judgement:
Appeal No. 515 of 1966.
Appeal by special leave from the Award dated November 23, 1964, of the Labour Court, Andhra Pradesh in Industrial Dispute No. 5 of 1964.
308 section V. Gupte, Solicitor General, Rameshwar Nath, Mohinder Narain and P. L. Vohra, for the appellant.
B. R. Dolia, E. C. Agarwala and P. C. Agrawala, for the res pondents.
The Judgment of the Court was delivered by Hidayatullah, J.
The present appeal arises from the award of the Presiding Officer, Labour Court, Andhra Pradesh, Hyderabad, by which the dismissal of one Subramaniam, van driver in the employ of the Firestones Tyre & Rubber Co. (P) Ltd., after a domestic enquiry was set aside and the Company was ordered to reinstate him but not to pay him his back wages.
The reference in which this decision was rendered was made by the Government of Andhra Pradesh on February 7, 1964.
The following are the circumstances leading up to it.
Subramaniam was a van driver with the Firestone Tyre & Rub ber Co. from 1953.
One of his duties as a van driver was the transportation for delivery of the products of the Company.
On May 28, 1963, Subramaniam set out to deliver tyres covered by six invoice .
s to diverse addresses.
Two of the invoices (Nos. 13815 and 13816) were concerned with eight tyres (4 tyres per invoice) of the specification 8.25 x 20 Tran.
H.D.Nyl.
12 PR.
Subramaniam took delivery of the tyres and signed the six invoices.
After locking the tyres in his van with a key which he claims never left his possession, he set out with one M. V. Das (packer/scooter driver) by his side in the driver 's cabin.
This was soon after the lunch break.
At about 3.15 p.m.
Subramaniam telephoned to the office of the Company that two tyres from the two invoices were short.
He was asked to return at once.
On his return the tyres with him were unloaded and counted.
By way of an immediate check the tyres held in stock were also counted.
There was no excess in stock.
The tyres in the van were short by two.
Subramaniam maintained that no tyres were lost or stolen on the way.
His case was that the tyres were shortloaded.
After investigation, a charge sheet was served on him for the following act of misconduct: "Theft, fraud or dishonesty in connection with the employer 's business or property".
The charge sheet gave full details and fixed the time and place of an enquiry to be held against him, and further informed him that he could defend himself through a workman, produce evidence or cross examine the witnesses.
He was suspended pending the result of the enquiry.
The enquiry was held by Mr. R. M. Coyajee, Industrial Relations Officer.
Four witnesses for the Company and two for Subramaniam were examined.
The Company filed: 20 documents and Subramaniam filed 2 documents.
Mr. Coyajee found the charge proved and submitted the minu tes of the enquiry to the Superior officers.
Then the Manager, Southern Division informed Subramaniam that he was convinced of. 309 the latter 's guilt and that he had tentatively decided to dismiss him.
He asked Subramaniam to show cause, if any, against this decision, Subramaniam showed cause but the Manager ordered his dismissal.
The Tyre and Rubber Company 's Employees Union having raised a dispute the matter was referred to the Tribunal: ",(a) whether the dismissal of Shri K. Subramaniam, van Driver by the employers of Firestone Tyre & Rubber Co. (P) Ltd., Hyderabad is justified? (b) If not, to what reliefs is he entitled?" Before the Tribunal the Union contended that the enquiry was opposed to the principles of natural justice and the conclusion was perverse.
The Tribunal held that the enquiry was not held properly and the conclusion arrived at the domestic enquiry was perverse.
The Tribunal rejected the evidence and on the basis of evidence recorded by it, held that the charge was not proved.
The Tribunal gave several reasons for its conclusion that the the enquiry was not properly conducted.
These were: (a) that the inquiry was held immediately after the investigation without taking the explanation of the workman; (b) The workman was examined and cross examined even before the evidence against him was recorded ', (c) Copies of the statements of witnesses examined at the preliminary enquiry were not supplied to the workman; (d) Copies of the minutes of the inquiry were not given to the workman before asking him to reply to the show cause notice; and (e) the evidence of Das which cleared the workman was not properly considered.
The Tribunal did not rely upon the record of the enquiry and on the basis of evidence recorded by itself, held that the fault of the workman was not established and that his dismissal was wrong, with the result already indicated.
The Company now contends that none of these grounds has any validity.
It has tried to meet each of the grounds and in our opinion successfully.
We shall take these grounds one by one and indicate the submissions which in our opinion must be allowed to prevail.
As regards ground No. (a) it is clear to us that, although it may be desirable to call for such an explanation before serving a charge sheet.
there is no principle which compels such a course.
The calling for an explanation can only be with a view to making an enquiry unnecessary, where the explanation is good but in many cases it would be open to the criticism that the defence of the workman was being fished out.
If after a preliminary enquiry there is 310 prima facie reason to think that the workman was at fault, a chargesheet setting out the details of the allegations and the likely evidence may be issued without offending against any principle of justice and fairplay.
This is what was done here and we do not think that there was any disadvantage to the workman.
The management has pointed out that even on facts the view is not correct.
They have referred to the workman 's letter dated May 30, 1963 in which he reiterated that he was supplied a shorter number of tyres than that given in the invoices and to his statement before Mr. Coyajee that he would state his case fully.
In these circumstances, it is hardly possible to say that the workman was at a disadvantage in any way.
We may leave for the present ground No. (b) and proceed to consider the others.
Ground No. (c) was not a ground of complaint before the Tribunal.
This round was made out by the Tribunal.
In fact these statements were not included in the record of the enquiry.
Nor were they made the basis of any conclusion.
As to ground No. (d) it is sufficient to say that the minutes were hardly needed as the workman was present personally and had conducted the defence.
If he needed to read the record he could have easily asked for an inspection and we have no doubt in our mind that he would have been given such an inspection.
The minutes show an utmost consideration at all stages of the need for a proper defence.
The Tribunal equated the domestic enquiry to enquiries under article 311 of the Constitution which was hardly proper.
It seems to us that the enquiring officer afforded every opportunity to Subramaniam to controvert or prove his case.
Subramaniam was informed of the charge very clearly, the witnesses were examined in his presence and be was allowed to cross examine them fully.
A true record was kept.
He was given an opportunity to lead evidence and the enquiry officer and the manager gave him a full chance to explain.
after apprising him in detail of the findings tentatively reached.
The evidence of Das was not dealt with in detail but as Das was not concerned with the loading operation and his evidence was not apparently accepted that Subramaniam had not removed the tyres.
Das was apparently taken to support Subramaniam 's claim that the tyres were not loaded at all, a conclusion not reached by the management on evidence.
This leaves over the contention that before examining the witnesses Subramaniam was subjected to a cross examination.
This was said to offend the principles of natural justice and reliance was placed on Tata Oil Mills Company Ltd., vs Its Workmen and Anr.(1), Sur Enamel & Stamping Works Ltd. vs Their Workmen(2), Meenglas Tea Estate V. Its Workmen(3) and Associated Cement Companies vs Their Workmen & Anr.(4).
(1) (3) [1963] 2 L.L.J.367.
(3) (4) 311 These cases no doubt lay down that before a delinquent is asked anything, all the evidence against him must be led.
This cannot be an invariable rule in all cases.
The situation is different where the accusation is based on a matter of record or the facts are admitted.
In such a case it may be permissible to draw the attention of the delinquent to the evidence on the record which goes against him and which if he cannot satisfactorily explain must lead ' to a conclusion of guilt.
In certain cases it may even be fair to the delinquent to take his version first so that the enquiry may cover the point of difference and the witnesses may be questioned properly on the aspect of the case suggested by him.
It is all a question of justice and fairplay.
If the second procedure leads to a just decision of the disputed points and is fairer to the delinquent than the ordinary procedure of examining evidence against him first, no exception can be taken to it.
It is, however, wise to ask the delinquent whether he would like to make a statement first or wait till the evidence is over but the failure to question him in this way does not ipso facto vitiate the enquiry unless prejudice is caused.
It is only when the person enquired against seems to have been held at a disadvantage or has objected to such a course that the enquiry may be said to be vitiated.
It must, however, be emphasised that in all cases in which the facts in controversy are disputed the procedure ordinarily to be followed is the one laid down by this Court in the cited cases.
The procedure of examining the delinquent first may be adopted in a clear case only.
As illustration we may mention one such case which was recently before us.
There a bank clerk had allowed overdrafts to customers much beyond the limits sanctioned by the bank.
The clerk had no authority to do so.
Before the enquiry commenced he admitted his fault and asked to be excused.
He was questioned first to find out if there were any extenuating circumstances before the formal evidence was led to complete the picture of his guilt.
We held that the enquiry did not offend ' any principles of natural justice and was proper (see The Central Bank of India Ltd. vs Karunamoy Banerjee(1).
