judgement:
vil Appeal No. 262 (NC) of 1976.
From the Judgment and Order dated 24.4.1975 of the Rajasthan High Court in D.B. Civil I.T.R. No. 45 of 1969.
Mrs. Anjali Verma for JBD & Co. and D.N. Misra for the Appellant.
O.P. Vaish, section Rajappa, Vinay Vaish, S.K. Aggarwal and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
This appeal is directed against the judgment and order of the High Court of Rajasthan dated 24.4.1975 answering the question referred to it by the Income Tax Appellate Tribunal in the negative, in favour of the Revenue and against the assessee.
The question referred to the High Court was as under: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the payment of Rs.3 lakhs to the Northern Railway was a revenue expenditure and was a deduction allowable under the Income Tax Act.
1961?" The circumstances leading to the reference and the appeal was necessary to be stated.
The Natural Science (India) Ltd. predecessor ininterest of the assessee acquired a lease from the Maharaja of the 317 erstwhile Bikaner State on September 29, 1948 for mining of gypsum for a period of 20 years over an area of 4.27 square miles at Jamsar.
The lease was liable to be renewed after expiring of 20 years.
The Natural Science (India) Ltd. by a deed of assignment dated December 11, 1948 assigned the rights under the lease to the Bikaner Gypsums Ltd., a compa ny wherein the State Government owned 45 per cent share.
The Bikaner Gypsums Ltd. (hereinafter referred to as the asses see) carried on the business of mining gypsum in accordance with the terms of conditions stated in the lease.
The asses see entered into an agreement with Sindri Fertilizers, a Government of India Public Undertaking for the supply of gypsum of minimum of 83.5 per cent quality.
Under the lease, the assessee was conferred the liberties and powers to enter upon the entire leased land and to search for win, work, get, raise, convert and carry away the gypsum for its own benefits in the most economic, convenient and beneficial manner and to treat the same by calcination and other proc esses.
Clause 2 of Part II of the lease authorised the lessee to sink, dig, drive, quarry, make, erect, maintain and use in the said lands any borings, pits, shafts, in clines, drifts, tunnels, trenches, levels, water ways, airways and other works and to use, maintain, deepen or extend any existing works of the like nature in the demised land for the purpose of winning and mining of the mineral.
Clause 3 granted liberty to erect, construction, maintain and use on or under the land any engines, machinery, plant, dressing, floors, furnaces, brick kilns, like kilns, plaster kilns etc.
Clause 4 conferred liberty on the lessee to make roads and ways and use existing roads and ways.
Clause 7 granted liberty to the assessee to enter upon and use any part of parts of the surface of the said lands for the purpose of stacking, heaping or depositing thereon any produce of the mines or works carried on and any earth materials and substance dug or raised under the liberties and powers.
Clause 8 conferred liberty on the lessee to enter upon and occupy any of the surface lands within the demised lands other than such as are occupied by dwelling houses or farms and the offices, gardens and yards.
Clause 9 conferred power on the lessee to acquire, take up and occupy such surface lands in the demised lands as were then in the occupation of any body other than the Government on payment of compensation and rent to such occupiers, and if the lessee is unable to acquire such land from the tenants and occupiers, the Government undertook to acquire such surface land for the lessee at the lessee 's cost.
Clause 15 of Part II conferred liberty and power on the lessee to do all things which may be necessary for winning, working getting the said minerals and also for calcining, smelting, manufac turing, converting and making merchantable.
318 Part III of the lease contained restrictions and condi tions to the exercise of the liberties and powers and privi leges as contained in Part II of the lease.
Clause 2 of Part III provided that the lessee shall not enter upon or occupy surface of any land in the occupation of any tenant or occupier without making reasonable compensation to such tenant or occupier.
Clause 3 prescribed restriction on mining operation within 100 yards from any railway, reser voir, canal or other public works.
It reads as under: "Clause 3: No mining operations or working shall be carried on or permitted to be carried on by the lessee in or under the said lands at or to any point within a distance of 100 yards from any railway, reservoir, canal or other public works or any buildings or inhabited site shown on the plan hereto annexed except with the previous permission in writ ing of the Minister, or some officer authorised by him in that behalf or otherwise then in accordance with such in structions, restrictions and conditions either general or special which may be attached to such permission.
The said distance of 100 yards shall be measured in the case of a Railway Reservoir or canal horizontally from the outer of the bank or of outer edge of the cutting as the case may be and in the case of a building horizontally from the plinth thereof.
" The above clause had been incorporated in the lease to protect the railway track and railway station which was situate within the area demised to the lessee.
Clause 5 of Part VIII of the agreement stated as under: "Clause 5: If any underground or mineral rights in any lands or mines covered and leased to the lessee in accordance with the provisions of those presents be claimed by any 'Jagir dar ' 'Pattedar ', 'Talukdar ', tenant or other person then and in all such cases the Government shall upon notice from the lessee forthwith put the lessee in possession of all such lands and mines free of all costs and charges to the lessee and any compensation required to be paid to any such "Jagir dar", 'Pattedar ', 'Talukdar ', tenant or other person claim ing to have any underground or mineral rights shall be paid by the Government." The assessee company exclusively carried on the mining of 319 gypsum in the entire area demised to it.
The Railway author ities extended the railway area by laying down fresh track, providing for railway siding.
The Railways further con structed quarters in the lease area without the permission of the assessee company.
The assessee company filed a suit in civil court for ejecting the Railway from the encroached area but it failed in the suit.
The assessee company, there upon, approached the Government of Rajasthan which had 45 per cent share of it and the Railway Board for negotiation to remove the Railway Station and track enabling the asses see to carry out the mining operation under the land occu pied by the Railways (hereinafter referred to as the 'Rail way Area ').
Since, on research and survey the assessee company found that under the Railway Area a high quality of gypsum was available, which was required as raw material by the Sindri Fertilizers.
All the four parties namely, Sindri Fertilizers, Government of Rajasthan, Railway Board and the assessee company negotiated the matter and ultimately the Railway Board agreed to shift the railway station, track and yards to another place or area offered by the assessee.
Under the agreement the Railway authorities agreed to shift the station and all its establishments to the alternative site offered by the assessee company and it was further agreed and all the four parties, Sindri Fertilizers, Govern ment of Rajasthan, Indian Railway and the assessee company shall equally bear the total expenses of Rs. 12 lakhs in curred by the Railways in shifting the railway station, yards and the quarters.
Pursuant to the agreement, the assessee company paid a sum of Rs.3 lakhs as its share to the Northern Railway towards the cost of shifting of the Railway Station and other constructions.
In addition to that the assessee company further paid a sum of Rs.7,300 to the Railways as compensation for the surface rights of the leased land.
On the shifting of the Railway track and Sta tion the assessee carried out mining in the erstwhile Rail way Area and it raised gypsum to the extent of 6,30,390 tons and supplied the same to Sindri Fertilizers.
The assessee company claimed deduction of Rs.3 lakhs paid to the Northern Railway for the shifting of the Railway Station for the assessment year 1964 65.
The Income Tax Officer rejected the assessee 's claim on the ground that it was a capital expenditure.
On appeal by the assessee, the Appellate Assistant Commissioner confirmed the order of the Income Tax Officer.
On further appeal by the assessee the Income Tax Appellate Tribunal held that the payment of Rs.3 lakhs by the assessee company was not a capital expenditure, instead it was a revenue expenditure.
On an application made by the Revenue the Income Tax Appellate Tribunal (hereinaf ter referred to as the 320 Tribunal referred the question as aforesaid to the High Court under section 256 of the Income Tax Act, 1961.
The High Court held that since on payment of Rs.3 lakhs to the Rail way the assessee acquired a new asset which was attributable to capital of enduring nature, the sum of Rs. 3 lakhs was a capital expenditure and it could not be a revenue expendi ture.
On these findings the High Court answered the question in the negative in favour of the Revenue against the asses see and it set aside the order of the Tribunal by the im pugned order.
Learned counsel for the appellant contended that since the entire area had been leased out to the assessee for carrying out mining operations, the assessee had right to win, the minerals which lay under the Railway Area as that land had also been demised.
to the assessee.
Since, the existence of railway station, building and yard obstructed the mining operations, the assessee paid the amount of Rs.3 lakhs for removal of the same with a view to carry on its business profitably.
The assessee did not acquire any new asset, instead, it merely spent money in removing the ob struction to facilitate the mining in a profitable manner.
On the other hand, learned counsel for the Revenue urged that in view of the restriction imposed by Clause 3 of Part III of the lease, the assessee had no right to the surface of the land occupied by the Railways.
The assessee acquired that right by paying Rs.3 lakhs which resulted into an enduring benefit to it.
It was a capital expenditure.
Both the counsel referred to a number of decisions in support of their submissions.
The question whether a particular expenditure incurred by the assessee is of Capital or Revenue nature is a vexed question which has always presented difficulty before the Courts.
There are a number of decisions of this Court and other courts formulating tests for distinguishing the capi tal from revenue expenditure.
But the tests so laid down are not exhaustive and it is not possible to reconcile the reasons given in all of them, as each decision is rounded on its own facts and circumstances.
Since, in the instant case the facts are clear, it is not necessary to consider each and every case in detail or to analyse the tests laid down in various decisions.
However, before we consider the facts and circumstances of the case, it is necessary to refer to some of the leading cases laying down guidelines for deter mining the question.
In Assam Bengal Cement Co. Ltd. vs The Commissioner of Income Tax, West Bengal, , 'this Court observed that in the great diversity of human affairs and the complicated nature of business opera tion, it is difficult to lay down a test which would apply to all situations.
