judgement:
iminal Appeal Nos. 211 & 212 of 1969 and Review Petition No. 37 of 1970.
Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18, 1969 in Criminal Appeal No. 183 of 1961.
C. K. Daphtary and section K. Dholakia, for the petitioner.
V. A. Seyid Muhammad and section P. Nayar for the respondents.
The Judgment of the Court on August 18, 1970 was delivered by Sikri, J.
These appeals, by special leave, are directed against the judgment of the High Court at Calcutta whereby the High Court (A. K. Das and K. K. Mitra, JJ.) set aside the order of acuittal and convicted the appellants before us under section 23(1A) of the Foreign Exchange Regulation Act (VII of 1947) hereinafter refered to as the Act.
The appellant Girdharilal Gupta, and the appellant Puranmall Jain, were sentenced to rigorous imprisonment for six months each and to pay 750 a fine of Rs. 2,000/ each, in default, to rigorous imprisonment ' for a further period of three months each.
The appellant, Bhagwandeo Tewari was sentenced to rigorous imprisonment for three months and to pay a fine of Rs. 1,000/ , in default, to rigorous imprisonment for two months.
The firm was sentenced to pay a fine of Rs. 2,000/ .
It does not appear that any special leave was obtained on behalf of the firm.
In order to appreciate the contentions made before us it is ncessary to state the relevant facts.
On October 25, 1958, Customs Preventive Officer B. Roy examined a parcel (wooden case) which purported to contain Rasogolla, Achar, papar and dried vegetable, booked for Hongkong, to be taken by the Swiss Air of which the Indian Airlines Corporation was the ,cargo handling agent.
The articles had been declared to be worth Rs. 20/ but the freight which had been paid came to Rs. 127.73 nP.
This excited the suspicion of the Customs Preventive Officer, B. Roy, and on opening the parcel and breaking down the case, five hundred ten currency notes of the denomination of hundred rupees each, valuing Rs. 51,0001 , were found.
The name of the consignor was Ramghawan Singh at Karnani Mansion, Park Street, Calcutta, but on enquiry no trace could be found of this Ramghawan Singh at Karnani Mansion.
In the course of further investigation suspicion fell ,on M/s. Agarwala Trading Corporation of which the appellants Girdharilal Gupta and Fumanmall Jain were the partners and the appellant Bhagwandeo Tewri was an employee.
On January 22, 1959, the office of the firm at 191, Mahatma Gandhi Road and the alleged residence of the partners at 11 B Jatindra Mohan Avenue was searched.
The appellant, Bhagwandeo Tewari, on being identified by the Traffic Assistant of the Indian Airlines Corporation, Ambar Nath Sen, P.W. 4, and one loader of Thai Airways, section K. Battu, P.W. 26, was arrested.
Certain incriminating documents, including account slips and cash books of the firm were seized.
On June 3, 1959, a complaint was lodged at the instance of the Assistant Collector of Customs, Calcutta.
After stating the above facts it was alleged, in the complaint that sending out money in Indian currency was prohibited under section 8(2) of the Act and any attempt to do the same was punishable under section 23B of the, Act.
At the trial a number of witnesses were examined.
B. Roy, Customs Preventive Officer, gave evidence regarding the dis covery of Rs. 51,0001 in Indian currency notes, apart from Rasogollas, pickles, etc.
on October 25, 1958.
No cross examination was directed to show that this did not happen on October 25, 1958.
751 section A. D. Moira, Traffic Assistant of the Indian Airlines Corporation, P.W. 2, who checks freight and does other transshipment work in course of his duties at Dum Dum airport, deposed that he received the relevant documents on October 25, 1958, from Calcutta office.
H. , said that the documents were in the handwriting of N. Sen of the Freight Section of the Calcutta Office.
Armed with the letter of authority, he took the parcel to the Customs Officer and P.W. 1, B. Roy, asked him to open the parcel and currency notes of the value of Rs. 51,000/ , along, with other things were discovered.