In the present case Subramaniam had complained earlier that his version ought to have been elicited first before enquiry against him was ordered.
This is exactly what was done by the enquiring officer.
We had the whole of Subramaniam 's statement read to us and found nothing which we can say was unfair.
The enquiring officer gave him an interpreter after ascertaining if he had any objection to the person selected, asked him to reply in English or Telugu as he preferred, invited him to call some workman to assist him, asked him the names of the witnesses he wished to examine and whether he wanted any further time for the preparation of his defence.
He was then questioned about the loading of tyres in his van, the invoices he had signed and whether he had checked the tyres loaded.
He was next asked what route he had followed,.
(1) ; , 312 whether there was a chance of pilferage en route and whether he suspected any person of having interfered with the van.
He was also asked if he was present when the stock was checked.
He denied certain details of this stock taking.
The issue was thus narrowed to the fact whether 8 tyres were loaded or 6, it being the case of the Company that 8 tyres were loaded and that of Subramaniam that only 6 tyres were loaded, but his receipt for 8 tyres was obtained.
The witnesses who loaded the tyres were then called and were ex amined searchingly by the Presiding Officer and cross examined by Subramaniam.
No doubt some of the questions appeared to be leading but they were respecting the matter of record and too much legalism cannot be expected from a domestic enquiry of this character.
The officer asked Subramaniam again and again whether he was defending himself properly or not and Subramaniam always expressed his satisfaction.
In these circumstances, we do not see how the enquiry can be said to have offended any principle of natural justice at all.
The Tribunal mechanically applied the dicta of this Court without noticing that the facts here were entirely different from those in the cited cases and the observations covered those cases where all or most of the facts were contested and could not be made applicable to cases where a greater part of the evidence was a matter of written record and the difference was narrow.
We are, therefore, of the opinion that the enquiry was properly conducted.
As to the evidence of Das it is obvious that Das was supporting Subramaniam in his statement that no tyres were lost during the journey which supported the version that 6 tyres instead of 8 were actually loaded.
It is curious that Das never left the van even when Subramaniam went out and on the solitary occasion when Das left the van Subramaniam was in the company of another officer of the Company at the Depot.
The evidence of Subramaniam and Das taken together excludes the possibility of loading of 8 tyres.
And this is how Das comes into the picture.
It is obvious that the enquiring officer and the Manager relied upon the evidence of those who loaded the tyres supported as it was by the admission several times repeated by Subramaniam that he had checked the tyres at the time of loading.
In other words, the Management refused to believe Subramaniam even though he was supported by Das.
This the Management was entirely within its right in doing and the Tribunal was in error in exercising appellate powers by coming to a different conclusion.
All that the Tribunal could do was to see that the enquiry was properly conducted.
As in our opinion the enquiry was so conducted the decision of the Tribunal cannot be supported.
The appeal therefore succeeds and will be allowed but in the circumstances of the case we make no order about costs.
On behalf of the Company it was stated that the amount paid to the workman during the pendency of the appeal as part of the wages will not be asked to be returned.
V.P.S. Appeal allowed.

summary:
The driver of the delivery van of the appellant company, was entrusted with some tyres for delivery at various addresses and he failed to account for two of the tyres.
After investigation, a domestic enquiry was held and the minutes of the enquiry were submitted to the Manager who gave notice to the driver to show cause why he should not be dismissed.
The driver showed cause but the Manager ordered his dismissal.
The respondent union of the workers then raised an industrial dispute which was referred to the Tribunal.
The Tribunal set aside the dismissal holding that the enquiry was opposed to principles of natural justice and that the conclusion was perverse.
In appeal by the Company to this Court, Held: Ordinarily in all cases in which the facts are in con troversy the procedure to be followed is, that before a delinquent is asked anything, all the evidence against him must be led.
The situation may be different when the accusation is based on a matter of record or, the facts are admitted, in which case, it may be permissible to draw his attention to the evidence on record and ask for his explanation.
Even in such a case, the delinquent should be asked whether he would like to make a statement first or wait till the evidence is over, but failure to do so does not ipso facto vitiate the enquiry unless prejudice is caused or he had objected to the particular course that was followed.
Ultimately, it is a question of justice and fair play depending on the facts of each case.
[311A D] In the present case the minutes showed that the driver had every opportunity to controvert the case against him, and to prove his case, and that he was never at a disadvantage.
All that the Tribunal could do was to see that the domestic enquiry was properly conducted, and, since it was so conducted, the Tribunal was in error in exercising appellate powers by coming to a different conclusion.
[310E; 312G] Tata Oil Mills Co. vs The Workmen.
[1963] 2 L.L.J.78; Sur Enamel & Stamping Works vs The Workmen.
; ; ; Meenglas Tea Estate vs Its Workmen. ; ; ; Associated Cement Companies vs Their Workmen.
[1964] 3 S.C.R. 632; and The Central Bank of India vs Karunamoy Banerjee ; ; referred to.


judgement:
Appeal No. 283 of 1966.
Appeal by special leave from the judgment and order dated March 13, 1963 of the Mysore High Court in Writ Petition No. 1440 of 1962.
B. R. L. Iyengar, R. N. Sachthey for R. H. Dhebar, for the appellant.
The respondent appeared in person.
The Judgment of the, Court was delivered by Bachawat, J.
This appeal raises a question of the validity of the latter part of r. 9(2) of the Mysore Recruitment of Gazetted Probationers ' Rules ' 1959 framed by Governor of Mysore in exercise of his powers under the proviso to article 309 of the Constitution.
The Rules came into force on September 1 1, 1959.
Rule 3 requires that for a period of five years.
two thirds of the number of vacancies as determined by the Government arising in the cadres in the State Civil Services specified in the schedule shall be filled by recruitment of candidates selected under the Rules.
The schedule lists two Class I and twelve Class 11 cadres.
The two Class I cadres are those of (1) Assistant Commissioners in the Mysore Administrative Service and (2) Assistant Controllers in the Mysore State Accounts Service.
Both cadres are in the pay scale 'of Rs. 300 25 500 50 30 700.
Rule 4 provides that the recruitments shall be made on the basis of the results of written and viva voce examinations conducted annually by the Public 'Service Commission.
Rules 5. 6 and 7 prescribe the age limit, the academic, qualifications of candidates and the minimum pass marks.
Rules 8 and 9 are in these terms: .lm15 "8.
List of successful candidates in the examination 'the names of candidates successful in the examination shall be published in the Mysore Gazette.
by the Commission in the order of merit.
Appointment of Probationers. (1) Subject to the rules regarding reservation of posts for backward classes contained in Government Orders Nos.
GAD 26 ORR 351 59, dated the 13th May 1959, and No. GAD 32 ORR 59, dated the 18th July 1959, and the provisions of sub rule (2), the candidates successful in the examination whose names are published under rule 8 shall be appointed as Probationers to Class I posts in the order of merit, and thereafter to Class It posts in the order of merit.
(2) While calling for applications, the candidates will be asked to indicate their preferences as to the cadres they wish to join.
The Government, however, reserves the right of appointing to any particular cadre, any candidate whom it considers to be more suitable for such cadre.
" By a notification dated September 26, 1959, the Public Service Commission invited applications for admission to a competitive examination for the recruitment of Class I Probationers to 20 posts in the Mysore Administrative Service and 2 posts in the Mysore State Accounts Service.
The number of posts were liable to alteration.
15 per cent of the posts was reserved for Scheduled Castes and 3 per cent was reserved for Scheduled Tribes.
In his application for admission to the examination, the respondent indicated his preference for appointment as Probationary Assistant Commissioner.
He was an eligible candidate and was allowed to appear at the examination.
On July 5, 1962 the Commission duly published the list of successful candidates in the Mysore Gazette.
In this list the respondent ranked fourth in the order of merit.
It appears that the Commission sent a separate recommendation to the Government stating that they had selected the 20 candidates ranking 1 to 3, 5 to 8, 10 to 14, 16 to 19, 21, 22, 25 and 26 for appointment as Assistant Commissioners and the seven candidates ranking 4, 9, 15, 20, 23, 24 and 27 for appointment as Assistant Controllers.
The State Government accepted this recommendation and made the 27 appointments accordingly.
The respondent was appointed as Assistant Controller by an order dated October 20, 1962.
The respondent was not appointed as Assistant Commissioner though he had indicated his preference for that post.
Aggrieved by this order, the respondent filed a writ petition in the Mysore High Court asking for an order directing the State of Mysore, to appoint him as Assistant Commissioner and for consequential reliefs.
Before the High Court, it was common ground.
that the two Class I posts, the post of Assistant Commissioner in the Mysore Administrative Service had better prospects and was more attractive.
More promotional posts including posts in the I.A.S. cadre were open to Assistant Commissioners.
