judgement:
Appeal No. 1695 of 1971.
From the Judgment and Order dated 2 2 1970 of the Bombay High Court in I.T. Reference No. 54/63) V. Rajagopal and A.G. Pudissery for the Appellant.
S.T. Desai, B.B.Ahuja and R.N. Sachthey for the Respondent.
UNTWALIA, J. This is an appeal by an assessee on grant of a certificate of fitness by the Bombay High Court under section 66A (2) of the Income tax Act, 1922 hereinafter referred to as the 1922 Act.
The assessee is an individual.
We are concerned in this case with his assessment for the assessment year 1958 59 corresponding accounting year being 1st April, 1957 to 31st March, 1958.
The Income tax Tribu nal made a composite order disposing of the assessee 's 640 appeals in respect of two assessment years i.e. 1958 59 and 1959 60.
The decision of the Tribunal was partly in favour of the assessee and partly in favour of the Revenue.
In respect of the assessment year 1958 59, a reference under section 66(1) of the 1922 Act was made by the Tribunal to the High Court.
Four questions were referred one at the instance of the Commissioner of Income tax and three at the instance of the assessee.
The High Court by ' its judgment under appeal which is reported in Commissioner of Income tax (Central), Bombay vs P.K. Badiani(1) has answered almost all the questions.
against the assessee.
Hence this appeal.
Mr. V. Rajgopal who had argued the case of the assessee before the High Court appeared before us in support of the appeal also.
He could not and did not attack the decision of the High Court as respects questions 2, 3 and 4.
But he strenuously urged before us for reversal of the High Court judgment in regard to question No. 1 which was re ferred at the instance of the Commissioner.
If the assessee could succeed before us in getting an answer in his favour to the said question, then, substantially he would have succeeded in getting the whole of the relief.
The first and the only question which falls for our examination in ' this appeal was referred by the Tribunal to the High Court in the following terms: "(1) Whether the development rebate reserve created by the company by duly charging the amount to the profit and loss account and being allowable under the Act constituted 'accumulated profits ' of the company within the meaning of section 2(6A)(e) of the Act?" We proceed to state the necessary facts for determina tion of the above question only.
The assessee was a major shareholder (although at the relevant time being a major or minor shareholder did not make any difference in law) in the Sadhana Textile Mills Pvt. Ltd. which was indisputably a Company in which the public were not substantially interested within the meaning of Section 23A of the 1922 Act.
The assessee was also the Managing Director of the said Private Limited Company.
He had a mutual open and current account in the books of the Company the accounting year of which was the calendar year i.e. commencing from January and ending in December.
The assessee in his accounting year 1957 58 had withdrawn con siderable amounts of money from the Company 's account.
The Income tax Officer ' treated the withdrawals made by the assessee as advances or loans given by the Company to him and taxed the amount as dividend under section 2(6A)(e) of the 1922 Act.
The Appellate Assistant Commissioner modi fied the figure of the deemed dividend calculated by the Income tax Officer and took the highest amount of advance made (I) 641 to the assessee by the Company at a particular point of time in the year in question as the amount of dividend taxable in the hands of the assessee.
The said amount was within the total figure of accumulated profits in the hands of the Company at the relevant time, i.e. 31st December, 1956.
It may just be stated here that according to the 1922 Act only the accumulated profits possessed by the company at the.
end of the corresponding previous year had to be taken into account unlike the corresponding provision engrafted in section 2(22) of the Income tax Act, 1961 hereinafter referred to as the 1961 Act, read with Explanation II thereto.
It was found that the aggregate amount of develop ment rebate allowed to the Company under section 10(2)(vi b) was Rs. 2,36,470/ .
The said amount had been debited in the profit and loss account of the Company for the account ing year 1966 leaving a balance of Rs. 6,641/ only in the profit and loss account.
The Appellate Assistant Commis sioner of Income tax treated the entire sum of Rs. 2,43,111/ as the amount of accumulated profits possessed by the Company.
Finding the highest amount of advance to the assessee.
at a particular ;point of time to be aggregating to Rs. 1,83,493.70 he directed the addition of the said amount in the assessee 's income under section 2(6A)(e) of the 1922 Act.
The High Court has directed some modification in the calculation of the said amount while answering the other questions referred to it at the instance of the asses see and we need not go into their details.
The main question for our determination in this appeal is whether the aggregate of the development rebates allowed to the Company under section 10(2)(vi b) of the 1 '922 Act could be treated as accumulated profits in the hands of the Company under section 2(6A)(e).
The Income tax Acts have undergone numerous changes from time to time and various amendments have been made both in the 1922Act as also in the 1961 Act.
We shall do well to quote all the subclauses (a) to (e) of section 2(6A) of the 1922 Act.
They read as follows: "2(6A) "dividend" includes (a) any distribution by a company of accumulated profits whether capitalised or not, if such distri bution entails the release by the company to its shareholders of all or any part of the assets of the company; (b) any distribution by a company of deben tures, debenture stock or deposit certificates in any form, whether with or without interest, to the extent to, which the company possesses accumulated profits, whether capitalised or not; (c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not; 642 (d) any distribution by a company on the reduc tion of its capital to the extent to which the company possesses accumulated profits which arose after the end of the previous year ending next before the 1st day of April, 1933, whether such accumulated profits have been capitalised or not; (e) any payment by a company, not being a company in which the public are substantially interested within the meaning of section 23A, of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company On behalf or for the individual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits; Explanation The expression "accumulated profits," wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948 and before the 1st day of April, 1956.
" The expression "accumulated profits" occurring in clause (e) of section 6A, or as a matter of that in any of the other clauses, undoubtedly means profits in the commercial sense and not assessable or taxable profits liable to tax as income under the.1922 Act.
It is a well known concept of the taxation law that the term 'profits ' in the various sections of the Income tax Acts have not got the same meaning.
In the context sometimes it means the assessable profits and sometimes it means the commercial profits.
In Palmer 's Company Law, Twenty First Edition at page 662 the distinc tion between profits, divisible profits and profits avail able for dividend has been pointed out.
At the said page occurs an oft quoted classical passage from the judgment of Fletcher Moulton, L.J., in Re Spanish Prospecting Co. Ltd. (1) which runs thus: " 'Profits ' implies a comparison between the state of a business at two specific dates usually separated by an interval of a year.
The fundamen tal meaning is the amount of gain made by the business during the year.
This can only be ascer tained by a comparison of the assets of the busi ness at the two dates .
If the total assets of the business at the two dates be compared, the increase which they show at the later date as compared with the earlier date (due allowance of course being made for any capital introduced into or taken out of the business in the meanwhile) represents in strictness the profits of the busi ness during the period in question.
" Bhagwati, J. has quoted the above passage with approval in the case of E.D. Sassoon & Company Ltd. and others vs Com missioner of Income tax, Bombay City.
( '2) Almost to the same effect ,was the view (1) , 98.
(2) at page 46.
643 expressed by Mahajan, J. as he then was, in the case of Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1) In Commissioner of Income tax, Bombay City vs Bipinchandra Maganlal & Co. Ltd.( '2) Shah, J., as he then was, delivering the judgment on behalf of the Court while interpreting the expression "smallness of profits" occur ring in section 23A of the 1922 Act said at page 296: "A company normally distributes dividends out of its business profits and not out of its assessa ble income.
There is no definable relation between the assessable income and the profits of a business concerned in a commercial sense.
Computation of income for purposes of assessment of income tax is based on a variety of artificial rules and takes into account several fictional receipts, deductions and allowances . . .
Smallness of the profit in section 23A has to be adjudged in the light of commercial principles and not in the light of total receipts, actual or fictional.
" The same view has been expressed by this Court in Gobald Motor Service (P) Ltd. vs Commissioner of Income tax, Ma dras(3).