R. R. Mukherjee, Traffic Officer of the Indian Airlines Corporation, P.W. 3, is another witness to the recovery of the currency notes.
P.W. 4, Ambare Nath Sen, was the Traffic Assistant in the Indian Airlines Corporation, who had typed out the consignment note in respect of this parcel after seeing the shipping bill (Ext. 1).
He identified the appellant, Bhagwandeo Tewari, as the, person who had handed over the shipping bill to him and the letter of authority, Ext. 11 He said that he .calculated the freight and received the freight, from this appellant.
He further said that this appellant signed the consignment notes in Hindi in his presence and he remembered having seen this appellant writing a postcard on the adjoining table while he was preparing the consignment notes.
He further stated that his immediate superior officer, P. K. Chatterjee, was also present at the time this consignment was being booked.
Apparently this is not the first time that hiss appellant had gone to the Indian Airlines Corporation because P.W. 4 says that seven days ahead of October 24, 1958, this appellant had called on him with another shipment although that consignment was booked by P. K. Chatterji.
Some days after October 25, 1958, this witness P.W. 4was taken by the Customs Officer to some place to find the man who is alleged to have booked the Parcel.
Two or three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area, which was the place of Agarwal Trading Corporation, and he said that he Pointed out the appellant, Bhagwandeo Tiwari, as the one who had taken the Parcel to him on October 24, 1958.
He was cross examined in order to show that he could not remember customers.
He admitted that it was not always possible for him to remember all the men who came in contact with him in the course of his work, but 'he said that he had told C. R. Basu who wag investigating the case that the person who brought the parcel was an oldish man and lean one, and had also described his nose.
He further admitted that at the place he identified appellant Bhagwandeo Tiwari, he was the only oldish man there.
He 4 Ll 100SupCI/71 752 said that he did not think that he committed a mistake unless the man he identified had a double in the shape of a twin brother and the like.
He further admitted that he had been trying to recollect the appearance of the man to reconstruct in his mind the outline of his appearance as far as he could.
The evidence of P.W. 4 impresses us and there is no reason why we should not place reliance on his evidence.
P. K. Chatterjee, P.W. 5, speaks of the earlier visit of the appellant Bhagwandeo Tiwari as the person who called on him with the shipping bill on October 17, 1958.
C. R. Basu, P.W. 6, Officer of the Customs who investigated the case, said that after making enquiries he applied for the issue of search warrant to search the premises No. 191, Mahatama Gandhi Road.
He also applied for a search warrant to search the premises of the partners of the firm at 11 B, Jatindra Mohan Avenue.
He did not himself search 11 B, Jatindra Mohan Avenue, but went to execute the search warrant at 191, Mahatma Gandhi Road, where on the identification of P.W.4 he arrested the appellant Bhagwandeo Tiwari.
He then conducted the search of the premises in the presence of the witnesses and took into possession one Rokar, one khata bahi, one nakal bahi, the attendance register and three account slips which he marked 8, 9 and 10 (Ext.
9 and 9/1 and 9/2 respectively).
We may reproduce his evidence regarding the discovery of these account slips because a great deal of argument has been addressed to us on the recovery of these slips.
He stated "The three slips, about which I have spoken just now, are in the same condition to day as I found them on the day when they were seized.
The witnesses to the search I conducted are Radhesyam Gupta and Lalit Kumar Chandu Lal Parekh.
Here is the search list over my signature and the signature of the witnesses.
(Ext. 10).
" In his cross examined he stated "You are right that Exhibits 9, 9/1 and 9/2 are included in Serial No. 38 of the search list.
The search list does not mention the slips separately but only mentions loose sheets in 'a sealed parcel.
It has been urged that there is no evidence to show when the seal was opened.
It is suggested that these slips have been fabricated and planted.
No such question was put to the witnesses and we are 753 unable 'to presume that the investigating officer would go about fabricating account slips in order to rope in the appellants.