Their next promotional post was that of Deputy Commissioner in the pay scale of Rs. 900 40 1100 50 1300.
For an Assistant Controller in the Mysore State Accounts Service the next promotional job was that of a Deputy Controller in the pay scale of L/S5SCI 9(a) 352 Rs. 600 40 1000.
The High, Court held,that (1)under r. 9(2) the Government ;had, the power to decide to which post or cadre a successful candidate should be appointed, (2) for; making the selection the Government had to apply its own, mind, (3) the Public Service Commission had no power to make the selection nor it need be consulted on this question under article 320(3) of the Constitution and (4), as the Government made the selection without applying,its own mind on the recommendation of the Commission, the order dated October 20, 1962 was invalid.
Accordingly, the High Court by its order dated March 13, 1963 issued a writ of mandamus directing the Government to decide to which post or cadre the respondent should be appointed.
From, this order, the State of Mysore appeals to this Court by special leave.
In this appeal, the State of Mysore challenges the correctness of the findings that (1) the Government did not apply its own mind in making the selection and (2) the Public Service Commission need not be consulted as to the suitability of the candidate for such selection under article 320(3) 'of the Constitution.
the State of Mysore naturally supports the finding that the Government had the power under r. 9(2) to select to which post or cadre a successful candidate should be appointed.
But the more fundamental question is whether that portion of r. 9(2) which vests, in the Government this power of selection is valid.
The contention of the respondent is that this portion of the Rule is, violative of articles 14 and 16 of the Constitution.
The Rules make provision for the direct recruitment to several cadres in the State Services on the basis of, the result of a competitive examination.
The examination is held annually.
It is open to all eligible, candidates.
The result of the examination is announced and the list of successful candidates in the order of merit is published.
Subject to the reservations for Scheduled Castes, Scheduled Tribes and Backward Classes, the successful candidates are entitled to be appointed as probationers to Class I posts in the order of merit and thereafter to Class II posts in the order of merit.
If there are vacancies in a number of Class I or Class II cadres, r. 9(2) comes into play.
The candidates are required to indicate in their applications their preferences for the cadres they wish to join.
Had there been nothing more in r. 9(2), the 'successful candidates would have the preferential claim in the order of merit to appointment in the cadres for 'which they indicated their preferences.
Thus, if there are 20 vacancies in cadre 'A ' and 1 7 vacancies in cadre 'B ', a successful candidate ranking fourth in order of merit would be appointed as a matter of course to cadre 'A ' for which he indicated his preference.
But the latter part of r. 9(2) reserves to the Government the right of appointing to any particular cadre any candidate whom it considers more suitable for such cadre.
The Rules are, silent on the question as to how the Government is to find out the 353 suitability of a .
candidate for a particular cadre.
A. single competitive examination is held to test the suitability 'of candidates for.
several cadres.
Those who succeed in the examination are found.
suitable.
for all the cadres and their.
list in order of merit is published under r. 8.
No separate examination is held to test the suitability of the candidate for any particular cadre.
The list of successful candidates published under r. 8 does not indicate that any candidate is more suitable for cadre 'A ' rather than for cadre 'B '.
The Rules do not give the Public Service Commission the power to test the suitability of a candidate for a particular cadre or to recommend that he is more suitable for it.
Nor is there any provision in the Rules under which the Government can test the suitability of a candidate for any cadre after the result of the examination is published.
The result is that the recommendation of the Public Service Commission is not a relevant material nor is there any other material on the basis of which the Government can find that a candidate is more suitable for a particular cadre.
It follows that under the latter part of r. 9(2) it is open to the Government to say at its sweet will that a candidate is more suitable for a particular cadre and to deprive him of his opportunity to join the cadre for which he indicated his preference.
Take the present case.
An open competitive examination was held for recruitment to the posts of Assistant Commissioners in the Mysore Administrative.
Service and Assistant Controllers in the Mysore State Accounts Service.
Though both are Class I posts, the post of Assistant Commissioner has better prospects.
But for the latter part of r.
9(2) the successful candidates would have the preferential claim for appointment as probationers to, the posts of Assistant Commissioners in order of merit and thereafter to the posts of Assistant Controllers in the order of merit.
As a matter of fact, there were 20 vacancies in the posts of Assistant Commissioners.
The respondent ranked fourth in the 'order of merit.
He indicated his preference for the post of Assistant Commissioner and had a preferential claim for appointment to that post.
The candidates ranking 1st, 2nd, 3rd and 5th were appointed as Assistant Commissioners.
The respondent though ranking fourth in order of merit was singled out and was debarred from the post of Assistant Commissioner.
It is because of the arbitrary power under the latter part of r. 9(2) that the Government could make this unjust discrimination.
The principle of recruitment by open competition aims at ensuring equality of opportunity in the matter of employment and obtaining the services of the most meritorious candidates.
Rules 1 to 8, 9(1) and the first part of r. 9(2) seek to achieve this aim.
The latter part of r. 9(2) subverts and destroys the basic objectives of the preceding rules.
It vests in the Government an arbitrary power of patronage.
Though r. 9(1) requires the appointment of successful candidates to Class I posts in the order of merit 354 and thereafter to Class 11 posts in the order of merit, r. 9(1) is subject to r. 9(2), and under the cover of r. 9(2) the Government can even arrogate to itself the power of assigning a Class I post to a less meritorious and a Class II post to a more meritorious candidate.
We hold that the latter part of r. 9(2) gives the Government an arbitrary power of ignoring the.
just claims of successful candidates for recruitment to offices: under the State.
It is violative of articles 14 and 16(1) of the Constitution and must be struck down.
Having regard to his rank in order of merit, the respondent had the right to be appointed to the post of Assistant Commissioner.
As the offending part of r. 9(2) is invalid, the State Government had no power to withhold the post from him.
The High Court should, therefore, have directed the Government to appoint him to that post.
In the result, we strike down the following part of r. 9(2) of the Mysore Recruitment of Gazetted Probationers ' Rules, 1959: "The Government, however, reserves the right of appointing to any particular cadre, any candidate whom it considers to be more suitable for such cadre".
The order passed by the High Court directing the Government to decide to which post or cadre the respondent should be appointed under r. 9(2).
is set aside.
We direct the State of Mysore to appoint the respondent to the post of Assistant Commissioner in the Mysore Administrative Service.
For the purpose of seniority, the respondent will be treated as appointed on October 20, 1962 according to his rank in the order of merit.
Subject to the directions aforesaid, the appeal is dismissed with costs.
V.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary:
The Mysore Recruitment of Gazetted Probationers ' Rules 1959, make provision for direct recruitment to several cadres in the State Services on the basis of the result of a competitive examination.
Under the first part of r. 9(2), the candidates are required to indicate in their applications their preferences for the cadres they wished to join.
After the examination, the list of successful cardi dates in order of merit is published.
and, subject to certain reservations for Scheduled castes and tribes and Backward classes, the successful candidates have preferential claim in the order of merit to appointment in the cadres for which they indicated their preference.
The latter part of r. 9(2), however, reserves to the Government the right of appointing to any particular cadre any candi date whom it considers more suitable for such cadre.
In the present case an open competitive examination was '.held for recruitment to the posts of Assist ant Commissioners in the Mysore Administrative Service and of Assistant Controllers in the Mysore State Accounts Service.
Though both are Class I cadres the post of Assistant Commissioner had better prospects.
There were 20 vacancies in the posts of Assistant Commissioners.
The respondent indicated his preference for the post of Assistant Com missioner.
Though his rank was fourth, the Public Service Commission recommended that he and some others should be appointed as Assistant Controllers while those who ranked after the respondent were recommended for appointment as Assistant Commissioners.
The State Government accepted the recommendation.
The respondent thereupon filed a writ petition in the High Court asking for an order directing the State to appoint him as Assistant Commissioner.
The High Court held that the Government had under the latter part of r. 9(2) the power to decide to which post or cadre the respondent should be appointed.
but that the Government should itself make up its mind without consulting the Public Service Commission, and directed the Government to decide accordingly.
The State appealed to this Court Held: The latter part of r. 9(2) was violative of articles 14 and 16(1) of the Constitution and therefore the State Government had no power to withhold the post of Assistant Commissioner from the respondent who bad a right to be appointed to that post having regard to his rank in order of merit.
The High Court should, therefore, have directed the Government to appoint the respondent to the post.
[354B C] L/S5SCI 350 The Rules are silent on the question as to how the Government was to find out the suitability of a candidate for a particular cadre, nor do the Rules give the Public Service Commission the power to test the suitability of a candidate for a particular cadre or to recommend that he is more suitable for it.
Further, there is no provision in the Rules under which the Government can test the suitability of a candidate for any cadre after the result of the examination is published.
Therefore, the latter part of r. 9(2) gives the,Government an arbitrary power of ignoring the just claims of successful candidates, for recruitment to offices under the State, and thus, subvert '$ the basic objectives of ensuring equality of opportunity in the matter of employment by open competition.
