jute, wool and 399 other fibres and produce, stores and other materials and to manufacture yarn cloth and other fabrics and to sell the same either in the said territories as well as elsewhere in India and either on credit or for cash, or for present or future delivery, and to execute become parties to and where necessary to cause to be registered all deeds, agreements, contracts, receipts and other documents and to insure the property of the Company for such purposes and to such extent and in such manner as they may think proper; and to institute, conduct, defend, compromise, refer to arbitration and abandon legal and other proceedings, claims and disputes in which the Company is concerned and to appoint and employ discharge, re employ or replace engineers.
managers, retain commission dealers, muccadums, brokers, clerks, mechanics, workmen and other officers and servants with such powers and duties and upon such terms as to duration of office remuneration or otherwise as they may think fit ; and to draw, accept endorse, negotiate and sell Bills of Exchange and Hundies with or without security and to receive and give receipts for all moneys payable to or to be received by the company and to draw cheques against the moneys of the company and generally to make all such arrangements and do all such acts and things on behalf of the Company, its successors and assignsas may be necessary or expedient and as are not specifically reserved to be done by the Directors.
4.The said Lachminarayan Ramgopal & Son Ltd., shall be at liberty to deal with the Company by way of sale to the Company of cotton all raw materials and articles required for the purpose of the Company and the purchase from the Company of yarn cloth and all other articles manufactured by the Company and otherwise, and to deal with any firm in which any of the shareholders of the said Lachminarayan Ramgopal & Son Ltd., may be directly or indirectly concerned provided always such dealings are sanctioned passed or ratified by the Board of Directors either before or after such dealings.
Clause 8 provided that two of the members for the time being of the appellants were at the option of the 400 appellants to be the ex officio Directors of the Company and clause 9 empowered the appellants to assign the agreement and the rights of the appellants thereunder subject to the approval and sanction of the Board to any person, firm or Company having authority by its constitution to become bound by the obligations undertaken by the appeallants.
No materials other than these 'were placed by the appellants either before the Income tax Authorities or the High Court and the questions that arise before us have to be determined only on these materials.
If on the construction of these documents we arrive at the conclusion that the position of the appellants was not that of servants but the agents of the Company the further question would have to be determined whether the activities of the appellants amounted to the carrying on of business.
If they were not the servants of the Company, the remuneration which they received would certainly not be wages or salary but if they were agents of the Company the question would still survive whether their activities amounted to the carrying on of business in which case only the remuneration which they received from the Company would be income, profits or gains from business.
The distinction between a servant and an agent is thus indicated in Powell 's Law of Agency, at page 16 : (a)Generally a master can tell his servant what to do and how to do it.
(b) Generally a principal cannot tell his agent how to carryout his instructions.
(c) A servant is under more complete control than an agent, and also at page 20: (a)Generally, a servant is a person who not only receives instructions from his master but is subject to his master 's right to control the manner in which he carries out those infructions.
An agent receives his principal 's instructions but is generally free to carry out those instructions according to his own discretion 401 (B) Generally, a servant, qua servant, has no authority to make contracts on behalf of his master ' Generally, the purpose of employing an agent is to authorise him to make contracts on behalf of his principal.
(c) Generally, an agent is paid by commission upon effecting the result which he has been instructed by his principal to achieve.
Generally, a servant is paid by wages or salary.
The statement of the law contained in Halsbury 's Laws of England Hailsham Edition Volume 22, page 113, paragraph 192 may be referred to in this connection : "The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
" The position is further clarified in Halsbury 's Laws of England Hailsham Edition ,Volume 1, at page.
193, article 345 where the positions of an agent, a a servant and independent contractor are thus distinguished : " An agent is to be distinguished on the, one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference, and merely undertakes to produce a specified resulted employing his own means to produce that result.
An ament, though bound to exercise his authority in accordance with all lawful instructiOns which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not a servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant ' "Considering the position of the appellants in the light of the above principles it is no doubt true that the 52 402 appellants were to act as the agents of the Company and carry on the general management of the business of the Company subject to the control and supervision of the Directors.
That does not however mean that they acted under the direct control and supervision of the Directors in regard to the manner or method of their work.
The Directors were entitled to lay down the general policy and also to give such directions in regard to the management as may be considered necessary.
But the day to day management of the business of the Company as detailed in Article I 1 6 of the Articles of Association and clause 3 of the Agency Agreement above set out was within the discretion of the appellants and apart from directing what work the appellants had to do as the agents of the Company the Directors had not conferred upon them the further right to direct how that work of the general management was to be done.
The control and supervision of the directors was a general control and supervision and within the limits of their authority the appellants as the agents of the Company had perfect discretion as to how that work of general management was to be done both in regard to the method and the manner of such work.
The appellants for instance had perfect latitude to enter into agreements and contracts for such purpose and to such extent and in such manner as they thought proper.