The prosecution produced two witnesses who had signed the recovery list.
The evidence of Radheshyam Gupta, P.W. 7, must be discarded because although he was examined before the Chief Presidency Magistrate he was not made available for cross examination.
The learned counsel, Mr. Bhattacharya, suggested that if this witness had been produced for cross examination he would have deposed against the prosecution.
We are unable to draw any such presumption.
The other witness was Lalit C. L. Parekh, P.W. 8.
He had signed the search list but on cross examination he stated that "Basu had taken slips of paper from the 'Agal Bagal ' of the guddy, by which I mean from underneath the Takia on the bed".
He further said that "bits of paper Basu found from a wooden case as well." He further stated as follows "You are right that Basu placed all these bits of papers at one and the same place.
How many pieces ? I cannot say.
I did not count.
By guess I can say that the number of bits of paper would run to 50 or 60. 1 signed all the pieces of paper which were found so.
" The learned counsel fastens on the last line and says that these slips do not bear the signature of Lalit C. L. Parekh, and therefore it is clear that these have been fabricated later.
We are unable to sustain this contention.
The witness had signed a number of documents including the search list and he pay well have thought that he had signed every piece of paper which was seized.
No such question was put to the investigating officer.
P.W. 11, N. R. Paul, who was the assistant attached to the Appraising Department of the Calcutta Customs deposed re garding the preparation of the shipping bill.
It appears that the shipping bill bore the words "Thai Airways Co." and these words were scored out and "Swiss Air" written in hand.
He could not say who corrected the entry but nothing turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons it was not possible to send that parcel through this airways.
The prosecution led evidence to show that as a matter of fact appellant Bhagwandeo Tiwari had approached some body in Thai Airways but we need not dwell on, this part of the case.
754 The prosecution also produced Shridhar Chatterjee, hand writing expert, who examined the signature reading as "Ram Chandra" writing in Hindi and in pencil in the two way bills, Ext. 3 and 4, and the specimen writing, He was of the opinion that the writer of the specimen writing was the writer of the signature "Ram Chandra" appearing in the airway bill.
We may mention that Bhagwandeo Tiwari is alleged to have signed as "Ram Chandra".
The expert also gave the opinion that.
the type written papers, Exts. 11 and IX had been typed on the same machine.
Exhibit 9/2, 'one of the seized account slips, is a very im portant document.
The official translation is printed in the records and reads: "Translation of EXT.9/2 dated 24 10 58. . . 2/8/ 4 cases Godown A/C 1 . . . /8/ 3 "opened below and goods brought.
In Cash (Paper Torn) cases bound (Pettis)(?). . . /4/ Case I ' (Illegible) /2/ Illegible (Paper tom) Cases (Pettis)(Illegi ble) 2 R.B. /151 for coming and going to I.A.C. Rs.223/8/. 4/51 127/73 HongkongShanghai (torn & illegible)" The High Court had to translate it again and the last line was translated into "Hongkong Lagaya" in, place of "Hongkong Shanghai".
In the account books of M/s. Agarwala Trading Corporation (Exts. 21 and 21/1) under the entries dated October 24, 1958, on which date the booking is alleged by the prosecution to have been done, on entry appears as follows: "Rs. 415/ Through Bhagwan Deo /8/ Colli (Janka) 115/ Rickshaw fare 2/ 14/ Cart Charge Rs. 1/8/ Through Ghanshyam & Pandey /4/ Bus fair 1/4/ Bus fair 1/4 Bus Tarm" It will be noticed that the same items appear in Ext.
The breakup in exhibit 9(2) is slightly different but in the account book 755 the four annas and two annas entries have been added to Rs. 2/8/to make Rs. 2/14/ as cart charge.
Again the entries in Ext.
9/1 are as follows "/1/ But hire for going home.
