judgement:
Appeal No. 91 of 1953.
Appeal from the Judgment and Decree dated the 12th day of June 1951 of the High Court of Judicature at Calcutta in Appeal from Original Decree No. 56 of 1951 arising out of the Decree dated the 8th day of March 1951 of the said High Court exercising its Ordinary Original Civil Jurisdiction in Suit No. 3993 of 1950.
H.J. Umrigar, Rameshwar Nath and Rajinder Narain for the appellant.
A.N. Sinha and P. C. Dutta for the respondent.
December 6.
The judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal, by leave of the High Court of Calcutta under article 133 (1) (c) For these two sections 45 B and 45 G (inserted by Act XX of 1950) two now sections 45 B and 45 U wore inserted by section 10 of Act LII of 1953.
1099 of the Constitution, from its judgment in its appellate jurisdiction confirming that of a Single Judge of the Court.
The point involved is a short one and arises on the following facts.
The respondent before us, Associated Bank of Tripura Ltd., went into liquidation on the 19th December, 1949.
A month prior to the liquidation, i.e., on the 19th November, 1949, the appellant before us and the Bank entered into an agreement whereby the appellant became a tenant of the Bank in respect of a certain parcel of land.
One of the terms of the tenancy agreement was that the appellant should vacate the land demised on 24 hours ' notice.
After the Bank went into liquidation the Liquidator served on the appellant on the 18th April, 1950, a notice terminating his tenancy and calling upon him to vacate the land and to hand over possession by the end of April, 1950.
This not having been done, the Liquidator filed an application on the original side of the High Court under section 45 B of the Banking Companies Act for ejectment of the appellant and obtained an ex parte decree against him on the 10th July, 1950.
On the 28th August, 1950, the appellant applied for setting aside the ex parte decree but the application was dismissed on the 7th September, 1950.
Consequently the appellant filed the present suit on the 12th September, 1950, in the original side of the High Court, asking for a declaration that the ex parte decree against him was made without jurisdiction and was a nullity and that he continued to be a tenant notwithstanding the said ex parte decree.
The plaint does not specifically mention the reason for claiming the decree to be without jurisdiction or nullity.
But the point taken at the trial was that the Court had no power to deal with a question relating to the ejectment of the appellant from the demised land, in a summary proceeding initiated on an application but could pass the decree only on a suit regularly instituted.
This contention was raised on the basis of a judgment of the Calcutta High Court given on the 24th August, 1950, that in respect of such a relief under section 45 B a summary proceed 141 1100 ing is not maintainable but that a suit has to be filed.
This decision has since been reported in Sree Bank vs Mukherjee(1).
The learned trial Judge before whom the present suit came up was of the opinion that though the ex parte decree for ejectment was obtained on a wrong proceeding, there was no inherent lack of jurisdiction in the Court and that the fact of the decree having been obtained in a wrong proceeding did not render it a nullity.
This view of the learned Judge was affirmed by the Appellate Bench.
It has not been disputed before us that the relief by way of ejectment.
of the appellant from the land demised is one which would fall within the scope of section 45 B of the Banking Companies Act and that the Liquidator could obtain the said relief by an appropriate proceeding in the High Court.
Indeed, the learned appellate Judges specifically held that the Court had by virtue of section 45 B, jurisdiction over the subject matter of the dispute and this view has not been challenged having regard to the wide and comprehensive language of the section.
But what is urged is that the Court having followed the view taken in the Sree Bank Case (supra) (whose correctness was not challenged before it) that the appropriate proceeding to obtain such a relief was only a suit, it should have, consistently therewith, held the decree obtained on a mere application to be invalid.
In the Court below the question as to whether the decree obtained on a wrong proceeding was one so wholly without jurisdiction as to be a nullity or whether it was vitiated only by a mere irregularity in the mode of obtaining the relief, and hence not open to attack in collateral proceedings was the subject matter of elaborate consideration.
It appears to us, however, that it would be more satisfactory to consider and decide whether the basic assumption which gave rise to this argument, viz. that the appropriate proceeding under section 45 B was only a suit and not an application, is correct.
It is necessary for this purpose to notice the relevant sections.
Section 45 A of the Banking Companies Act, 1949, as amended by Act XX of 1950 (1) 1101 defines 'Court ' for the purposes of Part III and Part III A of the Act as "the High Court exercising jurisdiction in the place where the registered office of the Banking Company concerned, which is being wound up, is situated".
The said section also provides that "notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in any notification, order or direction issued thereunder or in any other law for the time being in force, no other court (i.e. a court other than the one as above defined) shall have jurisdiction to entertain any matter relating to or arising out of the winding up of a banking company".
Next is section 45 B (1) which is in the following terms: "Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in any other law for the time being in force, the Court shall have full power to decide all claims made by or Against any banking company and all questions of properties and all other questions whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of the banking company coming within the cognizance of the Court".
Section 45 G authorises the Court to make rules consistent with the Act concerning the mode of proceedings for the decision of claims and other proceedings under the Act.
This group of sections in Part III A constitute a wide departure from the corresponding provisions of the Indian Companies Act.
Under various sections thereof the liquidator, after an order for winding up of a company is made, can approach a Company Court for exercising certain powers in aid of and to expedite the process of liquidation.
The procedure normally adopted for the purpose is by way of application.
But the scope of matters in respect of which the liquidator can obtain the help of the Company Court by summary procedure is rather limited.
In respect of other matters and particularly in the matter of collecting assets or recovering properties from third parties, (not covered by sections 185 and 186) the liquidator has to invoke the help of the 1102 appropriate Court in the ordinary way.
This as is wellknown leads to a great deal of inevitable delay and expense.
When in 1949 special legislation in respect of Banking Companies was taken up, it was one of the stated objects, to provide a machinery by which proceedings in liquidation of Banking Companies could be expedited and speedily terminated.
It was found, however, that the Act of 1949, as originally enacted, was inadequate to achieve that purpose.
It is in this situation that the Amending Act of 1950 introduced into the Act of 1949 an entire Chapter, Part III A, consisting of sections 45 A to 45 H under the heading "Special provisions for speedy disposal of winding up proceedings".
It appears to us that, consistently with this policy and with the scheme of the Amending Act, where the liquidator has to approach the Court under section 45 B for relief in respect of matters legitimately falling within the scope thereof, elaborate proceedings by way of a suit involving time and expense, to the detriment of the ultimate interests of the company under liquidation, were not contemplated.
In the absence of any specific provision in this behalf in the Act itself and in the absence of any rules framed by the High Court concerned under section 45 G, the procedure must be taken to be one left to the judgment and discretion of the Court, having regard to the nature of the claim and of the questions therein involved.
In the Sree Bank Case (supra), the question that arose for direct consideration was one of limitation.
But in considering it and when pressed with the argument that, if the appropriate proceeding was by way of an application and not a suit, difficulties might arise as to the question of limitation, the learned Judges felt it unnecessary to consider whether or not the Limitation Act applies to the applications under section 45 B and if so what would be the period which would govern such applications.
They proceeded to decide the particular case before them, viz. a case relating to a debt due to the Bank, on the view that "there is nothing in the Companies Act or the Banking Companies Act which permits a 1103 liquidator to recover debts from debtors of a Banking Company by a summary proceeding such as an application to the Company Judge" and therefore held that no application for recovery would lie and that only a suit should have been brought for which the period of limitation was the ordinary period provided in the Limitation Act.
It appears to us, with great respect to the learned Judges, that this approach as to the nature of the proceeding required or permitted under section 45 B of the Banking Companies Act was not correct.
The question is not whether section 45 B permitted summary proceedings but the question is whether the section prescribed definitely a particular method of proceeding and whether consistently with the policy of the Act it was not to be presumed that a speedy and cheap remedy was to be available to the Liquidator, unless the Court in its discretion thought fit to direct or the rules of the High Court provided that a claim of a particular nature had to be pursued by a suit.
It is to be remembered that section 45 B is not confined to claims for recovery of money or recovery of property, moveable or immoveable, but comprehends all sorts of claims which relate to or arise in the course of winding up.
Obviously the normal proceeding that the section contemplated must be taken to be a summary proceeding by way of application.