They had the power to appoint, employ, discharge, reemploy or replace the officers and servants of the Company with such powers and duties and upon such terms as to duration of office remuneration or otherwise as they thought fit.
They had also the power generally to make all such arrangements and to do all such things and acts on behalf of the Company, as might be necessary or expedient and as were not specifically reserved to be done by the Directors.
These powers did not spell a direct control and supervision of the Directors as of a master over his servant but constituted the appellants the agents of the Company who were to exercise their authority subject to the control and supervision of the Directors but were not subject in such exercise to the direct control or supervision of the principals.
The liberty given to the appellants under clause 4 of the Agency 403 Agreement to deal with the Company by way of sale and purchase of commodities therein mentioned also did not spell a relation as between master and servant but empowered the appellants to deal with the Company as Principals in spite of the fact that under clause 8 of the Agreement two of their members for the time being were to be the ex officio Directors of the Company.
The power to assign the Agreement and the rights of the appellants thereunder reserved to them under clause 9 of the Agency Agreement though subject to the approval and sanction of the Board was hardly a power which could be vested in a servant.
There was further the right to continue in employment.
as the agents, of the Company for a period of 30 years from the date of the registration thereof and thereafter until the appellants of their own will resigned, which also would be hardly consistent with the employment of the appellants as mere servants of the Company.
The remuneration by way of commission of 2 1/2 per cent.
of the amount of sale proceeds of the produce of the Company savoured more of the remuneration given by a principal to his agent in the carrying out of the general management of the business of the principal@ than of wages or salary which would not normally.
be on such a basis.
All these circumstances together with the power of sub delegation reserved under Article 118 in our opinion go to establish that the appellants were the agents of the Company and not merely the servants of the Company remunerated by wages or salary.
Even though the position of the appellants qua the Company was that of agents and not servants as stated above it remains to be determined whether the work which they did under the Agency Agreement amounted to carrying on business so as to constitute the remuneration which they received thereunder income, profits or gains from business.
The contention which was urged before us that the appellants only worked as the agents of the Mills Company and no others and therefore what they did did not constitute a business does not avail the appellants.
The activities in order to constitute a business need not necessarily be concerned with several.
individuals or concerns.
They would constitute 404 business in spite of their being restricted to only one individual or concern.
What is relevant to consider is what is the nature and scope of these activities though either by chance or design these might be restricted to only one individual or concern.
It is the nature and scope of these activities and not the extent of the operations which are relevant for this purpose.
The activities of the appellants certainly did not come within the inclusive definition of business which is given in section 2 clause 4 of the Excess Profits Tax Regulation, Hyderabad.
Business is there defined to include any trade, commerce or manufacture or any adventure in the 'nature of a trade, commerce or manufacture or any profession or vocation but not to include a profession carried on by an individual or by individuals in partnership if the profits of the profession depend wholly or mainly on his or their personal qualifications unless such profession consists wholly or mainly in the making of contracts on behalf of other persons or giving to other persons of advice of a commercial nature in connection with the making of contracts.
The work which the appellants did under the terms of the Agency Agreement constituted neither trade, commerce or manufacture or any adventure: in the nature of trade, commerce or manufacture nor was it a profession or vocation.
, The activities which constitute carrying on business need not necessarily consist of activities by way of trade, commerce or manufacture or activities in the exercise of a profession or vocation.
They may even consist of rendering services to others which services may be of a variegated character.
The considerations which apply in the case of individuals in the matter of determining whether the activities constitute a business within the meaning of the, inclusive definition thereof set out above may not apply in the case of incorporated companies.
Even though the activities if carried on by individuals might constitute business in that sense they might not constitute such business when carried on by incorporated companies and resort must be had to the general position in law in order to determine whether the incorporated company was carrying on business ad 405 as to constitute the income earned by it income ' profits or gains from business.
Reference may be made in this context to William Esplen, Son and Swainston, Limited vs Commissioners of Inland Revenue (1).
In that case a private limited company was incorporated for carrying on business as naval architects and consulting engineers.
: Before the formation of the company, a partnership had existed for many year between three persons who, on incorporation, became the sole shareholders and directors of the company.
The partnership had carried on the profession.
of naval architects and consulting engineers and the work done by the company was identical in character with that formerly done by the partnership which it succeeded.
The work done by the company was identical in all respects with the work of a professional naval architect and consulting engineer, and was performed by the said three shareholders and directors of the company personally.
A question arose whether the company was carrying on a profession within the meaning of section 39 paragraph C of the Finance (No. It was contended that it carried on a profession of naval architects and consulting engineers because the members composing it were three naval architects.
That contention was however negatived and it was held that even though what was to be looked at was the character of the work done by the company, it was not carrying on the profession of the naval architects within the meaning of the section, because for that purpose it was of the essence of a profession that the profits should be dependent mainly upon the personal qualifications of the person by whom it was carried on and that could only bean individual.