1/4/ Caine from home to Thai (?) Taxi /12/ Riksha hire from Thai /1/ Coolie /4/ Thai Office Colie ______________________ 2/6/ Rs. 147/10/ In Cash" The corresponding entry in the account books are as follows "Rs. 2/6/ (Bus fare /1/Taxi fare Rs. 1/4/ Rickshaw Rs. /12/ Cooli 151 " It is true that the entry of Rs. 127/73 which exists in Ext.
9/2 has not been carried over into the account books but perhaps that would have been even too much for an accountant to do.
He never dreamt that these entries, of Rs. 4/5/ and Rs. 2/6/ in the account books would be seized upon by the prosecution to complete the case against the appellants.
Be that as it may, the entries in the account books demolish the case of defence that these slips were fabricated and that they had nothing to do with the firm.
exhibit 9/2, on the other hand, clearly shows that somebody had gone to the I.A.C. office and paid /15/ for going and coming to the I.A.C. office and paid the incidental charges.
Mr. Bhattacharya, who followed Mr. Chagla for the appellants, contends that a serious question of law is involved, the question being that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated.
It is a novel proposition and he has not been able to cite any authority or principle in support of it.
It all depends on the facts in each, case.
At any rate here we have the corroborative evidence of P.W. 8, who signed the search document and also the entries themselves in the account books and their tallying with the slips.
It was urged on behalf of the defence counsel that these slips could not be taken into consideration at all because they are not evidence.
We are unable to appreciate why they are not evidence.
These are part of the things discovered during search and 756 if the entries therein are carried into the account books there is no reason why these things could not be looked at.
The learned counsel has taken us through the judgments of the Chief Presidency Magistrate and the High Court.
We are in agreement with the conclusions arrived at by the High Court.
We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or two places made minor mistakes.
Mr. Chagla, while arguing on behalf of the partners, said that there was evidence that one, partner was not in Calcutta on the 24th or 25th October, 1958,as he was in Japan.
But even if we take this fact into consideration, which fact was not brought to the notice of the Chief Presidency Magistrate or the High Court, it does not help him at all.
Entries were made in the account books and it was the firm 's money which was spent and he being an active partner is clearly liable under section 23C(1) of the Act which reads : "23C(1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and, was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly; Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to pre vent such contravention.
" This sub section deems the appellant Girdhari Lal Gupta guilty.
The question is : Has he proved that the contravention took place without his knowledge and he exercised due diligence to prevent such contravention ? What he said in his statement under section 342, Cr P.C., was that he alone looks after the affairs of the firm.
There is also no evidence to show that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.
The entries were there in his account books and the only thing that, he had to say about these entries in his account books is that they pertain to the routine work of the firm.
Under the circumstances we are unable to exonerate him of the charge.
As far as the other partner, Puramnall Jain, is concerned ' he stated that he does not look after the affairs of the firm and further 757 that he stays all along at Sriganganagar in Rajasthan and does not stay in Calcutta.
The prosecution has not led any reliable evidence to prove that he took any active part in the conduct of the business of the firm.
In these circumstances we are inclined to give him the benefit of doubt and acquit him.
In the result the appeal of Puranmall Jain is allowed and he is acquitted of the charge.
Ms bail bond shall stand cancelled.
The appeals of Girdhari Lal and Bhagwandeo Tewari are dismissed.
[After the above judgment was delivered Review Petition No. 37 of 1970 was filed.
The judgment of the Court thereon was delivered on February 18, 1971 by] Sikri, C.J. We disposed of Criminal Appeals Nos. 211 and 212 of 1959 by our judgment dated August 18, 1970, whereby the appeals of Girdharilal Gupta, and Bhagwandeo Tewari against.
their convictions were dismissed.
Girdharilal Gupta put in this review petition stating that the counsel had omitted to bring to our notice the provisions of section 23C(2) of the Foreign Exchange Regulation Act, 1947 hereinafter referred to as the Act which has a vital bearing on the case.
The judgment in Criminal Appeal No. 211 of 1959 has, therefore, been re opened.