We think that the term "profits" occurring in section 2(6A)(e) of the 1922 Act means profits in the com mercial sense that is to say the profits made by the Company in the real and true sense of the term.
,We may just give one example.
Suppose the assessable profit of a company is Rs. 1,00,000/ out of which the Company had to pay a tax under the Income tax Act say to the extent of Rs. 30,000/ .
.Although payment of tax is not a sum deductible from the assessable profits of the Company, in the commer cial sense the Company would be left with a sum of Rs. 70,000/ only as profits.
We may add that Mr. Rajgopal could not and did not seriously dispute this proposition of law.
The gravamen of the argument of the assessee has been that development rebate deductible from the assessable profits of the Company is also.
a type of outgoing expendi ture or out of pocket cost which is deductible while ascertaining the profits of the Company in the commercial sense.
Counsel submitted that it is in the nature of a depreciation allowance and is identical with initial depre ciation; it should, therefore, be deducted from the commer cial profits of the Company as held by the Gujarat High Court in the case of Commissioner of Income tax, Bombay North vs Viramgam Mills Co. Ltd. (4).
This argument found favour with the Tribunal but was repelled by the High Court.
The point is res integra and we have to examine the correct ness of the view expressed by the High Court.
Depreciation allowance has been allowed to be deducted from the assessable .profits of an assessee under section 10(2) (vi) of the 1922 Act corresponding to section 32 of the 1961 Act.
It would appear from the report of the Taxation Enquiry Commission 1953 54 Vol.
II as to what is the nature of the depreciation allowance; vide Chapter V, page 74.
The normal depreciation provided in clause (vi) and the additional depreciation mentioned in clause (vi a) of section 10(2) of (1) 18 I.T.R. 472 at 502.
(2) 41 I.T.R. 290.
(3) (4) 43 I.T.R. 270.
644 the 1922 Act is permitted to be deducted from the 'written downvalue '.
By and large, the cost of replacements is allowed as deductions in lieu of depreciation in respect of certain assets.
By the amendments made by the Income tax Amendment Act, 1946.
, the Finance Act, 1955 and the Finance Act, 1956 certain initial depreciation was allowed in re spect of buildings newly erected or the machinery and plant newly installed.
Obviously, it was by way of an incentive for the new structures or the new installations.
The amount of initial depreciation was not deductible in deter mining the 'written down value ' although under proviso (c) it was to be taken into account in the aggregate of all allowances so as not to permit them to exceed the maximum limit provided therein.
Development rebate was provided in clause (vi b) with effect from 1st April, 1955 by the Fi nance Act of 1955.
There was an over lapping period of about two years in relation to the allowance of initial depreciation or the development rebate.
But as provided for in clause (vi) an assessee could not have ' had both even in regard to that period.
Although initial depreciation and development rebate were not identical as they differed in some material particulars, they were similar in nature as both were by way of incentive for installation of new ma chinery or plant.
The initial depreciation or the develop ment rebate was to be allowed, as the case may be; at a certain percentage of the actual cost of the machinery or the plant for the year of installation only.
It was not a recurring allowance for the subsequent years like; the allowance of the normal depreciation or the additional depreciation.
The Taxation Enquiry Commission in its report aforesaid had recommended in Chapter VII, page 98 of Vol.
II for assisting the expansion and development of :productive enterprise by allowing them a proportion of new investment in fixed assets to be charged to current costs of production thereby permitting the taxable profits to be brought down to that extent.
In the Finance Act of 1955 a provision was made to allow a development rebate of 25% of the cost of all new plant and machinery installed for business purposes instead of the then existing initial depreciation allowance of 20%.
It would thus be seen that by way of an incentive for installation of new machinery and plants initial depreciation allowance of 20% was replaced by a develop ment 'rebate of 25%.
But it was, like grant of export rebate by way of incentive to make more exports, in the nature of an incentive for setting up new machineries and plants.
We do not find any warrant for accepting the contention of Mr. Rajgopal that the initial depreciation or the develop ment rebate was allowed as 'an extra deductible allowance of business expenses in the year of installation of new machin ery for meeting the ever increasing costs of its replacement in future years.
In our opinion it was meant merely to reduce the tax liability of the assessee in order to give him an incentive to instal new machineries or plants.
The Gujarat High Court in the case of Viramgam Mills Co. Ltd. (supra) was concerned with the question as to whether the normal depreciation reserve of . 'the Company could be taken to be the accumulations of past profits within the meaning of the proviso to section 23A of the 1922 Act as it stood at the relevant time.
It held that it could not form part of the accumulated past profits as in the words of Wixon (vide Wixon 's Accounts Hand Book) it was "the estimat ed 645 expiration of asset value" or as observed by Paton in his Accountants ' Hand Book, Third edition it is an out of pocket cost as any other cost.
Says the learned author in the above book at p. 746 thus: "There is still widespread misapprehension as to the precise significance of the depreciation charge.
It is often deemed a more or less imagi nary and hypothetical :element, and is sharply contrasted with the regular "out of pocket" oper ating costs.
As a matter of fact there is nothing at all imaginary about depreciation as a cost of business operation and at bottom it is just as much 'an out of pocket cost as any other.
The deprecia tion charge is merely the periodic operating aspect of fixed asset costs, and there is no doubt as to the reality of such costs.
Far from being a non out of pocket charge depreciation represents the extreme example of prepayment." Mr. S.T. Desai, learned counsel for the Revenue drew our attention to the decision of the Calcutta High Court in Commissioner of Income tax.
Calcutta vs Sri Bibhuti Bhusan Dutt(1) and submitted that it has taken a view different from the one taken by the Gujarat High Court even in regard to the nature of normal 'depreciation allowance.
The Calcut ta case seems to be one of a property holding company, the profits of which were assessable under section 9 wherein the question of depreciation was not relevant.
It is not neces sary for us to examine in this case the exact nature of the normal depreciation allowance and whether it is deductible from the profits of a person while determining his commer cial profits.
The view expressed by the Gujarat High Court seems to be reasonably plausible and correct and for the purposes of this case we shall assume it to be so.
Yet, we do not feel persuaded to accept the argument of the assessee and equate the initial depreciation or the develop ment rebate with the normal depreciation.
In our opinion such an allowance is in no sense a deductible item of cost or expenditure in the process of settlement of the commer cial profits.
Although it does not form part of the assessable profits, undoubtedly it does form part of the commercial profits.
Tea Estate India Pvt. Ltd. vs Commissioner of Income tax, West Bengal 11 (and vice versa)(2) one of us (Khanna, J.) delivering the judgment on behalf of the Court has interpreted the, expression "accumulated profits" occur ring in clause (c) of section '2(6A) of the 1922 Act to include the amount of development rebate in the commercial sense.
It has been stated at page 794: "The acceptance of the contention would necessarily postulate reading in section 2(6A)(c) the words "accumulated profits as are liable to be taxed under the Act".
The words "as are liable to be taxed under the Act" are not there in the definition and it would not, in our opinion, be permissible to so construe the clause as if those words were a part of that clause.
There is also nothing in the language (1) (2) 646 Or Context of that clause as would warrant such a construction.
Accumulated profits would retain their character as such even though a part of them were not taxed as profits under the Act.
" The purpose of section 2 (6A) of the 1922 Act corresponding to section 2(22) of the 1961 Act is to include within the term "dividend" for the purpose of taxation certain distri butions or payments of certain items of money or the like as deemed dividend for the purpose of taxation.
Under clause (e) an advance or loan or money to a shareholder by a pri vate Company has been directed to be treated as dividend to the extent to which the Company possessed accumulated profits.
The advance or the loan, by a legal fiction, is to resemble the actual dividend.
For the purpose of distribu tion of the dividend the amount of development rebate could form part of the profits of the Company; a fortiori, it would be so far the purposes of clause (e) also.
During the course of the arguments of this appeal, our attention was directed to a new facet of the question under consideration and that is this.