One has, therefore, to apply the criteria from the business 320 point of view in order to determine whether on fair appreci ation of the whole situation the expenditure incurred for a particular matter is of the nature of capital expenditure or a revenue expenditure.
The Court laid down a simple test for determining the nature of the expenditure.
It observed: the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring bene fit of the business it is properly attributable to capital and is of the nature of capital expenditure.
If on the other hand it is made not for the purpose of bringing into exist ence any such asset or advantage but for running the busi ness or working it with a view to produce the profits it is a revenue expenditure.
If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically.
The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure.
" In K.T.M.T.M. Abdul Kayoom and Another vs Commissioner of Income Tax, , this Court after consider ing a number of English and Indian authorities held that each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect.
The Court observed that what is decisive is the nature of the business, the nature of the expenditure, the nature of the right acquired, and their relation inter se, and this is the only key to resolve the issue in the light of the general principles, which are followed in such cases.
In that case the assessee claimed deduction of Rs.6, 111 paid by it to the Government as lease money for the grant of exclusive rights, liberty and authority to fish and carry away all chank shells in the sea off the coast line of a certain area specified in the lease for a period of three years.
The Court held that the amount of Rs.6,111 was paid to obtain an enduring benefit in the shape of an exclusive right to fish; the payment was not related to the chanks, instead it was an amount spent in acquiring an asset from which it may collect its stockin trade.
It was, therefore, an expenditure of a capital nature.
In Bombay Steam Navigation Co. Pvt. Ltd. vs Commissioner of Income Tax, Bombay, ; , the assessee pur chased.
the 321 assets of another Company for purposes of carrying on pas senger and ferry services, it paid part of the consideration leaving the balance unpaid.
Under the agreement of sale the assessee had to pay interest on the unpaid balance of money.
The assessee claimed deduction of the amount of interest paid by it under the contract of purchase from its income.
The court held that the claim for deduction of amount of interest as revenue expenditure was not admissible.
The Court observed that while considering the question the Court.
should con . sider the nature and ordinary course of business and the object for which the expenditure is in curred.
If the outgoing or expenditure is so related to the carrying on or conduct of the business, that it may be regarded as an integral part of the profit earning process and not for acquisition of an asset or a right of a perma nent character, the possession of which is a condition for the carrying on of the business, the expenditure may be regarded as revenue expenditure.
But, on the facts of the case, the Court held that the assessee 's claim was not admissible, as the expenditure was related to the acquisi tion of an asset or a right of a permanent character, the possession of which was a condition for carrying the busi ness.
The High Court has relied upon the decision of this Court in R.B. Seth Moolchand Suganchand vs Commissioner of Income Tax, New Delhi, , in rejecting the assessee 's contention.
In Suganchand 's case the assessee was carrying on a mining business, he had paid a sum of Rs. 1,53,800 to acquire lease of certain areas of land bearing mica for a period of 20 years.
Those areas had already been worked for 15 years by other lessees.
The assessee had paid a sum of Rs.3,200 as fee for a licence for prospecting for emerald for a period of one year.
In addition to the fee, the assessee had to pay royalty on the emerald excavated and sold.
The assessee claimed the expenditure of Rs.3,200 paid by it as fee to the Government for prospecting licence as revenue expenditure.
The assessee further claimed that the appropriate part of Rs. 1,53,800 paid by it as lease money was allow able as revenue expenditure.
The Court held that while considering the question in relation to the mining leases an empirical test is that where minerals have to be won, extracted and brought to surface by mining operations, the expenditure incurred for acquiring such a right would be of a capital nature.
But, where the mineral has already been gotten and is on the surface, then the expenditure incurred for obtaining the right to acquire the raw material would be a revenue expenditure.
The Court held that since the payment of tender money was for acquisition of capital asset, the same could not be treated as a revenue expenditure.
As regards the claim relating to the prospecting licence 322 fee of Rs.3,200 the Court held that since the licence was for prospecting only and as the assessee had not started working a mine, the payment was made to the Government with the object of initiating the business.
The Court held that even though the amount of prospecting licence fee was for a period of one year, it did not make any difference as the fee was paid to obtain a licence to investigate, search and find the mineral with the object of conducting the business, extracting ore from the earth necessary for initiating the business.
The facts involved in that case are totally dif ferent from the instant case.
The assessee in the instant case never claimed any deduction with regard to the licence fee or royalty paid by it, instead, the claim relates to the amount spent on the removal of a restriction which obstruct ed the carrying of the business of mining within a particu lar area in respect of which the assessee had already ac quired mining rights.
The payment of Rs.3 lakhs for shifting of the Railway track and Railway Station was not made for initiating the business of mining operations or for acquir ing any right, instead the payment was made to remove ob struction to facilitate the business of mining.
The princi ples laid down in Suganchand 's case do not apply to the instant case.
In British Insulated and Helsby Cables Ltd. vs Atherton, , Lord Cave laid down a test which has almost universely been accepted.
Lord Cave observed: ". when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circum stances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue out to capital." This dictum has been followed and approval by this Court in the cases of Assam Bengal Cement Co. Ltd. (supra); Abdul Kayoom (supra) and Seth Sugancha.nd (supra) and several other decisions of this Court.
But, the test laid down by Lord Cave has been explained in a number of cases which show that the tests for considering the expenditure for the purposes of bringing into existence, as an asset or an advantage for the enduring benefit of a trade is not always true and perhaps Lord Cave himself had in mind that the test of enduring benefit of a trade would be a good test in the absence of special circumstances leading to an opposite conclusion.
Therefore, the test laid down by Lord Cave was not a conclusive one as Lord Cave himself did not regard his test 323 as a conclusive one and he recognised that special circum stances might very well lead to an opposite conclusion.
In Gotan Lime Syndicate vs C. I. T., Rajasthan & Delhi, 18, the assessee which carried on the busi ness of manufacturing lime from limestone, was granted the right to excavate limestone in certain areas under a lease.
Under the lease the assessee had to pay royalty of Rs.96,000 per annum.
The assessee claimed the payment of Rs.96,000 to the Government as a revenue expenditure.
This Court after considering its earlier decision in Abdul Kayoom 's case (supra) and also the decision of Lord Cave in British Insu lated (supra), held that the royalty paid by the assessee has to be allowed as revenue expenditure as it had relation to the raw materials to be excavated and extracted.
The Court observed that the royalty payment including the dead rent had relation to the lime deposits.
The 'Court observed although the assessee did derive an advantage and further even though the advantage lasted at least for a period of five years there was no payment made once for all.
No lump sum payment was ever settled, instead, only an annual royal ty and dead rent was paid.
The Court held that the royalty was not a direct payment for securing an enduring benefit, instead it had relation to the raw materials to be obtained.
In this decision expenditure for securing an advantage which was to last at least for a period of five years was not treated to have enduring benefit.
In M.A. Jabbar vs C.I.T. Andhra Pradesh, Hyderabad; , , the assessee was carrying on the business of supplying lime and sand, and for the purposes of acquiring sand he had obtained a lease of a river bed from the State Government for a period of 11 months.
Under the lease he had to pay large amount of lease money for the grant of an exclusive right to carry away sand within, under or upon the land.
The assessee in proceedings for assessment of incometax claimed deduction with regard to the amount paid as lease money.
The Court held that the expenditure incurred by the assessee was not related to the acquisition of an asset or a right of permanent character instead the expenditure was for a specific object of ena bling the assessee to remove the sand lying on the surface of the land which was stock in trade of the business, there fore, the expenditure was a revenue expenditure.
Whether payments made by an assessee for removal of any restriction or obstacle to its business would be in the nature of capital or revenue expenditure, has been consid ered by courts.
In Commissioner of Inland Revenue vs Carron Company, [1966 69] 45 Tax Cases 13 the assessee carried on the business of iron founders which was incor 325 porated by a Charter granted to it in 1773.
By passage of time many of its features had become archaic and unsuited to modern conditions and the company 's commercial performance was suffering a progressive decline.
The Charter of the company placed restriction on the company 's borrowing powers and it placed restriction on voting rights of certain mem bers.
The company decided to petition for a supplementary Charter providing for the vesting of the management in Board of Directors and for the removal of the limitation on compa ny 's borrowing powers and restrictions on the issue and transfer of shares.
The company 's petition was contested by dissenting share holders in court.
The company settled the litigation under which it had to pay the cost of legal action and buy out the holdings of the dissenting share holders and in pursuance thereof a supplementary Charter was granted.
In assessment proceedings, the company claimed deduction of payments made by it towards the cost of obtain ing the Charter, the amounts paid to the dissenting share holders and expensed in the action.
The Special Commissioner held that the company was entitled to the deductions.
On appeal the House of Lords held that since the object of the new Charter was to remove obstacle to profitable trading, and the engagement of a competent Manager and the removal of restrictions on borrowing facilitated the day to day trading operation of the company, the expenditure was on income account.
The House of Lords considered the test laid down by Lord Cave L.C. in British Insulated Company 's case and held that the payments made by the company, were for the purpose of removing of disability of the company trading operation which prejudiced its operation.
This was achieved without acquisition of any tangible or intangible asset or without creation of any new branch of trading activity.
From a commercial and business point of view nothing in the nature of additional fixed capital was thereby achieved.
The Court pointed out that there is a sharp distinction between the removal of a disability on one hand payment for which is a revenue payment, and the bringing into existence of an advantage, payment for which may be a capital payment.
Since, in the case before the Court, the Company had made payments for removal of disabilities which confined their business under the out of date Charter of 1773, the expendi ture was on revenue account.