We are clearly of the opinion that in the present case the Court which passed the ex parte decree was fully competent to decide the matter raised before it on summary application and to pass the ex parte decree which has been challenged by the suit and that the decree of the Courts below dismissing the suit is correct.
We are not to be supposed to have expressed any opinion on the question of limitation which was raised before the High Court in the Sree Bank Case (supra).
That is a question which may have to be decided in an appropriate case when it is raised directly.
The appeal is accordingly dismissed with costs.

summary:
The object of the Banking Companies Act, 1949 is to provide a machinery for expeditious and speedy termination of proceedings in liquidation and in the absence of any specific provisions of the Act to the contrary or any rules framed by the High Court under section 45 G of the Act (inserted by Act XX of 1950) the normal procedure for deciding all claims under section 45 B of the Act (inserted by Act XX of 1950) should be a summary proceeding originating with an applica tion.
But the court in its discretion may think fit to direct or the rules of the High Court may provide that a suit is the proper remedy in view of the nature of claim made and the questions involved in such claim.
Sree Bank vs Mukherjee ([1950] , referred to.


judgement:
Appeals Nos. 240 and 241 of 1969.
Appeals from the judgment and decree dated December 18, 1968 of the Allahabad High Court in Civil Misc.
Writ No. 4697 of 1968.
J. P. Goyal and Sobhag Mal Jain, for the appellant (in both the appeals).
L. M. Singhvi and O. P. Rana, for the respondents ( in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
These are appeals by certificate.
They are by the same appellant and they raise common question of law.
Hence they are considered together.
Two questions of law were urged on behalf of the appellant in support of the appeals.
The first contention urged was that 147 Section 3 D(1) of the U.P. Sales Tax Act, 1948 (to be hereinafter referred to as the Act) is ultra vires the Constitution, firstly because that under that section excessive legislative power had been delegated to the State Government and secondly on the. ground that it discriminates between the registered dealers who made their purchases through licensed dealers and the registered .
dealers who made their purchases through dealers who are not licensed.
The second contention taken was that notification No. ST 7122/X 900(16)64 dated October 1, 1964 issued under section 3 D(1) of the Act imposing purchase tax on oil seeds is invalidas it contravenes section 3AA of the Act.
We have considered the first ground of attack in Civil Appeals, Nos. 362 and 1692 of 1969 (Mls.
Sita Ram Bishambhar Dayal etc.
vs State of U.P.) in which we have delivered judgment just now.
For the reasons mentioned therein, the contention that section 3 D(1) is ultra vires the Constitution fails.
The only surviving question is whether the notification re ferred to earlier is violative of section 3AA of the Act.
Before examining that contention, it is necessary to set out the, relevant facts.
The appellant is a partnership firm.
It carries on business as dealers in roundnuts, oil seeds and Arhar.
For the assessment years 1965 66, 1966 67, the Sales tax Officer, Rampur assessed ' the appellant to sales tax on the turnover of the groundnuts oil manufactured by the appellant and to purchase tax on the turnover of the oil seeds and foodgrains.
The appellant unsuccessfully appealed against the assessment orders.
Thereafter it took up the matter in revision before the revising authority.
There, again it substantially failed.
Aggrieved by that decision, he moved ' the High Court of Allahabad for a writ of certiorari quashing the levy of purchase tax imposed on him in respect of his purchases of oil seeds.
The High Court rejected those petitions.
Hence these appeals.
We shall now extract the impugned notification to the extent,: it is material for the purpose of this appeal.
It reads thus: "Not.
No. ST 7122/X 99(16)64 dated October 1, 1964.
In exercise of the powers under sub section (1) of section 3 D of the Uttar Pradesh Sales Tax Act, 1948 (U.P. Act No. XV of 1948), the Governor of Uttar Pradesh is pleased to notify that with effect from October 1, 1964, the turnover of first purchases in respect 148 of goods mentioned below shall be liable to tax under Section 3 D of the said Act.
Name of goods Rate of tax.
Foodgrains including cereals and pulses1 .5 paisa per rupee 2.
Gur 3 paisa per rupee 3.
Oilseeds 2 paisa per rupee As per this notification a purchase tax of 2 paise per rupee ,,on the turnover of the first purchase of oil seeds is leviable.
It is contended that this notification violates section 3AA of the Act.
Section 3AA says: "Notwithstanding anything contained in section 3 or 3A, the turnover in respect of the following goods shall not be liable to tax except at the point of sale by a dealer to the consumer, and the rate of tax shall be such, not exceeding the maximum rate for the time being specified in section 15 of the , as may be declared by the State Government by notification in the Official Gazette: (i). . (ii). . (iii). . (iv). . (v). . (vi) oil seeds, that is to say, seeds yielding non volatile oils used for human consumption, or in industry, or in the manufacture of varnishes, soap and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like.
Unless the dealer proves otherwise, every sale 'by a dealer shall, for the purposes of sub section (1) be presumed to be to a consumer.
Explanation.
A sale of any of the goods specified in sub section
(1) to a registered dealer who does not purchase them for resale in the same condition in which he has purchased them, or to an unregistered dealer shall, for pur poses of this section, be deemed to be a sale to the consumer.
" 149 This section was incorporated into the Act on April 1, 1956.
Under this section, on the goods specified therein, sales tax not, exceeding the maximum rate for the time being specified in section 15 of the can be levied by the StateGovernment on the turnover in respect of sales by dealers to the consumers.
From an analysis of this provision, we get the following: 1.
that tax to be levied is a sales tax; 2. levy in question is a single point levy; 3.
the point of levy is the sale by the dealer to the consumer and 4.
the rate to be fixed by the State Government is not to exceed the maxi mum rate for the time being specified in section 15 of the .
If we hold that provisions contained in section 3AA continue to be in force in respect of dealing in oil seeds then the appellant 'section contention that the impugned levy is an invalid levy succeeds, But the question is whether that contention is correct.
This takes us to section 3 D.
That section reads: "1.
Except as provided in sub section (2), there shall be levied and paid, food each assessment year or part thereof, a tax on the turnover, to be determined in such manner as may be prescribed, of first purchases made by a dealer or through a dealer, acting as a pur chasing agent in respect of such goods or class of goods, and at such rates, not exceeding two paisa per rupee in the case of foodgrains, including cereals and pulses, and pulses, and five paisa per rupee in the case of other goods and with effect from such date, as may, from time to time, be notified by the State Government in this behalf.
Explanation.
In the case of a purchase made by a registered dealer through the agency of a licensed dealer, the registered dealer shall be deemed to be the first purchaser, and in every other case of a first purchase, made through the, agency of a dealer, the dealer who is the agent shall be deemed to be the first purchaser.
x x x x 3.
x x x x 150 4.
On the issue of a notification under this section no tax shall be levied under any other section in respect of the goods so notified.
The provisions of the second and third proviso to Section 3 and of Section 18, shall mutatis mutandis apply in relation to the tax payable under this Section.
x x x x 7.
Unless the dealer proves otherwise to the satisfaction of the assessing authority, every purchase by or through a dealer shall, for the purposes of sub section (1), be presumed to be the first purchase by such dealer and every sale through a dealer shall, for the purposes of sub section (2), be presumed to be sale to a first purchaser.
" For our present purpose, it is not necessary to refer to the second and third provisos to section 3 and section 18.
It may be noted that section 3 D was incorporated into the, Act on August 1, 1958.
The contention on behalf of the appellant was that section 3AA is a special provision regarding certain specified class of goods including oil seeds whereas section 3 D is a general provision.
Hence dealings in respect of oil seeds must be held to be governed exclusively by section 3AA.
In support of his contention, the learned ,Counsel for the appellant called into, aid the rule of construction that a special provision excludes the application of a general provision.
On the other hand, it was contended on behalf of the Revenue that power was conferred on the State Government to levy purchase tax in place of sales tax in respect of any goods ' that may be notified under section 3 D(1) subject only to the conditions mentioned therein.