In clauses (a) to (d) of section 2(6A) of the 1922 Act so also in the corresponding clauses of section 2(22) of the 1961 Act the expression "accumulated profits" is qualified by the expression "whether capitalised or not".
But the latter phrase is conspicuously absent in clause (e).
What is the purpose of this difference in the phraseology of the various clauses of sub section (6A) ? The reason is not far to seek and yet not helpful to the assessee in this case.
The profits of a Company can be capitalised in accord ance with the Articles of Association and the law.
On the capitalisation of the profits they cease to be profits in the hands of the Company.
The nature of the asset is changed although it does not make any difference in the total assets of the Company.
But profits stand transmuted and transformed into capital.
The most common example of capitalisation of profits is by issuance of bonus shares to the shareholders.
Clause (a) to (d) were intended by the Legislature to cover the cases of accumulated profits even though they may be capitalised.
But the Legislature did not intend to rope in the capitalised profits in clause (e).
We may add that though under clause (b) distribution by a Company of debentures, debenture stock or deposit certifi cates in any form in lieu of capitalised profits is to be deemed dividend within the meaning of sub section (6A), mere distribution of bonus shares after capitalising the accumu lated profits, unless the distribution entails the release by the Company to its shareholders of any part of the assets of the Company is not to be a deemed dividend.
Even under the 1961 Act distribution of bonus shares to the equity shareholders after capitalising the profits in accordance with law is not to be a deemed dividend although distribu tion of such shares to preference shareholders is.
It is thus clear that if money is paid to a shareholder of a private company by way of advance or loan after the accumu lated profits have been capitalised in accordance with the law and the Articles of Association then such payment, although it may represent a part of the assets of the Compa ny or otherwise, cannot be co related to the capitalised profits of the Company.
To the extent the profits have been capitalised the Company cannot be said to possess any accu mulated profits.
647 But the Obvious difficulty in the way of the appellant is that the accumulated profits of the Company in the year in question were never capitalised.
Mere transferring the sum of Rs. 2,36,470/ by debiting it to the profit and loss account to the development reserve account did not amount to the capitalisation of profits.
The nature of the assets in the hands of the Company did not change.
It remained profits in the hands of the Company.
According to the Dictionary of English Law by Earl ' Jowitt, Vol.
1 "capitalisation" means "the conversion of profits or income into.
capital, e.g., by resolution of a company".
Buckley on the Companies Acts, thirteenth edi tion, has pointed out at page 907 "Profits carried to re serve do not cease to be profits unless and until they are effectually capitalised".
Says the learned author at page 912 after referring to Article 128 corresponding to Regula tion 96 of Table "A" of the Indian Companies Act: "A company may, if its constitution so al lows, capitalize profits, instead of dividing them, by applying them in paying up unissued shares, or debentures or other securities, and issuing such shares or securities as fully paid to its members, thereby transferring the sum capitalized from profit and loss or reserve account to share or loan capital account.
" To the same effect is the statement of the law to be found in Palmer 's Company Law, twenty first edition page 673.
The "capitalisation of profits".
says the learned author, means "that profits which otherwise are available for distribution among the shareholders are not divided among them in cash, but that the shareholders are allotted further shares or debentures which are paid up wholly or in part out of ' those profits.
The amount paid by the company out of its divisible profits on account of these newly issued shares is known as the bonus, and the shares are referred to as bonus shares." Lord Herscheil in the case of Ann Bouch and Wil liam Bouch vs William Bouch Sprou(1) was considering as to what was the nature and substance of the transaction in question in that case.
The learned and the noble Lord said at page 398: "I think we must look both at the 'substance and form of the transaction . .
And it was obviously contemplated, and was, I think, certain that no money would, in fact, pass from the company to the shareholders, but that the entire sum would remain in their hands as paid up capi tal." And finally 'it was said at page 399: "I cannot, therefore, avoid the conclusion that the substance of the whole transaction was, and was intended to be, to convert the undivided profits into paid up capital upon newly creat ed shares.
" The Madras High Court has pointed out in Commissioner Income tax, Madras vs
K. Srinivasan and others(2), to quote the placitum only: "For the purposes of section 2(6A)(e) of the Income tax Act, 1922, "accumulated profits" include general reserves.
(1) 12 Appeal Cases, 385.
(2) 648 Unless the profit is capitalised in some form or other mere transfer of the profits to any reserve account will not take away from profits the charac ter of accumulated profits.
" In Sheth Haridas Achratlal vs Commissioner of Income tax, Bombay North, Kutch and Saurashtra, Baroda(1) Chief Justice Chagla delivering the judgment on behalf of the Bench of the Bombay High Court said at page 690: "But when we compare the language used by the Legislature in sub clauses (a), (b) and (d) and when we note the omission of the qualifying words in sub clause (c) then it is clear that the Legislature advisedly did not intend to subject to tax those accumulated profits which had been capitalised.
" It appears that the ex pression "capitalised or not": was added in clause (c) after this decision.
For the reasons stated above, we hold that the develop ment rebate reserve created by the Company by duly charging the amount of profit and loss account although liable as a deduction under the 1922Act, constituted accumulated profits of the Company Within the meaning of section 2(6A)(e).
We accordingly affirm the decision of the High Court and dis miss this appeal but in the circumstances make no orders as to costs.
V.P.S. Appeal dismissed.

summary:
Under section 2(6A)(e), Income Tax Act, 1922, dividend includes any payment by a company, not being a company in which the public are substantially interested within the meaning of section 23A, of any sum by way of advance to a share holder to the extent to which the company possesses accumu lated profits.
The appellant assessee was a shareholder in a company in which the public were not substantially interested within the meaning of section 23A.
He had withdrawn some amounts from the company 's account.
The company had been allowed devel opment rebate under section 10(2)(vi b) and that amount was debited in the profit and loss account of the company for the accounting year leaving a small balance of profit in the profit and loss account.
The Appellate Assistant Commis sioner treated the entire sum, that is, the amount allowed as development rebate and the amount of balance in the profit and loss account, as the amount of accumulated prof its possessed by the company.
Treating the withdrawals by the appellant as advances by the company to him and finding the highest amount of advance to the assessee to be within the total figure of accumulated profits as arrived at by him, he directed the addition of the advance to the asses see 's income as dividend under section 2(6A)(e) of the Act.
The Tribunal held that the development rebate was not liable to be treated as accumulated profits; but, on reference.
the High Court substantially confirmed the order of the Appel late Assistant Commissioner.
On the question whether the development rebate could be treated as accumulated profits in the hands of the company under section 2(6A)(e), the appellant contended that the develop ment rebate, being identical with initial depreciation is in the nature of depreciation allowance, and since it is de ductible from the assessable profits of the company, it is also a type of outgoing expenditure or out of pocket cost, and was therefore, deductible from the company 's commercial profits.
Dismissing the appeal, HELD: The development rebate reserve created by the company, although it does not form part of the assessable profits, undoubtedly forms part of the commercial profits and hence constituted accumulated profits of the company. within the meaning of section 2(6A)(e).
[648D] (1) The term 'profits ' in taxation law varies in its meaning according to the context.
The expression 'accumu lated profits ' occurring in section 2(6A) means profits in the commercial sense that is profits in the real and true sense of the term and not assessable or taxable profits.
[642E] E.D. Sassoon & Company Ltd. and Others vs Commissioner of Income tax, Bombay City at page 46, Commission er of Income taX, Bombay vs Ahmedbhai Umarbhai.
& Co., Bombay 18 ITR 472 at 502, Commissioner of Income tax.
Bombay City vs Bipinchandra Maganlal & Co. Ltd. and Gobaid Motor Service (P) Ltd. vs Commissioner of Income tax, Madras followed.
(2) Although they are not identical and differ in some material particulars, initial depreciation and development rebate are similar in nature as both are by 639 way of incentive for installation of new machinery or plant.