In Empire Jute Company vs C.I. T, [1980] 124 ITR I, this Court held that expenditure made by an assessee for the purpose of removing the restriction on the number of working hours with a view to increase its profits, was in the nature of revenue expenditure.
The Court observed that if the advantage consists merely in facilitat ing the assessee 's trading operations of enabling the man agement and conduct of the assessee 's business to be carried on more efficiently or more profitably while leaving 326 he fixed capital untouched, the expenditure would be on revenue account even though the advantage may endure for an indefinite future.
We agree with the view taken in the aforesaid two decisions.
In our opinion where the assessee has an existing right to carry on a business, any expendi ture made by it during the course of business for the pur pose of removal of any restriction or obstruction or disa bility would be on revenue account, provided the expenditure does not acquire any capital asset.
Payments made for remov al of restriction, obstruction or disability may result in acquiring benefits to the business, but that by itself would not acquire any capital asset.
In the instant case the assessee had been granted mining lease in respect of 4.27 square miles at Jamsar under which he had right to sink, dig, drive, quarry and extract mineral i.e. the gypsum and in that process he had right to dig the surface of the entire money, licence fee and other charges for securing the right of mining in respect of the entire area of 4.27 square miles including the right to the miner als under the Railway Area.
The High Court has held that on payment of Rs.3 lakhs, the assessee acquired capital asset of an enduring nature.
The High Court failed to appreciate that Clause 3 was only restrictive in nature it did not destroy the assessee 's right to the minerals found under the Railway Area.
The restriction operated as an obstacle to the assessee 's right to carry on business in a profitable man ner.
The assesse paid a sum of Rs.3 lakhs towards the cost of removal of the obstructions which enabled the assessee to carry on its business of mining in an area which had already been leased out to it for that purpose.
There was, there fore, no acquisition of any capital asset.
here is no dis pute that the assessee completed mining operations on the released land (Railway Area) within a period of 2 years, in the circumstances the High Court 's view that the benefit acquired by the assessee on the payment of the disputed amount was a benefit of an enduring nature is not sustain able in law.
As already observed, there may be circumstances where expenditure, even if incurred for obtaining advantage of enduring benefit may not amount to acquisition of asset.
The facts of each case have to be borne in mind in consider ing the question having regard to the nature of business its requirement and the nature of the advantage in commercial sense.
In considering the cases of mining business the nature of the lease the purpose for which expenditure is made, its relation to the carrying on of the business in a profitable manner should be considered.
In the instant case existence of Railway Station, yard and buildings on the surface of the demised land operated as an obstruction to 327 the assessee 's business of mining.
The Railway Authorities agreed to shift the Railway establishment to facilitate the assessee to carry on his business in a profitable manner and for the purposes the assessee paid a sum of Rs.3 lakhs towards the cost of shifting the Railway construction.
The payment made by the assessee was for removal of disability and obstacle and it did not bring into existence any advan tage of an enduring nature.
The Tribunal rightly allowed the expenditure on revenue account.
The High Court in our opin ion failed to appreciate the true nature of the expenditure.
We are, therefore, of the opinion that the High Court committed error in interfering with the findings recorded by the Income Tax Appellate Tribunal.
We, accordingly, allow the appeal, set aside the order of the High Court and re store the order of the Tribunal.
The appellant is entitled to its costs.
N.V.K. Appeal allowed.

summary:
The appellant assessee carried on the business of mining gypsum.
The predecessor in interest of the assessee acquired a lease from the Maharaja of one of the erstwhile princely State on September 29, 1948 for mining of gypsum for a period of 20 years over an area of 4.27 square miles in the State.
The lease was liable to be renewed after the expiry of 20 years.
By a deed of assignment dated December 11, 1948 the rights under the lease were assigned to the assessee company, in which the State Government owned 45% shares.
The assessee entered into an agreement with a Government of India Public Undertaking for the supply of gypsum of minimum of 83.5% quality.
Under the lease, the assessee was conferred the liberties and powers to enter upon the entire leased land and to search for win, work, get, raise, convert and carry away the gypsum for its own benefits in the most economic convenient and beneficial manner and to treat the same by calcination and other processes.
The lease agreement consisted of several parts and each part contained several clauses.
Clause 3 of part Iii prescribed restrictions on mining operation within 100 yards from any railway, reser voir, canal or other public works.
This clause had been incorporated in the lease to protect the railway track and railway station which was situated within the area demised to the lessee.
The assessee exclusively carried on the mining of gypsum in the entire area demised to it.
The Railway Authorities extended the railway area by laying down fresh track, pro viding for railway siding and further constructed quarters in the leased area without the permission of the assessee.
The assessee company filed a civil suit for ejecting the railways from the encroached area but it failed in the suit.
314 As the assessee company on research and survey found that under the railway area a high quality of gypsum was available, which was required as raw material by the Public Sector Company, all the parties (Public Sector Company, the Railway Board and the assessee company) negotiated the matter, the Railway Board agreeing to shift the railway station, track and yards to an alternative area offered by the assessee, the parties equally bearing the cost of the shifting.
Under the aforesaid agreement, the assessee company paid a sum of Rs.3 lakhs as its share towards the cost of shift ing of the Railway Station and other constructions, and claimed deduction of the said sum for the assessment year 1964 65.
The Income Tax Officer rejected the assessee 's claim on the ground that it was a capital expenditure.
The order was confirmed on appeal by the Appellate Assistant Commissioner.
On appeal by the assessee, the Income Tax Appellate Tribunal held that the payment of Rs.3 lakhs by the assessee company was not a capital expenditure, but a revenue expend iture.
The Tribunal referred the question to the High Court under section 256 of the Income Tax Act, 1961, on an appli cation by the revenue, which held that since on payment of Rs.3 lakhs to the Railways the assessee acquired a new asset which was attributable to capital of enduring nature, the sum of Rs.3 lakhs was a capital expenditure and it could not be a revenue expenditure.
In the appeal to this Court on the question whether the payment of Rs.3 lakhs to the Northern Railway was a revenue expenditure and was a deduction allowable under the Income Tax Act, 1961.
Allowing the appeal, this Court, HELD: 1(a) Where the assessee has an existing right to carry on a business, any expenditure made by it during the course of business for the purpose of removal of any re striction or obstruction or disability would be on revenue account, provided the expenditure does not acquire any capital asset.
[326A] (b) Payments made for removal of restriction, obstruc tion or disability may result in acquiring benefits to the business, but that by itself would not acquire any capital asset.
[326B] Gotan Lime Syndicate vs C.I.T., Rajasthan & Delhi, ; M.A. Jabbar vs C.I.T., Andhra Pradesh, Hyderabad, [1968] 315 2 SCR 413 and Commissioner of Inland Revenue vs Carron Company, [1966 69] 45 Tax Cases 18, referred.
Empire Jute Company vs C. I. T., ; , affirmed.
In the instant case, the assessee have been granted mining lease in respect of 4.27 square miles under which he had right to sink, dig, drive, quarry and extract mineral i.e. the gypsum and in that process he had right to dig the surface of the entire area leased out to him.
The payment of Rs.3 lakhs was not made by the assessee for the grant of permission to carry on mining operations within the railway area, instead the payment was made towards the cost of removing the construction which obstructed the mining opera tions.
On the payment made to the Railway Authorities the assessee did not acquire any fresh right to any mineral nor he acquired any capital asset instead, the payment was made by it for shifting the Railway Station and track which operated as hindrance and obstruction to the business of mining in a profitable manner.
[326C E] 2.
There may be circumstances where expenditure, even if incurred for obtaining advantage of enduring benefit would not amount to acquisition of asset.
The facts of each case have to be borne in mind in considering the question having regard to the nature of business, its requirement and the nature of the advantage in commercial sense.
[326F G] 3(a) The test for considering the expenditure for the purposes of bringing into existence an asset or an advantage for the enduring benefit of a trade is not always true and conclusive.
[327B] 3(b) In considering the cases of mining business the nature of the lease the purpose for which expenditure is made, its relation to the carrying on of the business in a profitable manner should be considered.
[326H] In the instant case, existence of Railway Station, yard and buildings on the surface of the demised land operated as an obstruction to the assessee 's business of mining.
The Railway Authorities agreed to shift the Railway establish ment to facilitate the assessee to carry on his business in a profitable manner and for that purpose the assessee paid a sum of Rs.3 lakhs.
The payment made by the assessee was for removal of disability and obstacle and it did not bring into existence any advantage of an enduring nature.
There was therefore.
no acquisition of any capital asset.
[326H; 327A] 316 British Insulated and Helsby.
Cables Ltd. vs Atherton, , explained.
Assam Bengal Cement Co. Ltd. vs The Commissioner of Income Tax, West Bengal, , referred to.
R.B. Seth Moolchand Suganchand vs Commissioner of Income Tax, New Delhi, , distinguished.
The Tribunal rightly allowed the expenditure on revenue account.
The High Court failed to appreciate the true nature of the expenditure.
It committed an error in interfering with the findings recorded by the Income Tax Appellate Tribunal.
[327B C]


judgement:
ivil Appeal No. 2675 of 1987.
From the Judgment and Order dated 18.3.1987 of the Central Administrative Tribunal, Allahabad in Registration T.A. No. 999 of 1986.
A. Subba Rao and C.V. Rao for the Appellants.
Harish N. Salve, B.S. Chauhan, Sushil Kumar Jain, Ms. Gitanjali Mohan and B.P. Singh for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
Respondents 1 and 2 in this Appeal Dr. Tripa thi and Shri Sinha (hereinafter referred to as the respond ents) were recruited directly to the posts of Income Tax Officers, Class I.