We may mention that Bhagwandeo Tiwari has not filed a review petition against his conviction, upheld by this Court.
Mr. Daphtary contends that on the facts, as found by us, the appellant, Girdhari Lal Gupta, does not come within the purview of section 23C(1) or section 23C(2) of the Act.
Sections 23C(1) and 23C(2) read as follows "23C. (1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place, without his knowledge or that he exercised all due diligence to prevent such contravention.
23C. (2) Notwithstanding anything contained in sub section (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the 758 part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.
For the purposes of this section, (a) " company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm.
Mr. Daphtary contends that there is no evidence to show that the appellant was in charge of the conduct of the business of the firm at the relevant time and therefore, section 23C(1) does not apply.
He further says that as the appellant was abroad, the contravention took place without his knowledge.
We may mention, however, that the defence that he was abroad at the relevant time was not taken in the courts below.
At the time of the last hearing learned counsel produced the passport of the appellant before us from which it appears that he was abroad at that time and came back a few days after the alleged contravention.
Mr. Daphtary further contends that section 23C(2.) also does not apply because there is no evidence that the contravention took place with the consent or connivance of, or was attributable to any neglect on the part of, the appellant.
He referred to us a number of authorities of the High Courts in India which have interpreted similar provisions and we shall refer to them later.
It seems to us quite clear that section 23C(1) is a highly penal section as it makes a person who was in charge and responsible to the company for the conduct of its business vicariously liable, for an offence committed by the company.
Therefore, in accordance with well settled principles this section should be construed strictly.
What then does the expression "a person in charge and responsible for the conduct of the affairs of a company mean ' ? It will be noticed that the word 'company" includes a firm or other association and the same test must apply to a director in charge and a partner of a firm in charge of a business.
It seems to us that in the context a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
This inference follows from the wording of section 23C(2).
It mentions director, who may be a party to the policy being followed by a company and yet not be in charge of the business of the company.
Further it mentions manager, who 75 9 usually is in charge of the business but not in over all charge.
Similarly the other officers may be in charge of only some part of business.
In State vs section P. Bhadani(1), Kanhaiya Singh, J., in construing a similar provision of the Employees Provident Fund Act (1952).
Section 14A held that the first sub section would be confined only to officers in the immediate charge of the management of the company.
Later he observed that "it is, therefore, manifest that all the officers of the company not in direct charge of the management of the business are immune from the liability for the offence, unless they have contributed to its commission by consent, connivance or neglect." In R. K. Khandelwal vs State (2 D. section Mathur, J., in construing section 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed : "There can in directors who merely lay down the policy and are not concerned with the day to day working of the Company.
Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable.
" In The Public Prosecutor vs R. Karuppian(3), Somasundaram J., while dealing with a case arising under the (section 17(1)) observed that the Secretary of the Co operative Milk Society, on the facts of the case, could not be held to be a person in charge of the Society.
On the facts of that case the business of selling milk was done by the clerk of the Society and the Secretary was only an honorary Secretary and was not coming to.
the Society daily.
The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker.
He stated in examination in chief : "Who exactly the proprietors of the said firm are, I cannot say.
But I can say this much that whenever I had been there I was referred to Girdharilal Gupta (accused No. 2) and Puranmal Jain (accused No. 3) as the Maliks of the firm.
I see accused No. 2 Girdharilal Gupta in court (identified him).
I know that Bhagwandeo Tewari (accused No. 4) is the Cashier of that firm.
I see him here in court (identifies accused No. 4).
(1) A.I.R. [1959] Pat.9.
(2) (3) A.I.R. [1958] Mad.
760 .lm15
I know of another employee of the firm the manager, Jagdish Prasad.
I know another employee of the firm the accountant, Shyamlal.
" The appellant in 'his statement under section 342, Cr.
P.C. stated thus "You ask me, Sir, if I have to say anything about the evidence led in this case to the effect that I happen, to be a partner of accused No. 1 firm.