But the initial depreciation or the development rebate is not a recurring allowance for the subsequent years like the normal depreciation allowance provided in section 10(2)(vi) or the additional depreciation provided in section 10(2)(vi a).
The normal depreciation and the additional depreciation are permitted to be deducted from the written down value.
But the amount of the initial depreciation is not deductible in determining the written down value.
[644D E] (3) Normal depreciation reserve of the company may not form part of the accumulated past profits as held in Commis sioner of Income tax, Bombay vs Viramgam .Mills Co. Ltd. But since the initial depreciation or the devel opment rebate cannot be equated with normal depreciation, it is not a deductible item of cost or expenditure in.
arriving at the commercial profits.
The initial depreciation or the development rebate is not allowed as an extra deductible allowance of business expenses for meeting the costs of replacement in future years, but they are meant merely to reduce the tax liability of the assessee for the year of installation only, in order to give him an incentive to instal new machinery or plant [645D F] (4) The purpose of section 2(6A) is to include within the term 'dividend ', for the purpose of taxation, certain dis tributions or payments as deemed dividend.
Section 2(6A)(c) provides that 'dividend ' includes any distribution to the shareholders liquidation to the extent to which the distri bution is attributable to accumulated profits.
In Tea Estate India Pvt. Ltd. vs C.I.T., W. Bengal it was held that accumulated profits in cl.
(c) include devel opment Tebate.
If for the purpose of distribution the amount of development rebate could form part of the accumu lated profits of the company, a fortiori, it would be so far the purpose of cl.
(e) also.
[646B; 645G] (5) The use of the expression 'whether capitalised or not ', as qualifying the expression 'accumulated profits ' in cls.
(a) to (d), but not in cl.
(e), shows that the legisla ture does not intend to rope in capitalised profits in el.
That is, to the extent the profits have been capita lised in accordance with the law and its Articles of Associ ation, a company cannot be said to possess any accumulated profits.
But in the present case, the accumulated profits of the company were never capitalised.
Merely transferring the sum to the development reserve account by debiting it to the profit and loss account did not amount to capitalisation of profits.
The nature of the assets did not change out continued to remain as profits.
[646E G; 647A B] Ann Bouch and William Bouch vs William Bouch Sprou (12 Appeal Cases, 385 applied.
Commissioner of Income tax, Madras vs
K. Srinivasan and others approved.
Sheth Haridas Achratlal vs Commissioner of Income tax, Bombay North, Kutch and Saurashtra, Baroda referred to.


judgement:
ON: Criminal Appeal No. 214 of 1971.
(Appeal by Special Leave from the judgment and Order dated 27 7. 1970 of the Andhra Pradesh High.
Court in Criminal Appeals Nos. 26 and 27/69).
7 1234SCI/76 604 P. Parmeswara Rao and G. Narayana Rao for the Appellant.
A. Subba Rao for the Respondents.
This appeal by special leave is directed against a judgment of the High Court of Andhra Pradesh.
It arises out of these facts.
In Rompicherla village, there were factions belonging to three major communities viz., Reddys, Kammas and Bhatrajus.
Rayavarapu (Respondent No. 1 herein) was the leader of Kamma faction, while Chopparapu Subbareddi was the leader of the Reddys.
In politics, the Reddys were supporting the Con gress Party, while Kammas were supporters of Swatantra Party.
There was bad blood between the two factions which. were proceeded against under section 107, Cr.
In the Panchyat elections of 1954, a clash took place between the two parties.
A member of the Kamma faction was murdered.
Consequently, nine persons belonging to the Reddy faction were prosecuted for that murder.
Other incidents also ' took place in which these warring factions were involved.
So much so, a punitive police force was stationed in this village to keep the peace during the period from March 1966 to September 1967.
Sarikonda Kotamraju, the deceased person in the instant case, was the leader of Bhatrajus.
In order to devise protective measures against the onslaughts of their opponents, the Bhatrajus held a meeting at the house of the deceased, wherein they resolved to defend themselves against the aggressive actions of the respondents and their party men.
PW 1, a member of Bhatrajus faction has a cattle shed.
The passage to this cattle shed was blocked by the other party.
The deceased took PW 1 to Police Station Nekar ikal and got a report lodged there.
On July 22, 1968, the Sub Inspector of Police came to the village and inspected the disputed wail in the presence of the parties.
The Sub Inspector went away directing both the parties to come to the Police Station on the following morning so that a com promise might be effected.
Another case arising out of a report made to the police by one Kallam Kotireddi against Accused 2 and 3 and another in respect of offences under sections 324, 323 and 325, Penal Code was pending before a Magistrate at Narasaraopet and the next date for hearing fixed in that case was July 23, 1968.
On the morning of July 23, 1968, at about 6 30 a.m., PWs 1, 2 and the deceased boarded Bus No. AP 22607 at Rompicher la for going to Nekarikal.
Some minutes later, Accused 1 to 5 (hereinafter referred to as A1, A2, A3, A4 and A5) also got into the same bus.
The accused had obtained tickets for proceeding to Narasaraopet.
When the bus stopped at Nekar ikal Cross Roads, at about 7 30 a.m., the deceased and his companions alighted for going to the Police Station.
The five accused also got down.
The deceased and PW 1 went towards a Choultry run by PW 4, While PW 2 went to the roadside to ease himself.
A1 and A2 went towards the Coffee Hotel situate near the Choultry.
From there, they picked up heavy sticks and went after the deceased into the Choultry.
On seeing the accused.
P W 1 ran away towards a hut nearby.
The deceased stood up.
605 He was an old man of 55 years.
He was not allowed to run.
Despite the entreaties made by the deceased with folded hands, A 1 and A 2 indiscriminately pounded the legs and arms of the deceased.
One of the by standers, PW 6, asked the assailants as to why they were mercilessly beating a human being, as if he were a buffalo.
The assailants angri ly retorted that the witness was nobody to question them and continued the beating till the deceased became unconscious.
The accused then threw their sticks at the spot, boarded another vehicle, and went away.
occurrence was witnessed by PWs 1 to 7.
The victim was removed by PW 8 to Narasaraopet Hospital in a temporar.
There, at about 8.45 a.m., Doctor Konda Reddy examined him and found 19 in juries, out of which, no less than 9 were (internally) found to be grievous.
They were: 1.
Dislocation of distal end of proximal phalanx of left middle finger.
Fracture of right radius in its middle.
Dislocation of lower end of right ulna.
Fracture of lower end of right femur.
Fracture of medial malleolus of right tibia.
Fracture.
of lower 1/3 of right fibula.
Dislocation of lower end of left ulna.
Fracture of upper end of left tibia.
Fracture of right patella.
Finding the condition of the injured serious, the Doctor sent information to the Judicial Magistrate for getting his dying declaration recorded.
On Dr. K. Reddy 's advice, the deceased was immediately removed to the Guntur Hospital where he was examined and given medical aid by Dr. Sastri.
His dying declaration, exhibit P 5, was also recorded there by a Magistrate (PW 10) at about 8.05 p.m.
The de ceased, however, succumbed to his injuries at about 4.40 a.m. on July 24, 1968, despite medical aid.
The autopsy was conducted by Dr. P.S. Sarojini (PW 12) in whose opinion, the injuries found on the deceased were cummulatively sufficient to cause death in the ordinary course of nature.
The cause of death, according to the Doctor, was shock and haemorrhage resulting from multiple injuries.
The trial Judge convicted A 1 and A 2 under section 302 as well as under section 302 read with section 34, Penal Code and sen tenced each of them to imprisonment for life.
On appeal by the convicts, the High Court altered their conviction to one under section 304, Pt.
II, Penal Code and reduced their sentence to 'five years rigorous imprison ment, each.
Aggrieved by the judgment of the High Court, the State has come in appeal to this Court after obtaining special leave.
