judgement:
Appeals Nos. 416 and 417 of 1947.
Appeals from the judgment and decree dated May 1, 1956, of the Punjab High Court in Regular First Appeal No. 45 of 1950.
276 A.V. Viswanatha Sastri, Gopal Singh and R. N Sachthey, for the appellants (in C.A. No. 416/1962), and respondent (in C.A. No. 417/62).
S.T. Desai, Hardayal Hardy and J. P. Agarwal, for the, respondent (in C.A. No. 416 of 1962) and appellants (in C.A. No. 417 of 1962).
May 8, 1964.
The following Judgments were delivered by the Court.
SARKAR J.I agree with the orders proposed by my brother Hidayatullah.
These appeals arise out of a suit brought by a firm called the Modern Cultivators against the State of Punjab to recover damages for loss suffered by flooding of its lands as a result of a breach in a canal belonging to the State of Punjab.
Both the Courts below have held in favour of the plaintiff but the High Court reduced the amount of the damages awarded by the trial Court.
Both parties have appealed to this Court.
The Modern Cultivators contend that the High Court is in error in reducing the amount of the damages.
The State of Punjab contends that it had no liability forthe loss caused by the flooding.
The breach and the floodingof the plaintiff 's lands are not now denied.
In regard to the appeal by the Modern Cultivators I have nothing to add to what has been said by Hidayatullah J.
For the reasons mentioned by him I agree that the damages had been correctly assessed by the trial Court.
In its appeal the State of Punjab first contended that the plaintiff could not succeed as it had failed to prove that the breach had been caused by the defendant 's negligence.
I am unable to accept this contention.
The trial Court inferred negligence against the defendant as it had failed to produce the relevant documents and with this view agree.
The defendant had produced no documents to show how the breach was caused.
It had been asked by the trial Court to do so by an order made on May 12, 1949 but failed to produce them.
The defendant bad a large number of canal officers and according to Mr. Malhotra, the,Executive Engineer in charge of the canal at the relevant time, 277 there was a regular office and various reports concerning the breach had been made.
None of these was produced at the hearing.
It is obvious that in an Organisation like the canal office, reports and other documents must have been kept to show how the breach occurred and what was done to stop it.
If such documents are not produced, an inference can be legitimately made that if produced, they would have gone against the case of the defendant, that is, they would have proved that the defendant had been negligent: Murugesan Pillai vs Manickavasaka Pandara(1).
It was suggested in this Court.
that the documents had been destroyed.
It may be that they are now destroyed.
One of the defendant 's officers called by the High Court in view of the unsatisfactory nature of the documentary evidence said that documents Were destroyed after three lo seven years.
The breach occurred in August 1947, the suit was filed in October 1948 and the trial was held about August 1949.
So it would appear that at the time ,of the trial the relevant documents had not been destroyed.
Nor was it said that they had then been destroyed.
Furthermore, in view of the pendency of the suit the documents must have be en preserved.
It is, clear that they bad not been produced deliberately.
An inference that the defendant was negligent in the management of the canal arises from the non production of the documents.
There is therefore, evidence that the defendant was negligent.
Furthermore it seems to me that the rule of res ipsa loquitur applies to this case.
The canal was admittedly in the management of the defendant and canal banks are not breached if those in management take proper care.
In such ,cases the rule would apply and the breach itself would be prima facie proof of negligence: see Scott vs London Dock Co.(1).
No doubt the defendant can show that the breach was due to act of God or to act of a third party or any ,other thing which would show that it had not been negligent, but it did not do so.
It may be that the rule of res ipsa loquitur may not apply where it is known how the thing which caused the damage happened as was held in Bankway vs South Wales Transport Co., Ltd.(1).
But that is not the (1) L.R. 44 I.A. 98.
(2) (3) 278 case here.
No reason has been advanced why the rule should not apply.
Therefore I think that the first contention of the defendant that there is no evidence of negligence must be rejected.
I do not think it necessary in the present case to consider whether the rule in Rylands vs Fletcher(1) applies to make the defendant liable for I have already held that it is liable as negligence has been proved.
The second point raised by the defendant was one of limitation.
It was contended on behalf of the defendant that the case was governed by article 2 of the first schedule of the Limitation Act.
It is not in dispute that if that article applies, the suit would be out of time.
That article relates to a suit "for compensation for doing or omitting to do an act alleged to be in pursuance of any enactment".
It was said that the imposed a duty on the defendant to take care of the canal banks and its failure to do so was the omission to do an act in pursuance of an enactment within the article.
I have very grave doubt if this interpretation of article 2 is correct.
There is authority against it: see Mohammad Saadat Ali Khan vs The Administrator, Corporation of City of Lahore(1).
But apart from that I find nothing in the Canal Act imposing any duty on the defendant to take care of the banks.
We were referred to sections 6 and 51 of that Act.
Both are enabling sections giving power to the State Government to do certain acts.
Under section 6 it has power to enter on any land and remove any obstruction and close any channels or do any other thing necessary for the application or use of the water to be taken into the canal.
This obviously does not impose any duty in connection with the canal bank.
Section 15.
gives the power to the canal autho rities in case of accident happening or being apprehended to a canal to enter upon lands of others and to do all things necessary to repair the accident or prevent it.
This section again has nothing to do with taking care of the canal banks.
Therefore, even assuming that the defendant 's interpretation of article 2 is correct, this is not a case to which it may apply.
I wish however to make it clear that nothing that I have said (1) ; (2) [1945] L.R 26 Lah.
523 279 here is to be read as in any way approving the defendant 's interpretation of article 2.
Therefore the defendant '& conten tion that the suit was barred by limitation also fails.
The defendant 's appeal must, therefore, be dismissed and the plaintiff 's appeal allowed.
Costs will naturally follow the result.
HIDAYATULLAH, J.On August 15, 1947 the Western Jamna Canal at R.D. No. 138000 near Sangipur and Jandhrea villages burst its western bank.
The canal water inundated the neighbouring fields where crops of sugar cane, maize, urud etc.
grown by the plaintiff firm were damaged.
The plaintiff brought this action alleging that the breach in the bank was caused by negligence on the part of the canal authorities who were guilty of further negligence in not closing the breach without delay.
The plaintiff estimated its loss at Rs. 60,000 in respect of the standing crop and a further loss of Rs. 10,000 in respect of the deterioration of the land for future cultivation.
It however, limited its claim to Rs. 20,000.
The State Government denied negligence on the part of the canal authorities.
Government admitted that a breach did occur in an old inlet channel of Chhalaundi Silting Tank on August 15, 1947 and some canal water escaped through the breach which, it was said, flowed back to the canal through the outlet of the silting tank lower down the canal.
Government claimed that the site was immediately inspected by the Executive Engineer and no damage to the crops was discovered and that the breach was promptly closed and the bank was strengthened.
Government stated that there were heavy rains on the 8th September and again from 23rd to 28th September, 1947 causing floods in the nullahas but as the canal was running full supply, water brought by the nullahas to the silting tank could not get to the canal and over flowed to the adjoining areas.
Shortly stated, plaintiff 's case was that there was a breach in the western bank of the canal owing to the negligence of the defendants and canal water escaped to the fields causing them to be flooded; while the case of the Government was that a breach did take place but it was promptly repaired 280 and the fields were flooded not by the canal water but by heavy rains in the month of September.
The trial judge passed a decree for Rs. 20,000 against Government, but it was reduced by the High Court to Rs. 14,130.
These two cross appeals have thus been filed by the rival parties by special leave of this Court.
The High Court and the court below have a, reed in holding that there was a break in the canal.
The size of the breach has been variously described, but it was certainly not less than 30 feet wide and the depth of the water at the breach was about 15 feet.
It is admitted that the canal was then running full supply 2, 5,000 Cusecs.
As the width of the canal was 400 feet, the out flow would be at the rate of 5,00OX30/400 Cusecs if the breach was 30 feet wide.
This would mean extensive flooding of the low lying areas unless the breach was immediately closed.
Some of the witnesses say that it was as much as 70 to 80 feet wide and that would make the out flow even greater.
The High Court held that the floods were not caused by the rains.
Prior to the break in the canal there was only I inch of rainfall.
The heavy rains took place much later.
The inundation of the fields was thus by water from the canal and not from the nullahas.
This much has already been held.
It ,is admitted that the breach occurred at a place where there was an old nullah through which silting operations were carried out in the past and this exit was closed in the previous years and the breach was at that very site.
The breach was noticed on the morning of the 16th.
No attempt was made by either side to establish the exact duration of time before the breach was repaired.
Mr. Malhotra (Executive Engineer) stated that it was repaired by the 18th but was re opened (one does not know why) on the 20th and again closed on the 21st.
Evidence on behalf of the plaintiff established that water continued pouring out as late as the month of October.
This was apparently an exaggeration.
There is no evidence to show that the flow of water in the canal was reduced from the headworks the breach occurred.
It apparently continued on full The High Court attempted to secure the documents from the canal Office which had not been produced earlier.
The 281 Executive Engineer, then in charge was summoned to bring all the papers in his office and he produced the telegrams received by and copies of telegrams issued from the head office between August 16, 1947 and September 5, 1947.