[352H: 353B C; 354A B]


judgement:
Appeal NO.
437 of 1966.
Appeal by special leave from the Award dated March 31, 1964 of the Industrial Tribunal, Maharashtra in Reference (IT) No. 40 of 1963.
H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant.
H. R. Gokhale and 1.
N. Shroff, for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal by special leave against the award dated March 31, 1964 of the Industrial Tribunal, Maharashtra in a Reference by Government under section 10(1)(d) of the .
The appellant is a Trade Union established on January 1, 1962 by the employees of Ghatge & Patil (Transports) Private Ltd. and the respondent is the Company.
The Company has its registered office at Kolhapur and is engaged in the transport and removal of goods by road.
It operates on a large scale owning at the material time as many as 70 trucks and plies them from Kolhapur (where the registered office of the Com pany is situate) to far off places such as Bombay, Poona, Bangalore, Goa and Madras.
On January 14, 1963, the Union served a notice of demand upon the Company asking for the abolition of a newly introduced contract system for the running of vehicles.
This was referred first to the Conciliation Officer, but later the reference was made by Government as stated already.
The dispute arose in the following circumstances: For the operation of its trucks the Company was previously employing 70 drivers and an equal number of cleaners.
On January 8, 1963, the Company advertised in a local newspaper of Kolhapur that it had trucks in working condition for sale and also trucks in working condition to be given for plying on a contract system.
As many as 54 drivers applied for obtaining contracts having resigned their service as drivers.
The Company then entered into agreements with these drivers between January 9 and 31.
Each driver received one motor truck for operation according to the terms of the agreement.
A model agreement has been produced in the case in which the parties, after reciting that there were difficulties in operating motor transport vehicles, because of the passing of the , stated that the agreement was being entered into for the operation of the trucks.
It is not necessary either to set out the agreement or to analyse all its terms.
302 For our purpose it is sufficient to say that the Company let to these former drivers (to whom we may refer as operators) a truck each on condition that they paid the Company Re. 1.00 per mile for its use.
The Company on its part undertook to supply fuel, oil tyres, tubes, etc.
for the purpose of running the vehicle.
Under this agreement the operator was at liberty to canvass for goods and transport them but he was required to give the utmost priority to the goods entrusted to the Company for transport.
In this way the goods booked with the Company were transported by the operator s in priority and they paid Re. 1.00 per mile for the use of the truck , all other expenses being borne by the Company.
The operator s were required to bring all the gross receipts to the Company which deducted its own charges at Re. 1.00 per mile and handed over the balance.
The operators were responsible for any damage to the vehicle, save normal wear and tear, and were required to observe the terms and conditions of the permit held by the Company.
In this way, the Company continued to function as a transport undertaking while the trucks were not run through paid servants but through independent contractors.
The above move by the Company was necessary (so the Company admits) because of the passing of the Motor Transport Wor kers Act, 1961, on May 20, 1961.
This Act was passed to provide for the welfare of Motor Transport workers and to regulate the conditions of their work.
It applies to Motor Transport Undertakings, by which is meant, among other things, undertakings engaged in carrying goods by road for hire or reward.
Such undertakings are required to register under the Act and an inspecting staff is brought into existence for the purpose of seeing that the requirements of the Act are carried out.
The fourth chapter of the Act (headed "Welfare and Health") requires the Motor Transport Undertakings to provide canteens in every place where 100 Motor Transport workers or more are employed , rest rooms for the use of such workers, uniforms, medical and First Aid facilities.
The fifth chapter prescribes the hours of work for Motor Transport workers and in ordinary circumstances puts a ceiling of 48 hours in a week and a maximum of 8 hours a day and a daily interval for rest after 5 hours of work, with a spreadover of not more than 12 hours in every day.
It also provides for a day of weekly rest.
The sixth chapter prohibits the employment of children, enjoins the carrying of tokens by employees and provides for their medical examination.
The seventh chapter applies the Payment of Wages Act and provides for annual leave with wages and extra wage for overtime.
The eighth chapter provides for penalties and procedure and the ninth chapter gives power to the Government to grant exemptions, to make rules and to give directions.
Section 37, which is in this last chapter, provides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service whether made before or after the commencement of this Act but not so as to take away from a Motor Trans 303 port worker an existing benefit which is more favourable than those under the Act or to prevent him from entering into an agreement for better rights and privileges than those given to him by the Act.
The Company frankly admitted at all stages that it was impossible for it to implement all the conditions of the Act in respect of the drivers of motor vehicles.
It stated that its motor drivers.
while working in its employment, were required to go on long journeys and it was practically impossible to enforce the conditions of hours of work or of rest.
Since this entailed penal consequences and the possibility of the permits being cancelled, the Company was forced to adopt a system under which it would not be requir ed to observe the Act because under it the truck drivers became independent contractors and were therefore not within the ambit of the Act.
On the other hand, the Union contended that this arrangement was invented to nullify the beneficial legislation intended to improve the conditions of Motor Transport workers in general and truck drivers in particular.
Under the system, the Union submitted, the drivers lost the benefit of leave of various kinds, over time payment, Provident Fund, gratuity and insurance and there was no control either in respect of hours of work or of rest which were the main objects of the Act to secure.
"The matter of dispute referred to the Tribunal was: "The contract system for the running of vehicles which has been newly introduced, must be abolished immediately.
Such ex employees of the Company who have been given this work on contract basis should be reinstated with back wages".
The Tribunal held that the first part as also the second referred to the 54 drivers who had resigned their jobs and become operators.
The Tribunal saw difficulty in acting on the second part because the drivers had resigned.
In dealing with this problem the Tribunal considered the evidence and came to the conclusion that the drivers were not coerced or forced to take this action.
The Tribunal then posed the question, how to re instate persons who had voluntarily resigned their services and could not be said to be dismissed, discharged or retrenched within the ? The Tribunal also held that the agreements were simple agreements for transport of goods and were essentially fair to the operators.
Of course, there were advantages as well as disadvantages but the employees not being servants were free agents and could do the work as and when they liked and even accept work from others.
They thus got, what they considered, more benefit from the contract system than from their contract of employment.
None of the drivers had appeared to complain against the new system.
There was also nothing to show that this system took unfair advantage of the former drivers.
The Tribunal, therefore, held that the contract system could not be described as an unfair labour practice.
The Tribunal also commented that under the agreements 304 themselves the contract was capable of being terminated by three days ' notice on either side and hence it was hardly necessary for the Union to take recourse to a Tribunal for getting it abolished.
Holding that the new system could not be said to be an unfair or anti labour practice the Tribunal rejected the claim of the Union.
The Union now appeals by special leave.
The argument on behalf of the Union centres round two facts.
Firstly, that the resignation of the drivers and cleaners and the setting up of the contract system amounts to an unfair labour practice and exploitation of labour because by this device these and other transport workers are being victimized; and, secondly, the salutary and beneficial legislation conceived in the best interest of the transport workers is being deliberately set at naught.
According to the Union the operators continue to be workmen notwith standing that they are posed as independent contractors hiring the trucks.
By this system many of the benefits secured to the Motor Transport workers including drivers and cleaners, have been made inapplicable to a section of Motor Transport workers, namely, the former drivers and cleaners employed by the Company.
The argument on the side of, the Company is that the hiring out of trucks to the operators is not illegal and does not amount to exploitation of the former drivers or an unfair labour practice.
According to the Company the operators are free agents and freely resigned their jobs and the Company points out that even the, office bearers of the Union were among those who resigned as drivers and entered into agreements to become operators.
The Company further points out that many of the contracts were entered into after the, present reference was made to the Tribunal.
There is no doubt that the Company is a Motor Transport ' Undertaking because it is engaged in carrying goods by road for hire or reward.
Since the drivers have resigned their jobs they cannot be said to be employed in the Motor Transport Undertaking.
The word "employed" in the definition of Motor Transport worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one 's service.
The definition is, of course, made wide to take in all persons working in a professional capacity in an undertaking for running its affairs in any capacity and not only persons employed on wages.
The word "wage" has the meaning given to the word in the Payment of Wages Act and takes in all paid employees and also persons who are employed in a professional.
capacity although not in receipt of wages.
Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Un dertaking in the sense of persons kept in service.
The operators, therefore, are not Motor Transport workers within the definition.
The Act is not only intended to confer benefits on Motor Transport workers but is also regulatory with penal consequences.
305 The apprehension of the Company is that some of the regulatory provisions of the Act are incapable of being observed properly in the case of drivers and cleaners going on long journeys because there is no means of enforcing them.
For example, the provisions about hours of work, hours of rest etc. are not easy to enforce enroute or at far off places.