A 1, Rayavarappu Punnayya (Respondent 1) has, as reported by his Counsel, died during the pendency of this appeal.
This information is not contradicted by the Counsel appearing for the State.
This 606 appeal therefore, in so far as it relates to A , abates.
The appeal ' against A 2 (Respondent 2), however, survives for decision. 'The principal question that falls to be considered in this appeal is, whether the offence disclosed by the facts and circumstances established by the prosecution against the respondent, is 'murder ' or 'culpable homicide not amounting to murder '.
In the scheme of the Penal Code, 'culpable homicide ' is genus and 'murder ' its specie.
All 'murder ' is 'culpable homicide ' but not viceversa.
Speaking generally, 'culpable homicide ' sans 'special characteristics of murder ', is 'culpable homicide not amounting to.
murder '.
For the pur pose of fixing punishment, proportionate to the gravity of this generic offence, the Code practically recognises three degress of culpable homicide.
The first is, what may be called, culpable homicide of the first degree.
This is the gravest form of culpable homicide which is defined in section 300 as 'murder '.
The second may be termed as 'culpable homicide of the second degree '.
This is punishable under the l st part of section 304.
Then, there is 'culpable homicide of the third degree. ' This is the lowest type of culpable homicide and the punishment provided for it is, also, the lowest among the punishments provided for the three grades.
Culpa ble homicide of this degree is punishable under the second Part of section 304.
The academic distinction between 'murder ' and 'culpable homicide not amounting to murder ' has vexed the courts for more than a century.
The confusion is caused, if courts losing sight of the true scope and meaning of the terms used by the legislature in these sections, allow themselves to be drawn into minutae abstractions.
The safest way of approach to the interpretation and application of these provisions seems to be to keep in focus the key words used in the various clauses of sections 299 and 300.
The following comparative table will be helpful in appreciating the points of distinction between the two offences.
Section 299 Section 300 A person commits culpable homicide Subject to certain if the act by which the death exceptions culpable is caused is done homicide is murder if the act by which the death caused is done INTENTION (a) with the intention of causing death: (1) with the intention of causing death; or or (b) with the intention of (2) with the intention of causing such bodily injury causing such bodily inju as is likely to cause death; ry as the offender knows to or be likely to cause the death of person to whom the harm is caused; or (3) with the intention of causing bodily injury to any person and the bodily injury intended to be inflicted is sufficient in the ordinary course of nature to cause death; or 607 KNOWLEDGE (c) with the knowledge that (4) with the knowledge that the act likely to cause death.
the act is so imminently dangerous that it must in all probability cause death or such bodily injury as is likely to cause death, and without any excuse for incurring the risk of using death or such injury as is mentioned above.
Clause (b) of section 299 corresponds with cls.
(2) and (3) of section 300.
The distinguishing feature of the mens rea requi site under cl.
(2) is the knowledge possessed by the offend er regarding the particular victim being in such a peculiar condition or state of health that the intentional harm caused to him is likely to be fatal, notwithstanding the fact that ' such harm would not in the ordinary way of nature be sufficient to cause death of a person in normal health or condition.
It is noteworthy that the 'intention to cause death ' is not an essential requirement of el.
Only the intention of causing the bodily injury coupled with the offender 's knowledge of the likelihood of such injury caus ing the death of the particular victim, is sufficient to bring the killing within the ambit of this clause.
This aspect of cl.
(2) is borne out by illustration (b) appended to section 300.
Clause (b) of section 299 does not postulate any such knowl edge on the part of the offender.
Instances of cases falling under cl.
(2) of section 300 can be where the assailant causes death by a fist blow intentionally given knowing that the victim is suffering from an enlarged liver, or enlarged spleen or diseased heart and such blow is likely to cause death of that particular person as a result of the rupture of the liver, or spleen or the failure of the he,art, as the case may be.
If the assailant had no such knowledge about the disease or special frailty of the victim, nor an inten tion to.
cause death or bodily injury sufficient 'in the ordinary course of nature to cause death, the offence will not be murder, even if the injury which caused the death, was intentionally given.
In clause (3) of section 300, instead of the words 'likely to cause death ' occurring in the corresponding el.
(b) of section 299, the words "sufficient in the ordinary course of nature" have been used.
Obviously, the distinction lies between a bodily injury likely to cause death and a bodily injury sufficient in the ordinary course of nature to cause death.
The distinction is fine but real, and, if over looked, may result 'in miscarriage of justice.
The differ ence between cl.
(b) of section 299 and cl.
(3) of section 300 is one of the degree of probability of death resulting from the intended bodily injury.
To put it more broadly, it is the degree of probability of death which determines whether a culpable homicide is of the gravest, medium or the lowest degree.
The word "likely" in cl.
(b) of section 299 conveys the sense of 'probable ' as distinguished from a mere possibili ty.
The words "bodily injury. sufficient in the ordinary course of nature to cause death" mean that 608 death will be the "most probable" result of the injury having regard to the ordinary course of nature.
For cases to fall within cl.
(3), it is not necessary that the offender intended to cause death, So long as death ensues from the intentional.
bodily injury or injuries sufficient to cause death in the ordinary course of nature.
Rajwant and anr.
vs State of Kerala(2) is an apt illustra tion of this point.
In Virsa Singh vs The State of Punjab, (2) Vivian Bose j. speaking for this Court, explained the meaning ' and scope of Clause (3), thus (at p. 1500): "The prosecution must prove the following facts before it can bring a case under section 300, 3rdly '.
First, it must establish, quite objective ly, that a bodily injury is present;.
secondly the nature of the injury must be proved.
These are purely objective investigations.
It must be proved that there was an intention to inflict that particular injury, that is to say,.
that it was not accidental or unintentional or that some other kind of injury was intended.
Once these three elements are proved to be present, the enquiry proceeds further, and, fourthly it must be ,proved that the injury of the type just described made up of the three elements set out above was suffi cient to cause death in the ordinary course of nature.
This part of the enquiry is purely objec tive and inferential and has nothing to do with the intention of the offender." Thus according to the rule laid down in Virsa Singh 's case (supra) even if the intention of accused was limited to the infliction of a bodily injury sufficient to cause death in the ordinary course of nature and did not extend to the intention of causing death, the offence would be murder.
Illustration (c) appended to section 300 clearly brings out this point.
Clause (c) of section 299 and cl.
(4) of section 300 both require knowledge of the probability of the causing death.
It is not necessary for the purpose of this case to dilate much on the distinction between these corresponding clauses.
It will be sufficient to say that cl.
(4) of section 300 would be applicable where the knowledge of the offender as to the probability of death of a person or persons in general as distinguished from a particular person or persons being caused from his imminently dangerous act, approximates to a practical certainty.
Such knowledge on the part of the offender must be of the highest degree of probability, the act having been committed by the offender without any excuse for incurring the risk of causing death or such injury as aforesaid.
From the above conspectus, it emerges that whenever a court is confronted with the question whether the offence is 'murder ' or 'culpable homicide not.
amounting to murder, ' on ,the facts of a case, it will ' (1) A.I.R. 1966 S.C. 1874.
(2) ; 609 be convenient for it to approach the problem in three stages.
The question to be considered at the first stage would be, whether the accused has done an act by doing which he has caused the death of another.
Proof of such causal connection between the act of the accused and the death, leads to the second stage for considering whether that act of the accused amounts to "culpable homicide" as defined in section 299.
If the answer to this question is prima facie found in the affirmative, the stage for considering the operation of section 300, Penal Code is reached.
This is the stage at which the Court should determine whether the facts proved by the prosecution bring the case within the ambit of any of the four Clauses of the definition of murder ' contained in section 300.
If the answer to this question is in the negative the offence would be 'culpable homicide not amounting to murder ', punishable under the first or the second part of section 304, depending.
respectively, on whether the second or the third Clause of section 299 is applicable.