From these documents it is now established that the breach was not repaired at least upto August 27, 1947 and the evidence that it was repaired on the 18th was therefore not accurate.
It has also been established that the case of the plaintiff that water continued to flow right upto October was also false.
It may thus be assumed that repairs were completed by the 27th August but not earlier.
It is admitted that the area into which water flowed was used as a silting tank.
The silting operations comprise the opening of the bank of the canal at a selected place to let out turbid water which passing through the silting tank drops the sediment and flows back to the canal at a lower reach free of the silt, and closing of the bank.
It is now admitted that at the exact spot where the breach took place there was previously an opening for silting purposes which was recently closed.
There is no evidence to show negligence on the part of Government.
Curiously enough Government said that it had not preserved the papers connected with this mishap.
We can hardly believe this.
Government led evidence to establish that the banks of the canal were periodically inspected and claimed that the breach was an act of God without any negligence on the part of the canal authorities.
It is an admitted fact that crops of the plaintiff were destroyed if not wholly at least substantially.
The only question, therefore, is whether Government can be held responsible for the damage caused to the plaintiff and, if so what should be the compensation.
Two points were urged on behalf of Government: the first was that the suit filled by the plaintiff was out of time inasmuch as article 2 of the Indian Limitation Act which pres cribes a period of three months was applicable and not article 36 which prescribes a period of two years.
This wag held against Government by the High Court and the court below.
The second point urged on behalf of Government was that there was no proof of negligence whatever by the plaintiff and the plaintiff must therefore fail.
The High 282 Court in dealing with this point held that, in the circum stances res ipsa loquitur and that it was not necessary for the plaintiff to prove negligence and it must be so presumed.
The High Court differed from the court below in assessing damages.
In the appeal of the Government both these points are urged.
On behalf of the plaintiff, in the companion appeal, it is contended that the High Court omitted to give proper compensation for the loss of maize and urud crop.
It is submitted that the High Court adopted the formula that in respect of sugar cane crop which needs plenty of water the damages should be assessed at 1/3 of the value of the crop and in respect of maize and urud crops at 1/2 the value.
The plaintiff contends in its appeal (that the whole of the maize and urud crop was completely destroyed and the decree of the court of first instance allowing 3/4 of the value of the crop as compensation was unassailable.
It is pointed out that evidence disclosed that water in the fields was 4 to 5 feet deep and the maize and urud plants were less than 2 feet high.
In other words, the plants remained submerged during all the time the fields were mandated.
It is obvious that the crop must have been entirely destroyed and the allowance of 1/4 was because the destroyed crop had some value as chari.
On the facts, as found, there was hardly any justification for reducing the amount of the decree for damages passed by the court of first instance.
The High Court itself, in more than one place, stated in its judgment that the maize and urud crops were completely destroyed.
It is, therefore, clear that unless Government succeeds in its appeal the.
decree of the court of first instance must be restored in this case.
Mr. Vishwanatha Sastri on behalf of Government asked for a remit, but in view of the slight difference and the fact that the High Court itself remarked that the maize and urud crops were completely destroyed there would not be any necessity to order a remit in case the appeal of the Government fails.
I shall now turn to that appeal.
The facts as found in this case are that in 1946, the land which got flooded, was used for silting operations.
An opening in the western bank was made in that year and the 283 bank was restored in June 1946.
Till the month of August in the following year there was no complaint.
Evidence discloses that the banks were regularly inspected.
A special Engineer and a Special Sub Divisional Officer were in charge and there were watchmen also.
There is no evidence of wilful conduct.
The plaintiff has not led evidence to establish any particular act of negligence.
There is no evidence that the breach was caused by the act of a third party or even of God.
Sastri, therefore, contends that as there was no foreseable danger against which precautions could be taken beyond making periodical inspections, and this was done, there can be no liability.
He submits that in this view of the matter the plaintiff must fail in the absence of proof of negligence.
The High Court applied to the case the rule in Donoghue vs Stavenson(1) reinforcing it with what is often described as the doctrine of res ipsa loquitur.
This case is first of its kind in India and needs to be carefully considered.
Before us reliance was placed upon the rule in Rylands vs Fletcher(1).
That rule, shortly stated, is: that any occupier of land who brings or keeps upon it anything likely to do damage if it escapes is bound at his peril to prevent its escape, and is liable for all the direct consequences of its escape, even if he has been guilty of no negligence: Per Salmond, Law of Torts 13th Edu.
p. 574.
The rule in Rylands vs Fletcher was derivatively created from the rule of strict liability applicable to the acts of animals but, in my opinion, it is hardly applicable here.
Canal systems are essential to the life of the nation and land that is used as canals, is subjected to an ordinary use and not to an unnatural use on which the rule in Rylands vs Fletcher rests.
The words of Lord Cairns "non,natural use" of land and of Blackburn, J. "special use bringing with it increased danger to others" are sometimes missed.
There is difficulty in distinguishing non natural and natural user but perhaps the best test to apply is slated by Lord Moulton in Richards vs Lothian(1): (1) [1932] A.C. 562 (2) L.R 3 H.L. 300 (3) ; , 280 284 "Some special use bringing with it increased danger to others, and must not merely be the ordinary use of the land or such a use as is proper for the general benefit of the community.
" They formed the basis of observation of Viscount Maugham in Sedleigh Denfield vs V. O 'Callaghan and Ors.(1).
As was pointed out by Holmes in his Common Law (1963) at p. 93: "It may even be very much for the public good that dangerous accumulations should be made.
" Cases of breaks in canals resulting in danger to neigh bouring lands are rare but some are to be found in law reports from the United States of America.
I need not refer to them because the following passage from American Jurisprudence Vol.
9 page 340 para 38 gives an adequate summary of the principles on which they had been dealt with: "A canal company is also liable for flooding private property where it has not acquired the legal right to do so; it is answerable in damages for all loss occasioned by a neglect on its part to use reasonable care and precaution to prevent the waters of its canal from escaping therefrom to the injury and detriment of others.
A canal proprietor is not, however, liable for damages to adjoining lands resulting from a mere accidental break in his canal which human foresight and vigilance could not have anticipated, and against which proper prudence and judgment could not be expected to provide.
Although it has been held that a canal company is not liable for damages occasioned by the per colation of waters through the banks of its canal, in the absence of proof of negligence on its part in want of skill or care in the construction and maintenance of its canal, such holdings are maintenance of its canal.
such holdings (1) ; at 889 285 are opposed to the weight of reason and autho rity.
" Perhaps the liability is viewed strictly as an inducement to care Safety is best secured when.
it is made the responsi bility of the person who must not only take precautions to avoid accident but who alone decides what those precautions should be.
In this connection the rule that is most often quoted was stated by Erle C.J. in Scott vs London and St. Katherine Docks Co. (1) thus: "There must be reasonable evidence of negligence.
But where the thing is shown to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants that the accident arose from want of care.
" In subsequent cases it has been customary to regard this as a statement of the principle of res loquitur.
But the principle, if it be one, cannot always be safely applied where the facts before the court are not the whole facts.
In a vast canal system constructed with great care and attention to detail it may be difficult to prove negligence but it may sometimes be equally difficult to explain how the defect arose.
The principle of res ipsa loquitur had its origin in the failing of a barrel of flour from a first floor window on a passerby but it has been extended to situations quite different.
It is not very much in favour and if applied it must be correctly understood.
It is not a principle which dispenses with proof of negligence.
Rather it shifts onus from one party to another.
It is rule of evidence and not of liability.
A too ready reliance on the maxim reinforces a fault liability and makes it into an absolute liability.
If absolute liability is to give way to fault liability, some fault must be established by evidence or must be capable of being reasonably inferred from the circumstances.
It is not (1) ; : 286 sufficient to say res ipsa loquitur because the danger is that facts may not always tell the whole story and if there is something withheld how can the thing be said to speak for itself ? The principle which I consider reasonable to apply where fault has to be inferred from circumstances was best stated by Lord Porter and I respectfully adopt it.
Speaking of res ipsa loquitur it was observed by Lord Porter in Barkway vs South Wales Transport Co. Ltd.(1) : "The doctrine is independent on the absence of explanation, and, although it is the duty of the defendants, if they desire to protect themselves, to give an adequate explanation of the cause of the accident, yet, if the facts are sufficiently known, the question ceases to be one where the facts speak for themselves, and the solution is to be found by determining whether, on the facts as established, negligence is to be inferred or not.
" I have made these observations so that the principle may not be applied too liberally.
It must also be remembered that what is said in relation to it in one case cannot indiscriminately be applied to another case.
It should not be applied as legal rule but only as an aid to an inference when it is reasonable to think that there are no further facts to consider.
I shall now consider the facts as they stand in this case to discover if the canal authorities can be said to be at fault.
The facts show that the water escaped into the Chillaundi Silting Tank through the nallah which had previously been used for silting operations and had been sealed in the previous year.
If the plug were sound it would have withstood the pressure of water as it did after it was repaired on the 27th August even though 28" of rainfall fell within 20 days.
There is nothing to show that the outflow was due to rainfall or a storm so exceptional that it could be regarded as an act of Good.
Nor was it due to any disturbance of the earth 's crust or interference by a stranger.