According to Dr. Singhvi, learned 'Counsel for the Revenue, the legislature left the questions whether in respect of a class of goods, the appropriate levy is sales tax or purchase tax as well as what is the appropriate point of levy, to the State Government because a decision on that question has to be taken on an assessment of various factors, some of which are not constant.
According to him in view of the language employed in sub section
(4) of section 3 D, it is not possible to apply the rule of construction that special legislation in respect of any particular topic should exclude the application of general legislation.
It may be noted that section 3 D was incorporated into the Act much later than section 3AA.
As seen earlier section 3AA was incorpo rated into the Act on April 1, 1956 whereas section 3 D was added 151 on August 1, 1958.
At the time the legislature incorporated into the Act section 3 D, it must have been aware of the existence of section 3AA but yet in sub section
(4) of section 3 D, it declared that on the issue of a notification under that section, no tax shall be levied under any other section in respect of the goods so notified.
The ambit of this provision is very wide and it clearly takes in goods mentioned in section 3AA.
Now turning to section 3AA, it is important to note that it begins by saying "notwithstanding anything contained in section 3 or 3 A".
The non obstante clause does not take in section 3 D.
If the legislature intended to exclude the operation of section 3 D, in respect of matters covered by section 3AA, nothing would have been easier than to say so.
It could have said "notwithstanding anything contained in section 3, 3 A and section 3 D".
But it did not choose to do that.
Therefore there are no grounds to cut down the amplitude of the power conferred on the State Government under sub section
(4) of section 3 D.
The High Court of Allahabad has consistently taken the view that it is open to the State Government to levy purchase tax in exercise of its powers under section 3 D even in respect of goods covered by section 3AA.
We are in agreement with that view.
In the result these appeals fail and they are dismissed with costs.
One set.
K.B.N. Appeals dismissed.

dataset_name: IN-Abs

summary:
Under section 3AA of the Uttar Pradesh Sales Tax Act, 1948 "not withstanding anything contained in section 3 or 3A" tax on the turnover of the goods specified therein was not leviable except at the point of sale by a dealer to the consumer.
Section 3D, incorporated into the Act later, authorised the imposition of a tax on the turnover of first purchase and on the issue of a notification under the section no tax could be levied under any other section in respect of the goods so notified.
On the question whether the notification dated October 1, 1964 imposing a purchase tax on oil seeds was invalid for the reason that it contravened section 3AA of the Act, HELD : It is open to the State Government to levy purchase tax, in exercise of its powers under section 3D, in respect of goods covered by section 3AA.
At the time the legislature incorporated into the Act section 3D it must have been aware of the existence of section 3AA, yet, in sub section
(4) of section 3D it declared that on the issue of a notification under the section, no tax shall be levied under any other section in respect of the goods so notified.
The ambit of this provision is very wide and it clearly takes in goods mentioned in section 3AA.
Further, the non obstante clause does not take in section 3D, and if the legislature intended to exclude the operation of section 3D, in respect of matters covered by section 3AA nothing would have been easier than to say so.
Therefore, there are no grounds to cut down the amplitude of the power conferred on the State Government under sub section
(4) of section 3 D. [150 H 151 D]


judgement:
Appeals Nos. 62 and 1672 of 1969.
Appeals from the judgments and orders dated May 17, 1968 of the Allahabad High Court in Writ Petitions Nos. 310 and 627 of 1968.
J. P. Goyal and Sobhag Mal Jain, for the appellants (in both the appeals).
L. M. Singhvi and O. P. Rana, for the respondents (in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
These are appeals by certificate.
They raise a common question of law for decision.
The only contention arising for decision in these appeals is as to the vires of section 3 D(1) of the U.P. Sales Tax Act, 1948 (to be hereinafter referred to as the Act).
The validity of that section has been assailed on two different grounds viz. (1) that the power delegated to the executive under section 3 D(1) is excessive and as such bad in law and (2) Section 3 D infringes article 14 of the Constitution in as much as it discriminates between the registered dealers who purchase through the agency of licensed dealers and the registered dealers who purchase through other dealers, The appellants are dealers in Rab.
In respect of their dealings in Rab, they have been levied purchase tax as per the notification issued by the Government under section 3 (D) (1) of the Act.
They are challenging the validity of the levy on the grounds mentioned above.
The High Court has repelled both the above contentions.
The High Court has come to the conclusion that the power con ferred on the State Government under section 3 D is a valid power.
It opined that the conferment of power on the executive to fix the rate of tax within the limits laid down in the section is not impermissible.
Further it held that the section is not hit by article 14 of the Constitution.
143 Before proceeding to consider the correctness of the conten tions advanced on behalf of the appellant, it is necessary to read section 3 D(1).
It says: "Except as provided in sub section (2), there shall levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in such manner as may be prescribed, of first purchases made by a dealer or through a dealer, acting as a purchasing agent in respect of such goods or class of goods, and at such rates, not exceeding two paisa per rupee in the case of foodgrains, including cereals and pulses, and five paisa per rupee in the case of other goods and with effect from such date, as may, from time to time, be notified by the State Government in this behalf.
Explanation.
In the case of a purchase made by a registered dealer through the agency of a licensed dealer, the registered dealer shall be deemed to be the first purchaser, and in every other case of a first purchase, made through the agency of a dealer, the dealer who is the agent shall be deemed to be the first purchaser.
" It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines, that power can be delegated to the executive.
Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects, such as the availability of the goods, administrative convenience, the extent of evasion, the impact of tax levied on the various sections of the society etc.
have to be considered.
In a modem society taxation is an instrument of planning.
It can be used to achieve the economic and social goals of the State.
For that reason the power to tax must be a flexible power.
It must be capable of being modulated to meet the exigencies of the situation.
In a Cabinet form of Government, the executive is expected to reflect the views of the legislatures.
In fact in most matters it gives the lead to the legislature.
However, much one might deplore the "New Despostism" of the executive, the very complexity of the modern society and the demand it makes on its Gov enment have set in motion forces which have made it absolutely necessary for the legislatures to entrust more and more powers to the executive.
Text book doctrines evolved in the 19th Century have become out of date.
Present position as regards delegation of legislative power may not be ideal, but in the absence of any better alternative, there is no Escape from it.
The legisla 144 tures have neither the time, nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again.
In certain matters they can only lay down the policy and guidelines in as clear a manner as possible.
In State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd.(1) this Court observed : "Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be levied, the rate at which it is to be charged in respect of different classes of goods and the like".
It was not contended before us that the power delegated to the executive to select the goods on which the purchase tax is to be Ievied was an excessive delegation nor was it contended that the power granted to the executive to determine the rate of tax by itself amounts to an excessive delegation.
All that was said was that in empowering the Government to levy tax on goods other than foodgrains at a rate not exceeding 5 paise in a rupee, the legislature parted with one of its essential legislative functions as the power given to the executive is an unduly wide one.
We are unable to accede to this contention.
Whether a power delegated by the legislature to the executive has exceeded the permissible limits in a given case depends on its facts and circumstances.
That question does not admit of any general rule.
It depends upon the nature of the power delegated and the purposes intended to be achieved.
Taking into consideration the legislative practice in this country and the rate of tax levied or leviable under the various sales tax laws in force in this country, it cannot be said that the power delegated to the executive is excessive.
In Devi Dass Gopal Krishnan and ors.
vs The State of Punjab and ors(2) this Court ruled that it is open to the legislature to delegate the power of fixing the rate of purchase tax or sales tax if the legislature prescribes a reasonable upper limit.
We are unable to accept the contention of Mr. Goyal, Iearned Counsel for the appellant that the maximum rate fixed under section 3 D is unreasonably high.
At any rate there is no material before us on the basis of which, we can come to that conclusion.
This takes us to the contention that section 3 D is ultra vires article 14 of the Constitution.
The argument on this question proceeds thus : The explanation to section 3 D provides that in 'the case of (1) ; (2) 20 S.T.C. 430.
145 purchase made by a registered dealer through the agency of a licensed dealer, the registered dealer would be deemed to be the first purchaser whereas in every other case of a first purchase made through the agency of a dealer, the dealer who is the agent would be deemed to be the first purchaser.
This difference according to Mr. Goyal is discriminatory in character.