They had made a grievance before the Central Administrative Tribunal, Allahabad that they were not appointed to the next higher post of Assistant Commis sioner, Income Tax according to their turn in the seniority list prepared as per the directions given by this Court in the cases of Bishan Sarup Gupta etc.
vs Union of India & Ors., etc.
; , and Union of India etc.
vs Majji Jangamayya etc.; , As a result, their seniority as Assistant Commissioners was adversely affected and it required correction.
This grievance found favour with the Tribunal which by its impugned decision of 18.3.
1987 quashed the seniority list of Assistant Commis sioners and Commissioners of Income Tax and directed the appellants herein, namely, the Central Board of Direct Taxes and the Union of India to redetermine their seniority in the list of Asstt.
Commissioners, vis avis, the seniority of respondents 3 to 20 who are also direct recruits, and other concerned officers, in the light of the directions and princi 338 ples laid down by this Court in the case of Union of India etc.
vs Majji Jangamayya etc.
(supra).
The dispute with regard to the seniority between the direct recruits and the promotees in the Income Tax Depart ment was set at rest by a Constitution Bench of this Court when it delivered its decision on 16.4.1974 in B.S. Gupta case (supra) which is also known as the lind B.S. Gupta case.
By that decision, this Court accepted as correct the seniority list of Income Tax Officers which was filed before it on February 15, 1973 having been prepared in accordance with the directions given in the judgment dated August 16, 1972 in, what is known as the 1st B.S. Gupta case reported in 1975 Supp.
SCR 491.
On the basis of this seniority list, the Departmental Promotion Committee (hereinafter referred to as the Committee) prepared a selection list in July, 1974 for promotion of Income Tax Officers, Class I to the posts of Assistant Commissioners.
There were 112 vacancies and the Government sent to the Committee 336 names in order of seniority for consideration of the field of choice.
The Committee followed the instructions given for the purpose in the Government Memorandum of 1957 and found 276 Officers fit for the area of choice, assessed the merits of 145 persons in order of seniority, found one officer outstanding, 114 very good and 7 Scheduled Caste Scheduled Tribes Officers good.
This selection was challenged in various High Courts.
Two of the High Courts allowed the petitions in favour of the challenging petitioners and the other High Courts gave interim orders staying the operation of the selection list.
At that stage, the Union of India preferred appeals to this Court.
This Court allowed the appeals and upheld the selec tion list, vide Union of India etc.
vs Majji Jangamayya case (supra) decided on 5.11.1976.
While doing so, this Court explained the observations made in the 1st B.S. Gupta case (supra) at page 506 thereof, which were relied upon by the respondent Officers in that case.
These observations were as follows: "After the fresh seniority list is made in accord ance with the above directions, it will be open to any direct recruit or promotee to point out to the department that in the selections made to the post of Assistant Commis sioner from 1962 onwards, he, being otherwise eligible, was entitled on account of the new seniority given to him, to be considered for promotion to the post of Assistant Commis sioner.
The department may have to consider his case for promotion on his record as on the date when he ought to have been considered for selection but not so considered.
If 339 he is selected, his position will be adjusted in the cadre of the Assistant Commissioners without affecting the promo tee Assistant Commissioners who had been confirmed prior to 22.2.1967 the date on which the Jaisinghani 's case was disposed of by this Court." (Emphasis supplied) While explaining these observations, this Court observed as follows: "The observations . . are that if as a result of the fresh seniority list it is found that any officer was eligible for promotion to the post of Assistant Commissioner on account of his place in the new seniority list, the department might have to consider his case for promotion on his record as on the date when he ought to have been consid ered and if he would be selected his position will be ad justed in the seniority list of Assistant Commissioners.
The object is to see that the position of such a person is not affected in the seniority list of Assistant Commissioners because he is actually promoted later pursuant to the new seniority list, although according to the new seniority list itself he should have been promoted earlier.
The observa tions do not mean that although the Committee can meet for the selection of officers for promotion to the post of Assistant Commissioner only after the seniority list is approved by this Court, the selection would be deemed to be made at the time when a vacancy in the post of Assistant Commissioner occurred and the eligibility of officers for selection will be determined by such deemed date of selec tion.
No employee has any right to have a vacancy in the higher post filled as soon as the vacancy occurs.
Government has the right to keep the vacancy untilled as long as it chooses.
In the present case, such a position does not arise because of the controversy between two groups of officers for these years.
The seniority list which is the basis for the field of choice ,for promotion to the post of Assistant Commissioner was approved by this Court on 16 April, 1974.
Promotions to the post of Assistant Commissioners are on the basis of the selection list prepared by the Committee and are to be made prospectively and not retrospectively." (Emphasis ours) 340 The contention raised by the respondents Dr. Tripathi & Shri Sinha in the present appeal and which as stated above, is accepted by the Tribunal, was that in view of the said observations in 1st B.S. Gupta case (supra) as explained in Majji Jangamayya case (supra) while selecting the Income Tax Officers to the post of Assistant Commissioners, the Commit tee was required to consider the cases of the Income Tax Officer falling within the zone, with reference to their records on the date the Committee met for selection.
They were not to be selected with reference to their records relevant to the year for which their selection was to be made.
Since the Committee followed the latter course, it had, according to the petitioners, violated the directions of this Court given in the case of 1st B.S. Gupta (supra) as explained in the case of Majji Jangamayya (supra).
Unfortu nately, the Tribunal fell for this contention little realis ing that it was the first course canvassed by the contesting respondents and not the latter which would have been con trary to the directions of this Court in both the 1st B.S. Gupta case (supra) as well as Majji Jangamayya case (supra).
As is abundantly clear from the relevant observations repro duced above, what was desired by this Court in both these cases was that if according to the new seniority list there were cases of officers who were entitled to be considered for promotion much before they were considered on the basis of the old seniority list, the Committee should Look into such cases, and should adjust the promotions given right from the year 1962 onwards by considering the cases of such unjustly superseded officers.
Hence the Committee was re quired to consider the vacancies in the posts of Asstt.
Commissioners year wise from 1962 onwards, and if the super seded officers were found fit for such promotion, they were to be given seniority as Asstt.
Commissioners from the year in which they would have been promoted.
It goes without saying that while considering the promotions in the earlier years, the Committee had to consider the record of the officers relevant to those years.
The Committee could not have taken into consideration the record of future years for promotion in the earlier years.
This is also the import of the observations of this Court emphasised by us above.
The Committee did exactly that as is clear from what is stated in paragraphs 12 to 18 of the counter filed on behalf of the appellants in the proceedings before the Tribunal.
There it is pointed out specifically with reference to the contesting respondents Dr. Tripathi and Shri Sinha that the Committee which met from 1977 to 1979 to adjust the promotions as directed by this Court, ' considered in 1978 the case of Dr. Tripathi with respect to his claim which arose in September 1968, February 1969 and September 1969.
He was not selected to the post for the vacancies in September 1968 and February 341 1969 on the basis of comparative merit.
However, he was selected for one of the vacancies in September 1969 and was given deemed promotion with reference to that date.
So also the case of respondent Shri Sinha was considered for the vacancies in September 1968, February 1969 and September 1969.
He was not selected for the vacancies in September 1968 and February 1969, but was selected for one of the vacancies in September 1969.
He was given the deemed date of promotion from that date.
There is no dispute that the seniority of both the respondents as Asstt.
Commissioners has been fixed with reference to the said dates of their deemed promotion.
Mr. Salve, the leaned counsel appearing for both the contesting respondents, however, urged two contentions.
His first and the main contention was that the claims of the said respondents should have been considered on the basis of their records either on the date the new seniority list was prepared, i.e., February 2, 1973 (as.
approved in the lind Gupta case decided on April 16, 1974) or on the date the Committee met in 1978 to consider their claims for the promotional posts.
He contended that this was the direction given by this Court in the 1st Gupta case (supra) and in Majji Jangamayya case (supra).
We have already quoted above the directions given in both the said cases.
It will be obvious from the said directions that the course suggested by Shri Salve, if adopted by the Committee, would have been in clear violation of the said directions.
On the other hand, the Committee had strictly and correctly abided by the said directions.
The second contention urged by Shri Salve was that the selection was not made according to the instructions given in the Government Memorandum of 1957.
According to him, it is the merit cum seniority and not seniority cum merit formula which should have been followed while making the promotions.
We have no record before us to find out what exactly were the comparative merits of the contesting re spondents as against the other candidates.
The respondents in their counter affidavit have stated in so many words that the comparative merits of the respondents were considered, vis a vis the other candidates for each of the occasions.
They were not selected for the vacancies of two earlier occasions and were selected on the third occasion on the basis of the comparative merits.
We also cannot overlook the fact that before the Tribunal the contesting respondents neither advanced any such contention nor requested for the production of the records.
In fact, their case before the Tribunal did not centre rounds this point at all.
Even so, since the records were brought by the appellants in this Court, we had asked Shri Salve to look into them and inform us 342 whether his grievance that the merits of his clients were not given due weight by the Committee had any substance.
No such material was furnished to us.
The result is, the appeal is allowed and the impugned decision of the Tribunal is set aside.
In the circumstances, there will be no order as to costs.
The interim application and the contempt petitions respectively were filed by the contesting respondents for seeking directions to the appellants to appoint them provi sionally as Chief Commissioners of Income Tax and for taking action for the alleged breach of the orders of this Court for not considering their claims to the said posts according to seniority.
In the view we have taken, they have to be dismissed.