If this question is found in the positive, but the case comes, within any of the Exceptions enumerated in section 300, the offence would still be 'culpable homicide not amounting to murder ' punishable under the First Part of section 304, Penal Code.
The above are only broad guidelines and not cast iron imperatives.
In most cases, their observance will facilitate the task of the court.
But sometimes the facts are so inter twined and the second and the third stages so tele scoped into each other, that it may not be convenient,to give a separate treatment to the matters involved in the second and third stages.
Now let us consider the problem before us in the light of the above enunciation.
It is not disputed that the death of the deceased was caused by the accused, there being a direct causal connec tion between the beating administered by A 1 and A 2 to the deceased and his death.
The accused confined the beating to.
the legs and arms of the deceased, and therefore, it can be said that they perhaps had no "intention to cause death" within the contemplation clause (a) of section 299 or cl.
(1) of section 300.
It is nobody 's case that the instant case falls within el.
(4) of section 300.
This clause, as already noticed, is designed for that class of cases where the act of the offender is not directed against any particular individual but there is in his act that recklessness and risk of immi nent danger, knowingly and unjustifiably incurred, which is directed against the man in general, and places the lives of many in jeopardy.
Indeed, in all fairness, Counsel for the appellant has not contended that the case would fall under el.
(4) of section 300.
His sole contention is that even if the accused had no intention to cause death, the facts estab lished fully bring the case within the purview of cl.
(3) of section 300 and as such the offence committed is murder and nothing less.
In support of this contention reference has been made to Andhra vs State of Rajasthan(1) and Rajwant Singh vs State of Kerala (supra).
As against this, Counsel for the respondent submits that since the accused selected only non vital parts of the body of the deceased, for (1) A.I.R. 1966 S.C. 148.
610 inflicting the injuries, they could not be attributed the mens rea requisite for bringing the case under clause (3) of section 300; at the most, it could be said that they had knowl edge that the injuries inflicted by them were likely to cause death and as such the case falls within the third clause of section 299, and the offence committed was only "culpa ble homicide not amounting to murder", punishable under section 304, Part 11.
Counsel has thus tried to support the reason ing of the High Court.
The trial Court, 'as 'already noticed, had convicted the respondent of the offence of murder.
It applied the rule in Virsa Singh 's case (supra).
and the ratio of Anda vs State and held that the case was clearly covered by clause Thirdly of section 300.
The High Court has disagreed with the trail Court and held that the offence was not murder but one under section 304, Pt.
The High Court reached this conclusion on the following reasoning: (a) "There was no premeditation in the attack.
It was almost an impulsive act".
(b) "Though there were 21 injuries, they were all on the arms and legs and not on the head or other vital parts the body." (c) "There was no compound fracture to result in heavy haemorrhage; there must have been some bleeding".
(which) "according to PWI might have stopped with in about half an hour to one hour." (d) "Death that had occurred 21 hours later, could have been only due to shock and not due to haemorrhage also, as stated by PW 12. who conducted the autopsy.
This reference is strengthened by the evidence of PW 26 who says that the patient was under shock and he was treating him for shock by sending fluids through his vein.
From the injuries inflicted the accused therefore could not have intended to cause death.
" (e) "A1 and A2 had beaten the deceased with heavy sticks.
These beatings had resulted in fracture of the right radius, right femur, right tibia, right fibula, right patalla and left tibia and dislocation of. , therefore considerable force must have been used while inflicting the blows.
Accused 1 and 2 should have therefore inflicted these injuries with the knowledge that they are likely, by so beating, to cause the death of the deceased, though they might not have had the knowledge that they were so imminent ly dangerous that in all probability their acts would result in such injuries as are likely to cause the death.
The offence . is therefore culpable homicide falling under . section 299, I.P.C. punishable under section 304 Part II and not murder.
" 611 With respect we are unable to appreciate and accept this reasoning.
With respect, to be inconsistent, erroneous and largely speculative,It appears to us To say that the attack was not premeditated or pre planned is not only factually incorrect but also at war with High Court 's own finding that the injuries were caused to the deceased in furtherance of the common intention of A 1 and A 2 and therefore, section 34, I.P.C. was applicable.
Fur ther, the finding that there was no compound fracture, no heavy haemorrhage and the cause of the death was shock, only, is not in accord with the evidence on the record.
The best person to speak about haemorrhage and the cause of the death was Dr. P. section Sarojini (PW 12) who had conducted the autopsy.
She testified that ,the cause of death of the deceased was "shock and haemorrhage due to multiple in juries".
This categorical opinion of the Doctor was not assailed in cross examination.
In the post mortem examina tion report exhibit P 8, the Doctor noted that the heart of the deceased was found full of clotted blood.
Again in injury No. 6, which also was an internal fracture, the bone was visible through the wound.
Dr. D.A. Sastri, PW 26, had testified that he was treating Kotamraju injured of shock, not only by sending fluids through his vein, but also blood.
This part of his statement wherein he spoke about the giving of blood transfusion to the deceased, appears to have been overlooked by the High Court.
Dr. Kondareddy, PW 11, who was the first Medical Officer to examine the injuries of the deceased, had noted that there was bleeding and swelling around injury No. 6 which was located on the left leg 3 inches above the ankle.
Dr. Sarojini, PW 12, found fracture of the left tibia underneath this injury.
There could therefore, be no doubt that this was a compound fracture.
P.W. 11 found bleeding from the other abraded injuries, also.
He however found the condition of the injured grave and immediately sent an information to the Magistrate for recording his dying declaration.
PW 11 also advised immediate removal of the deceased to the bigger Hospital at Guntur.
There, also, Dr. Sastri finding that life in the patient was ebbing fast, took immediate two fold action.
First, he put the patient on blood transfusion.
Second, he sent an intimation for recording his dying declaration.
A Magistrate (PW 10) came there and recorded the statement.
These are all tell tale circumstances which unerring by show that there was substantial haemorrhage from some of the injuries involving compound fractures.
This being the case, there was absolutely no reason to doubt the sworn word of the Doctor, (PW 12) that the cause of the death was shock and haemorrhage.
Although the learned Judges of the High Court have not specifically referred to the quotation from page 289, of Modi 's book on Medical Jurisprudence and Toxicology (1961 Edn.) which was put to Dr. Sarojini in cross examination, they appear to have derived support from the same for the argument that fractures of such bones "are not ordinarily dangerous"; therefore, the accused could not have intended cause death but had only knowledge that they were likely by such beating to cause the death of the deceased.
It will be worthwhile to extract that quotation from Mody, as a reference to the same was made by Mr. Subba Rao before us, also.
612 According to Mody: "Fractures are not ordinarily dangerous unless they are compound, when death may occur from ,loss of blood, if a big vessel is wounded by the split end of a fractured bone.
" It may be noted, in the first place, that this opinion of the learned author is couched in too general and wide language.
Fractures of some vital bones, such as those of the skull and the vertebral column are generally known to be dangerous to life.
Secondly, even this general statement has been qualified by the learned author, by saying that compound fractures involving haemorrhage, are ordinarily dangerous.
We have seen, that some of the fractures under neath the injuries of the deceased, were compound fractures accompanied by substantial haemorrhage.
In the face of this finding, Mody 's opinion, far from advancing the conten tion of the defence, discounts it.
The High Court has held that the accused had no inten tion to cause death because they deliberately avoided to hit any vital part of the body, and confined the beating to the legs and arms of the deceased.
There is much that can be said in support of this particular finding.
But that find ing assuming it to be correct does not necessarily take the case out of the definition of 'murder '.
The crux of the matter is, whether the facts established bring the case within Clause Thirdly of section 300.
This question further narrows down into a consideration of the two fold issue :.
(i) Whether the bodily injuries found on the deceased were intentionally inflicted by the accused ? (ii) If so, were they sufficient to cause death in the ordinary course of nature ? If both these elements are satisfactorily established, the offence will be 'murder ', irrespective of the fact whether an intention on the part of the accused to cause death, had or had not been proved.