To that, Sir, my answer is that I am. " The evidence to that end is correct.
I shall only add that I alone look after the affairs of _this firm." Mr. Daphtary says that on this evidence it cannot be held that the appellant was in charge of the conduct of the business.
We are unable to agree with him on this point.
The appellant has himself stated that he alone, looked after the affairs of the firm.
This means that the is in charge of the business of the firm within the meaning of the section though there may be a Manager working under him.
The question then arises whether the appellant was in charge of the conduct of the business of the firm at the time the contravention was committed.
He was not physically present, in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad.
was the manager of the firm.
It is true that the onus of proving that the appellant was in charge of the conduct of the business of the company at the time the contravention took place lies on the Prosecution, but when a partner in charge of a business proceeds abroad it does not mean that he ceases to be charge, unless there is evidence that he gave up charge in favour of another person ' Therefore, we must hold that the appellant was in charge of the business of the firm within the meaning of sec.
23C(1).
But while imposing sentence a Court might take notice of the fact that a person is being vicariously punished for an offence and if he shows that it is possible that the contravention of the Act took place without his knowledge or neglect a sentence of imprisonment may not be imposed.
In this case he was abroad at the time of contravention and it is possible that the contravention took place without his knowledge or because of lack of diligence.
It seems to us that on the facts of this case a sentence of fine of Rs. 2,000/ will meet the ends of justice.
The learned counsel for the respondent State urges that this is not a case fit for review because it is only a case of mistaken judgment.
But we are unable to agree with this submission 761 because at the time of the arguments our attention was not drawn.
, specifically to sub section 23C(2) and the light it throws on the interpretation of sub section
In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No. 211 of 1969 modified to the extent that the sentence of six months ' rigorous.
imprisonment imposed on Girdharilal is set aside.
The sentence , of fine of Rs. 2,000/ shall, however, stand.
G.C. Ordered accordingly.

summary:
An air parcel declared by the consigner to contain rasogollas and other edibles was found to contain Rs. 51,000 worth of Indian currency notes.
The parcel was booked to be sent from Calcutta to Hong Kong.
The consignor 's name as given.
on the parcel was found to be false and on investigation the suspicion of the customs authorities fell on the appellants two of whom were partners in a firm, the third being an employee of the firm.
The office of the firm was searched.
Certain incriminating documents including account slips and cash books of the firm were seized.
In a complaint filed by the Assistant Collector of Customs against the appellants and their firm it was alleged that sending out money in Indian currency was prohibited by section 8(2) of the Foreign Exchange Regulation 7 of 1947 and any attempt to do the same was punishable under section 23B of the Act.
The trial court acquitted the appellants but the High Court in appeal convicted them under section 23(1A).
By special leave appeals were filed in this Court.
Judgment was delivered on August 18, 1970.
Thereafter review petition No. 37 of 1970, was filed.
A further judgment in respect of the contention raised therein as to the interpretation of section 23C(i) was delivered on February 18, 1971.
HELD : (i) The proposition that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated is a novel one with no principle or authority to support it.
It all depends on the facts of each case.
In the present case there was the corroborative evidence of P.W. 8 who signed the search document and also the entries themselves in the account books and their tallying with the slips.
[755 G] (ii) There was no substance in the argument that the account slips could not be taken into consideration because they were not evidence.
These were part of the things discovered during search and if the entries therein were carried into the account books there was no reason why they could not be looked at [755 H] (iii) In the context of section 23C(1) a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
The inference follows from the wording of section 23C(2).
It mentions director who may be a. party to the policy being followed by 749 a company and yet not be in charge of the business of the company.
Further it mentions manager who usually is in charge of the business not in over all charge.
Similarly the other officers may be in charge of only some part of the business.
[758 G 759 A] State vs section P. Bhadani, A.I.R. 1959 Pat. 9, R. K. Khandelwal vs State and Public Prosecutor vs R. K. Karuppian, A.I.R. 1958 Mad.