We also understand from the appellants that the contesting respondents have since been appointed as Chief Commissioners according to their seniority as determined by the department and approved by us as above.
We have been told by appellants ' counsel that the reversal of the Tribu nal 's decision no longer affects the promotion granted to them.
N.P.V. Appeal al lowed.

dataset_name: IN-Abs

summary:
Respondents Nos. 1 and 2, direct recruit Income Tax Officers, CIasa I, flied a petition before the Central Administrative Tribunal contending that they were not ap pointed to the next higher post of Assistant Commissioner according to their turn in the seniority list prepared as per directions given by the Court in Bishan Sarup Gupta etc.
vs Union of India; , and Union of India Etc.
vs Majji Jangammayya, ; , adversely af fecting their seniority as Assistant Commissioners, and hence it required correction.
The Tribunal quashed the seniority list of Assistant Commissioners and Commissioners of Income Tax and directed the appellants to redetermine their seniority in the cadre of Assistant Commissioners via a via the seniority of re spondents No. 3 to 20, also direct recruits and other con cerned officers, in the light of the directions and princi ples laid down by this Court in Majji Jangamayya 's case.
Hence the appeal by the Department.
was contended on behalf of the respondents that in view of the instructions of this Court in 1st B.S. Gupta case (1975) Supp SCR 491, as explained in Majji Jangamayya 's case, while selecting the Income Tax Officers to the post of Assistant Commissioners, the Departmental Promotion Commit tee was required to consider the cases of the Income Tax Officers falling within the zone with reference to the records, either on the date of seniority list was prepared i.e. February 2, 1972 (as approved by the Court in 2nd Gupta case) or on the date the Committee met for selection, and not with reference to their records relevant to the year for which their selection was to made, but since the Committee had followed the latter course, it had violated the direc tions of this Court.
It was also urged that the selection was not rode according to the instruc 336 tions given in the Government Memorandum of 1957, and that while making the promotions, merit cum seniority and not seniority cummerit formula, should have been followed.
Allowing the appeal, this Court, HELD: 1.1 The dispute with regard to the seniority be tween the direct recruits and the promoters in the Income Tax Department was set at rest by this Court in 2nd B.S. Gupta case wherein this Court accepted as correct the sen iority list of Income Tax Officers, prepared in accordance with the directions given in the 1st B.S. Gupta case.
While upholding the selection list for promotion of Income Tax Officers, Class I to the posts of Assistant Commissioners prepared on the basis of the aforesaid seniority list and the instructions in the Government Memorandum of 1957, in Majji Jangamayya 's case, this Court explained the observa tions made in the 1st B.S. Gupta 's case.
[338B C; F] 1.2 What was desired by this Court in the 1st B.S. Gupta case and Majji Jangamayya case was that if according to the new seniority list there were cases of officers who were entitled to be considered for promotion much before they were considered on the basis of the old seniority list, the Committee should look into such cases, and should adjust the promotion given right from the year 1962 onwards by consid ering the cases of such unjustly superseded officers.
Hence the Committee was required to consider the vacancies in the posts of Asstt.
Commissioners year wise from 1962 onwards and if the superseded officers were found fit for such promotion, they were to be given seniority as Asstt.
Commis sioners from the year in which they would have been promot ed.
Thus, while considering the promotions in the earlier years, the Committee had to consider the record of the officers relevant to those years.
The Committee could not have taken into consideration the record of future years for promotion in the earlier years.
This is the import of the observations of this Court.
[340D F; B] 1.3 The Committee, which met from 1977 to 1979 to adjust the promotions as directed by this Court, considered in 1978 the cases of Respondents No. 1 and 2 with reference to their claims which arose in September 1968, February 1969 and September 1969.
They were not selected for the vacancies in September 1968 and February 1969, on the basis of compara tive merit.
However, they were selected for the vacancies in September 1969 and given deemed promotion with reference to that date and their seniority as Assistant Commissioners fixed as on that date.
The Committee has strictly and cor rectly abided by the directions in both the cases.
[340G H] 337 1.4 The comparative merits of the two respondents were considered on each of the three occasions and they were selected only on the third occasion.
They have since been appointed as Chief Commissioners according to their seniori ty as determined by the department and approved by this Court.
[342C] Bishan Sarup Gupta vs Union of India and Ors., [1975] Supp.
SCR 491; Union of India etc.
vs Majji Jangamayya etc.
; , explained and Bishan Sarup Gupta etc.
vs Union of India & Ors.
Etc., ; , re ferred to.


judgement:
ivil Appeal No. 1996 of 1990.
From the Judgment and Order dated 14.9.
1989 of the Delhi High Court in Civil Writ No. 2038 of 1988.
T.S. Krishnamurthy Ayer, T.V.S.N. Chari and C.V. Rao for the Appellants.
Ashok Grover and V.N. Kaura for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
This appeal raises some questions which are important both for the Delhi Administration as well as for their lessees of land.
Shortly stated, the questions in volved are: (a) what constitutes an application for permis sion to convert the user of the land? (b) from which date the conversion charges are leviable? and (c) from which date interest is chargeable on the conversion charges? 2.
The land involved in the present ease is at 20, Barakhamba Road, New Delhi and admeasures about 0,956 acre.
It was leased by 304 the Governor General in Council to one Smt.
Rama Bai on November 17, 1931.
The regular lease deed was drawn up in 1938.
It was a perpetual lease given on a premium of Rs.8,000 at the annual rent of Rs.400.
Rama Bai con structed a residential building on the land.
On May 20, 1938, Smt.
Rama Bai assigned the lease in favour of Smt.
Leelawati who died on November 6, 1969.
The interest in the lease devolved on respondents 1 4 and one Hans Raj Gupta and their names were mutated in the record of rights as is evidenced by the Government Memo of November 21, 1977.
Hans Raj Gupta died on July 31, 1985.
Respondents 5 11 are his heirs and legal representatives.
It appears that Hans Raj Gupta had left a will.
It is the subject matter of probate proceedings in Suit No. 62 of 1985 which is being contested.
If the will is probated then share of the late Hans Raj Gupta will devolve upon respondents 6 9; otherwise, it will devolve on all his heirs, viz., respondents 5 11.
For the purpose of the questions to be answered in this appeal, we are not much concerned with the revolution of property after the death of late Hans Raj Gupta.
In September 1962, the Delhi Development Authority prepared a Master Plan for Delhi under Section 7 of the Delhi Development Act, 1957 (hereinafter referred to as the "Act").
Before the names of respondents 1 4 and the late Hans Raj Gupta were mutated in the property register on November 21, 1977, a letter was written on April 25, 1977 by one of the lessees to be precise, by the first respondent, through an advocate, to the Land & Development Officer which read as follows: ". .
My client Shri Dev Raj Gupta son of late Smt.
Leela Gupta proposes to construct a multi storeyed building on the above mentioned plot.
Please let me know the charges, if any, payable for conversion of the land use from residen tial to commercial for constructing a multi storeyed commer cial building on the said plot after demolishing the exist ing bungalow constructed on the above said plot.
Your early response in the matter shall highly be appreciated.
Thanking you, We do not have on record reply, if any, sent to this letter.
But it 305 appears that there was some letter of the same date, viz., April 25, 1977 addressed by "the heirs and executors" of the estate of late Smt.
Leelawati Gupta, C/o Shri Prem Shankar, Advocate, i.e., the very same advocate who had written the letter earlier alluded to on behalf of the first respondent, and a reply was given by the office of the Land & Develop ment Officer on July 29, 1977 to this letter of the "heirs and executors etc." stating therein that their letter was receiving attention.
What that letter was has not come on record.
The only development thereafter was, as stated earlier, the Government Memo of November 21, 1977 communi cating that the names of respondents 1 4 and of the late Hans Raj Gupta were mutated in the property register against the leased land.
It may be mentioned here that this Govern ment Memo was addressed to the late Hans Raj Gupta and respondents 1 4 care of the said Advocate, Shri Prem Shan kar.
We are informed at the Bar that the request for such mutation was made on October 12, 1972 on the basis of a partition deed of December 15, 1970 after the death of Smt.
Leelawati on November 26, 1969.
What is important to note from the developments so far, as tar as the issues involved in this appeal are concerned, is that no application for conversion of the land was made on behalf of the lessees of the land.
On February 15, 1978, the late Hans Raj Gupta, for himself and "Dev Raj Gupta and others", wrote a letter to the Land & Development Officer stating therein as follows: "Under the Master Plan and the Zonal Plan the above plot now residential can be developed for the construction of a Commercial building.
Please let me know your terms in respect thereof together with commercialisation charges that will have to be paid by us.
The plans have already been submitted to the N.D.M.C. after their approval by the Urban Land Art Commis sioner.
Yours faithfully, S/ d Hans Raj Gupta for Hans Raj Gupta, Dev Raj Gupta and Others" 306 We have then on record a letter dated March 1, 1980 by the Assistant Settlement Commissioner to the lessees as follows: S/Shri Hans Raj Gupta, Dev Raj Gupta, Prem Raj Gupta Pardeep Kumar Gupta, C/o Shri Hans Raj Gupta, 3 Ratendon Road, New Delhi.
Sub: Premises situated on Plot No. 5, Block No. 205 known as 20 Barakhamba Road, New Delhi.
Dear Sir, I am to say that the applications in respect of the above mentioned premises received so far from different persons (some of them are not co lessees) to intimate con version charges for the construction of Multi stroyed Commercial building and your intention to sell the property to M/s. Central Investment (P) Ltd. and the United Towers India (Pvt.) Ltd. but rejection of the same by *.he
Compe tent authority under Urban (Ceiling & Regulation) Act, 1976 have created some doubts about that ownership.