There is thus ,sufficient evidence, in the absence of reasonable explanation (1) at 394,395 287 (which there is not), to establish negligence.
Further, there was inordinate delay and negligence in sealing the breach.
Even the flow in the canal was not reduced for repairs to be carried out quickly.
In such circumstances, the facts prove negligence and government was rightly held responsible.
Whether the defect was patent or latent is not much to the purpose.
It was not an inevitable accident, and the Government must be held liable.
It remains to consider the question of limitation.
The high Court and the court below have applied article 36 of the indian Limitation Act.
Government claims that the proper Article to apply was article 2.
These Articles may be set down here: Description of Period of limitation Time from which suit.
period begins to run.
For compensation Ninety days When The act or for doing or for omission takes omitting to do an place.
act alleged to be in pursuance of any enactment in force for the time in India 36.
For compensation Two years (now When the malfeasance for any mal feas one year) misfeasance or non ance, misfeasance feasance takes place.
or nonfeasance independent of contract and not herein specially provided for.
It is not denied that if article 2 was not applicable, the proper Article would be article 36 and the suit would also be within time.
In contending that the second article applies reliance is placed on a decision of the Privy Council in Punjab Cotton Press Co. Ltd. vs Secretary of State(1).
But that case is clearly inapplicable.
There the canal authorities cut the bank of a canal at a selected point to let the water away with a view to protecting a railway track passing close by ,on a high embankment and in this way flooded and injured the plaintiff 's mills.
The Judicial Committee held that if the act was done, as was said, under section 15 of the (8 of 1873), article 2 was applicable and not article 36.
The case was thus remanded (1) I.L.R. to Lah.
171 P.C. 288 to find the fact necessary for the application of the.
right article.
In relying upon this case, Mr. Viswanatha Sastri claims that section 15 of the Canal Act covers the present facts.
Mr. Gopal Singh, who followed, also refers to section 6.
These, sections read: "6.
Powers of Canal Officer.
At any time after the day so named, any Canal Officer, acting under the orders of the State Government in this behalf, may enter on any land and remove any obstructions, and MaY close any channels, and do any other thing necessary for such application or use of thE said water." "15.
Power to enter for repairs and to prevent accidents.
In case of any accident happening or being apprehended to a canal, any Divisional Canal.
Officer or any person acting under his general or special orders in this behalf may enter, upon any lands adjacent to such canal, and may execute all works which may be necessary for the purpose of repairing or preventing such accidents.
Compensation for damage to land.
In every such case, such Canal Officer or person shall tender compensation to the proprietors or occupiers of the said lands for all damage done to the same.
If such tender is not accepted, the Canal Officer shall refer the matter to the Collector, who shall proceed to award compensation for the damage as though the State Government had directed the occupation of the lands under section 43 of the Land Acquisition Act, 1870.
" In regard to section 6 it is sufficient to say that it has no application here.
It refers to the day named in section 5 and 289 that section provides for a notification to be issued declaring that water would be applied after a particular date for purpose of any existing or projected canal or drainage work or for purposes of Government.
On such notification issuing any Canal Officer, acting under the orders of the State Government, may enter on any land and remove obstructions or close any channels so that water may be applied to those purposes.
This is an entirely different matter and it is no wonder that Mr. Viswanatha Sastri did not rely upon section 6.
Section 15 no doubt confers a power to enter lands and property of others to affect repairs or to prevent accidents.
One can hardly dispute that it is the normal duty of canal authorities to make repairs and execute works to prevent accidents.
But article 2 cannot apply to omissions in following the statutory duties because it cannot be suggested that they are 'in pursuance of any enactment '.
Cases of malfeasance, misfeasance or nonfeasance may or may not have statutory protection.
Act or omission which can claim statutory protection or is alleged to be in pursuance of a statutory command may attract article 2 but the act or (mission must be one which can be said to be in pursuance of an enactment.
Here the suit was for compensation for damage consequent on a break in the canal on August 15, 1947.
The only act or omission could be the opening and closing of the channel for silting operations.
That was before June 1946.
The third column of article 2 provides the start of the limitation of 90 days" when the act or omission takes place.
" The period of limitation in this case would be over even before the injury if that were the starting point.
This subject was elaborately discussed in Mohamad Sadaat Ali Khan vs Administrator Corporation of City of Lahore(1) where all rulings on the subject were noticed, Mahajan J. (as he then was) pointed out that "the act or omission must be those which are honestly believed to be justified by a statute".
The same opinion was expressed (1) I.L.R. F.B. 51 S.C. 19. 290 by Courtney Terrell C.J., in Secretary of State vs Lodna Colliery Co. Ltd. (1) in these words : "The object of the article is the protection of public officials, who, while bona fide purporting to act in the exercise of a statutory power, have exceeded that power and have committed a tortious act; it resembles in this respect the English Public Authorities Protection Act.
If the act complained of is within the terms of the statute, no protection is needed, for the plaintiff has suffered no legal wrong.
The protection is needed when an actionable wrong has been committed and to secure the protection there must be in the first place a bona fide belief by the official that the act compalined of was justified by the statute; secondly, the act must have been performed under colour of a statutory duty, and thirdly, the act must be in itself ,a tort in order to give rise to the cause of action.
It is against such actions for tort that the statute gives protection.
" These cases have rightly decided that Art.2 cannot apply to cases where the act or omission compalained of is not complained of is not alleged to be in pursuance of statutory authority.
It is true that in Commissioners for the Port of Calcutta vs Corporation of Calcutta(1) the Judicial Committee, while dealing with section 142 of the Calcutta Port Act (3 of 1890) which reads: No suit shall be brought against any person for any done or purporting or professing to be done in pursuance of this Act, after the expiration of three months from the day on which the cause of action in such suit shall have arisen", pointed to the presence of the words "purporting or profess ing to be done in pursuance of this Act" and observed that (1) I.L.R. 1 5 Pat.
510 (2) 64 I.A. 36 291 they regarded the words as of 'pivotal importance ' and that their presence postulated "that work which is not done in pursuance of the statute may nevertheless be accorded its protection if the work professes or purports to be done in pursuance of the statute".
But they were giving protection to an act which could legitimately claim to be in pursuance of the Port Amt.
Here the break in the bank was not that kind of act or omission.
It could not claim to be in pursu ance of the Canal Act.
Nor could the opening or closing of the channel for silting operations, though in pursuance of the Canal Act, be the relevant act or omission because they were more than a year before the cause of action and to apply a limitation of 90 days to that cause of action is not only impossible but also absurd.
article 2, therefore, does not apply here.
It was not contended before us that the suit was otherwise time barred and we accordingly confirm the finding that the suit was within time.
The result thus is that the appeal filed by the State Government fails and I would dismiss it with costs and allow the appeal filed by the plaintiff with costs.
I would modify the judgment and decree of the High Court by altering the amount of Rs. 14,130 to Rs. 20,000 as ordered by the trial judge.
MUDHOLKAR, J.I agree with my brethren Sarkar and Hidayatullah that the appeal preferred by the defendant, the Stale of Punjab, be dismissed and the appeal preferred by the plaintiff, the Modern Cultivators, be allowed and the decree for damages be restored to the sum awarded by the trial court.
I also agree with the order for costs as proposed.
I wish to add nothing with regard to the plaintiff 's appeal to what has been said by my brother Hidayatullah nor to what he or my brother Sarkar has said regarding the question of limitation raised on behalf of the defendant.
They have both held that article 2 of the Limitation Act is not attracted to a case like the present where the damages sustained by the plaintiff are not the result of anything done by the State 292 in pursuance of a statutory power exercised by it or by reason of an act which could properly be said to have been performed in the purported exercise of a statutory power.
If article 2 is out of the way, it is not disputed on behalf of the State that the suit will be within time.
My learned brother Hidayatullah has referred to the rule of common law as to strict liability with respect to damages resulting from the escape of deleterious substances or cattle from the land which have been accumulated or brought on the land by its owner for his use and which were not natural there.
The rule was stated thus in Rylands vs Fletcher(1) by Blackburn, J. "We think that the true rule of law is that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and if he does not do so is prima facie answerable for all the damage which is the natural consequence of its escape.
" It was approved by the House of Lords, but Lord Cairns laid down a new principle distinguishing the natural from the non natural user of land and holding that in the latter case only was the liability absolute.
(see Salmond on Torts, 13th ed.
p. 579).
This rule has been adopted in this country in several cases (see Gooroo Churn vs Ram Dutt(2); Dhanusao vs Sitabai(3) and several other cases) and can, therefore, be regarded as a part of the common law of the land.
In the country of its origin, this rule has been subjected to certain exceptions.
The present case falls in one of the exceptions recognised in some, though not, all cases.
It has been held in some cases that where the owner or occupier of land accumulate,,, a deleterious substance thereon by virtue of an obligation imposed upon him by a statute or in exercise of statutory authority he will not be rendered liable for damages resulting therefrom to other persons unless it is established that he was guilty (1) 18681 ; (2) 293 of negligence in allowing the deleterious substance to escape.
In a recent decision Dunne vs Horth Western Gas Board(1) the Court of Appeal has recognised this exception and the controversy may be said to have been set at rest subject, of course, to what the House of Lords may have to say hereafter.