183, referred to.
In the present case the appellant G had himself stated that he alone looked after the affairs of the firm.
This meant that he was in charge within the meaning of the section though there may be a manager working under him [760 C D] When a partner in charge of a business proceeds abroad it does not mean that he ceased to be in charge, unless there is evidence that he gave up charge in favour of another person.
Therefore it must be held that the appellant was in charge of the business of the firm within the meaning of section 23C(1).
[760 E F].
In view of the fact that G was abroad at the time of contravention it was possible that the contravention took place without his knowledge or lack of diligence.
He was being vicariously punished.
In such a case a. sentence of imprisonment may not be imposed but a sentence of fine only would meet the ends of justice.
[760 G] (iv) As regards appellant P the prosecution had been unable to prove by any reliable evidence that he took any active part in the conduct of the business of the firm.
He must therefore be given the benefit of doubt and acquitted.
[757 A] (v) The case was fit for review because at the time of arguments the attention of the court was not drawn specifically to sub section 23C(2) and the light it throws on the interpretation of sub s.(1).
[761 A]


judgement:
Appeal No. 435 of 1970.
Appeal by special leave from the judgment and order dated March 28, 1969 of the Assam and Nagaland High Court in Civil Rule No. 183 of 1965.
932 Naunit Lal, for the appellant.
M. C. Chagla, P. K. Goswami and R. Gopalakrishnan,for the respondent.
B. Datta, for the intervener.
The Judgment of the Court was delivered by Shah J.
The Assam Tea Company Ltd owns,teagardens in the village of Nazira in the State of Assam.
By a notification dated June 16, 1909, the Government of Bengal (which then had territorial jurisdiction over the territory now within the State of Assam) constituted a Town Committee at Nazira adjacent to the tea garden of the, Company.
In 1923 the Legislature enacted the Assam Municipal Act 1 of 1923.
Section 328 of the Act provided for the constitution of notified areas.
By sub section
(1) of section 328 the Provincial Government was authorised by notification, to signify its intention to declare that with respect to some or all of the matters upon which a municipal fund may be expended, improved arrangements are required within a specified area.
After issuing such a notification the Government was competent, after six weeks from the date of Publication, and after considering the objections, if any, to declare, by notification.
, the specified area or any portion thereof to be a notified area.
Section 4 of the Act authorised the Provincial Government by notification, inter alia, to signify its intention to include within a municipality any local area in the vicinity of the same or exclude from a municipality any local area comprised therein.
Any inhabitant of any part of a local area defined in a notification published under section 4, was entitled by virtue of section 5 to raise objections to the proposed action.
The Government would, after considering the objections, inter alia, include the local area or any part thereof within the municipality or exclude it therefrom.
The provisions of sections 4 and, 5 were not of their own force applicable to a notified area constituted under section 328 but by virtue of cl.
(d) of, sub section
(1) of section 330 it was competent to the Provincial Government to extend to any notified area the provisions of any section of the Act.
By sub section
(3) of section 330 it was provided : "For the purposes of any section of this Act which may be extended to a notified area, the town committee constituted for such area, under section 329.
shall be deemed to be a Municipal Board under this Act and the area to be a municipality.
" Notifications were issued from time to time applying certain provisions of the Assam Municipal Act, 1923.
In 1951 the Government of the State of Assam issued a notification applying sections 4(1) 933 (b)& (c) and 5(1) &_(2) (b) of the Assam Municipal Act, 1923 to the notified area committee including the Nazira Town Committee.
But no notification under section 328 of the Assam Municipal Act, 1923 extending the boundaries of the Nazira Town Committee area was issued.
In 1957 the Assam Municipal Act, 1923 was repealed and was replaced by the Assam Municipal Act 15 of 1957.
On January 6, 1964 notification was issued under section 4 (1) (b) of Act 15 of 1957 to revise the boundaries of the notified area at Nazira, and thereby included a part of the tea estate belonging to the Assam Tea Co. Ltd. in the Nazira Town Committee area.