A company such as that could only do a naval architect 's work by sending a naval architect to its customers to do what they wanted to be done and it was held that the company was not carrying on a profession but was carrying on a trade or business in the ordinary sense of the term.
When a partnership firm comes into existence it can be predicated of it that it carries on a business, because partnership according to section 4 of the Indian Partner.ship Act is the relation between persons who have (1) (1919] 2 K.B. 731.
406 agreed to share the profits of a business carried on by all or any of then acting for all.
(See Inderchand Hari Ram V. COMMissioner of Income tax, U.P & C.P.(1)).
But when a company is incorporated it may not necessarily come into existence for the purpose of carrying on a business.
According to section 5 of the Indian Companies Act any seven or more persons (or, where the company to be formed will be a private company, any two or more persons) associated for any lawful purpose may by subscribing their names to a memorandum of association. . . . . form an incorporated company, and the lawful purpose for which the persons become associated might not necessarily be the carrying on of business.
When a company is incorporated for carrying out certain activities it would be relevant to enquire what are the objects for which it has been incorporated.
As was observed by Lord Sterndale, M.R., in Commissioners of Inland Revenuev.
The Korean Syndicate Limited(2) : " If you once get the individual and the company spending exactly on the same basis, then there would be no difference between them at all.
But the fact that the limited company comes into existence in a different way is a matter to be considered.
An individual comes into existence for many purposes, or per.
haps sometimes for none, whereas a limited company comes into existence for some particular purpose, and if it comes into existence for the particular purpose of concessions and turning them to account, then that is a matter to be considered when you come to decide whether doing that is carrying on a business or not." Justice Rowlatt followed the above view of Lord Sterndale, M.R., in Commissioners of Inland Revenue vs Birmingham Theatre Royal Estate Co., Limited(1), and held that " when you are considering whether a certain form of enterprise is carrying on business or not, it is material to look and see whether it is a company that it; doing it.
" The objects of an incorporated company as laid down in the Memorandum of Association are (1) (2) at P. 202.
(3) (1923) I2 Tax Cas.
580 at P. 584.
407 certainly not conclusive of the question whether the activities of the company amount to carrying on of business.
(See Indian Law Reports 55 Calcutta 1059 and (1951] But they are relevant for the purpose of determining the nature and scope of such activities.
The objects of the appellants in this case inter alia were to act as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business.
This object standing by itself would comprise within its ambit the activities of the appellants as the agents of the Company and constitute the work which they did by way of general management of the business of the company an agency business.
The words " carry on all kinds of agency business " occurring at the end of the object as therein set out were capable of including within their general description the work which the appellants would do as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers and others when they acted as agents of the Company which were manufacturers inter alia of cotton piece goods they would be carrying on agency business within the meaning of this object.
Apart however from this there is the further fact that there was a continuity of operations which constituted the activities of the appellants in the general management of the Company a business.
The whole work of management which the appellants did for the Company within the powers conferred upon them under Article 116 of the Articles of Association and clause 3 of the Agency Agreement consisted of numerous and continuous operations and comprised of various services which were rendered by the appellants as the agents of the Company.
The appellants were also entitled though with the sanction or ratification by the Board of Directors either before or after the dealings to enter into dealings with the Company by way of sales and purchases of various commodities.
There was nothing in the Agency Agreement to prevent the appellants from acting as the agents of other manufacturers, Joint Stock Companies etc., and the appel lants could have as well acted as the agents of other 408 concerns besides the Company.
All these factors taken, into consideration alongwith the fixity of tenure, the nature of remuneration and the assignability of their rights, are sufficient to enable us to 'come to the conclusion that the activities of the appellants as the agents of the Company constituted a business and the remuneration which the appellants received from the Company under the terms of the Agency Agreement was income, profits or gain from business.
The appellants were therefore rightly assessed for excess profits tax and these appeals must stand dismissed with costs.
Appeal dismissed.

summary:
The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
The positions of an agent, a servant and independent contractor are distinguished as under: An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.
An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not 9, servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant.
Held, that the position of the appellants in the light of the principles stated above and the terms of the Agency Agreement was that of the agents of the Dewan Bahadur Ram Gopal Mills Ltd., and they carried on the general management of the business of the company subject to the control and supervision of the Directors.
394 The control and supervision of the Directors was, however, a general control and supervision and within the limits of their authority the appellants as the agents of the company had perfect discretion as to how that work of general management was to be clone both in regard to the method and the manner of such work and therefore the circumstances of the case together with the of power of sub delegation reserved under the Articles of Association established beyond doubt that the appellants were the agents of the company and not merely the servants of the company remu nerated by wages or salary.
Held further, that various factors along with the fixity of tenure, the nature of remuneration and the assignability of their rights were sufficient to prove that the activities of the appellants as the agents of the company constituted a business and the remuneration which the appellants received from the company under the terms of the Agency Agreement was income, profits or gains from business and the appellants were rightly assessed under the provisions of Hyderabad Excess Profits Tax Regulation.