In the instant case, the existence of both these ele ments was clearly established by the prosecution.
There was bitter hostility between the warring factions to which the accused and the deceased belonged.
Criminal litigation was going on between these factions since long.
Both the factions had been proceeded against under section 107, Cr.
The accused had therefore a motive to beat the deceased.
The attack was premeditated and pre planned, although the interval between the conception and execution of the plan was not very long.
The accused had purchased tickets for going further to Narasaraopet, but on seeing the deceased, their bete noir, alighting at Nekarikal, they designedly got down there and trailed him.
They selected heavy sticks about 3 inches in diameter, each, and with those lethal weapons, despite the entreaties of the deceased, mercilessly pounded his legs and arms causing no less than 19 or 20 injuries, smashing at least seven bones.
mostly major bones, and dislocating two more.
The beating was administered in a brutal and reckless manner.
It was pressed home with an unusually fierce, cruel and sadistic determination.
When the human conscience of one of the shocked bystanders spontaneously cried out in protest as to why the accused were beating a human being as if he were a buffalo, the only echo it could draw from the assailants, 613 a minacious retort, who callously continued their malevolent action, and did not stop the beating till the deceased became unconscious.
May be, the intention of the accused was to cause death and they stopped the beating under the impression that the deceased was dead.
But this lone circumstance cannot take this possible inference to the plane of positive proof.
Nevertheless, the formidable weapons used by the accused in the beating, the savage manner of its execution, the helpless state of the unarmed victim, the intensity of the violence caused, the callous conduct of the accused in persisting in the assault even against the protest of feeling bystanders all, viewed against the background of previous animosity between the parties, irresistibly lead to the conclusion that the in juries caused by the accused to the deceased were intention ally inflicted, and were not accidental.
Thus the presence of the first element of Clause Thirdly of section 300 had been cogently and convincingly established.
This takes us to the second element of Clause (3).
Dr. Sarojini, PW 12, testified that the injuries of the deceased were cumulatively sufficient in the ordinary course of nature to cause death.
In her opinion which we have found to be entirely trustworthy the cause of the death was shock and haemorrhage due to the multiple injuries.
Dr. Sarojini had conducted the post mortem examination of the deadbody of the deceased.
She had dissected the body and examined the injuries to the internal organs.
She was therefore the best informed expert who could opine with authority as to the cause of the death and as to the suffi ciency or otherwise of the injuries from which the death ensued.
Dr. Sarojini 's evidence on this point stood on a better footing than that of the Doctors (PWs.
11 and 26) who had externally examined the deceased in his life time.
Despite this position, the High Court has not specifically considered the evidence of Dr. Sarojini with regard to the sufficiency of the injuries to cause death in the ordinary course of nature.
There is no reason why Dr. Sarojini 's evidence with regard to the second element of Clause (3) of section 300 be not accepted.
Dr. Sarojini 's evidence satisfacto rily establishes the presence of the second element of this clause.
There is therefore, no escape from the conclusion, that the offence committed by the accused was 'murder ', notwith standing the fact that the intention of the accused to cause death has not been shown beyond doubt.
In Anda vs State of Rajasthan (supra), this Court had to deal with a very similar situation.
In that case, several accused beat the victim with sticks after dragging him into a house and caused multiple injuries including 16 lacerated wounds on the arms and legs, a hematoma on the forhead and a bruise on the chest.
Under these injuries to the arms and legs lay fractures of the right and left ulnas, second and third metacarpal bones on the right hand and second metacar pal bone of the left hand, compound fractures of the right tibia and right fibula.
There was loss of blood from the injuries.
The Medical Officer who conducted the autopsy opined that the cause of the death was shock and syncope due to multiple injuries; that all the injuries collectively could be sufficient to cause death in the ordinary course of nature, but individually none of them was so sufficient.
614 Question arose whether in such a case when no signifi cant injury had been inflicted on a vital art of the body, and the weapons used were ordinary lathis, and the accused could not be said to have the intention of causing death, the offence would be 'murder ' or merely 'culpable homicide not amounting to murder '.
This Court speaking through Hidayatullah J. (as he then was), after explaining the comparative scope of and the distinction between sections 299 and 300, answered the question in these terms: "The injuries were not on a vital part of the body and no weapon was used which can be described as specially dangerous.
Only lathis were used.
It cannot, therefore, be said safely that there was an intention to cause the death of Bherun within the first clause of section 300.
At the same time, it is obvious that his hands and legs were smashed and numerous bruises and lacerated wounds were caused.
The number of injuries shows that every one joined in beating him.
It is also clear that the assailants aimed at breaking his arms and legs.
Looking at the injuries caused to Bherun in furtherance of the common intention of all it is clear that the injuries intended to be caused were sufficient to cause death in the ordinary course of nature, even if it cannot be said that his death was intended.
This is suffi cient to bring the, case within 3rdly of section 300." The ratio of Anda vs State of Rajasthan (supra) applies in full force to the facts of the present case.
Here, a direct causal connection between the act of the accused and the death was established.
The injuries were the direct cause of the death.
No secondary factor such as gangrene, tetanus etc., supervened.
There was no doubt whatever that the beating was premeditated and calculated.
Just as in Anda 's case, here also, the aim of the asailants was to smash the arms and legs of the deceased, and they succeeded in that design.
causing no less than 19 injuries, including fractures of most of the bones of the legs and the arms.
While in Anda 's case, the sticks used by the assailants were not specially dangerous, in the instant case they were unusually heavy, lethal weapons.
All these acts of the accused were pre planned and intentional, which, considered objectively in the light of the medical evidence.
were sufficient in the ordinary course of nature to cause death.
The mere fact that the beating was designedly con fined by the assailants to the legs and arms, or that none of the multiple injuries inflicted was individually suffi cient in the ordinary course of nature to cause death, will not exclude the application of Clause 3rdly of section 300.
The expression "bodily injury" in Clause 3rdly includes also its plural, so that the clause would cover a case where all the injuries intentionally, caused by the accused are cumula tively sufficient to cause the death in the ordinary course of nature, even if none of those injuries individually measures upto such sufficiency.
The sufficiency spoken of in this clause.
as a|ready noticed, is the high probability of death in the ordinary course of nature, and if such suffi ciency exists and death is caused and the injury causing it is intentional, the case would fail under Clause 3rdly of section 300.
All the conditions which are a pre requisite for the applicability of this clause have been established and the offence committed by the accused in the instant case was 'murder '.
615 For all the foregoing reasons, we are of opinion that the High Court was in error in altering the conviction of the accused respondent from one under section 302, 302/34, to that under section 304, Part II, Penal Code.
Accordingly we allow this appeal and restore the order of the trial Court convicting the accused (Respondent 2 herein) for the offence of murder, with a sentence of imprisonment for life.
Respondent 2, if he is not already in jail shall be arrested and committed to prison to serve out the sentence inflicted on him.
P.B.R. Appeal allowed.

dataset_name: IN-Abs

summary:
In the scheme of the Penal Code, 'culpable homicide ' is genus and 'murder ' its specie.
All 'murder ' is 'culpable homicide ' but not vice versa.
Speaking generally, 'culpable homicide ' sans 'special characteristics of murder ', is 'culpable homicide not amounting to murder '.
For the purpose of fixing punishment, proportionate to the gravity of this generic offence, the Code practically recognises three degrees of culpable homicide.
The first is, what may be called, culpable homicide of the first degree.
This is the gravest form of culpable homicide, which is defined in section 300 as 'murder '.
The second may be termed as 'culpable homicide of the second degree '.
This is punishable under the 1st part of section 304.
Then there is 'culpable homicide of the third degree '.
This is the lowest type of culpable homicide and the punishment provided for it is, also, the lowest among the punishments provided for the three grades.