He urged that there was no justification for making an agent liable to pay sale tax merely because he is an unlicensed agent.
According to him there is no rational distinction between the purchases made through licensed dealers and those made through unlicensed dealers.
The power to levy tax includes within itself the power to provide against evasion of tax.
A licensed dealer has to function according to the conditions of his licence.
He is bound to maintain true and correct accounts of his day to day transactions Of sales and purchase of goods notified in sub section
(1) of section 3 D in an intelligible form and in such manner, if any, as may be prescribed and further he must furnish to the assessing authority the details of the aforesaid transactions together with the name and parti culars of the purchaser and the number and date of the registration certificate filed by the purchaser under section 8A and such other information regarding the transactions as may, subject to rule, if any, in this behalf be required.
Hence whenever a purchase is made through a licensed agent, the authorities have the opportunity to know what purchases have been made and from whom those purchases were made but that would not be the case when purchases are made through dealers who are not licensed.
They are not required by law to maintain any accounts or submit any returns.
Hence if registered dealers are permitted to make purchases through dealers who are not licensed and those dealers themselves are not liable to be taxed then opportunity for evasion becomes larger.
The rule of discrimination does not rule out classification.
The power of classification under a fiscal law is larger than in the case of other laws.
Hence there was nothing wrong in the legislature making a classification between licensed dealers and dealers who are not licensed.
Even when a dealer who is not licensed is liable to pay purchase tax, the ultimate burden falls on his principal.
For these reasons, we do not see any basis for the contention that section 3 D is violative of article 14.
For the reasons mentioned above these appeals fail and they are dismissed with costs one set.
S.N. Appeals dismissed.

summary:
The appellants are dealers in Rab.
The State Government under section 3D(1) of the U.P. Sales Tax Act, 1948, levied purchase tax in respect of their, dealings in Rab.
Section 3D(1) of the Act, inter alia, provides that for each assessment year, there shall be levied and paid a tax on the turnover of first purchases made by a dealer or through a dealer in respect of such goods, at such rates not exceeding 2 paise per rupee in the case of foodgrains and 5 paise in respect of other goods and in the explanation it is provided that "in the case of purchase made by a registered dealer through a licensed dealer, 'the registered dealer shall be the, first purchaser and in every other case of fresh purchase, the dealer through whom the first purchase is made shall be deemed to be the first purchaser.
The appellants challenged the vires of section 3(d)(1) of the Act before the High Court but the High Court held against the appellants.
In appeal this Court, it was contended by the appellants that in empowering the Government to, levy tax on goods other than foodgrains at a rate not exceeding 5 paise in a rupee, the legislature had given an unduly wide power to the executive.
Such a delegated power was, therefore, excessive and bad in law and secondly, section 3D(1) infringed article 14 of the Constitution because it discriminated between registered dealers who purchased through licensed dealers and the registered dealers who purchased through other dealers.
Dismissing the appeals, HELD: (i) The power to fix the rate of tax is a legislative power, but if the legislature lays down the legislative policy and provides the necessary guidelines that power can be delegated to the executive.
, Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various social and economic factors are to be considered and since the legislatures have very little time to go into details, they have to delegate certain powers to the Executive.
This Court has ruled that if a reasonable upper limit is prescribed, the legislature can always delegate the power of fixing the rate of purchase 'tax or sales tax.
[143 E] Devi Days Gopal Krishnan vs State of Punjab, 20 S.T.C. 430, followed.
In the present case, taking into consideration the legislative practice in this country and the rate of tax levied or leviable under the various sales tax laws in force in this country, it cannot be said that the power delegated to the.
executive is excessive and in the absence of any material, it cannot be said that the maximum rate fixed under section 3D(1) is unreasonably high.
144 E F] (ii) Section 3D is not violative of article 14 of the Constitution.
In the present case, there is nothing wrong for the legislature to make a classification between licensed dealers and dealers who are not licensed.
A licensed dealer has to maintain true and correct accounts and other particulars of 142 purchasers whereas dealers who are not registered are not required to maintain any accounts.
Hence, if registered dealers are permitted to make purchases through dealers who are not licensed and those dealers are themselves not liable to be taxed, then opportunity for evasion of tax becomes larger.
Under the circumstances, the classification is not unjustified.
[145 G] State of Madras vs Gannon Dunkerlay & Co. (Madras) Ltd., ; and Devi Deo Gopal Krishna vs State of Punjab, 20 S.T.C. 430, referred to.


judgement:
Appeals Nos. 2459 and 2460 of 1968 and 1161 and 1162 of 1971.
Appeals by certificate/special leave from the judgment and order dated April 1, 1968 of the Calcutta High Court in Income tax Reference No. 163 of 1964.
N. A. Palkhivala, T. A. Ramachandran and D. N. Gupta, for the appellant (in all the appeals).
Jagadish Swarup, Solicitor General, B. B. Ahuja, R. N. Sach they and B. D. Sharma for the respondent (in all the appeals).
The Judgment of the Court was delivered by Hegde, J.
The first two appeals have been brought by certi ficate and the other two by special leave.
The later two appeals came to be filed because the certificates on the basis of which the earlier appeals were brought, were found to be defective inasmuch as the High Court had not given any reason in support of those certificates.
Hence it is sufficient, if we deal with the later two appeals.
The appellant is a non resident British Shipping Co. whose ships ply in waters all over the world including the Indian waters.
For the assessment years 1960 61, and 1961 62 (the relevant accounting years being calendar years 1959 and 1960), the Income tax Officer computed its total income taxable under the 12 L 256 Sup CI/72 170 Indian Income tax Act, 1922 (which will hereinafter be referred to as the, Act) by taking into account the ratio certificates issued by the Chief Inspector of Taxes, U.K. which were based on the assessments made on the appellant in U.K. During the relevant period, there was in U.K. "investment allowance" corresponding to "development rebate" under the Act.
The certificates issued by the Chief Inspector contained the percentage ratio of the total world profits of the appellant to its world earnings and similarly the percentage ratio of the wear and tear allowance and the investment allowance to its total world earnings.
In making the assessment the Income tax Officer purported to proceed on the basis of rule 33 of the Indian Income tax Rules 1922.
The said rule reads : "In any case in which the Income tax Officer is of opinion that the actual amount of the income, profits or gains accruing or arising to any person residing out of the taxable territories whether directly or indirectly through or from any business connection in the taxable territories, or through or from any property in the taxable territories or through or from any assets or source ,of income in the taxable territories, or through or from any money lent at interest and brought into the taxable territories in cash or in kind cannot be ascertained, the amount of such income, profits or gains for the purposes of assessment to income tax may be calculated on such percentage of the turnover so accruing or arising as the Income tax Officer may consider to be reasonable, or on an amount which bears the same proportion to the total profits of the business of such person (such profits being computed in accordance wi th the provisions of the Indian Income tax.
Act), as the receipts so accruing or arising bear to the total receipt of the business, or in such other manner as the Income tax Officer may deem suitable.
" The Income tax Officer proceeded to assess the appellant assessee on the second of the three bases mentioned in rule 33; but in computing Indian earnings, he did not include the destination earnings ' received in India ie.freight received in Indian ports in respect of cargo loaded at non Indian ports nor did he take into account the investment allowance granted to the appellant in its U.K. assessments.
Aggrieved by the order of the Income tax Officer, the assessee took up the matter in appeal to the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner accepted the contention of the assessee as regards the inclusion of the desti 171 nation earnings in the computation of the *Indian earnings of the assessee but rejected its contention as regards the investment allowance.
Aggrieved by the order of the Appellate Assistant Commissioner both the assessee as well as the Revenue appealed to the income tax Appellate Tribunal.
The Tribunal allowed the appeal of the assessee and dismissed that of the Revenue.
Thereafter at the instance of the Revenue, the following two questions of law were referred to the High Court under section 66(1) of the Act.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the destination earnings collected in India should be considered as part of the Indian earnings in determining the assessee 's Indian income under Rule 33 of the Income tax Rules ? Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing the claim of the assessee for the investment allowance under the U.K. Act (corresponding to the development rebate under the Indian Income tax Act, 1922) in the compu tation of its total world income for the purpose of determining the assessee 's Indian income under rule 33 of the Income tax Rules, 1922 ?" The High Court answered the first question in favour of the, assessee and the second in favour of the Revenue.