Indeed, the liability to pay damages to another resulting from an act of a person is laid upon him by the law of torts upon the basis that his act was wrongful and that he was a wrong doer.
Where, therefore, the act consists of something which the law enjoins upon that person to do or which the law permits him to do, it cannot possibly be said that his mere act in doing that something was in itself wrongful and that he was a wrong doer.
He will, however, be liable if he performed the act in a negligent manner or if the escape of the deleterious substance subsequent to accumulation of that substance in exercise of a statutory authority was the result of his negligence.
There is nothing here to show that in constructing the canal under the powers conferred by the State did anything other than what the law permitted.
Therefore, by constructing the canals and allowing water to flow along it the State merely exercised its statutory authority.
Further, there is nothing to show that there was any want of care in constructing the canal and so no question of negligence will arise in constructing the canal and allowing water to flow along the canal in question.
Here, what has happened is that at the point where prior to 1946 the water from the canal was allowed to flow into the silting tank through a nallah, there was an opening which was plugged in that year.
Here, it is established that over a year after that opening was plugged by the State a breach of about 30 or 40 feet was caused.
This occurred on August 15, 1947.
It has not been shown that the breach could have been caused by an act of God or an act of third party.
The contention of the State that it was caused by heavy rains in the catchment area has not been found to be true If, therefore, there is material from which it could be inferred that the breach was caused by reason of negligence on the part of the State in inspecting the banks of the canal and in (1) 294 particular that portion of it where the breach had been caused the State would be liable in damages.
This would be, so not by the operation of the rule in Rylands vs Fletcher(1) but by reason of negligence.
The sole ground upon which the liability of the State could be established in this case would be negligence of the State in properly maintaining the banks of the canal.
For this purpose it would be relevant to consider whether there were periodical inspections, whether any breaches or the development of cracks were noticed along the banks of the canal and in particular at the place where the breach ulti mately occurred or whether any erosion of the banks parti cularly at the place where one of the banks had been plugged had been noticed and no action or timely action had been taken thereon.
There is evidence to show that the canals were being regularly inspected.
That, however, is not the end of the matter.
Immediately after the breach occurred some reports were made and as pointed out by my brethren in their judgments they were not placed before the court despite its order requiring their production.
When the matter went up before the High Court it was said that the records had been destroyed in the year 1958 or so and therefore they could not be furnished.
This action on the part of the State is manifestly unreasonable and the legiti mate inference that could be drawn from it is that if the documents had been produced they would have gone against the State and would establish its negligence.
In it could legitimately be presumed that the State was negligent inasmuch as it had deliberately suppressed evidence in its possession which could have established negligence.
In the circumstances of this case I do not think it appropriate to refer to the rule of evidence res ipsa loquitur.

summary:
A firm called the Modern Cultivators brought a suit against the State of Punjab to recover damages for loss of crops suffered by flooding of its lands as a result of a break in a canal belonging to the State.
The plaintiff 's case was that there was a breach in the western bank of the canal owing to the negligence of the defendants and canal water escaped to the fields causing them to be flooded.
The case of Government was that breach did take place but it was promptly repaired and the fields were flooded not by the canal water but by heavy rains in the month of September.
The trial Judge passed a decree for Rs. 20,000 against Government, but it was reduced by the High Court to Rs. 14,130.
The High Court held that the inundation of the fields was by water from the canal and not from the nallahas.
Both the plaintiff and the defendant filed cross appeals by special leave of this Court.
Held (per Sarkar, J.): (i) That the rule of res ipsa loquitur was applicable to the facts of this case because there would not have been a breachin the banks of the canal if those in management took proper care andthe breach itself would be prima facie proof of negligence.
Scott vs London Dock Co., applied.
Barkway vs South Wales Transport Co. Ltd., [1950] 1 All.
E.R. 392, distinguished.
(ii)An inference that the defendant was negligent in the management of the canal arises because it is clear from the record that documents called for had not been produced deliberately.
Murugesam Pillai vs Manickavasaka Pandara, L.R. 44 I.A. 98, referred to.
(iii)Article 2 of the Limitation Act does not apply to the facts of the casefor there is nothing in the Canal Act imposing any duty on the defendant to take care of the banks.
Held (per Hidayatullah, J.): (i) The principle of res ispa loquitur cannot always, be safely applied where the facts before the court are not the whole facts.
It should not be applied as legal rule but only 51 S.C. 18. 274 as an aid to an inference when it is reasonable to think that there are lb no further facts to consider.
It is not a principle which dispenses with proof of negligence.
Rather it shifts onus from one party to another.
It is a rule of evidence and not of liability.
A too ready reliance on the maxim reinforces a fault liability and makes it into an absolute liability.
If absolute liability is to give way to fault liabilty, some fault must be established by evidence or must be capable of being reasonably inferred from the circumstances.
It is not sufficient to say res ipsa loquitur because the danger is that facts may not always tell the whole story and if there is something withheld how can the thing be said to speak for itself? The High Court erred in applying the principle of res ipsa loqutur to the facts of this case.
In the present case there was sufficient evidence, in the absence of reasonable explanation (which there was not), to establish negligence.
Donoghue vs Stevenson, 1932 1 A.C. 562, explained.
Sedleigh Denfield vs V. O 'Callaghan and Other section 1940 1 A.C. 890 and Scott vs London and St. Katherine Docks Co., ; , referred to.
Barkway vs South Wales Transport Co. Ltd. [1950] 1 All.
E.R. , relied on.
(ii)The rule in Raylands vs Fletcher is hardly applicable here.
Canal Systems are essential to the life of the Nation and land that is used as canals, is subjected to an ordinary use and not to unnatural use on which the rule in Raylands vs Fletcher rests.
There is difficulty in distinguishing non natural and natural user.
Rylands vs Fletcher, L.R. 3 H.L. 300, inapplicable.
Richards vs Lothian, ; , relied on.
(iii)Article 2 of the Limitation Act cannot apply to cases where the act or omission complained of is not alleged to be in pursuance of statutory authority.
Act or omission which can claim statutory protection or is alleged to be in pursuance of a statutory command may attract article 2 of the Limitation Act but the Act or omission must be one which can be said to be in pursuance of an enactment.
In the present case the breach in the bank was not that kind of act or omission.
It could not claim to be in pursuance of the Canal Act.
Nor could the opening or closing of the channel for operations, though in pursuance of the Canal Act, be the relevant act or omission because they were more than a year before the cause of action and to apply a limitation of 90 days to that cause of action is not only impossible but also absurd.
Article 2, therefore does not apply.
Article 3 of the Limitation Act applies to the present case.
Punjab Cotton Press Co. Ltd. vs Secretary of State, I.L.R. P.C., inapplicable 275 Mohamad Sadaat Ali Khan vs Administrator Corporation of City of Lahore, I.L.R. F.B. and Secretary of State vs Lodna Colliery Co. Ltd., I.L.R. 15 Pat.
510, referred to.
Commissioners for the Port of Calcutta vs Corporation of Calcutta, 64 I.A. 363, distinguished.
Held (per Mudholkar. J.): (i) The rule in Rylands vs Fletcher applies only if the defendant brings or accumulates on his own land something that is likely to escape and do mischief, irrespective of the question whether that was done by the defendant wilfully or negligently.
This rule has been adopted in this country in several cases and so can be regarded as a part of the common law of the land.
In the country of its origin, this rule has been subjected to certain exceptions.
One of the exceptions is this: that where the owner or occupier of land accumulates a deleterious substance thereon by virtue of an obligation imposed upon him by a statute or in exercise of statutory authority he will not be rendered liable for damages resulting therefrom to other persons unless it is established that he was guilty of negligence in allowing the deleterious substance to escape.
The present case falls within this exception.
The State of Punjab would not be liable for damages by the operation of the rule in Rylands vs Fletcher but is liable by reason of its negligence.
The breach was caused by the negligence on the part of the officers of the State in inspecting the banks of the canal and in particular that portion of it where the breach had been caused.
Rylands vs Fletcher, ; explained.
Gooroo Churn V. Ram Dutt, , Dhanusao V. Sitabai, , and Dunne vs North Western Gas Board, referred to.
(ii)The rule of evidence res ipsa loquitur cannot be applied to the facts of this case because all the facts for the decision of the case were not placed before the court.
Immediately after the breach occurred some reports were made by the officers of the State but they were not placed before the Court despite its order requiring their production.
In other words the State had deliberately suppressed evidence in its possession which could have established negligence.
In this view the rule of res ipsa loquitur is not the applicable.


judgement:
Appeal No. 322 of 1963.
Appeal from the Judgment and order dated April 1, 1958 of the former Bombay High Court in Miscellaneous Application No. 327 of 1957.
K.N. Rajagopala Sastry and R. N. Sachthey, for the appellant.
74 Bishan Narain, section P. Mehta, J. B. Dadachanji, 0.
C. Mathar and Ravinder Narain, for the respondent.
April 30, 1964.
The Judgment of the Court was, delivered by SHAH J.
M/s Lal and Company hereinafter called the assessee carry on business in Bombay as commission agents.
In the course of assessment proceedings for the year 1954 55 the assessee 's books of account were examined by the Income tax Officer and it was noticed that the assessee had business connections with certain non resident parties.