Culpable homicide of this degree is punishable under the second Part of section 304.
[606B D] Clause (b) of section 299 corresponds with cll.
(2) and (3) of section 300.
The distinguishing feature of the mens rea requisite under clause (2) is the knowledge possessed by the offender regarding the particular victim being in such a peculiar condition or state of health that the intentional harm caused to him is likely to be fatal, notwithstanding the fact that such harm would not in the ordinary way of nature be sufficient to cause death of a person in normal health or condition.
The 'intention to cause death ' is not an essential requirement of clause (2).
Only the intention of causing the bodily injury coupled with the offender 's knowledge of the likelihood of such injury causing the death of the particular victim, is sufficient to bring the killing within the ambit of this clause This aspect of clause (2) is borne out by illustration (b) appended to section 300.
[607C D] Instances of cases failing under clause (2) of section 300 can be where the assailant causes death by a first blow intentionally given knowing that the victim is suffering from an enlarged liver, or enlarged spleen or diseased heart and such blow is likely to cause death of that particular person as a result of the rupture of the liver, or spleen or the failure of the heart, as the case may be.
If the as sailant had no such knowledge about the disease or special frailty of the victim, nor an intention to cause death or bodily injury sufficient in the ordinary course of nature to cause death, the offence will not be murder, even if the injury which caused the death, was intentionally given.
Clause (b) of section 299 does not postulate any such knowledge on the part of the offender.
[607E F] In Clause (3) of section 300, instead of the words 'likely to cause death ' occurring in the corresponding clause (b) of section 299, the words "sufficient in the ordinary course of nature" have been used.
The distinc tion between a bodily injury likely to cause death and a bodily injury sufficient in the ordinary course of nature to cause death, is fine but real, and, if overlooked, may result in miscarriage of justice.
The difference is one of the degree of probability of death resulting from the intended bodily injury.
The word "likely" in section 299(b) conveys the sense of of 'probable ' as distinguished from a mere possibility.
The words bodily injury . sufficient in the ordinary course of nature to cause death ' mean that death will be the 'most proba ble ' result of the injury, having regard to the ordinary course of nature.
[607G H] 602 For cases to fail within clause (3), it is not necessary that the offender intended to cause death, so long as death ensues from the intentional bodily injury or injuries suffi cient to cause death in the ordinary course of nature.
[608B] Clause (c) of section 299 and clause (4) of section 300 both require knowledge of the probability of the act causing death.
Clause (4) of section 300 would be applicable where the knowledge of the offender as to the probability of death of a person or persons in general as distinguished from a particular person or persons being caused from his immi nently dangerous act, approximates to a practical certainty.
Such knowledge on the part of the offender must be of the highest degree of probability, the act having been committed by the offender without any excuse for incurring the risk of causing death or such injury as aforesaid.
[608F G] Whenever a court is confronted with the question whether the offence is 'murder ' or 'culpable homicide not amounting to murder ', on the facts of a case, it will be convenient for it to approach the problem in three stages.
The question to be considered at the first stage would be, whether the accused has done an act by doing which he has caused the death of another.
Proof of such casual connection between the act of the accused and the death, leads to the, second stage for, considering whether that act of the accused amounts to culpable homicide as defined in section 299.
If the answer to this.
question is prima facie found in the affirm ative, the stage for considering the operation of section 300, Penal Code, is reached.
This is the stage at which the Court should determine whether the facts proved by the prosecution bring the case within the ambit of any of the four clauses of the definition of 'murder ' containd in section 300.
If the answer to this question is in the negative the offence would be 'culpable homicide not amounting to mur der ', punishable under the first or the second part of section 304, depending, respectively, on whether the second or the third clause of section 299 is applicable.
If this question is found in the positive, but the case comes within any of the Exceptions enumerated in section 300, the offence would still be 'culpable homicide not mounting to murder ', punishable under the First Part of section 304, Penal Code.
[608H; 609A C] Rajwant and anr.
vs State of Kerala AIR 1966 SC 1874, Virsa Singh vs The State of Punjab ; and Andhra vs State of Rajasthan AIR 1966 S.C. 148 followed.
In the instant case the prosecution alleged that in furtherance of political feuds of the village the accused followed the deceased in the bus when he went to a neigh bouring place, chased him when he got off the bus, and indiscriminately pounded the legs and arms of the deceased, who was 55 years old, with heavy sticks.
The deceased succumbed to his injuries on the following morning.
The trial court held that the case was covered by clause 'thirdly ' of section 300 and convicted them under section 302 and section 302 read with section 34.
Indian Penal Code.
In appeal, the High Court altered the conviction to one under section 304 Part II; on ' the grounds that (i) there was no premeditation in the attack; (ii) injuries were not on any vital part of the body; (iii) there was no compound fracture resulting in heavy haemorrhage; (iv) death occurred due to shock and not due to haemorrhage and (v) though the accused had knowledge while inflicting injuries that they were likely to cause death, they might no( have had the knowledge that they were so imminently dangerous that in ' all probability their acts would ' result in such injuries as are likely to came the death.
In appeal to this Court the appellant State contended that the case fell under section 300(3) I.P.C., while the accused sought to support the judgment ' of the High Court.
603 Allowing the appeal.
HELD: (1) It is not correct to say that the attack was not premeditated or preplanned.
The High Court itself found that the injuries were caused in furtherance of the common intention of the respondents, and that therefore section 34 was applicable.
[611B] (2) The High Court may be right in its finding that since the injuries were not on vital parts, the accused had no intention to cause death but that finding assuming it to be correct does not necessarily take the case out of the definition of 'murder '.
The crux of the matter is whether the facts established bring the case within clause 'thirdly ' of section 300.
This question further narrows down into a con sideration of the two fold issue; (i) whether the bodily injuries found on the deceased were intentionally inflicted by the accused ? and (ii) If so, were they sufficient to cause death in the ordinary course of nature ? If both these elements are satisfactorily established, the offence will be 'murder ', irrespective of the fact whether an reten tion on the part of the accused to cause death, had or had not been proved.
[612 C E] In the instant case, the formidable weapons used by the accused in the beating the savage manner of its execution, the helpless state of the unarmed victim, the intensity of the violence caused, the callous conduct of the accused in persisting in the assault even against the protest of feeling by standersall, viewed against the background of previous animosity between the parties, irresistibly lead to the conclusion that the injuries caused by the accused to the deceased were intentionally inflicted, and were not accidental.
Thus the presence of the first element of clause 'thirdly ' of section 300 had been cogently and convincing ly established.
[613 B C] (3) The medical evidence shows that there were compound fractures and that there was heavy haemorrhage requiring blood transfusion.
Such injuries are ordinarily dangerous.
[613D] (4) The medical evidence clearly establishes that the cause of death was shock and haemorrhage due to multiple injuries which were cumulatively sufficient to cause death in the ordinary course of nature.
[612B C] (5) The mere fact that the beating was designedly con fined by the assailants to the legs and arms or that none of the multiple injuries inflicted was individually sufficient in the ordinary course of nature to cause death, will not exclude the application of clause 'thirdly ' of section 300.
The expression 'bodily injury ' in clause 'thirdly ' includes also its plural, so that the clause would cover a case where all the injuries intentionally caused by the accused are cumula tively sufficient to cause the death in the ordinary course of nature.
even if none of those injuries individually measures upto such sufficiency.
The sufficiency spoken of in this clause, is the high probability of death in the ordinary course of nature, and if such sufficiency exists and death is caused and the injury causing it is intention al, the case would fail under clause 'thirdly ' of section 300.
All the conditions which are a pre requisite for the ap plicability of this clause have been established and the offence committed by accused in the instant case was 'mur der '.
[614G H] There is no escape from the conclusion that the offence committed by the accused was murder notwithstanding the fact that the intention of the accused to cause death has not been shown beyond doubt.
[613F]