Therefore, rather than run the risk of losing the permit for want of compliance with the , the Company has decided not to run transport trucks itself but to let them be run by independent hirers.
There does not appear to be any bar in law to such action.
Section 59 of the Motor Vehicles Act contemplates the transfer of permits with the permission of the Transport Authorities and this enables any person to whom a vehicle covered by the permit is transferred to get the right to use the vehicle in the manner authorised by the permit.
Here the vehicle is not transferred but is only let out on hire and hence there is prima facie no need for permission.
The Union made no attempt before us to establish that the inauguration of the contract system offended the Motor Vehicles Act or was prohibited under it.
No objection to the system by the Authorities under the Motor Vehicles Act was proved in the case.
The operators also seem to be happy because no operator appeared to complain and the only dissatisfaction has been registered by the Union which apparently lost the allegiance of some of its former members and even office bearers.
In view of the findings of the Tribunal, which we see no reason to disapprove, it must be held that the drivers voluntarily resigned and entered into the agreements since they apparently considered them to be more favourable than the terms of their former employment.
In this view of the matter it is difficult to hold that the Tribunal was wrong in its conclusion that there was no ex ploitation of the drivers.
It is also equally true that there is no bar in law to the introduction of the system.
The Union, however, contends that on the analogy of some cases of this Court in which contract labour was put down as unfair labour practice because it involved exploitation of labour, we should declare this system also to be harmful to the interests of labour.
Contract labour was declared in this Court to be an unfair labour practice because the intention was to introduce a middle man to avoid observance of laws and to deny to labour the advantages it had acquired by bargaining or as a result of awards.
Such is hardly the case here.
The two systems were there for the drivers to choose.
It is reasonable to think that the drivers must have chosen a system which was considered by them to be more beneficial to themselves.
There was no compulsion for the drivers to resign their jobs and they did so voluntarily obviously thinking that the new system was more profitable to them.
We cannot lose sight of the fact that some of the office bearers of the Union were among the first to resign.
Many of the drivers resigned the jobs and entered into agreements even after the dispute was taken up by the Union.
The present case is, therefore, not analogous to the case of 306 contract labour where employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury.
The matter of dispute no doubt referred in the second part to ex drivers but it referred generally to the new system in the first.
The Tribunal was wrong in thinking that the first part also referred to the ex drivers (now operators).
On the whole, however, it is clear that the Company has not done anything illegal.
A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying.
This, of course, he can do only so long as he does not break that or any other law.
The Company has declared before us that it is quite prepared, if it was not already doing so, to apply and observe the provisions of the in respect of its employees proper where such provisions can be made applicable.
In view of this declaration we see no reason to interfere, because Parliament has not chosen to say that transport trucks will be run only through paid employees and not independent operators.
The appeal fails but in the circumstances of the case we make no order as to costs.
G.C Appeal dismissed.

summary:
The respondent company carried on the business of transport and removal of goods by road.
It owned a fleet of trucks and employed drivers and cleaners to run them.
In 1963 the company, finding difficulty in observing the provisions of the , introduced a scheme whereby the trucks, instead of being run by the company itself were hired out to contractors at a fixed rate per mile.
Employees of the company who were engaged in running the trucks resigned their jobs and most of them who had for merly been drivers became contractors under the scheme.
The workmens ' Union however raised a dispute asking for the reinstatement of the ex employees who had been given work on contract basis.
The Tribunal held that the contract system could not be said to be an unfair labour practice, for the ex employees were never coerced or forced to resign their jobs, and they got more benefits from the contract system than from their original contract of employment.
In appeal to this Court the Union contended that the ex employees of the company continued to be workmen notwithstanding that they were posed as independent contractors, that the beneficent legislation conceived in the interests of transport workers was being set at naught by the company, and that the setting up of the contract system amounted to unfair labour practice.
Held: (i) Since the drivers had resigned their jobs they could not be said to be employed in the Motor Transport undertaking.
The word 'employed ' in the definition of Motor Transport.
Worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one 's service.
Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Undertaking in the sense of persons kept in service.
The operators were therefore not Motor Transport Workers within the definition.
[304F H] (ii) There was no bar in law to the introduction of the con tract system.
A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement, no proper means of obeying.
This, of course, he can do only so long as he does not break that or any other law.
[306 B C] (iii) Those who resigned did so voluntarily and they got substantial benefits under the new system.
The Tribunal was right in its conclusion that there was no exploitation of the ex employees.
There 301 was thus no unfair labour practice.
The present case was not analogous to the case of contract labour when employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury.
, [305E 306A.]


judgement:
Appeals Nos.
1182 1184 of 1965.
Appeals by special leave from the judgment and order dated August 19, 1963 of the Punjab High Court in General Sale 's Tax Reference Nos. 8, 10 and 11 of 1962.
R. Ganapathy Iyer, R. N. Sachthey for R. H. Dhebar, for the appellant (in all the appeals).
R. K. Garg, section C. Agarwal, Shive Pujab Singh and Anil Kumar, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Bachawat, J.
The respondents are dealers assessable to sales tax under the East Punjab General Sales Tax Act, 1948.
In their return for the assessment years 1955 56, 1956 57 and 1957 58 they 338 claimed exemption from tax in respect of sales of edible oils.
It is common case before us that this exemption was claimed in respect of Sales of edible oil produced in ghanis run by mechanical process.
By his orders dated March 3, 1959, April 9, 1959 and July,17, 1959, the Assessing Authority, Jullundur held that exemption from tax was not allowable under item No. 57 of the schedule of, tax free goods as, substituted by the Punjab Government Notification No. 3483 E & T 54/723(CH) dated August 5, 1954.
The appeals from these orders were dismissed by the Deputy Excise and Taxation Commissioner, Jullundur Division by his orders dated August 3, 1959 and February 16, 1960.
Revision Petitions from these orders were dismissed by the Excise and Taxation Commissioner, Punjab by his orders dated November 24, 1961.
.Revision Petitions from the last orders were dismissed by the Financial Commissioner, Revenue, Punjab by his orders dated April 27, 1962.
On the application of the respondents, the Financial 'Commissioner, Revenue, Punjab by his order dated August 9, 1962 referred under section 22(1) of the Punjab General Sales Tax Act, 1948 the following question of law for the decision of the High Court of Punjab at Chandigarh: "Whether notification No. 3483 E & T 54/723(CH), dated the 5th August, 1954, whereby exemption from Sales Tax granted by the Government in respect of edible oils was abolished in the case of such edible oils produced in ghanis run by mechanical process was intravires and not the law made by the Legislature of the State which requires ' the previous assent of the President of India." These References were marked, as Sales Tax References Nos. 8, 10 and 11 of 1962.
By its judgment dated August 19, 1963 the High Court held following its earlier decision in Ganga Ram Suraj Prakash vs The State of Punjab(1) that the notification was a law made by the State Legislature after the enactment of Central Act No. 52 of 1952, and since it did not receive the assent of the President it was ultra vires and invalid.
In the earlier decision, the Punjab High Court held that (1) section 5 of the East Punjab General Sales Tax Act, 1948, as it originally stood, was invalid on the ground of excessive delegation of legislative power to the executive, (2) the remaining sections of the Act including section 6 could not survive the invalidity of section 5, (3) the Act did not become valid until the insertion of the new section 5 in the main Act by the East Punjab Act No. 19 of 1952, and (4) as the East Punjab Act No. 19 of 1952 which alone could sustain the impugned notification dated August 5, 1954 was passed after the Central Act No. 52 of 1952, the impugned notification could not be justified and was invalid.
The High Court observed that it was not impressed with the argu ment that the notification was not a law made by the legislature of the State and therefore the assent of the President could be dispensed with.
The present appeals have been preferred from the orders of the High Court dated August 19, 1963.
(1) S.T.C. 476.
339 To appreciate the points in.
controversy, it is necessary to refer to the course of legislation.
The East Punjab General Sales Tax Act (East Punjab Act No. 46 of 1948) was enacted on November 15, 1948.
Section 4 of the Act provided for the incidence of taxation and declared that the classes of dealers specified in sub sections
(1), (2), (3) and (4) would be liabe to pay tax under the Act.
Section 5(1) was in these terms: "5.
Rate of tax (1) Subject to the provisions of this Act there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct.
" 'Turnover ' as defined in section 2(i) included the aggregate of the amount of sales. 'Taxable turnover ' as defined in section 5(2) was ascertained after deducting from the gross turnover inter alia sales of goods declared tax free under section 6.
Section 6(1) provided that no tax shall be payable under the Act on the sale of goods specified in the first column of the schedule to the Act.
Section 6(2) provided: "The Provincial Government after giving by notification not less than three months ' notice of its intention so to do, may by like notification add to or delete from the schedule, and thereupon the schedule shall be deemed to be amended accordingly." On November 19, 1952 the East Punjab General Sales Tax (Second Amendment) Act, 1952 (Act No. 19 of 1952) was passed amending section 5 of the East Punjab Act No. 46 of 1948.