On March, 12, 1957, the Income tax Officer issued a notice calling upon the assessee to show cause why in respect of the assessment year 1954 55 the assessee should not be treated under section 43 of the Indian Income tax Act, 1922, as an agent in respect of twenty five non resident parties named in the notice.
The assessee denied that he had "direct dealings" with any non resident party and that in any event the proposed action was barred because the period prescribed for initiation of proceeding had expired, and requested the Income tax Officer to drop the proceeding.
The Income tax Officer B III Ward, Bombay issued on March 27, 1957, a notice under section 34 of the Indian Income tax Act for assessment of the assessee as an agent of the twentyfive named non resident parties.
The assessee submitted a return showing his income as "nil".
The Income tax Officer held that the transactions disclosed from the books of account of the assessee clearly showed that the assessee "had regular business connection with" non resident parties, that through the assessee those non resident parties were receiving income, profits and gains, and section 43 was clearly applicable to the assessee there being definite business connection between the assessee and the named non residents.
He therefore treated the assessee as agent of the non resident parties, under section 43 of the Act.
The Income tax Officer also rejected the contention of the assessee that action under section 34 was barred at the date of the notice issued to the assessee.
Relying upon the first proviso to section 34(1) (b) (iii) inserted by the Finance Act, 1956, the Income tax Officer held that the Legislature had 75 by amendment extended the "time limit in clear and express terms so as to cover" action under section 34 against a person on whom the assessment or reassessment is to be made as an agent of a non resident person under section 43 of the Act for the assessment year 1954 55, and accordingly assessed the income of the assessee at Rs. 60,684, estimating the income of the parties residing outside the taxable territories, in the absence of accounts to be Rs. 50,000.
The asessee then :filed a petition under article 226 of the Constitution in the High Court of Judicature at Bombay praying that a writ in the nature of mandamus or prohibition do issue restraining and prohibiting the Income tax Officer from giving effect to or taking any steps or proceedings by way of recovery or otherwise in pursuance of the orders of assessment.
The assessee pleaded, inter alia, that the proceedings for assessment under section 34 of the Act commenced by the Income tax Officer after the expiry of one year from the end of the assessment year 1954 55 were without the authority of law.
The High Court of Bombay, following its earlier judgment in section C. Prashar vs Vasantsen Dwarkadas(1) held that at the date when the notice was issued, by reason of the proviso which was in operation under section 34(1) in respect of the assessment year 1954 55 the notice was out of time and that the period provided thereby could not be extended by the Finance Act of 1956 so as to authorise the Income tax Officer to issue a notice for assessment or reassessment of the assessee as statutory agent of a party, residing outside the taxable territory.
In the view of the High Court the notice dated March 27, 1957, was invalid, and a valid notice being a condition precedent to the exercise of jurisdiction under section 34, the proceeding under section 34 was not maintainable.
Against the order of the High Court issuing writs prayed for by the assessee, with certificate of fitness this appeal is preferred by the Income tax Officer, Bombay.
In order to appreciate the contention raised by the assessee and which has found favour with the High Court, it is necessary to refer to the relevant provisions of section 34, 76 as they stood before the section was amended by the Finance Act, 1956.
The clauses relevant prescribing the period within which notice may be issued read as follows: (1) (a) If x x x (b) x x x he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, x x x a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or re assess such income, profits or gains or recompute the loss or depreciation allowance; x x x Provided that (i) x x x (ii) x x x (iii) Where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of non resident person under section 43, this sub section shall have effect as if for the periods of eight years and four years a period of one year was substituted.
" By section 18 of the Finance Act, 1956, section 34 was extensively amended and cl.
(iii) of the proviso was substituted by the following proviso: "Provided further that the Income tax Officer shall not issue a notice under this sub section for ,any year after the expiry of two years from that year if the person on whom an assessment or reassessment is to be made in pursuance of the notice is a person deemed to be an agent of non resident person under section 43." Initially a notice of assessment or re assessment under section 34(1) against a person deemed to be an agent of a non 77 resident person under section 43 could not be issued after the expiry of one year from the end of the year of assessment: under the amended section this period was extended to two years from the end of the relevant assessment year.
In the course of assessment to income tax for the year 1954 55 the relevant law applicable prescribed that a notice of assessment or re assessment against a person deemed to be an agent under section 43 could not be issued after the expiry of one year from the end of the assessment year.
That period expired on March 31, 1956, and after that date no notice could be issued, relying upon the law as it stood before amendment for assessment or re assessment treating the assessee as an agent of a non resident under section 43.
But the Income tax Officer sought recourse to the amended provision which gave him a period of two years from the end of the assessment year, for initiating assessment proceedings, and the authority of the Income tax Officer to so act is challenged by the assessee.
Section 18 of the Finance Act, 1956, is, it is common ground, not given retrospective operation before April 1, 1956.
The question then is, whether the Income tax Officer may issue a notice of assessment to a person as an agent of a non resident party under the amended provision when the period prescribed for such a notice had before the amended Act came into force expired? Indisputably the period for serving a notice of re assessment under the unamended section had expired, and there was in the Act as it then stood, no provision for extending the period beyond the end of one year from the year of assess ment.
The Income tax Officer could therefore commence a proceeding under section 34 on March 27, 1957, only if the amended section applied and not otherwise.
The amendin Act came into force after the period provided for the issue of a notice under section 34 before it was amended had expired.
It is true that there was no determinable point of time between the expiry of the prescribed time within which the notice could have been issued against the assessee under section 34 proviso (iii) before it was amended.
But there was no overlapping period either.
Prima facie, on the expiry of the period prescribed by section 34 as it originally stood, there was no scope for issuing a notice unless the 78 Legislature expressly gave power to the income tax Officer to issue notice under the amended section notwithstanding the expiry of the period under the unamended provision or unless there was overlapping of the period within which notice could be issued under the old and the amended pro vision.
But counsel for the Commissioner submitted that at no time was the Income tax Officer bereft of authority to issue a notice under section 34 of the Indian Income tax Act, 1922.
He submitted that till the mid night of March 31, 1956, notice could be issued in exercise of the powers con ferred by section 34 proviso (iii) before it was amended and notice of assessment or re assessment could also be issued under the amended provision immediately thereafter in exercise of the powers conferred by section 18 of the Finance Act, 1956.
Counsel relied upon the rule contained in section 5(3) of the General Clauses Act that unless the contrary is expressed, a Central Act or Regulation shall be construed as coming into operation immediately on the expiration of the day preceding its commencement.
It was submitted that this is merely a statutory recognition of the rule which is well settled that where a statute names a date on which it shall come into operation, it shall be deemed to come into force immediately on the expiration of the previous day and the law does not take into consideration fractions of a day.
Reliance was placed by counsel upon Tomlinson vs Bullock( ') and English vs Cliff(2).
In Tomlinson 's case( ') the question was whether an order of affiliation could be made on an application made in respect of a child born at any time of the day an August 10, 1872 under the Bastardy Act, 35 & 36 Vict.
c. 65.
In an application made for an order of affiliation, it was held that the order could competently be made in respect of a child born at any time of the day on the 10th of August, 1872, because the Act in the contemplation of law for this purpose came into effect from the commencement of the day on which it received the royal assent, and that normally an Act which comes into operation becomes law as soon as it commences.
In English vs Cliff (2) it was held by the Court of Chancery (1) (2) 79 that the trustees under a deed of settlement dated May 13, 1892, who stood possessed of an estate during the term of twenty one years from the date of settlement upon trust to apply the rents and profits mentioned therein and who were authorised at the expiration of the said period to sell the estate could competently sell it and their action was not liable to be challenged as infringing the rule of per petuity.
It was held in that case that the determination of the term of twenty one years and the conunencement of the trust for sale arising at one and the same moment, the trust was not void for remoteness on the ground that it was limited to take effect at the expiration of the term.
Neither of these cases has, in our judgment, any application to the principle applicable in the present case.
The power to issue a notice under the unamended Act came to an end on March 31, 1956.
Under that Act no notice could thereafter be issued.
It is true that by the amendment made by section 18 of the Finance Act, 1956, a notice could be issued within two years from the end of the year of assessment.
But the application of the amended Act is subject to the principle that unless otherwise provided if the right to act under the earlier statute has come to an end, it could not be revived by the subsequent amendment which extended the period of limitation.
The right to issue a notice under the earlier Act came to an end before the new Act came into force.
There was undoubtedly no determinable point of time between the expiry of the earlier Act and the commencement of the new Act; but that would not, in our judgment, affect the application of this rule.
Reliance was also placed by counsel for the Commissioner upon the rule which has prevailed in the Supreme Court of the United States of America that "a new statute should be construed as a continuation of the old one with the modifications contained in the new one, although it formally repeals the old statute, when it re enacts its substantial provisions and the two statutes are almost identical." Bear Lake & River Water Works & irrigation Company and Jarvis Conklin Mortgage Trust Company vs William Garland and Corey Brothers & Co.( ').
It appears (1) I64 U.S. 1 80 to have been recognised in the Supreme Court of the United states of America in Pacific Mail section section Co. vs jolifee(1) that repeal in terms of a former statute does not necessarily indicate an intention of the legislature thereby to impair right which had arisen under the act which was repealed.