It has there fore been decided that a fresh application for the permis sion to construct the Multi storeyed Building duly signed by all the co lessees be asked for.
You arc therefore requested to make an application in the prescribed proforma for the permission to construct the Multi storeyed Commercial building duly signed by all the co lessees.
Yours faithfully, S/d Encl.
As above.
(R.L. Gupta) Asstt.
Settlement Commissioner".
On June 3, 1980, a reminder was sent by the Government to the late Hans Raj Gupta and respondents 1 4 which reads as follows: " . .
I am to refer to this Office Letter No. LI 9/205(5)/ 307 80/197 dated 1.3.1980 on the above subject and to say that no reply thereto has to far been.
(sic.) In case no reply is received from you within 15 days from the said date of receipt on this letter, then it will be presumed that you are not interested for the permis sion to construct the multi storeyed Commercial Building and the case will be treated as closed . . " To this reminder, the late Hans Raj Gupta replied that the letter of March 1, 1980 sent by the Government appeared to have been lost in transit and did not reach their hands and requested for a duplicate of the same to enable them to take necessary steps.
The Government by its letter of August 11, 1980 sent a copy of its letter of March 1, 1980 and along with it also sent to the late Hans Raj Gupta and others a show cause notice dated May 31, 1980 which had also been received back by the Government undelivered.
Thereaf ter, on February 27, 1981, the late Hans Raj Gupta, and one Raj Kumar Gupta as a constituted Attorney for respondents 1 4, sent an application in the prescribed form.
In the accompanying letter of the same date, if was mentioned that the application was sent with reference to the Land & Devel opment Officer 's letter dated March 1, 1980 and the discus sions held in his office on February 9, 1981 for permission to construct a multi storeyed building.
All that is neces sary for us to note from the contents of the application form is firstly that it was mentioned there against the relevant query that the plan for constructing commercial building was sanctioned on January 21, 1981 by the New Delhi Municipal Committee and that exemption application under Section 20(1) of the Urban Land (Ceiling & Regulation) Act, 1976 was being processed.
On January 12, 1984, the Govern ment intimated to the parties that with reference to their letter of February 27, 1981 seeking permission for construc tion of multi storeyed commercial building, the lessor, i.e., the Government was willing to consider their said request provided they were willing to comply with the terms and conditions mentioned therein full in advance.
The terms and conditions mentioned in this communication included, among other things, the payment of additional premium of Rs.1,77,31,548 in jumpsum and payment of interest on the additional premium at 10 per cent per annum from 27th May, 1981 to 14th July, 1983 being Rs.37,84,349.55 and from 15th July, 1983 to the date of payment, at Rs. 1,47,762.90 per month.
The other terms and conditions imposed by the said letter are not in dispute and, therefore, they need not be reproduced here.
308 6.
On receipt of this letter, the late Hans Raj Gupta and other lessees made a representation on March 31, 1984 to the Works & Housing Minister of the Government of India requesting reconsideration of the terms and conditions imposed in the Government 's letter of permission of January 12, 1984.
It appears that thereafter there was a correspond ence between the parties which finally culminated in the Government 's letter of June 12, 1987 which virtually reject ed the representations of the lessees.
Further representa tions were made thereafter for reconsideration of the terms and conditions offered by the Government for conversion of the use of the leased land but it appears that they were not replied to.
The result was that the lessees approached the High Court by a writ petition challenging the appellant 's letter dated June 12, 1987 reiterating the terms and condi tions which were intimated earlier by the letter of January 12, 1984.
The main challenge in the petition was to the base year for the calculation of the charges for conversion of the land from the residential to the commercial purpose.
It was the contention of the petitioners that since they had applied to the respondents for permission to convert the user on February 15, 1978, they were liable to pay charges calculated with reference to the said date and not as the respondents had done with reference to May 25,1981.
Their second contention was that for the same reason no charges for the misuse of the land could be levied after February 15, 1978 and their third contention was that no interest could be charged on the alleged additional premium which was calculated by taking into consideration May 25, 1981 as the base date.
The High Court accepted all the said three con tentions by holding that the date with reference to which the conversion charges had to be calculated was February 15, 1978 when according to the court the respondents had duly applied for conversion of the user.
The High Court also held that in fact there was no need to make any such application for conversion after September 1962 when the Master Plan was prepared by the Delhi Development Authority declaring the region in which the leased land was situate as a commercial zone.
According to the court, there was an automatic and statutory conversion of the use of the land from residential to commercial purpose and hence there was no question of either payment of conversion charges or the misuse charges.
In this view of the matter the court held that the demand which had been made by the appellants for conversion charges calculated on the basis of the rate prevalent in April, 1981 instead of the rate prevalent on February 15, 1978 was not in accordance with law and the respondents were not obliged to make the payment pursuant to an invalid demand.
The High Court, therefore, quashed the 309 demand for conversion charges contained in the appellants letters dated January 12, 1984 and June 12, 1987 and direct ed the appellants to recompute the additional premium and other charges within a period of six months in accordance with law and in accordance with the observations made by it.
It is this decision which is challenged in this appeal.
While narrating the facts we have referred to the alleged application made by the respondents or on their behalf on April 25, 1977 and February 15, 1978.
Since the respondents do not contend that their alleged application of April 25, 1977 was an application for conversion of the user of the land, it is not necessary for us to deal with the same.
However, since it is contended vehemently on their behalf that the application of February 15, 1978 was a proper application for conversion of the user of the land and the High Court has also accepted it as such, it is necessary to deal with the same.
The contents of the said application have been reproducted above.
In the first in stance, this application was sent by the late Hans Raj Gupta for himself and for "Dev Raj Gupta and others".
The late Hans Raj Gupta did not sign it for Dev Raj Gupta and others as the holder of the power of attorney from them.
Nor did he make clear who "the said others were".
The lessees of the property at that time were Dev Raj Gupta Prem Raj Gupta and Pradeep Kumar Gupta in addition to the late Hans Raj Gupta.
Neither the said letter was signed by Dev Raj Gupta Prem Raj Gupta and Pradeep Kumar Gupta nor was it stated any where in the letter that they had authorised the late Hans Raj Gupta to seek permission on their behalf.
As far as the contents of the letter are concerned, they are self explanatory.
All that the late Hans Raj Gupta wanted to know from the Land and Development Officer were the terms and conditions for the construction of a commercial building on the land and the charges that would have to be paid for the same.
This can hardly be called an application for permission to con struct a commercial building on the land.
It is no more than an enquiry.
We are, therefore, unable to appreciate the contention that this letter constituted an application for permission to use the land for commercial purposes.
It is for this reason that we are unable to agree with the High Court 's finding that this letter was an application for the conversion of the user of the land.
It is immaterial in this connection whether any regular form of application was prepared and was available for use at the relevant time.
Even assuming that such a form was prescribed for the first time on June 15, 1978, the letter of February 15, 1978 could hardly be described as an application signed by the lessees, meaning thereby, all the lessees for permission to convert the user of the land.
310 The absence of a prescribed from does not made the letter the required application.
The least that is expected in an application for the purpose is a request by all the lesseess to permit the change of the user of the land showing readi ness and willingness to abide by the terms and conditions for such conversion of the user.
The letter in question, on the other hand, did nothing more than make an enquiry sug gesting that the application for the change of the would be made after the terms and conditions including the charges for the same are known.
We are, therefore, satisfied that the letter of February 15, 1978 was not an application made for the change of the user of the land.
It is for this very reason that we are of the view that it was for the first time on February 27, 1981 that a proper application was made for the purpose.
As has been pointed out hereinabove, after the letter of February 15, 1978 addressed by the late Hans Raj Gupta and others to the authority, we have on record only the letter of March 1, 1980 addressed by the authority to Hans Raj Gupta and others pointing out that applications in respect of the land were received by him from different persons some of whom were not even co lessees, to intimate conversion charges for the construction of "multi storeyed commercial building".
The letter also referred to their intention to sell the property to M/s. Central Investment Private Limited and the United Towers India Private Limited".
The authority also referred to the reflection of the same by the competent authority under the Urban Land (Ceiling and Regulation) Act, 1976 stated that the same had created some doubts about the ownership of the land.
It was, therefore, necessary accord ing to the authority that a fresh application for the per mission to construct the multi storeyed building" duly signed by all the co lessees" in the prescribed form should be sent.
It is obvious from this letter that there was some correspondence between the parties between February 15, 1978 and March 1, 1980 which has not come on record.
The letter of March 1, 1980 is obviously not a reply sent by the au thority to the late Hans Raj Gupta 's letter of February 15, 1978, for the latter does not refer to the construction of a multi storeyed building or the intended sale of the property to a third party.
The letter is also addressed not to the late Hans Raj Gupta and Dev Rai Gupta and others, but to the late Hans Raj Gupta, Dev Raj Gupta, Prem Raj Gupta and Pradeep Kumar Gupta.
It is also clear from the authority 's letter that different persons were seeking permission for change of the user of the land and some of them were not even the co lessees of the land.
The situation which ob tained till March 1, 1980 was, therefore, that there was no firm application by the authorised person or persons for conversion of the user of the land and it 311 is for this reason that the authority had asked the lessees to send the application in the prescribed form duly signed by all the co lessees.
There was no reply to this letter of March 1, 1980 and hence a reminder was sent by the authority on June 3, 1980 warning the lessees that in case no reply was received from them within 15 days, the matter would be treated as closed.