Section 2 of the amending Act was in these terms: "In sub section (1) of section 5 of the East Punjab General Sales Tax Act, 1948, after the word 'rates ' the following words shall be inserted, namely, 'not exceeding two pice in a rupee '.
" It is common ground before us that before the passing of the East Punjab Act No. 19 of 1952 the State Government bad issued notifications under section 5 fixing the rates of tax.
In exercise of its powers under section 6(2) of the Act, the Punjab Government issued the notification No. 3483 E & T 51/2518, dated May 30, 1951 adding item No. 57 (edible oils) to the schedule referred to in section 6(2).
The entry was as follows: "57.
Edible oils produced from sarson, toria and till ghanis but not in hydrogenated from e.g. vegetable, ghee, vanaspati etc.
" By a later notification No. 3483 E & T 54/723(CH) dated August 5, 1954, the Punjab Government substituted the following entry No. 57 in the schedule: "57.
Edible oils produced from sarson, toria and till indigenous kohlus worked by animal or human agency when sold by the owners of such kohlus only".
340 it is common case before us that as a result of this notification sales of edible oil produced by ghanis run by mechanical power ceased to be tax free after August 5, 1954.
It may be recalled that article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act, 1956 provided: "No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." On August 9, 1952 Parliament passed the Essential Goods (De claration and Regulation of Tax on Sale or Purchase) Act, 1952 (Central Act No. 52 of 1952).
By section 2 of this Act read with item 5 of the schedule, edible oils were declared to be essential for the life of the community.
Section 3 of this Act was in these terms: "3.
Regulation of tax on sale or purchase of essential goods.
No law made after the commencement of this Act by the legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods declared by this Act to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
" On September 11, 1956 the Constitution (Sixth Amendment) Act, 1956 was passed substituting a new cl.
(3) in article 286.
The amended article 286(3) did not put any check on a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods.
The Central Act No. 52 of 1952 was repealed by section 16 of the (Act No. 74 of 1954) passed on December 21, 1956.
The repealing section came into force on January 5, 1957.
It is to be noticed that the respondents claimed that they were not liable to pay tax on their sales of edible oil produced in ghanis run by mechanical power.
The revenue authorities rejected this claim on the ground that such sales were not exempt from tax in view of the amendment of the schedule of tax free goods by the notification dated August 5, 1954.
Confronted with this notification, the respondents challenged its validity on the ground that it required the assent of the President of India.
On the materials and arguments before us, we are satisfied that the real dispute between the respondents and the revenue authorities was whether the tax was effectively imposed on those sales so that the respondents may be held.
liable to pay tax thereon during the assessment years in question.
This dispute was not properly brought out in the question referred to the High Court.
We, therefore, re frame the question thus: "Was tax effectively imposed on sales of edible oil produced 341 in ghanis run by mechanical power, so that the respondents can be held liable to pay tax on such sales during the assessment years, 1955 56, 1956 57 and 1957 58?" This question involves consideration of the validity of section 5 and other sections of the East Punjab Act No. 46 of 1948, section 5 as amended by East Punjab Act No. 19 of 1952 and the notifications issued under sections 5 and 6(2) as also the effect of article 286(3) of the Constitution, its amendment by the Constitution (Sixth Amendment) Act, section 3 of Central Act No. 52 of 1952 and its repeal by Central Act No. 74 of 1954.
On the arguments addressed before us, the following ques tions arise for decisions: (1) Was section 5 of the East Punjab Act No. 46 of 1948 as originally passed in 1948, invalid? (2) If so, did the invalidity of section 5 invalidate the other provisions of the Act? (3) Is section 5 of the East Punjab Act No. 46 of 1948 as amended by East Punjab Act No. 19 of 1962 invalid? (4) Was the amended section 5 a law imposing or authorising the imposition of a tax within the meaning of article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act? If so, with what effect? (5) What is the effect of the amendment of article 286(3) of the Constitution by the Constitution (Sixth Amendment) Act and the repeal of Central Act No. 52 of 1952 by Central Act No. 74 of 1954? (6) Is the notification dated August 5, 1954 issued under section 6(2) valid? (7) Are the notifications issued under section 5 before the passing of the East Punjab Act No. 19 of 1952 valid? (8) Was tax effectively imposed on sales of the edible oil in question during the relevant assessment years? The first three questions are concluded by the decision of this Court in M/s. Devi Das Gopal Krishan and others vs State of Punjab and others(1).
In that decision, this Court held that (1) section 5 of East Punjab Act No. 46 of 1948, as originally passed in 1948, was void on the ground of excessive delegation of legislative power to the State Government, (2) the striking down of section 5 did not render void section 4 and the other sections of the Act though till an appropriate section 5 was inserted section 4 remained unenforceable and (3) section 5 as amended by the East Punjab Act No. 19 of 1952 was not invalid on the ground of excessive delegation of legislative authority nor was it invalid on the ground that Act 19 of 1952 purported to amend a stillborn section.
The Court held that though in (1) ; 342 terms Act No. 19 of 1952 amended section 5, in.
substance it inserted a, new amended section 5 in Act No. 46 of 1948 with retrospective effect.
The fourth question is whether the amended section 5 inserted by East Punjab Act No. 19 of 1952 levying a tax on the taxable turnover of the dealer at such rates not exceeding 2 pice in a rupee as the State Government by notification may direct was a law imposing or authorising the imposition of a. tax on essential goods within the meaning of article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act, and if so, what are the consequences.
As pointed out by Ramachandra Iyer, J. in Sreenivas and Co. vs Deputy Commercial Tax Officer(1), the decisions on the interpretation of section 55 of the Australian Constitution are not a reliable guide to the interpretation of the words "imposing or authorising the imposition of a tax" in article 286(3) of the Constitution and section 3 of Central Act No. 52 of 1952.
Section 55 which is directed to preserving the privileges of the House of Representatives with respect to finance and providing against their abuse has received a somewhat narrow interpretation from the Australian Courts.
See the cases collected in Wynes.
Legislative, Executive and Judicial Powers, 3rd Edn., p. 240.
We may add that the observations of Isaccs, J. in Federal Commissioner of Taxation vs Munro(2) suggest that an Act naming the rate but leaving the persons on whom the tax should fall to be thereafter determined would be a measure "imposing taxation" even for the purposes of section 55.
Nor is much light thrown on the interpretation of those words by the decisions under the Indian Income tax Act.
In Messrs. Chatturam Horilram Ltd. vs Commissioner of Income tax, Bihar and Orissa(3) this Court held that income was chargeable under section 3 of the Indian Income tax Act though the Finance Act was not extended to the relevant area during the year in question.
In Kesoram Industries vs Commissioner of Wealth Tax(4) this Court by a majority following the dicta in Wallace Brothers & Co. Ltd. vs Commissioner of Income tax, Bombay(5) Chatturam vs Commissioner of Income tax, Bihar(6) and explaining the dicta in Commissioner of Income tax vs Western India Turf Club Ltd. (7 ) and Maharaja of Pithapuram vs Commissioner of Income tax, Madras(8), held that there was a liability to pay income tax and a debt owed by the assessee in respect of income tax on the last day of the accounting year within the meaning of section 2(m) of the Wealth Tax Act, 1957.
None of these decisions dealt with the construction of the words "imposing or authorising the imposition of a tax" in article 286(3) of the Constitution.
It is remarkable, however, (1) [1960] 11 S.T.C.68, 75 77,On appeal from (1959) 10 S.T.C.171.
(2) ; , 189.
(3) ; , 297 300 (4) ; (5) , 244.
(6) , 308.
(7) (1927) L.R. 55 I.A. 14, 17.
(8) , 223 24. 343 that in the Maharaja of Pithapuram 's case(1) the language used by Lord Thankerton suggests that the income tax is imposed for a particular fiscal year by a Finance Act and in Chatturam Horilram 's case(2), Jagannadhadas, J. said that the Finance Act of each year imposed the obligation for the payment of a determinate sum for each such year.
Moreover, in Luipaard 's Vlei Estate and Gold Mining Co. Ltd. vs The Commissioner of Inland Revenue(3), Rowlatt, J. said the English Income tax was annually imposed by the Finance Act and in Bowels vs Bank of England(4), Parker, J. held that the Crown could not lawfully levy income tax before the rate of tax was ascertained and the tax was actually imposed by Apt of Parliament.
These dicta suggest that an Act fixing the rate of tax is a law imposing a, tax.
The specification of the class or classes of persons liable to pay the tax and the fixation of the rate of tax are both necessary for the imposition of a tax.
Section 4 of the East Punjab Act No. 46 of 1948 took the first step for imposing the tax.