As the provisions of the new act took effect simultaneously with the repeal of the old one, the Supreme Court held that the new one might more properly be said to be substituted in the place of the old one, and to continue in force, with modifications, the provisions of the old act, instead of abrogating or annulling them and re enacting the same as a new and original act.
Apart from the question whether the rule so enunciated is applicable to the interpretation of Indian statutes, in this case we are not concerned with re enactment of a statute.
The statute abrogates one rule of limitation, and enacts another rule with a limited retrospective operation.
To such a case the rule enunciated by the Supreme Court of America, assuming it applies, attributing to the Legislature an intention to continue in force the provisions of the old Act, with a modification, so as to give to the new statute in substance operation retrospectively from the date on which the old statute was enacted, can have no application.
We do not think that any such intention may be attributed to the Legislature in enacting section 18 of the Finance Act, 1956 so as to make it the basis of a liability to taxation after the expiry of the period prescribed in that behalf by the Legislature .
Counsel also submitted that section 34 lays down a rule of limitation for commencing an action for assessment or re assessment, and that in the absence of an express provision to the contrary, a statute of limitation in operation at a given time governs all proceedings from the moment of its enactment, even though the cause of action on which the proceeding was based came into existence before the Act was enacted.
Equating a proceeding under section 34 of the Indian Income tax Act with a suit or a proceeding in a civil court, counsel said that the law of limitation being a law of procedure, assessment proceedings including proceedings for re assessment are governed by the law in force (1) 69 U.S. 81 at the date on which they are instituted, and that the rule that the repeal of a statute without express words or clear implication in the repealing statute, cannot take away a right vested in a party acquired under the repealed statute when it was in force, is a rule of prescription and not of procedure, and notwithstanding general observations to the contrary in certain decisions, applies only to those actions in which by the determination of the period prescribed, a right to institute an action for possession of property is extnguished.
Counsel relies in support of the plea on Baleswar vs Latafat(1).
It is unnecessary to dilate upon this argument in any detail, or to enter upon an analysis of the numerous cases which were mentioned at the Bar to determine whether the rule that without an express pro vision, or a clear implication arising from the amending statute rights acquired under the repealed statute by the determination of the period of limitation prescribed thereby cannot be deemed to be revived, applies to suits for posses sion only.
It may be sufficient to make two comments on the argument.
The rule has in fact been applied to suits other than suits for possession: e.g.
Mahomed Mehdi Faya vs Sakinabai(2) (a suit for restitution of conjugal rights); M. Krishnaswami Nalcker vs A. Thiruvengada Muddaliar(3) (a suit for recovery of a debt); Shambhoonath Saha vs Guruchurn Lahiri (4) (an application for execution); and Nepal Chandra Roy Chowdhury vs Niroda Sundari Ghose(5) (an application for setting aside an ex parte decree).
Again soon after it was delivered the the authority of Baleswar 's case( ') was weakened by the judgment in Jagdish vs Saligram(6) where the Court doubted the correctness of the earlier view.
A proceeding for assessment is not a suit for adjudication of a civil dispute.
That an income tax proceedings it; the nature of a judicial proceeding between contesting parties, is a matter which is not capable of even a plausible argument.
The Income tax authorities who have power to assess and recover tax are notacting as judges deciding a (1) I.L.R. 24 Pat.
383 (3) A.I.R. (1935) mad.
245(4) I.L.R. (5) I.L.R. (6) I.L.R. 24 Pat.
391 51 S.C. 6.
82 litigation between the citizen and the States: they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate.
Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State: The Commissioner of Inland Revenue vs Sneath(1); and Shell Company of Australia Ltd. vs Federal Commissioner of Taxation( ').
Again the period prescribed by section 34 for assessment or re assessment is not a period of limitation.
The section in terms imposes a fetter upon the power of the Income tax Officer to bring to tax escaped income.
It prescribes different periods in different classes of cases for enforce ment of the right of the State to recover tax.
It was observed by this Court in Ahmedabad Manufacturing and Calico Printing Co. Ltd. vs section C. Mehta.
income tax Officer and another( '): "It must be remembered that if the Income tax Act prescribes a period during which tax due in any particular assessment year may be assessed, then on the expiry of that period the department cannot make an assessment.
Where no period is prescribed the assessment can be completed at any time but once completed it is final.
Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escapement of assessment of income for one reason of another (section 34).
Both these sections which enable reopening of back assessments provided their own periods of time for action but all these periods of time, whether for the firs assessment or for rectification, or for reassess ment, merely create a bar when that time passe( (1) 164 (2) [1931) A.C. 275 (3) [1963] SUPP.
2 S.C.R. 92,117 118 83 against the machinery set up by the Incometax Act for the assessment and levy of the tax.
They do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period.
The liability is not enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reason of a new power.
This is, of course, subject to the condition that the law must say that such is the jurisdiction, either expressly or by clear implication.
If the language of the law has that clear meaning, it must be given that effect and where the language expressly so declares or clearly implies it, the retrospective operation is not controlled by the. commencement clause.
" Counsel for the Commissioner sought to derive some support from Income tax Officer, Companies District I, Calcutta and another vs Calcutta Discount Company Ltd.( ') in which Chakravartti C.J., dealing with the effect of the Income tax and Business Profits Tax (Amendment) Act, 1948, observed: "The plain effect of the substitution of the new section 34 with effect from 30th March, 1948 is that from that date the Income tax Act is to be re ad as including the new section as a part thereof and if it is to be so read, the further effect of the express language of the section is that so far as cases coming within cl.
(a) of sub section
(1) are concerned all assessment years ending within eight years from 30th March, 1948 and from subsequent dates, are within its purview and it will apply to them, provided the notice con templated is given within such eight years.
What is not within the purview of the section is an assessment year which ended before eight years from 30th March, 1948.
(1) 84 But it may be recalled that the amending Act of 1948 with which the Court was concerned in Calcutta Discount Company 's case(1) came into force on September 8, 1948, but section 1(2) prescribed that the amendment in section 34 of the Income tax Act, 1922, shall be deemed to have come into force on March 30, 1948, and the period under the unamended section within which notice could be issued under section 34(3) against the assessee company ended on March 31, 1951.
Before that date the amending Act came into operation, and at no time had the right to re assess become barred.
In considering whether the amended statute applies, the question is one of interpretation i.e., to ascertain whether it was the intention of the Legislature to deprive a taxpayer of the plea that action for assessment or re assessment could not be commenced, on the ground that before the amending Act became effective, it was barred.
Therefore the view that even when the right to assess or re assess has lapsed on account of the expiry of the period of limitation prescribed under the earlier statute, the Income tax Officer can exercise his powers to assess or re assess under the amending statute which gives an extended period of limitation, was not accepted in Calcutta Discount Company 's case( ').
As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non resident party under the Income tax Act before it was amended, ended on March 31, 1956.
It is true that under the amending Act by section 18 of the Finance Act, 1956, authority was conferred upon the Income tax Officer to assess a person as an agent of a foreign party under section 43 within two years from the end of the year of assessment.
But authority of the Income tax Officer under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date whenhe issued the notice it is within the period provided by that amending Act.
This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the (1) 85 commencement of the amending Act.
The Legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation i.e., upto April 1, 1956, only.
That provision must be read subject to the rule that in the absence of an express provision or clear implication, the Legislature does not intend to attribute to the amending provision a greater retrospectivity than is xpressly mentioned, nor to authorise the Income tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided, become barred.
The appeal fails and is dismissed with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary:
The appellant company was carrying on business in Bombay as commission agents.
In the course of assessment proceedings for the year 1954 55, the Income tax Officer noticed from the ssee 's boo s of account that the assessee had business connections with certain nonresident parties and found that the transactions disclosed that through the assessee those non resident parties were receiving income, profits and gains.
He considered that section 43 of the Indian Income tax Act, 1922, was applicable to the assessee and issued on March 27, 1957, a notice under section 34 of the Act for assessment of the assessee as an agent of the said non resident parties.
The assessee pleaded, inter alia, that the proceedings intiated by the Income tax Officer under section 34 were barred since the notice issued by him was after the expiry of one year from the end of the assessment year 1954 55, but the Income tax Officer rejected the contention relying on the amendment made to the proviso to section 34(l)(b)(iii) by the Finance Act, 1956, under which the period of one year was changed to two years.
The amendment was given retrospective operation upto April 1, 1956, but since the power to issue a notice under the unamended Act had come to an end on March 31, 1956, the question was whether the Income tax Officer could issue a notice of assessment to a person as an agent of a non resident party under the amended provision when the period prescribed for such a notice had before the amended Act came into force expired.
HELD:The proceedings initiated by the Income tax Officer by the notice dated March 27, 1957, were barred; the authority of the Incometax Officer under the Indian Income tax Act before it was amended by the Finance Act of 1956 having come to an end, the amending provision would not entitle him to commence a proceeding even though at the date when he issued the notice it was within the period provided by the amendment.
Notwithstanding the fact that there was no determinable point of time between the expiry of the time provided under the old Act and the commencement of the Amendment Act, in the absence of an express provision or clear implication, the legislature could not be said to have intended to attribute to the Amending provision a greater retros pectivity than was expressly mentioned.