It is pursuant to this reminder that on February 27, 1981 a letter accompanied by an application in the prescribed form was sent, and both the letter as well as the prescribed form were duly signed for the first time by all the co lessees.
The contents of the accompanying letter make it clear that even the lessees treated this application as the first duly made application for the purpose.
It may also be mentioned here that, as has been stated in the application, the plans for the construction of the commer cial building were sanctioned only on January 21, 1981 and the,exemption application made to the competent authority under Section 20 (1) of the Act was even then still under process.
It is in response to this application that the sanction was given by the authority on January 12, 1984 to convert the user of the land.
We are, in the circumstances, of the view that it was only on February 27, 1981 that an application for the change of the user of the land was made by or on behalf of the respondent lessees of the land.
There is no explanation given by the appellants as to why the application made by the respondents of February 27, 1981 was not replied to till January 12, 1984.
Hence in the absence of anything else on records, it will have to be held that the date with reference to which conversion charges have to be counted is 27th February, 1981.
The authority has calculated additional premium with reference to May 27, 1981 on the footing that the outer limit for granting permission was three months from the date of the receipt of the application.
There is no justification for the authority to hold thus, for they are expected to process the application as early as possible and not to wait till the end of three months.
Unless there are valid reasons for them to do so or the delay is caused on account of an omission or commission on the part of the applicants, it is not proper to take the end of the three months as the date with reference to which the conversion charges should be calculated.
We are, however, informed that in the present case it makes no difference whether the charges are calculated with reference to 27th February 1981 or May 27, 1981.
Hence, the difference in dates in immaterial for our purpose.
312 11.
The High Court is further not right in holding that there was an automatic or a statutory conversion of the user of the land because in the Master Plan the land in question fell in the area reserved for commercial use.
The High Court failed to appreciate that the charge of user of the land permitted by the Plan was only enabling in nature.
It lifted the restriction which was otherwise there for using the land for commercial purpose.
The land has to be used as per the agreement between the contracting parties, and no change of the user can be made contrary to the agreement even if the Plan permits such user.
The Plan helps the parties to change the user, if the parties mutually agree to do so.
It does not permit the occupant to change the user unilaterally.
It is not, therefore, correct to say that no permission of the landlord was reeded to change the user of the land.
In the view we have taken, we direct that the addi tional premium should be calculated by the appellants on the basis of the rate which was prevalent as on February 27, 1981 which is the date of the application made for the change of the user.
The interest should be charged on such additional premium w.e.f. 12th April, 1984 since a period of three months from the date of notice, viz., January 12, 1984 was available to the respondent lessees to make the payment of the additional premium.
Taking into consideration the facts and circumstances of the present case, the appellants should be given the facility to make the payment in three equal annual installments and the interest should be charged on such deferred payment at not more than 14 per cent per annum.
The respondent lessees would, however, not be enti tled to convert the present user of the land into the com mercial user until and unless the last of the amount of the additional premium together with the interest thereon is paid.
The respondents will further be liable to pay the misuse charges mentioned at items 6 and 7 of the ,notice of 12.1.1984 till 12th April, 1984 from which date, they would be paying the conversion charges as above.
The appellants will give the respondents the facility to pay the rest of the amounts, i.e., the amounts other than the conversion charges in twenty four monthly installments with interest at no more than 10 per cent annum.
The decision of the High Court is set aside and the appeal is allowed accordingly with no order as to costs.
G.N. Appeal al lowed.

summary:
The land in this case was leased by the Government to one R in 1931 and a regular lease deed was drawn in 1938.
It was a perpetual lease.
The lessee constructed a residential building on the land, and assigned the lease in favour of one L.
On the death of L, the interest in the lease devolved on the respondents.
Respondent No. 1 sent a letter through his Advocate to the Land & Development Officer, stating that he proposed to construct a multi storeyed building demolish ing the bungalow and demanding to know the charges for conversion of the land use from residential to commercial purposes.
The Land & Development Officer replied that the letter was receiving attention.
Actually the names of the respondents were mutated in the property register after the exchange of the above letters.
However, no application for conversion of the land user was made on behalf of the les sees of the land.
Again in 1978 the parties sent a letter to the Land & Development Officer demanding to know the terms for con struction of a commercial building on the lease land and the charges to be paid for the same.
The Assistant Settlement Commissioner sent a reply requesting that a formal applica tion be made in the prescribed proforma for permission to construct multi storeyed commercial building duly signed by all the co lessees.
In 1980 a reminder was sent to the parties.
Only thereafter the parties filed an application in the prescribed form.
In 1984, the Government intimated the parties that it was willing to comply with the request, provided the parties were willing to abide by certain terms and conditions in advance.
The parties made a representation to the Works & Housing Minis 301 ter requesting for reconsideration of the terms and condi tions.
After a good deal of correspondence the Government rejected the representation.
Thereafter the parties ap proached the High Court by way of a Writ Petition challeng ing the terms and conditions imposed by the Government.
It was contended that since they applied for permission to convert the user of land on 15.2.1978, they were liable to pay charges calculated with reference to that date only; that no charges for misuse of the land could be levied after 15.2.1978; that no interest could be charged on the alleged additional premium which was calculated by taking into consideration May 25, 1981 as the base date.
Accepting the contentions, the High Court held that there was no need to make any application for conversion after 1962 when the Master Plan was prepared by the Delhi Development Authority declaring the region as a commercial zone and that the conversion was automatic and statutory.
The High Court held that the Respondents were not,obliged to make the payment of conversion charges calculated at rates prevalent in April, 1984 instead of the rates obtaining in February, 1978.
It directed the Government to recompute the additional premium and other charges.
Aggrieved by the High Court Judgment, the Government preferred the present appeal.
The same contentions as were raised in the High Court were advanced before this Court, by both the parties.
Allowing the appeal, this Court, HELD: 1.
The land has to be used as per the agreement between the contracting parties, and no change of the user can be made contrary to the agreement even if the Master Plan permits such user.
The Plan helps the parties to change the user, if the parties mutually agree to do so.
It does not permit the occupant to change the user unilaterally.
It is not, therefore, correct to say that no permission of the landlord was needed to change the user of the land.
The High Court is not right in holding that there was an automatic or a statutory conversion of the user of the land because in the Plan the land in question fell in the area reserved for commercial use.
The High Court failed to appreciate that the change of user of the land permitted by the Plan was only enabling in nature.
It lifted the restriction which was otherwise there for using the land for commercial purpose.
[312B C & A] 2.
All that the parties wanted to know from the Land & Development Officer were the terms and conditions for the construction of a commercial building on the land and the charges to be paid for the same.
This can hardly be called an application for permission to con 302 struct a commercial building on the land.
It is no more than an enquiry.
It is immaterial in this connection whether any regular form of application was prepared and was available for use at the relevant time.
Even assuming that such a form was prescribed for the first time on June 15, 1978, the letter of February 15, 1978 could hardly be described as an application signed by the lessees meaning thereby all the lessees for permission to convert the user of the land.
The absence of a prescribed form does not make the letter the required application.
The least that is expected in an application for the purpose is a request by all the lessees to permit the change of the user of the land showing readi ness and willingness to abide by the terms and conditions for such conversion or the user.
The letter in question, on the other hand, did nothing more than make an enquiry sug gesting that the application for the change of the user would be made after the terms and conditions including the charges for the same are known.
Thus, the letter of February 15, 1978 was not an application made for the change of the user of the land.
[309F H; 310A B] 3.
It is clear from the authority 's letter dated March 1, 1980 that different persons were seeking permission for change of the user of the land and some of them were not even the co lessees of the land.
Since there was no firm application by the authorised person or persons for conver sion of the user of the land the authority had asked the lessees to sent the application in the prescribed form duly signed by all the co lessees.
There was no reply to this letter of March 1, 1980 and hence a reminder was sent by the authority on June 3, 1980 warning the lessees that in case no reply was received from them within 15 days, the matter would be treated as closed.
It is pursuant to this reminder that on February 27, 1981 a letter accompanied by an appli cation in the prescribed form was sent, and both the letter as well as the prescribed form were duly signed for the first time by all the co lessees.
The contents of the accom panying letter make it clear that even the lessees treated this application as the first duly made application for the purpose.
As has been stated in the application, the plans for the construction of the commercial building were sanc tioned only on January 21, 1981 and the exemption applica tion made to the competent authority under Section 20(1) of the Delhi Development Act, 1957 was even then still under process.
It is in response to this application that the sanction was given by the authority on January 12, 1984 to convert the user of the land.
Thus, it was only on February 27, 1981 that an application for the change of the user of the land was made by or on behalf of the respondent lessees of the land.
[310G H; 311A D] 4.
There is no explanation given by the appellants as to why the 303 application made by the respondents on February 27, 1981 was not replied to till January 12, 1984.
Hence in the absence of anything else on record, it will have to be taken that the date with reference to which conversion charges have to be counted is 27th February, 1981.
[311E] 5.
The additional premium should be calculated by the appellants on the basis of the rate which was prevalent as on February 27, 1981 which is the date of the application made for the change of the user.
The interest should be charged on such additional premium w.e.f. 12th April, 1984 since a period of three months from the date of notice, viz., January 12, 1984 was available to the respondent lessees to make the payment of the additional premium.
The respondent lessees would not be entitled to convert the present user of the land into the commercial user uniess and until the last of the three annual installments of the addi tional premium together with the interest thereon is paid.
[312C E] 6.
The respondents will further be liable to pay the misuse charges mentioned at items 6 and 7 of the notice of 12.1.1984 till 12th April, 1984 from which date, they would be paying the conversion charges.