It declared who were the persons liable to pay tax under the Act.
But section 5 of East Punjab Act No. 46 of 1948 was invalid and until the passing of the East Punjab Act No. 19 of 1952 and the insertion of the amended section 5 there was no provision in the main Act fixing or authorising the fixation of the rate at which the tax was to be levied.
In the absence of such a provision, there could be no levy, assessment and collection of the tax from the dealer and section 4 remained unenforceable.
The East Punjab Act No. 19 of 1952 by inserting the amended section 5 in the main Act for the first time provided for the levy on the taxable turnover of every dealer a tax at a rate to be fixed by the State Government.
The rate of tax could be fixed and the tax could be actually imposed under the amended section 5 only.
The East Punjab Act No.19 of 1952 therefore belonged to the category of laws authorising the imposition of a tax on the sale of goods.
The object of article 286(3) of the Constitution was to put a constitutional check on the operation of a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods.
Commerce in such goods was a matter of national concern and no such law could take effect unless it had been reserved for the consideration of the President and had received his assent.
An arbitrary or unjust rate of sales tax would unduly hamper dealings in such goods, and it is reasonable to think that a measure fixing or authorising the rate of tax would be subject to the salutary check of article 286(3).
In our opinion, the amended section 5 inserted in East Punjab Act No. 46 of 1948 by East Punjab Act No. 19 of 1952 authorising the fixation of the rate of tax leviable on the taxable turnover was a law authorising the imposition of a tax within the purview of the unamended article 286(3) of the Constitution.
(1) (2) ; (3) , 581.
(4) , 87. 344 The East Punjab Act No. 19 of 1952 was passed after the enactment of article 286(3) of the Constitution and after Parliament had by Central Act No. 52 of 1952 declared edible oil to be essential for the life of the community.
It was not reserved for the consideration of the President and did not receive his assent.
It was a law authorising the imposition of a tax on the sale of goods.
In so far as it authorised the imposition of a tax on the sales or purchases of edible oil, it could not take effect during the currency of article 286(3) of the Constitution as it stood before its amendment by the Constitution (Sixth Amendment) Act.
The fact that the amended section 5 inserted by the East Punjab Act No. 52 of 1952 was retrospective in operation made no difference.
It was still a law made after the Constitution came into force and after Parliament had by law declared edible oil to be essential for the life of the community.
As the East Punjab Act No. 52 of 1952 did not receive the assent of the President, the amended section 5 could not take effect at all either prospectively or retrospectively in respect of sales and purchases of essential goods while the ban of article 286(3) continued.
But it could take effect in respect of sales and purchases of other goods.
The fifth question involves consideration of the effect of the amendment of article 286(3) of the Constitution and the repeal of Central Act No. 52 of 1952.
The Constitution (Sixth Amendment) Act, 1956 passed on September 11, 1956 substituted a new cl.
(3) in article 286.
The effect of this amendment was that the restriction put by article 286(3) on the operation of the amended section 5 inserted by the East Punjab Act No. 19 of 1952 in respect of essential goods was lifted, and the section thereafter took effect on such goods also.
Counsel for the respondent submitted that in view of the ban imposed by article 286(3), the amended section 5 was a stillborn law and the section was not revived by the removal of the ban.
In this connection, our attention was drawn to the decisions under articles 286(2) and 13 of the Constitution.
Article 286(2), as it stood before the Constitution (Sixth Amendment) Act provided that "Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce".
In spite of the prohibitory words of article 286(2), in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh(1) and Messrs. Ashok Leyland Ltd. vs The State of Madras(2), this Court held that a State law imposing a tax on sales of goods in the course of inter State trade and commerce was not void, and the effect of the Sales Tax Laws Validation Act, 1956 was to liberate State laws from the fetter placed on them by article 286(2) and enable such laws to operate on their own terms.
In Mahendra Lal Jaini vs State of U. P.(") this Court held, reviewing the earlier cases, that a post Constitution (1) ; , 1459.
(2) ; (3) [1953] Supp. 1 S.C.R. 912.
345 Act taking away or abridging the fundamental rights in contravention of Article 13(2) was a stillborn law but a pre Constitution Act inconsistent with a fundamental right was in view of article 13(1) eclipsed for the time being and on the abolition of the fundamental right by a constitutional amendment the pre Constitution Act would begin to operate once again from the date of the amendment.
These decisions show that a law made by an incompetent legislature or in contravention of some constitutional limitation is void from its inception.
But the amended section 5 inserted by the East Punjab Act No. 19 of 1952 was passed by a competent legislature.
It always took effect in respect of non essential goods.
Article 286 (3) did not prohibit its making.
While the restriction imposed by article 286(3) continued, the section could not affect essential goods, but as soon as the restriction was removed, it became fully effective.
The section was not void or stillborn.
But the question still remains whether the check on a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods continued even after September 11, 1956 until January 5, 1957 when Central Act No. 52 of 1952 was repealed.
Article 286(3) authorised Parliament to declare by law which goods were essential for the life of the community.
Accordingly, Parliament passed Act No. 52 of 1952.
The preamable to the Act shows that it was an Act to declare in pursuance of cl.3 of article 286 of the Constitution certain goods to be essential for the life of the community.
By section 2, the goods specified in the sche dule were declared to be so essential.
As soon as this declaration was made, article 286(3) came into play.
Section 3 stated the conjoint effect of article 286(3) and section 2 and declared that no law made after the commencement of the Act by the legislature of a State imposing or authorising the imposition of a tax On the sale or purchase of any goods declared by the Act to be essential for the life of the community would have effect unless it had been reserved for the consideration of the President and had received his assent.
But section 3 had no independent existence.
The subject of a tax on the sale or purchase of goods other than newspapers was exclusively a State subject,, see List II, Entry 54.
Article 286(3) did not authorise Parliament to legislate on this subject.
It only conferred,on Parliament the authority to declare that certain goods were essential for the life of the community.
On such a declaration being made, the check.
imposed by article 286(3) came into operation.
But on the amendment of article 286(3) this check was lifted and thereafter.
section 3 had no force.
It follows that as from September 11, 1956 the.
amended section 5 inserted by East Punjab Act No. 19 of 1952 took,effect on sales or purchases of edible oil also.
The sixth question relating to the validity of the notification dated August 15, 1954 involves the interpretation of the expression "law made by the legislature of a State" in article 286(3) as it stood before the Constitution (Sixth Amendment) Act.
We are not con cerned in these appeals with the interpretation of the expression 346 "law of a State" in the amended article 286(3) and other Articles.
The notification dated August 5, 1954 was authorised by section 6(2) of East Punjab Act No. 46 of 1948.
Section 6(2) being a pre Constitution law was outside the purview of article 286(3) of the Constitution and Central Act No. 52 of 1952.
See Sardar Soma Singh vs The State of Pepsu and Union of India(1).
Consequently, section 6(2) from its inception affected essential goods.
By force of section 6(2) the notification dated August 5, 1954 issued under it took effect immediately in respect of essential goods.
The notification issued by the State Government was not a "law made by the legislature of a State" within the meaning of article 286(3).
Though issued after the passing of Central Act No. 52 of 1952, it did not require the assent Of the President for affecting essential goods.
In The Indore Iron & Steel Registered Stockholders ' Association vs The State of Madhya Pradesh(2), this Court held that a notification dated October 24, 1953 specifying the goods whose sales were taxable under section 5(2) of the Madhya Bharat Sales Tax Act, 1950, a pre Constitution Act, was outside the purview of article 286(3) of the Constitution and section 3 of Central Act No. 52 of 1952.
Similarly, in Sreenivas & Co. vs Deputy Commercial Tax Officer(3), the Madras High Court held that Rules 15 and 16 of the Madras General Sales Tax (Turnover and Assessment) Rules specifying the transactions attracting the tax liability and framed under the Madras General Sales Tax Act, 1939, a pre Constitution Act, did not require the assent of the President for affecting hides and skins which had been declared by Parliament to be essential for the life of the community by Central Act No. 52 of 1952.
These decisions show that a, notification issued under the authority of a pre Constitution Act is not a law made by the legislature of a State within the meaning of the unamended article 286(3).
It follows that the impugned notification 'took effect in respect of edible oil as from August 5, 1954 and thereafter sales of edible oil produced in ghanis run by mechanical power were taxable.
But as the amended section 5 could not then affect edible oil, no tax was effectively imposed on it until September 11, 1956 during the currency of the unamended article 286(3) of the Constitution.
The respondents were, therefore, not liable to pay tax on their sales of such edible oil effected before September 11 , 1956.
It is common case before us that before the insertion of the amended section 5 by East Punjab Act No. 19 of 1952 the State Government had issued notifications under section 5 fixing the rate of tax.
The seventh question relates to the validity of those notifications.