judgement:
Appeal No. 745 of 1963.
Appeal from the judgment and order dated February 6, 1961 of the Andhra Pradesh High Court in Writ Appeal No. 71 of 1957.
A. V. Viswanatha Sastri, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant.
254 R.Ganapathy Iyer and B. R. G. K. A char, for the respondents.
May 8, 1964.
The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J.
The appellant Shri Jagadguru Kari Basava Rajendraswami of Gavi Mutt is the Matadhipati of Sri Gavi Mutt which is a religious institution dedicated to the propagation and promotion of the tenets of the Veera Saiva cult of Hinduism.
This Mutt is situated at Uravakonda in the district of Anantapur.
It appears that on the 6th September, 1939, the Board of Hindu Religious Endowments constituted under the Madras Act 11 of 1927 (hereinafter called 'the earlier Act ') framed a scheme under section 63 of the said Act for the proper administration of the said Mutt and its endowments.
The predecessor in office of the appellant then filed suit No. 21 of 1939 on the file of the District Judge, Anantapur for getting the said scheme set aside.
His suit substantially failed, because the District Court was persuaded to make only a few minor modifications in the scheme subject to which the scheme was confirmed.
That decision was taken in appeal by the predecessor of the appellant to the High Court of Madras (A.S. No. 269 of 1945).
During the pendency of the said appeal, the appellant 's predecessor died, and the appellant then brought himself on the record as the legal representative of his deceased predecessor.
Ultimately, the appeal was withdrawn and, therefore, dismissed.
Though a scheme had been formulated by the Board under section 63 of the said Act, apparently no effective step was taken to take over the actual management of the Mutt and its endowments.
The said management continued as before and the fact that an Executive Officer had been appointed under the scheme made no difference to the actual administration of the Mutt.
It was on the 5th April, 1952, that the appellant was served with a memorandum asking him to hand over the charge of all the properties of the Mutt to the Executive Officer.
A notice issued by the Executive Officer followed on the 16th April, 1952 by which the ippellant was informed that the Executive 255 Officer would take over possession.
Meanwhile, what is known as the Sirur Mutt case was decided by the Madras High Court and the appellant felt justified in refusing to hand over possession to the Executive Officer on the ground that the scheme under which possession was sought to be taken over from him was invalid inasmuch as it contravened the appellant 's fundamental rights guaranteed by the Consti tution which had come into force from the 26th January, 1950.
In 1951, the Madras Hindu Religious and Charitable Endowments Act XIX of 1951 (hereinafter called 'the latter Act ') repealed and replaced the earlier Act.
The appellant moved the Madras High Court on the 28th April, 1952, by his writ petition and prayed for an appropriate writ quashing the notice served on him by the Executive Officer threatening to take over the administration of the Mutt and its properties under the scheme.
This petition was heard by a single Judge of the said High Court and was allowed.
The learned Judge took the view that some provisions of the Scheme contravened the appellant 's fundamental rights under article 1 9 (1 ) (f ), and so, it could not be enforced.
It was no doubt urged before the learned Judge that the appellant 's writ petition should not be entertained because he had a definite adequate alternative remedy under the latter Act, but this plea was rejected by the learned Judge with the observation that where the fundamental right is clearly infringed, it is the duty of the Court to interfere in favour of the citizen, unless there are reasons of policy which make it inexpedient to do so.
Accordingly, the learned Judge directed that the scheme should be quashed.
He, however, took the precaution to make the observation that his order did not mean that the Government was not free to make a scheme in consonance with he Constitutional rights of the Matadhipati.
The respondent, the Commissioner of Hindu Religious and Charitable Endowments, who had been impleaded by he appellant to the writ petition along with the Executive Officer, challenged the correctness of the decision rendered by the learned Judge in the writ petition filed by the appel 256 lant.
This appeal succeeded and the Division Bench which heard the said appeal, held that the scheme having been framed as early as 1939 under the relevant provisions of the earlier Act which was valid when it was enacted, could ' not be challenged on the ground that some of its provisions contravened the fundamental right guaranteed to the citizens of this country under article 19.
Certain other contentions were raised before the appellate Bench by the appellant and they were rejected.
It is, however, not necessary to refer to the said contentions, because they have not been argued before us.
Having taken the view that the scheme when it was framed was valid, the appellate Bench reversed the decision of the single Judge, alowed the respondent 's appeal and directed that the writ petition filed by the appellant should be dismissed.
It is against this, decision of the Division Bench that the appellant has come to this Court with a certificate granted by the said High Court.
Before dealing with the points which have been raised before us by Mr. Sastri on behalf of the appellant, we may briefly indicate the nature of the scheme which has been framed under the relevant provisions of the earlier Act.
This scheme opens with the statement that the Board was satisfied that in the interests of the proper administration of the Mutt and all the endowments, movable and immovable belonging thereto, a scheme should be settled, and so, the Board, after consulting the Matadhipati of the Mutt and other persons having interest therein, proceeded to frame the scheme.
It was intended that the scheme should come into force on the 6th September, 1939, when it was framed It appears that either because the Executive Officer did no, take effective steps to implement the scheme, or because the predecessor of the appellant filed a suit challenging the scheme, the scheme in fact has not been implemented till today.
When the notice was served on the appellant in 1952 and it looked as if the Executive Officer would take over the administration of the Mutt and its properties, the present writ proceedings commenced and throughout the protracted period occupied by these proceedings.
the status quo has continued.
257 The scheme consists of 15 clauses and, in substance, it entrusts the administration of the Mutt and all its endow ments in the hereditary trustee and two non hereditary trustees appointed by the Board.
These latter are liable to be removed by the Board for good and sufficient cause and the Board 's order in that behalf has to be final.
The Board is authorised to appoint an Executive Officer for the on a salary of Rs. 60/ per month.
Such Executive is required to furnish security in the sum of Rs. 5001the satisfaction of the Board.
He has to be in charge of the day to day administration of the Mutt and he has to be answerable to the trustees.
The trustees are required to meet once, a month in the premises of the Mutt for discharg ing their duties.
They are given the power to inspect the accounts maintained by the Executive Officer and generally ,supervise his work.
The Board is also given the power to issue directions from time to time regulating the internal management of the Mutt.
It would thus be seen that though the scheme was framed in 1939, in essential features it is similar to the pattern of schemes which have been subsequently introduced either by legislation or by judicial decisions in respect of the management of public charitable institutions like the present Mutt, Mr. Sastri does not dispute the fact that the relevant provisions of the earlier Act as well as the scheme framed under them were valid at the relevant time.
He, however, argues that the earlier Act has been revealed by the latter Act XIX of 1951, and according to him, it is necessary to consider whether the present scheme is consistent with the appropriate and relevant provisions of this latter Act.
This argument is based on the provisions contained in section 103(d) of the latter Act.
This section provides that notwithstanding the repeal of the Madras Hindu Religious Endowments Act No. 11 of 1927, all schemes settled or modified by a Court of law under the said Act or under section 92 of the Code of Civil Procedure, 1908, shall be deemed to have been settled or modified by the Court under this Act and shall have effect accordingly.
The argument is that though the present scheme was framed under the provisions of the earlier Act.
it must now be deemed to be a scheme which 51 S.C. 17 258 has been settled or modified by the Court under this latter Act, and so, it is necessary to enquire whether all the pro visions of the scheme are consistent with the material pro visions of the latter Act.
If it is found that any of the said provisions are inconsistent with the relevant provisions of the latter Act, they must be modified so as to make them consistent with the said provisions.
In support of this argument, Mr. Sastri has invited our attention to the observations made by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. vs Finsbury Borough Council(1) that "if you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs bad in fact existed, must inevitably have flowed from or accompanied it.
" Basing himself on these observations, Mr. Sastri has urged that if the deeming provision prescribed by section 103 (d) is given its full effect, there would be no scope for refusing to apply the test for which he contends.
We are not impressed by this argument.
It is no doubt true that section 103(d) provides that a scheme settled or modified by a Court under the earlier Act shall be deemed to have been settled or modified under &a latter Act; but the effect of this provision merely is to make the schemes in question operative as though they were framed under the provisions of the latter Act; the intention was not to examine the said schemes once again by reference to the relevant provisions of this latter Act and re frame them so as to make them consistent with these provisions. 'This position appears to be clear if we examine other sub clauses of section 103.
Section 103(a) which deals with rules made, notifications or certificates issued, orders passed, decisions made, proceedings or action taken, schemes settled and things done by the Government, the Board or its President or by an Assistant Commissioner under the earlier Act, provides that the said rules, notifications, etc.
in so far as they are not inconsistent with the latter Act, shall be deemed to have been made, issued, massed, taken, settled or done by (1)[1952] A.C. 109 at p. 132.
259 the appropriate authority under the corresponding provisions of this latter Act and shall, subject to the provisions of clause (b) have effect accordingly.
Having thus provided for the continuance of rules, notifications, orders, etc., in so far as they are, not inconsistent with the provisions of the latter Act, section 103(b) has made provision for the modifications in the said rules.
notifications and orders.