[312F]


judgement:
ivil Appeal No. 4979 of 1990.
From the Judgment and Order dated 25.8.1989 of the Bombay High Court in W.P. No. 6058 of 1986.
468 V.M.
Tarkunde, D.R. Poddar and V.B. Joshi for the Appellant.
K.P. Parasaran (N.P.), Rama Subramaniam, A.K. Ganguli, R.P. Bhat, K. Swamy and A.S. Bhasme for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
Leave granted.
Counsel heard.
This is an appeal from the judgment of a learned Single judge of the Bombay High Court dismissing Writ Petition No. 6058 of 1986 filed by the appellant on the Appellate Side of that Court.
The appellant and respondent No. 1 are companies incorporated under the Indian Companies Act.
ReSpOndent No. 2 is a Cooperative Society registered under the Maharashtra Cooperative Societies Act, 1961 (hereinafter referred to as "the said Act").
Appellant is a member of respondent No. 2 Cooperative Society and has its office premises in the building owned by respondent No. 2.
Some time prior to September 10, 1985 the appellant entered into an agreement to sell the said office premises to respondent No. 1 subject to the approval of respondent No. 2.
The terms of the said agreement were incorporated in a letter dated September 10, 1985 addressed by the appellant to the Vice Chairman and the president of respondent No. 1: It was set out in the said letter that the price for the said premises was to be calcu lated at the rate of Rs. 2,000 per square feet.
The letter further stated: "We are agreeable to sell you the same subject to approval of the Cooperative Society owning the building.
We shall provide you vacant possession and hand over the same free of all incumbrances only after we are able to obtain alternate accommodation for our company . . ".
A sum of Rs. 50,000 was paid by a demand draft by re spondent No. 1 to the appellant under the said agreement.
By a letter dated November 15, 1985 the appellant sought the approval of respondent No. 2 to the transfer of the said office premises to respondent No. 1.
By its letter dated November 18, 1985 addressed to the appellant, respondent No. 2 stated that the appellant was requested to offer to trans fer of the said.
premises to the existing members of the society as a first preference as per the established prac tice of the society.
It further stated that in case the existing members of respondent No. 2 were not willing to buy the said premises, the premises could be given for trans 469 fer to an outside transferee.
By its letter dated November 22, 1985, addressed to respondent No. 1 the appellant point ed out that respondent No. 2 had declined to grant permis sion for transfer unless the premises were first offered to the existing members of the society by Way of a first pref erence.
The said letter then stated that it was not possible to continue negotiations any further.
Along with the said letter the demand draft of Rs.50,000 referred to above was returned by the appellant.
Without any further correspond ence respondent No. 1 filed a dispute in the Cooperative Court No. 17 Bombay against the appellant and respondent No. 1 by statement of claim which can be conveniently referred to as a plaint.
In the plaint respondent No. 1 inter alia stated that on the promises and representations made by the appellant to respondent No. 1 it had paid a sum of Rs.2,60,000 to one I.M. Choksey representing himself as the Chairman of the appellant and one section Ramakrishnan, claiming to be the repre sentative of his wife who was a Director of the appellant.
Respondent No. 1 further claimed that it had paid a further sum of Rs.40,000 in cash to the appellant without taking a .receipt.
Respondent No. 1 urged that but for the assur ance given by Choksey and Ramakrishnan acting on behalf of the appellant and one Col.
G.D. Hadep, acting on behalf of respondent No. 2 that the appellant would be in a position to transfer the said premises by the end of November 1985 and respondent No. 2 would not object to such transfer, respondent No. 1 would not have paid such a huge amount to the appellant.
Respondent No. 1 further stated that the appellant and respondent No. 2 had promised respondent No. 1 that they would complete the formalities of transfer of the said premises within a few days and there would be no objec tion or obstruction whatever in the said transfer.
Respond ent No. 1 went on to say that it was given to understand that the appellant and respondent No. 2 were conspiring to sell the said premises to a third party for a larger amount.
Respondent No. 1 was ready and willing to perform its part of the contract and prayed for an order for specific per formance of the contract.
The relevant portion of paragraph 10 of the plaint, which deals with jurisdiction, sets out that respondent No. 2 is a cooperative society and is vital ly interested in the transfer and sale of the said premises and to ensure that the transfer is done under the provisions of its bye laws, the said Act and the rules.
Respondent No. 2 had taken active part in the transaction entered into be tween respondent No. 1 and the appellant who _is a member of respondent No. 2, and that respondent No. 1 was claiming his rights through the appellant who was a member and hence, the subject matter of the dispute fell within the ambit of section 470 91 of the said Act.
Respondent No. 1 prayed for a declara tion that the aforesaid dispute was a dispute falling under section 91 of the said Act and prayed that the appellant and respondent No. 2 should be directed to specifically perform the agreement recorded in the letter of September 10, 1985 and transfer the said premises to respondent No. 1.
The rest of the prayers in the plaint are immaterial for our pur poses.
Pursuant to certain orders made by the Bombay High Court the Cooperative Court framed an issue as to whether it had jurisdiction to entertain the dispute.
The Court recorded evidence led by respondent No. 1 off this issue and dis missed the dispute for want of jurisdiction.
This order was set aside by the Maharashtra Cooperative Appellate Court, Bombay, by its order dated September 9, 1986.
The appellant herein filed a writ petition in the High Court to challenge the said order.
The learned Single Judge who heard the said writ petition dismissed the same and held that the case was governed by the provisions of section 91 of the said Act.
; It is this decision which is sought to be challenged before us by the appellant.
It is submitted by Mr. Tarkunde, learned counsel for the appellant that the agreement to sell the said premises with which we are concerned, was entered into between the appel lant, a member of respondent No. 2, a Cooperative Society and respondent No. 1, a nonmember.
The said agreement was for transfer of premises belonging to the appellant to respondent No. 1, a non member, in a building owned by respondent No. 2, a cooperative society.
The claim in the dispute was for obtaining the specific performance of the said agreement and the prayer for directing respondent No. 2 to approve the said agreement was in the nature of an ancil lary prayer to complete the relief.
The main relief was for specific performance of the said agreement.
It was submitted by him that such a dispute cannot be said to be a dispute "touching the management or business of a society" as con templated in sub section (1) of section 91 of the said Act nor can it be said that respondent No. 1, a non member was making a claim against respondent No. 2 society through a member, namely, the appellant.
The main relief sought was for specific performance of an agreement by a member to sell the premises in the society building to a non member and such a claim can never be said to be made against the socie ty through a member.
In order to appreciate the submissions made, it is desirable to set out the material portion of Section 91 of the said Act which runs as follows: 471 "91(1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the con struction, elections of the office beares.

summary:
The appellant company, a member of Cooperative Society, respondent No. 2, was having its office premises in a build ing owned by respondent No. 2.
It entered into an agreement to sell the said premises to respondent No. 1, a non member subject to the approval of the Cooperative Society.
The Cooperative Society declined to grant permission for trans fer of the premises.
Respondent No. 1 filed a dispute against the appellant and respondent No. 2 Cooperative Society in the Cooperative Court under section 91 of the Maharashtra Cooperative Societies Act, 1960 praying for a decree of specific performance of the contract and a direc tion to the Cooperative Society to approve the said agree ment.
The Cooperative Court dismissed the dispute for want of jurisdiction.
On appeal by respondent No. 1, the Maharashtra Cooperative Appellate Court set aside the order of the Cooperative Court.
Against the order of the Cooperative Appellate Court, the appellant filed a writ petition in the High Court which was dismissed by holding that the dispute was governed by Section 91 of the Act.
In the appeal to this Court against the Judgment of the High Court, it was contended on behalf of the appellant that the dispute between the parties was not governed by Section 91 since it was neither a dispute "touching the business of the society" nor was it a dispute between a person claiming through a member against the society.
467 Allowing the appeal and setting aside the judgment of the High Court, this Court, HELD: 1.
Before a dispute can be referred to a Coopera tive Court under the provision of section 91(1) of the said Act it is not only essential that the dispute should be of a kind described in sub section (1) of section 91 but it is also essential that the parties to the said dispute must belong to any of the categories specified in clauses (a) to (e) of subsection (1) of the said section.
[473B] 2.
In the instant case the main claim of Respondent No. 1 a nonmember, was for a decree for specific performance of the agreement.
The prayer for an order that respondent No. 2 Society should be directed to give their approval to the said agreement was merely an ancillary prayer made with a view to complete the relief of specific performance.
The main claim to have the agreement specifically performed cannot be said to be a claim made by a person (non member) against the Society.
The claim against the society cannot be said to be made through a member, the appellant, because it is only when a decree for performance of the said agreement is passed against the appellant, that it could be contended that the other relief namely, for an order directing re spondent No. 2 to approve the said agreement is claimed against the society through a member.
Consequently, the dispute cannot be said to fall within the scope of section 91(1)(b) of the Act.
Therefore, the High Court committed an error in coming to the conclusion that both the parties to the dispute belonged to the categories covered under section 91(1)(b) of the Act.
[473E H; 474A] Deccan Merchants Cooperative Bank Ltd. vs M/s Dalichand Jugraj Jain and Ors., [1969] 1 S.C.R. 887; M/s Leong and Anr.
vs Smt.
Jinabhai G. Gulrajami and Ors., A.I.R. 1981 Bom.
244 and Sanwarmal Kejriwal vs Vishwa Cooperative Hous ing Society Ltd. and Ors., [1990] 2 SCC 288, distinguished.
O.N. Bhatnagar vs Smt.
Rukibai Narsindas & Ors., ; , referred to.