Hence these appeals by the assessee.
The Revenue has not appealed against the decision of the High Court as regards Question No. 1.
Hence we have only to consider whether the decision of the High Court relating to Question No. 2 is in accordance with law.
At the commencement of his arguments Mr. Palkhivala, learned Counsel for the assessee indicated that rule 33 may not be applicable to the facts of the case; but he said that for the purpose of this case, he was prepared to proceed on the basis that the said rule is the governing provision.
The authorities under the Act as well as the High Court have examined the facts of this case on the basis of rule 33.
The second question referred to the High Court requires the High Court to express its opinion whether on the facts and in the circumstances of the case, the Tribunal was right in allowing the claim of the assessee for the investment allowance under the U.K. Act in the computation of the total world income for the purpose of determining the assessee 's Indian income under rule 33.
Under these circumstances, it would not be appropriate for, us at this stage to ignore the ,earlier proceedings and examine the case afresh on a wholly diffe 172 rent basis.
Hence we have not gone into the question whether rule 33 is applicable to the facts of the case.
We are proceeding on the assumption that it applies.
An mentioned earlier, the assessee is a non resident.
Its liability to pay tax arises under sections 3 and 4 of the Act.
The total income that arose or accrued or deemed to have arisen or accrued to it in this country in the relevant previous years is liable to be taxed in this country.
Section 10(2) provides for certain allowances to be deducted while computing the taxable income.
Section 10 (2) (vib) deals with the development rebate.
The material part of that section reads: "In respect of a new ship acquired or new machinery or plant installed after the 3 1st day of March, 1954 which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of acquisition of the ship or of the installation of the machinery or plant, equivalent to, (i) in the case of a ship acquired after the 3 1st day of December, 1957, forty per cent of the actual cost of the ship to assessee, and (ii) in the case of a ship acquired before the 1st day of January, 1958 and in the case of any machinery or plant, twenty five per cent.
of the actual cost of the ship or machinery or plant ,to the assessee.
" The proviso to that clause says "Provided that no allowance under this clause shall be made unless (a) the particulars prescribed for the purpose of clause (vi) have been furnished by the assessee in respect of the ship or machinery or plant; and (b) except where the assessee is a company being a licensee within the meaning of the (54 of 1948), or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1948 an amount equal to seventy five per cent of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve, account to be utilised by him 173 during a period of ten years next following : or the purposes of the business of the undertaking except (i) for distribution by way of dividends or profits, or (ii) for remittance outside India as profits or for the creation of any asset outside India, and if any such ship, machinery, or plant is sold or otherwise transferred by the assessee to any person other than the Government at any time before the expiry of ten years from the end of the year in which it was acquired or installed, any allowance made under this clause shall be deemed to have been wrongly allowed for the purposes of this Act.
" It may be noted that in the case.
of a shipping company like the appellant before us, whose ships ply all over the world, it may not be possible to strictly comply with the provisions contained in section 4 of section 10(2).
The provisions dealing with the levy of Income tax are not identical in all countries.
It may well nigh be impossible for a shipping company like the appellant to rigidly comply with the requirements of the laws in force in the numerous countries where it can be said to have earned income.
Possibly to get over such a difficulty rule 33 was enacted.
That is how the Revenue had proceeded in assessing the appellant.
Evidently in exercise of its power under section 5(8) of the Act, which says that "all officers and persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Central Board of Revenue.
", the Central Board of Revenue had issued the notification dated February 10, 1942.
Under that notification instructions had been issued to the assessing authorities, laying down the principles to be applied in assessing the foreign shipping companies.
As regards the British Shipping Companies, they were directed to permit those companies "to elect to be assessed on the basis of a ratio certificate granted by the U. ' K. authorities regarding the income or loss and the wear and tear allowance".
At the time that notification was issued the Act did not provide for a development rebate.
Therefore that notification does not refer to any development rebate.
But it is made clear by that notification that a British Shipping Company can elect to be assessed on the basis of a ratio certificate granted by the U.K. authorities regarding the income or loss which means the net income or net loss.
During the relevant previous years, the Act 174 provided for deduction of the development rebate in the computation of the taxable income.
During those years the U.K. Income tax Act provided for a similar allowance; but that allowance was known as investment allowance.
We were informed at the bar that in those years, the percentage of devlopment rebate allowed under the Act was the same as that allowed under the U.K. law as investment allowance.
In about the beginning of 1964 M/s. Turner Morrison & Co.which was the a agent of several British Shipping Companies in India appears to have written to the Board of Revenue seeking its advice as to how the British Shipping Companies could claim development rebate.
In reply to that letter, the Board of Revenue wrote to them as follows "Sub: Assessment of British Shipping Companies on the basis of ratio certificates Treatment of investment allowance granted in the U.K.
I am directed to reply your letter dated 8th Feb. 1957 on the above subject and to state that as the development rebate which corresponds to the investment allowance granted in the U.K. is allowed under the In dian Income tax Act from the assessment year 1956 57, there is no objection to allow the investment allowances for the purpose of the computation of the Indian Income of British Shipping Companies.
This would, however be subject to the condition that the investment allowance would be permitted as a deduction only to the extent to which the rate of the allowance granted in the U.K. is not greater than the rate of development rebate allowed under the Indian Income tax Act.
" We were informed that the copies of that letter were sent to the Income tax Commissioners in the various States.
From this letter, it is clear that the Board of Revenue had instructed the taxing authorities to take into consideration the investment allowance granted by the U.K. authorities in computing the taxable income of the British Shipping Companies.
At this stage, it is necessary to mention that the proviso to cl.
(vib) of section 10(2) referred to earlier was incorporated into the Act sometime after the above instructions were issued by the Board of Revenue.
The authorities under the Act have proceeded on the basis that the computation of the income of the assessee has to be made on the second of the three bases mentioned in rule 33.
This assumption appears to be incorrect.
Admittedly the profits of the assessee company were not computed in accordance with the provisions of the Act.
That being so, the second basis mentioned 175 in rule 33 cannot be applied.
This aspect was brought to the notice of the High Court.
But the High Court refused to consider the same on the ground that both the Revenue as well as the assessee had proceeded before the authorities under the Act on the assumption that the second basis mentioned in rule 33 is the relevant basis.
In our opinion the High Court erred in adopting that approach.
The fact that the authorities under the Act as well as the parties were under a mistaken impression cannot alter the true position in law.
It is obvious that that basis could not have been applied.
That being so the computation of the appellant 's income had to be made either under the first basis viz. the calculation of the profits and gains on such percentage of the turnover accruing or arising as the Income tax Officer may consider to be reasonable or on the third basis i.e. 'in such other manner as the Income tax Officer may doom suitable '.
From the assessment orders made by the Income tax Officer, it does not appear that in computing the taxable income of the assessee, he adopted the first basis.
The most appropriate basis under which he could have computed the income was the last basis viz. "in such other manner as the Income tax Officer may deem suitable.
" While adopting that basis, the Income tax Officer is not required to rigidly apply the various conditions prescribed in the Act in the matter of granting one or the other of the permissible allowances.
He may adopt any equitable basis so long as that basis does not conflict either with rule ' 3 or with the instructions or directions given by the Board of Revenue.
The power given to the Income tax Officer under that basis is a very wide power.
That power is available not only to the Income tax Officer but also to the Appellate Assistant Commissioner and the Tribunal.
As the Tribunal had determined the tax due from the appellant on the basis of the ratio certificate given by the U.K. authorities, it cannot be said that the decision reached by the Tribunal was an unreasonable one.
The Tribunal 's decision accords with the instructions given by the Board of Revenue.
The fact that the Proviso to section 10 (2) (vib) was incorporated into the Act after the Board issued its instructions cannot affect either the validity of rule 33 or the force of the instructions issued by the Board of Revenue because neither rule 33 nor the instructions issued were strictly in accordance with section 10(2).
They merely lay down certain just and fair methods of approach to a difficult problem.