In other words, the scheme of section 103(a) & (b) clearly brings out the fact that where the legislature wanted the conti nuance of the action taken under the provisions of the earlier Act only if the said action was consistent with the relevant provisions of the latter Act, it has so provided.
The same type of provision is made by section 103(f), (g) and (h).
If we examine section 103(d) in the light of these other provisions.
it would be clear that the question of the consistency or otherwise of the schemes to which section 103(d) applies, is treated as irrelevant, because no reference is made to the said aspect of the schemes.
In other words, the schemes to which section 103(d) applies have to be deemed to be settled or modified under the provisions of the latter Act without examining whether all the provisions of the said schemes are necessarily justified by, or consistent with.
the provisions of this latter Act; and that is why we do not think Mr. Sastri is right in contending that the deeming clause prescribed by section 103(d) necessitates an examination of the said schemes before they are allowed to be continued as though they were settled or modified under the latter Act.
This does not, however, mean that there is no provision prescribed by the latter Act for the modification of such ,schemes.
Section 62(3)(a) specifically provides that any scheme for the administration of a religious institution settled or modified by the Court in a suit under sub section (1) or on an appeal under sub section (2) or any scheme deemed under section 103, clause (d), to have been settled or modified by the Court may, at any time, be modified or cancelled by the Court on an application made to it by the Commissioner, the trustee or any person having interest.
This provision clearly brings out the fact that if a scheme governed by section 103 (d) is deemed to have been made or sanctioned tinder the provisions of the latter Act 260 and thus continued, modifications in it can be effected by adopting the procedure prescribed by section 62(3).
It) other words, a scheme like the present is automatically continued by operation of section 103(d), but is liable to be modified if appropriate steps are taken in that behalf under section 62(3 ).
Reading section 103(d) and section 62(3) together, it seems to us that Mr. Sastri 's argument that the consistency of the be examined in writ proceedings, cannot be entertainment In fact, unless modifications are made in the scheme unders.
62(3), the scheme as a whole, will be deemed to been made under the latter Act and will be deemed to have valid scheme.
That clearly is the purpose of s.we do not think we are called upon to consider the further contentions raised by Mr. Sastri that came of the clause in the scheme are inconsistent with theprovisions of the later Act.
There is one more point to which refrence must be made before we part with this appeal.
Mr. Sastri contended that though the scheme may have been valid when it was framed, since 'it was not actually enforced before the 26th January, 1950, it is , open to the appellant to challenge the validity of the scheme oil the ground that it deprives him of his fundamental right under article 19(1)(f) and as such, invalid.
Mr. Sastri concedes that the fundamental rights guaranteed by the Constitution, are not retrospective in operation; but that, he say, ,, is no answer to his plea, because the deprivation of his property rights is taking place for the first time in 1952 and as such, it is open to the challenge that it is invalid on the ground that it contravenes his fundamental right under article 19 (1) (f).
In support of this argument, Mr. Sastri has relied on certain observations made by Mukherjea J. in the case of R.S. Seth Shanti Sarup vs Union of India and Ors.
In that case, a partnership firm known as Lallamal Hardeodas Cotton Spinning Mill Company of which the petitioner was, a partner.
used to carry on the business of production and supply of cotton yam.
When it was found that the Mill (1) A.I.R. 1955 S.C. 624. 261 could be run only at a loss, it was closed on 19th March, 1949.
Thereafter, on the 21st July,.
1949, the Government of U.P. passed an Order purporting to exercise its .authority under section 3(f) of the U.P. Industrial Disputes Act, 1947, by which one of the partners of the firm was appointed as "authorised controller" of the undertaking.
The said order directed the said authorised controller tO take over ' possession of the :Mill to the exclusion of the other partners, and run ' it subject to the general supervision of the District Magistrate, Aligarh.
In 1952, the Union of India passed an order under section 3(4) of the Essential Supplies (Temporary Powers) Act, 1946, appointing the same person as an authorised controller, under the provisions of that section, and issued a direction to him to run.
the said undertaking to the exclusion of all the other Farmers.
It was then that the petitioner moved this Court by writ petition under article 32 and challenged the validity of both the orders on the ground that they were illegal and.
that they invaded his fundamental right.
His plea was upheld and both the impugned orders were quashed.
In appreciating the effect of this decision, it is necessary to bear in mind one crucial fact on which there was no dispute between the parties in that case, and that fact was that both the.
impugned orders did not come with in the purview of, and were not warranted 'by, the provisions of/he relevant Acts, under which they were purported to have been issued.
In other words, it was conceded by the Government that the impugned orders were invalid in law.
Even so, it was urged that though the orders may be invalid, they cannot be challenged .under article 32 inasmuch as the first invasion of the petitioner 's right was made in 1949 when the Constitutional guarantee was not available to him.
repelling this contention, Mukherjea, J., observed that the order against which the petition Was primarily directed was the order of the Central Government passed in October.
and that was a complete and clear answer to the contention raised by the learned Attorney General.
Even so, the learned Judge proceeded to observe that assuming that the deprivation took place in 1949 and at a time when the Constitution had not come into force.
the order effect 262 ing the, deprivation which continued from day to day must be held to have come into conflict with the fundamental.
rights of the petitioner as soon as tile Constitution came into force and became void on and from that date under article 13(1) of the Constitution.
It is on these observations that Mr. Sastri 's argument is founded.
With respect, we are not prepared to hold that these observations were intended.
to lay down an unqualified proposition of law that even if a citizen was deprived of his fundamental rights by a valid scheme framed under a valid law at a time when the Consti tution was not in force, the mere fact that such a scheme would continue to operate even after the 26th January, 1950, would expose it th the risk of having to face a challenge under article 19.
Ifthe broad and unqualified proposition for which Mr. Sastri contends is accepted as true, then it would virtually make the material provisions of the Constitution in respect of fundamental rights retrospective in operation.
In the present case, the scheme was framed and the Executive Officer was appointed as early as 1939.
If the Executive Officer could not take over the actual administration of the Mutt and its properties, it was partly because the appellant has continuously challenged the implementation of the scheme by legal proceedings and partly because he has otherwise obstructed the said implementation.
But it is clear that when the scheme was framed and a challenge made by the appellant to its validity failed in courts of law.
his property rights had been taken away.
The fact that the order was not implemented does not make any difference to this legal, position.
If Mr. Sastri 's argument were right, all such schemes, though implemented and enforced, may still be open to challenge on the ground that they contravened the Matadhipati 's fundamental rights under article 19.
Such a plea does not appear to have ever been raised and, in our opinion, cannot be validly raised for the simple reason that the further damental rights are not retrospective in their operation.
The observations on which Mr. Sastri relies must be read in "he light of the relevant fact to which we have just referred.
The deprivation of the petitioner 's property rights was brought about by invalid orders and it was in respect of such invalid 263 orders that the Court held that the petitioner was entitled to seek the protection of article 19 and invoke the jurisdic tion of this Court under article 32.
In our opinion, there fore, there is no substance in the contention that since in the present case, the scheme has not been completely imple mented till 1952, we must examine its validity in the light of the fundamental rights guaranteed to the appellant under article 19 of the Constitution.
The result is the appeal fails and is dismissed with costs.
Appeal dismissed,.

summary:
The appellant, who was a Matadhipati, moved the High Court for a writ quashing the notice served on him in 1952 by the Executive Officer to band ever to the latter the administration and the properties 253 of the Mutt in enforcement of a scheme framed in 1939 under section 63 of the Madras Act 11 of 1927.
The predecessor of the appellant had filed a suit in the District Judge 's Court to set aside that scheme.
The suit failed and the scheme was confirmed subject to minor modifications.
In 1951 the Madras Hindu Religious and Charitable Endowments Act, 1951, repealed and replaced the Madras Act 11 of 1927.
It was urged on behalf of the appellant in the High Court that the scheme contravened his fundamental rights guaranteed by the Constitution.
The single Judge who heard the matter found in his favour and held that the scheme contravened article 19(1)(f) of the Constitution.
On appeal by the respondent, the Division Bench reversed the decision of the Single Judge.
The High Court granted certificate to the appellant to appeal to this Court.
It was contended that although the scheme was valid as framed tinder the earlier Act, it incumbent under section 103(d) of the Act of 1951 that the validity of the all the provisions of the scheme must be tested in the light of its provisions.
Held:Section 103(d) of the Madras Hindu Religious and Charitable Endowments Act, 1951, properly construed, merely meant that earlier schemes framed under Madras Act It of 1927 would be operative as though they were framed under the Act of 1951.
It was not intended by the section that those schemes must be examined and reframed in the light of the relevant provisions of the Act.
Section 62(3)(a) of the Act which provided for the modification of such schemes made this amply clear.
Unless the schemes could be modified under that section they must be deemed to have been validly made under the Act of 1951 and enforced as such.
East End Dwellings Co. Ltd. vs Finsbury Borough Council, , considered.
Although the scheme in question had not been completely implemented before the Constitution, that was no ground for examining its provision in the light of article 19 of the Constitution.
The fundamental rights conferred by the Constitution are not retrospective in operation and the observation made by this Court in Seth Shanti Sarup vs Union of India, are not applicable to the present case.
Seth Shanti Sarup vs Union of India, A.I.R. 1955 S.C. 624, explained and distinguished.