As the unamended section 5 was invalid, under the law as it stood before the passing of the East Punjab Act No. 19 of 1952 those notifications were not authorised by law and were invalid.
The East Punjab Act No. 19 of 1952.
however, inserted section 5 with retrospective effect.
The effect of the East Punjab Act No. 19 of 1952 was that the amended s, 5 was inserted and was deemed to have always been inserted in the main Act.
After the passing of (1) ; (2) ; (3) [1960] 11 S.T.C. 68, 75 77, on appeal from [1959] 10 S.T.C. 171.
347 the East Punjab Act No. 19 of 1952 the result was that from the very commencement of the main Act the amended section 5 was deemed to have authorised the State Government to issue notifications fixing the rate of tax.
The notifications issued by the State Government under section 5 before 1952 must, therefore, be deemed to be and always to have been valid and not stillborn.
It was not necessary to pass another Act validating those notifications, nor was it necessary for the State Government to issue fresh notifications fixing the rate of tax.
In view of article 286(3), the amended section 5 and the notifications issued under it before 1952 could not take effect in respect of sales or purchases of essential goods before September 11, 1956.
But they took effect in respect of such sales after September 11, 1956.
The validity of the notifications issued after 1952 under 'he amended section 5 is not challenged before us.
It follows that the State law and the notifications issued there under effectively imposed tax on sales of edible oil from September 11, 1956 and not before.
The respondents are liable to pay tax on all sales of edible oil effected by them after September 11, 1956, but they are not liable to pay tax on their sales made before that date.
in C. M. Ps.
No. 877 to 879 of 1964, the respondents raised several additional contentions.
The first contention was that the consideration of the several questions arising in this case is precluded by res judicata in view of the decisions of the Punjab High Court in Sales Tax References Nos. 4 and 13 of 1961.
But this plea of res judicata has now been abandoned before us by counsel for, the respondents.
Secondly, it was urged that the appeals are infructuous because the respondents had obtained refund of the tax deposited by them in respect of the years, 1958 59 and 1959 60.
But the present appeals do not relate to those assessment years,and the fact that the respondents obtained refund of the tax for,those years is irrelevant in these appeals.
Thirdly, it was pointed out that by an order dated September 23, 1963 the Financial Commissioner gave effect to the decision of the High Court under appeal and directed that the assessment cases be disposed of ac cordingly.
The contention of the respondents was that in view of this order of the Financial Commissioner the present appeals are not maintainable.
There is no substance in this contention.
The order of the Financial Commissioner was passed under section 22(5) of East Punjab Act No. 46 of 1948.
Section 22(5) provides that the High Court shall send to the Financial Commissioner a copy of its judgment in a Sales Tax reference under its seal and the signature of the Registrar and the Financial Commissioner shall dispose of the case accordingly.
On receipt of the copy of the judgment of the High Court in Sales Tax References Nos. 8, 1 0, and 11 of 1962 the Financial Commissioner acting under section 22(5) directed that the cases should be disposed of according to the judgment of the High Court.
But those very judgments are under appeal in this Court.
In so far as those judgments are varied or reversed in these appeals, 348 effect must be given to the order of this Court and the Financial Commissioner must direct the disposal of the cases accordingly.
In C. M. Ps.
877 to 879 of 1964, the respondents prayed for revocation of the special leave granted by this Court.
There is no ground for revoking the special leave, and the petitions must be dismissed.
To summarise our conclusions: (1) The unamended section 5 of East Punjab Act No. 46 of 1948 was void.
(2) The invalidity of section 5 did not render sections 4 and 6 and other sections of the Act invalid.
(3) The amended section 5 inserted by East Punjab Act No. 19 of 1952 is valid.
(4) The amended section 5 was a law authorising the imposition of a tax within the meaning of article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act.
(5) The amended section 5 and the notifications issued under it did not take effect before September 11, 1956 in respect of sales or purchases of goods declared essential to the life of the community by Central Act No. 52 of 1952, but they took effect in respect of such sales or purchases after September 11, 1956.
(6) The notification dated August 5, 1954 issued under section 6(2) is valid.
(7) The notifications issued under section 5 before the passing of the East Punjab Act No. 19 of 1952 are valid.
(8) Tax was effectively imposed on the sales or purchases of edible oil from September II, 1956 and not before.
We, therefore, hold that the respondents are not liable to pay tax on sales of edible oil produced in ghanis run by mechanical power effected by them before September 11, 1956.
But they are liable to pay tax on such sales made after September 11, 1956.
The Sales Tax References and the appeals are disposed of accordingly.
C.M.Ps.
877 to 879 of 1964 are dismissed.
There will be no order as to costs.
R.K.P.S. Appeals partly allowed.

summary:
The respondents were dealers assessable to sales tax under the East Punjab General Sales Tax Act, 1948, and, in respect of the assessment years 1955 56 to 1957 58, they claimed an exemption from tax on sales of edible oil produced by them cal process.
The assessing authority rejected this claim on the ground that such sales we 're not exempt from tax in view of the amendment of the Schedule to the Act specifying tax free goods by the notification dated August 5, 1954.
The respondent 's appeals to the Excise and Taxation Commissioner:.
and to the Financial Commissioner were rejected but the High Court, upon a reference.
held that the notification was a law made by the State legislature after the enactment of Central Act No. 52 of 1952 which, read with article 286(3) of the Constitution , placed a bar on a State by a law imposing or authorising the imposition of a tax on the sale of essential goods unless the law in question had received the assent of the President; and since the notification had not received such assent, it was ultra vires and invalid; the respondents were, therefore, entitled to exemption under Item No. 57 of the Schedule prior to its amendment by the notification of August 5, 1954.
On appeal to this Court, Held: The respondents were not liable to pay tax on sales of edible oils produced in ghanis run by mechanical power effected by them before September 11, 1956; but they were liable to pay tax on such sales made after September 11, 1956, [348E] (i) The amended section 5 inserted in East Punjab Act No. 46 of 1948 by East Punjab Act No. 19 of 1952 authorising the fixation of the rate of tax leviable on the taxable turnover, was a law authorising the imposition of a tax within the purview of the unamended article 286(3) of the Constitution.
As the East Punjab Act No. 19 of 1952 was passed after the enactment of Art 286(3) of the Constitution and after Parliament had by Central Act 52 of 1952 declared edible oil to be essential for the life of the community and it was not reserved for consideration of the President and did not receive his assent, it could not take effect during the currency of article 286(3) prior to its amendment in so far as it authorised the imposition of a tax on the sale or purchases of edible oil.
It could however take effect in respect of sale and purchases of other goods.
[344A C; 348B C] (ii) The effect of the amendment of article 286(3) of the Constitution by the Constitution (Sixth Amendment) Act with effect from September 11, 1956 was that the restriction put by article 286(3) on the operation of the amended section 5 in respect of essential goods was 336 337 lifted and the section thereafter took effect on such goods also.
There was no force in the contention that the amended section 5 wag a still born Jaw and that the section was not revived by the removal of the ban.
It was inserted by the East Punjab Act No. 19 of 1952 which was passed by a competent legislature and always took effect in respect of nonessential goods.
[344D F] Section 3 of Central Act 52 of 1952 had no independent existence and after the amendment of article 286(3) it had no force from September 11, 1956 until its repeal with effect from January 5, 1957 by Central Act 74 of 1954.
[345C D,E F] (iii) The notification of August 5, 1954 which amended the Schedule of tax free goods was authorised by section 6(2) which was a pre Constitution law outside the purview of article 286(3).
The notification did not require the assent of the President for affecting essential goods.
The notification was therefore valid and took effect in respect of edible oil as from August 5, 1954 and thereafter sales of edible oil produced in ghanis run by mechanical power were taxable.
But as the amended section 5 could not then affect edible oil, no tax was effectively imposed on it until September 11, 1956 during the currency of the unamended article 286(3).
[346A C, E F] (iv) Although the notifications issued by the State Government under the unamended section 5 which was invalid were not authorised by law and also invalid, after the passing of the East Punjab Act 19 of 1952 the result was that from the very commencement of the main Act the amended section 5 was deemed to have authorised the State Government to issue notifications fixing the rate of tax.
The notifications issued under section 5 before 1952 must, therefore be deemed to be and always to have been valid and not still born.
It was not necessary to pass another Act validating those notifications nor was it necessary for the State Government to issue fresh notifications fixing the rate of tax.
Here again, such notifications could not take effect in respect of sales or purchases of essential goods before September 11, 1956.
[346H 347C] (v) There was no force in the contention that the present appeals were not maintainable because the Financial Commissioner had already directed disposal of the case under section 22(5) of the East Punjab Act 46 of 1948 in accordance with the judgment of the High Court.
Effect had to be given to the order of this Court and the Financial Commissioner must direct disposal of the cases accordingly.
[347F 348A] Case law reviewed.