The learned Solicitor General appearing for the Revenue at one stage of his arguments contended that the instructions issued 176 by, the, Board of Revenue cannot have any binding effect and those instructions cannot abrogate or modify the provisions of the Act.
.But he did not contend that the Rule 33 is ultra vires the Act.
The instructions, in question merely lay down the manner of applying rule 33.
Now coming to the question as to the effect of instructions issued under section 5 (8) of the Act, this Court observed in Navnit Lal C. Javeri vs K. K. Sen Appellate Asstt.
Commissioner Bombay : (1) "It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under section5(8) of the, Act.
This circular pointed, out to all the officers that it was likely that some of the companies might have advanced loans to their share holders as a result of genuine transactions of loans, and the idea was, not to affect such transactions and not to bring them within the mischief of the new provison." The directions given in that circular clearly deviated from the Provisions of the Act, yet this Court held that the circular was binding on the Income tax Officer.
For the reasons mentioned I above, Civil Appeals Nos. 1161 and 1162 of 1971 are allowed and in substitution of the answer given by the High Court to question No. 2, we answer that question in the affirmative and in favour of the assessee.
The assessee is entitled to its costs in those appeals both in this Court as well as in the High Court costs one set.
Civil Appeals Nos. 2459 and 2460 of 1968 are dismissed as being not maintainable.
In those appeals, there will be no order as to costs.
G.C. C.A.s Nos.
1161 and 1162/71 allowed.
C.A.s Nos.
2459 and 2460/68 dismissed.

summary:
Under a circular issued in 1962 by the Central Board of Revenue under section 5(8) of the Indian Income tax Act, 1922 the assessing authorities were directed to permit British Shipping Companies to elect to be assessed on the basis of a ratio certificate granted by the U.K. authorities regarding the income or loss and the wear and tear allowance.
In 1964 the Board instructed the taxing authorities to take into consideration the investment allowance granted by U.K. authorities in computing the taxable income of the British Shipping companies.
The appellant was a non resident British ' Shipping company whose ships plied all over the world including Indian waters.
For the years 1960 61 and 1961 62 the Income tax Officer computed it,, total income under the Indian Income tax Act, 1922 by taking into account the ratio certificates issued by the Chief Inspector of Taxes U.K. which were based on the assessments made on the appellant in U.K.
In making assessment the Income tax Officer purported to.proceed on the basis of r. 33 of the Indian Income tax Rules, 1922.
One of the points considered by the Income tax Officer and the Appellate Assistant Commissioner was whether the investment allowance was to be taken into account in assessing the Indian income.
Both of them rejected the contention of the appellant that it should be taken into account.
The tribunal decided in favour of the appellant but the High Court in reference took the oppo site view.
In appeal to this Court by special leave.
HELD : (i) The authorities under the Act proceeded on the basis that the computation of the income of the assessee had to be made on the second of the three bases mentioned in r. 33.
Admittedly the profits of the assessee were not computed in accordance with the provisions of the Act.
That being so, the second basis mentioned in r. 33 could not be applied.
This aspect was brought to the notice of the High Court.
But the High Court refused to consider the same on the ground that both the Revenue as well as the assessee had proceeded before the authorities under the Act on the assumption that the second basis mentioned r. 33 was the relevant basis.
The High Court erred in adopting this approach.
The fact that the authorities under the Act as well as the parties were under a mistaken impression could not alter the true position in law.
[174 H 175 B] (ii) The computation of appellant 's income had to be made either under the first basis viz. the calculation of the profits and gains on such percentage of the turnover accruing or arising as the income tax Officer may consider to, be reasonable, or on the third basis i.e. 'in such other manner as the Income tax Officer may deem suitable '.
[175 C] 169 From the assessment orders it did not appear that the first basis was adopted.
The most appropriate basis under which the income could have been computed was the last basis viz. "in such other manner as the Income tax Officer may deem suitable".
While adopting that basis the Income tax Officer is not required to rigidly apply the various conditions prescribed in the Act in the matter of granting one or the other of the permissible allowances.
He may adopt any equitable basis as long as the basis does not conflict either with r. 33 or with the instructions or directions given by the Board of Revenue.
The power given to the Income tax Officer on that basis is a very wide power.
That power is available not only to the Income tax Officer but also to the Appellate Assistant Commissioner and the Tribunal.
[175 D F] As the Tribunal had determined the tax due from the appellant on the basis of the ratio certificate given by the U.K. authorities, it could not be said that the decision reached by the Tribunal was an unreasonable one.
The Tribunal 's decision was in accord with the instructions of the Board of Revenue.
[175 F] The fact that the proviso to section 10(2) (vib) was incorporated into the Act after the Board issued its instructions could not affect either the validity of r. 33 or the force of the instructions issued by the Board of Revenue because neither r. 33 nor the instructions issued by the Board were strictly in accordance with section 10(2).
[175 G H] Navnit Lal C. Javeri V. K. K. Sen, Appellate Asstt.
Commissioner, Bombay, , applied.


judgement:
Appeals Nos.
1343 and 1473 of 1971.
Appeals by special leave from the judgments and orders dated September 3, 1971 and August 6, 1971 of the Delhi High Court in I.A. No. 1170 of 1971 in Election Petition No. 1 of 1971 and Election Petition No. 2 of 1971.
C. K. Daphtary, M. C. Bhandare and C. M. Oberoi, for the appellant (in C.A. No. 1343 of 1971).
D. D. Chawla, B. P. Nanda and J. B. Dadachanji, for the appellant (in C.A. No. 1473 of 1971).
section V. Gupte, U. M. Trivedi, section N. Marwah, R. P. Bansal,B. R. Sabarwal, N. M. Ghatate and K. C. Dua, for respondent No. 1 (in C.A. No. 1343/71).
C. B. Agarwala, section N. Marwah, B. P. Bansal A. K. Marwah and K.C. Dua, for respondent No. 1 (in C.A. No. 147 3 of 1971) V. P. Joshi, for respondent No. 6 (in both the appeals).Respondent No. 8 appeared in person (in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
These appeals by special leave arise from the decision of Andley J. (Delhi High Court) permitting inspection of the ballot papers polled during the last general election to the Lok Sabha held last March in the South Delhi Constituency and the Delhi Sadar Constituency.
179 The appellants are the successful candidates.
They con tested in the two constituencies mentioned earlier on behalf of the ruling Congress party.
Their symbol was cow and calf.
Their nearest rivals were the Jan Sangh nominees whose symbol was Deepak.
The appellants were declared elected.
The unsuccessful Jan Sangh candidates have challenged the validity of the election of the appellants.
The main ground pleaded in support of the election petition was that the ruling party had rigged the election.
The process adopted in rigging the election, according to the election petitioners is a somewhat complicated one.
That process was explained to us thus : Millions of ballot papers were chemically treated; the symbol of the congress candidates in those ballot papers was mechanically stamped by using invisible ink.
As a result of the chemical treatment of those ballot papers, the mark put at the time of the polling disappeared after a few days and the stamping mechanically placed earlier emerged.
The suggestion was that this was done as a result of a conspiracy between the ruling party and the Election Commission.
To carry out the design in question, we were told that quite contrary to the earlier practice, the Election Commission instructed the Returning Officers to forward to Delhi a substantial number of ballot papers of each constituency, ostensibly for the purpose of scrutiny but really for the purpose of carrying out the design mentioned earlier, According to them in place of the ballot papers received, the Returning Officers were supplied with the ballot papers chemically treated and mechanically stamped.
Those ballot papers formed a part of the ballot papers used at the election.
It was further said that in furtherance of the above design, the Eelection Com mission made two alterations in the practice followed earlier.
Firstly it provided a larger interval between the date of polling and the date of counting and secondly by precipitate alteration of a rule, it provided for mixing up of the ballot papers of various.
booths and rotating them in drums.
We were further told that these innovations were introduced so that the chemical treatment of the ballot papers may have the desired effect.
The election petitioners do not claim to have any direct evidence to support their version.
They seek to prove their version primarily on the basis of the examination of the ballot papers.
But to probabilise their version, they have put forward various circumstances.
They have filed affidavits of two persons who claim to have been present at the time of counting.
They supported the allegations in the petitions seeking inspection regarding the facts said to have been observed at the time of counting In those petitions it was alleged that at the time of the counting, it was noticed that the colour of a large number of ballot papers 180 was different from the colour of the other ballot papers, stamping of, the symbols in those ballot papers was uniform, at an identical spot in each of those ballot papers, the stamps were uniform in density and they looked bright and fresh.
Those features were quite dissimilar to those found in the other papers including those containing votes in favour of the defeated candidates.
The election petitioners in this connection referred to the rumours prevailing about the rigging of the election, the landslide victory of the ruling party which according to them was wholly unexpected and finding of huge quantity of unused ballot papers in a godown in Chandigarh.
The, material facts supporting the allegation of rigging are those said to have been observed at the time of the counting.
In addition they also pointed out the changes made by the Election Commission in the counting procedure and tried to draw an adverse inference therefrom.
Whether the, observations said to have been made are true or whether they were merely the figment of imagination of some fertile brains has yet to be examined.
The only effective way of checking the correctness of those allegations is by inspecting the ballot papers.
We are free to admit that we are unable to comprehend the theories propounded by the election petitioners.
But we are conscious of our limitations.
The march of science in recent years has shown that what was thought to be impossible just a few years back has become an easy possibility now.
What we would have thought as wild imaginations some years back are now proved to be realities.
Hence we are unable to reject the allegations of the election petitioners without scrutiny.
We shall accept nothing and reject nothing except on satisfactory proof.
We are approaching the allegations made in the election petition in that spirit.
The learned trial judge did not hold that the allegations made by the election petitioners were not bona fide allegations.
We see no reason to come to a contrary conclusion.
He took the view that those allegations were of serious character and the material facts stated in suport of those allegations were such as to call for investigation into the truth of those allegations.
We are of the same opinion.
The allegation that our electoral process has been fouled is a very serious allegation, That allegation is a challenge to the integrity and impartiality of the Election Commission.
Those allegations if believed are sure to undermine the confidence of our people in our democratic institutions.
Herein we are not merely concerned about the validity of elections in two constituencies.
They are no doubt important but in the context of things their importance pales into insignificance.
What is more important is the survival of the very democratic institu tions on which our way of life depends.
181 It was said, on behalf of the appellants that those allegations were nothing but propaganda stunts and they were wholly devoid of truth.
If that is so, it is in public interest that the falsity of that propaganda should be exposed.
The confidence in our electoral machinery should not be allowed to be corroded by false propoganda.
It is of utmost importance that our electorate should have full confidence in the impartiality of the Election Commission.
Even the very best institutions can be maligned.
In all countries, at all times, there are gullible persons.
The effectiveness of an institution like the Election Commission depends on public confidence.
For building up public confi dence, public must be given the opportunity to know the truth.
Any attempt to obstruct an enquiry into the allegations made may give an impression that there might be some truth in the allegations made.
From the records we gather that the allegations with which we are concerned are.
being made in several places in this country with some persistency.
It is not unlikely that a section of our people, rightly or wrongly, have persuaded themselves to believe in those allegations.
Such a situation should not be allowed to remain.
The strength of a democratic society depends on the knowledge of its ordinary citizens about the affairs of the institutions created to safeguard their rights.
It is dangerous to, allow them to feed themselves with rumours.
It was urged on behalf of the appellants that the scrutiny of ballot papers is a very serious thing; the secrecy of the ballot is of utmost importance; except on very good grounds, inspection of ballot papers should not be allowed and the petitioners have failed to make out a case for inspection.
It was further urged that at the time of counting, the attention of.
the Returning Officer was not invited to the strange features mentioned earlier nor was the acceptance of any of those ballot papers objected to on the ground that they were spurious ballot papers.
According to the election petitioners, they did invite the attention of the Assistant Returning Officer to the various features mentioned by them.
It is not necessary for us to go into that controversy at this stage.
Assuming that the persons concerned did not inform the Assistant Returning Officer of what they had observed, it does not estop the Election petitioners from taking the pleas in question in the election petitions though undoubtedly it is a circumstance to be considered on the question of the value to be attached to the allegations made regarding the observations said to have been made at the time of the counting.
Assuming that the conclusion reached by the election petitioners was the result of not merely observing certain facts at the time of the counting but on the basis of various circumstances, some of 182 which came to their notice before the election, some at the time of the counting and some after the counting, that by itself is not sufficient to brush aside the allegations.
It is true that merely because someone makes bold and comes out with a desperate allegation, that by itself should not be a ground to attach value to the allegation made.
But at the same time serious allegations cannot be dismissed summarily merely because they do not look probable.
Prudence requires a cautious approach in these matters.
In all these matters, the court 's aim should be to render complete justice between the parties.
Further, if the allegations made raise issues of public importance.
greater care and circumspection is necessary.
These cases have peculiar features of their own.
No such case had come up for decision earlier.
Hence decided cases can give little assistance to us.
In a matter like allowing inspection of ballot papers, no rigid rules have been laid down, nor can be laid down.
Much depends on the facts of each case.
The primary aim of the courts is to render complete justice between the parties.
Subject to that overriding consideration, courts have laid down the circumstances that should weigh in granting or refusing inspection.
Having said that much let us now examine the cases read to us on behalf of the appellants.
In Ram Sewak Yadav vs Hussain Kamil Kidwai and ors.(1), ,one of the defeated candidates challenged the election of the appellant, the returned candidate, inter alia, on the ground that there had been improper reception of invalid votes and rejection of valid notes at the time of counting and that on a true count he would have received a majority of valid votes.
Hence he claimed that he was entitled to be declared duly elected.
He claimed that by inspection of the ballot papers, he will be able to establish his case.
He averred that on the aforesaid allegations, the Tribunal was bound to grant an order for inspection, because he had tendered the sealed boxes of ballot papers in evidence, and on that account all the ballot papers were part of the record.
The Tribunal in its order stated that nothing was brought to its notice which would justify granting an order for inspection.
It further observed "if in future from the facts that may be brought to the notice of the Tribunal, it appears that in the interests of justice inspection should be allowed, necessary orders allowing an inspection could always be passed".
Thereupon another application was submitted by the election petitioner asking for inspection but no additional materials were placed before the Tribunal and no oral evidence was led at the trial.
The Tribunal rejected the application for inspection.
On appeal the High Court (1) 183 held that ballot papers had actually been called for from the Returning Officer and were before the Tribunal and there was nothing in the Code of Civil Procedure which prevented the Tribunal from allowing inspection of the ballot papers in the custody of the Court.
In the opinion of the High Court the Tribunal rejected the application for inspection without any adequate reasons.
On a further appeal, the question for determination before this Court was whether the election Tribunal erred in declining to grant an order for inspection of the ballot papers which had been, pursuant to an order in that behalf, lodged before the Tribunal in sealed boxes by the Returning Officer.
This Court ruled that by the mere production of the sealed boxes, the ballot papers did not become part of the record and they were not liable to be inspected unless the Tribunal was satisfied that such inspection was in the circumstances of the case necessary in the interests of justice.
The ratio of that decision is that the inspection of ballot papers should be allowed only when the court thinks that it is necessary in the interests of justice to do so.
In that case this Court did not lay down any hard and fast rule as to when an inspection of the ballot papers can be allowed.
The next case relied on is, the decision of this Court in Dr. Jagjit Singh vs Giani Kartar Singh(1).
Therein the question of inspection of ballot papers was dealt with in paragraph 31 of the judgment.
This is what the Court observed : "The true legal position in this matter is no longer in doubt.
Section 92 of the Act which defines the powers of the Tribunal, in terms, confers on it, by cl.
(a), the powers which are vested in a Court under the Code of Civil Procedure when trying a suit, inter alia, in respect of discovery and inspection.
There fore, in a proper case, the Tribunal can order the inspection of the ballot boxes and may proceed to examine the objections raised by the parties in relation to the improper acceptance or rejection of the voting papers.
But in exercising this power the Tribunal has to bear in mind certain important considerations.
Section 88 (1) (a) of the Act requires that an election petition shall contain a concise statement of the material facts on which the petitioner relies, and in very case, where a prayer is made by a petitioner for the inspection of the ballot boxes, the Tribunal must enquire whether the application made by the petitioner in that behalf contains a concise statement of the material facts on which he relies.
Vague or general allegations that valid votes were improperly rejected, or invalid votes were (1) A.I.R. 1966 S.C. 773.
184 improperly accepted would not serve the purpose which section 8 8 (1) (a) has in mind.
An application made for the inspection of ballot boxes must give material facts which would enable the Tribunal to consider whether in the interests of justice, the ballot boxes should be inspected or not.
In dealing with this question, the importance of the secrecy of the ballot papers cannot be ignored, and it is always to be borne in mind that the statutory rules framed under the Act are intended to provide adequate safeguard for the examination of the validity or invalidity of votes and for their proper counting.
It may be that in some cases, the ends of justice would make it necessary for the Tribunal to allow a party to inspect the ballot boxes and consider his objections about the improper acceptance or improper rejection of votes tendered by voters at any given election but in considering the requirements of justice, care must be taken to see that election petitioners do not get a chance to make a roving or fishing enquiry in the ballot boxes so as to justify their claim that the.
returned candidate 's election is void.
We do not propose to lay down any hard and fast rule in this matter indeed, to attempt to lay down such a rule would be in expedient and unreasonable.
" The above observations succintly bring out the circumstances under which an inspection can be ordered.
The overriding test laid down there is the interests of justice.
Facts naturally differ from case to case.
Therefore it is dangerous to lay down any rigid test in the matter of ordering an inspection.
It is no doubt true that a judge while deciding the question of inspection of the ballot papers must bear in mind the importance of the secrecy of the ballot papers.
The allegations in support of a prayer for inspection must not be vague or indefinite; they must be supported by material facts and prayer made must be a bona fide one.
If these conditions are satisfied, the court will be justified in permitting inspection of ballot papers.
Secrecy of ballot is important, but doing justice is undoubtedly more important and it would be more so, if what is in stake is the interests of the society.
The last decision relied on by the appellant is Jitendra Bahadur Singh vs Krishna Behari and ors.
To this decision one of us was a party.
There an elector (1st respondent in that appeal) challenged the election of the appellant to the Lok Sabha.
He alleged, inter alia, in the election petition that there were improper rejection and improper reception of votes.
In the (1) ; 185 Schedule to the petition, he gave some figures of votes improperly rejected,, as well as accepted.
In the verification to the election petition, he stated that the concerned allegations were made on the basis of information received from his workers and counting agents.
It was, however, not stated who those persons were and what was the basis of their information.
No written objection was filed during the counting either to the acceptance or to the rejection of any vote.
Nor was any application made for re counting.
Before the trial of the election petition, the election petitioners filed an application to inspect the ballot papers.
In the affidavit filed in support of the petition, the election petitioner claimed to have been present on one of the days when counting went on and thus came to know about the improper acceptance and rejection of ballot papers.
This was not a claim put forward in the election petition.
The High Court allowed the inspection and permitted the scrutiny solely on the basis of the allegations in the election petition and the affidavit filed by the petitioner.
This Court reversing the decision held that on the facts established, the High Court was not justified in allowing the inspection of the ballot papers.
This Court came to the conclusion that relevant allegations were vague and indefinite; they were not supported by material facts and there was no basis for coming to the conclusion that inspection of the ballot papers was necessary for doing justice between the parties.
At the hearing of the appeals we enquired with the Counsel for the appellants whether the allegation regarding the chemical treatment of the ballot papers can be proved in any other manner than, by inspecting the ballot papers.
We got no satisfactory reply to our querry.
In the very nature of things the allegations in question can be proved or disproved only by inspecting the ballot papers.
The next question is whether it is necessary to inspect all the ballot papers as has been ordered by the trial judge.
We think that a general inspection should not be permitted, until there is satisfactory proof in support of those allegations.
For finding out whether there is any basis for those allegations, it would be sufficient if some ballot papers, say about 600 out of those polled by each of the returned candidates are selected from different bundles, or tins in such a way as to get a true picture.
He may also select about 200 ballot papers cast in favour of the election petitioners for comparison.
All the selected ballot papers at the first instance be examined by the learned judge with the assistance of the Counsel for the parties as well as the parties.
If the learned judge comes to the conclusion that the matter should be further probed into, he may take evidence on the points in issue including evidence of expert witnesses.
Thereafter it is open to 13 L 256 Sup CI/72 186 him to direct or not to direct a general inspection of the ballot papers.
But in doing so he 'will take care to maintain the secrecy of the ballot.
Subject to the directions given above, these appeals are dismissed but in the circumstances of the case we make no order as to costs in these appeals.
V.P.S. Appeals dismissed.

summary:
In the last general election to the Lok Sabha the appellants were declared elected and the respondents, who were the unsuccessful candidates challenged the validity of the election on the ground that the ruling party had rigged the election.
According to the respondents many ballot papers were chemically treated so that the mechanically stamped marks in favour of the successful candidates by using invisible ink emerged and the mark actually put at the time of polling disappeared after a few days.
It was alleged that this was done as a result.
of conspiracy between the ruling party and the Election Commission, and that the Election Commission took certain unusual steps for facilitating the substitution of chemically treated ballot papers.
There was no direct evidence of the allegations and the respondents sought to probabilise their version by alleging that the colour of a large number of ballot papers was different from the colour of the original ballot papers, and that at the time of counting, it was noticed that the marking was uniform and at an identical spot in each of the ballot papers in favour of the appellants.
The trial Judge permitted inspection of all the ballot papers polled.
In appeal to this Court it was contended that : (1) that the allegations of the respondent were propaganda stunts wholly devoid of truth; (2) that the attention of the Returning Officer was not invited to the alleged strange features at the time of counting, and (3) that the scrutiny of ballot papers could not be allowed as it violates the secrecy of the ballot.
Dismissing the appeals, HELD: (1) Assuming that the allegation made was mere propaganda it was in the public interest that the allegations are required into the propaganda exposed.
Merely because allegations made are difficult to accept they cannot be dismissed summarily.
In all such matters the court 's aim should be to render complete justice between parties.
If the allegations made raise issues of public importance greater care and circumspection is necessary.
The allegation that the electoral process has been fouled is a very serious allegation and is a challenge to the integrity and impartiality of the Election Commission and a challenge to the survival of democratic institutions.
[180 G H; 181 A B; 182 B C] (2) Assuming that the persons concerned did not inform the Returning Officers of what they observed at the time of counting, it does not estop the respondents from taking the pleas in the election petitions.
It is only a circumstance to be considered on the question of value to be attached to the allegation.
Even assuming that the respondents made the allegations as a result of not merely observing certain facts at the time of counting but on the basis of various rumours, that by itself is not sufficient to brush aside the allegations.
[181 G H] (3) No rigid rules have been laid nor can he laid down for allowing inspection of ballot papers.
The overriding test is the interests of justice, depending on the facts of each case.
A judge while deciding the question 178 of inspection of ballot papers must bear in mind the importance of the secrecy of ballot.
Secrecy of ballot is important but doing justice is more important and it would be more so if what is at stake is the interests of society.
The allegations in support of the prayer for inspection must not be vague or indefinite.
They must be supported by material facts and the prayer made must be a bona fide one.
Further, the allegations regarding the chemical treatment of ballot papers in the present case, cannot be proved in any other manner than by inspection.
[182 C D; 184 E G] But the High Court erred in permitting a general inspection of the ballot papers.
It would be sufficient if some substantial number of ballot papers polled by each of returned candidates are selected from different bundles and compared with the ballot papers cast in favour of the respondents.
If the trial Judge thereafter comes to the conclusion that the matter should be further probed into he may take evidence on the points in issue including the evidence of expert witnesses, and thereafter, decide if it was necessary direct a general inspection of the ballot papers.
[185 F H] Ram Sewak Yadav vs Hussain Kamil Kidwai & ors.
, , Dr. Jagjit Singh vs Giani Kartar Singh, A.I.R. and Jitendra Bahadur Singh vs Krishna Behari & Ors., ; , referred to.