Objections submitted by the Assam Tea Company Ltd. were, considered and overruled and the Government of Assam by notification dated September 30, 1964, incorporated within the Nazira Town Committee area a part of the area of the tea garden belonging to the Company.
The Company then filed a petition in the High Court of Assam challenging the validity of the notification.
The High Court was of the view that the Company had provided all amenities and facilities which a municipality may provide, and since it did not appear that any "improved arrangements" could be provided by the Town Committee the notification issued by the Government was "colourable legislation" and was liable to be struck down insofar as it related to the area of the tea estate belonging to the Company.
We have considered in appeal No. 2052 of 1969 State of Assam vs The Amalgamated Tea Estates Co. Ltd. & Ors.the, correctness of this decision and we have rejected it.
But Mr. Chagla appearing on behalf of the Company contended that the notification dated January 6, 1964 signifying the intention of the State Government to include the area belonging to the Company with in the Nazira Town Committee and the final notification dated September 30, 1964, were unauthorised, because the provisions of sections 4 and 5 of the Assam Municipal Act 15 of 1957 were not extended to the Nazira Town Committee by notification issued under sub section
(3) of section 336 of the Assam Municipal Act.
Counsel invited our attention to section 2 of the Assam Municipal Act, 15 of 1957 as originally enacted.
By section 2 of that Act the Assam Municipal Act, 1923 was repealed; and by cl.
(b) of the proviso to that section it was provided " all municipalities constituted, limits defined.
regulations and divisions made, licenses an notices issued, taxes, tolls, rates and fees imposed or assessed, budgets passed, assessments made, plans approved, permissions or sanctions granted, under the Assam Municipal Act, 1923, shall so far as they are in force at the commencement of this Act, be deemed to have been respectively constituted, defined, issued, imposed, assessed, passed, made, approved or granted under this Act, and shall 934 remain in force for the period, if any, for which they were so constituted, defined, issued, imposed, assessed, passed, made, approved or granted.
" Counsel said that under the proviso, notifications issued under the: Act of 1923 were not saved and it was for the first time by the Amending Act of 1958 that the notifications issued under the Act of 1923 were sought to be saved, notwithstanding the repeal of the Assam Municipal Act of 1923.
But no retrospective operation was given to the Amending Act of 1958.
Counsel submitted that this attempt on the part of the Legislature to save notifications issued under the Act of 1923 was ineffective.
It is true that for the existing cl.
(b) of the proviso to section 2 by the new clause substituted "all municipalities constituted, limits defined, regulations and divisions made, all rules and bye laws, notifications, orders, appointments and assessments made, licences and notices issued, taxes, tolls, rates and fees imposed or assessed, budgets passed, plans approved, permissions or sanctions granted, contracts entered into, suits instituted and proceedings taken under the Assam Municipal Act, 1923" are saved from the repeal.
But the Amending Act of 1958 came into force on June 13, 1958, when it was published in the Assam Gazette.
The attempt to save notifications issued under the Act of 1923 by the Assam Municipal (Amendment) Act 17 of 1958 is therefore ineffective.
It is unnecessary to consider whether, as suggested by counsel for the State of Assam, by virtue of section 3 3 6 (3 ) once a notification under section 4 of the Act of 1923 was issued, for all purposes a Town Committee became a municipality and on that account the notification continued to remain in operation.
In our judgment, under the provisions of the Assam General Clauses Act, 1915, section 26 saves the notification in question.
Section 26 provides, inter alia : "Where any enactment is repealed and re enacted with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule, form, or by law, made or issued under the repealed enactment, shall so far as it is not inconsistent with the provisions re enacted, continue in force and be deemed to have been made or issued under the provisions so reenacted. .
There is no express provision in the Act 15 of 1957 which supersedes the notification issued in 1995 under the Act of 1923, nor is the continuance of the notification inconsistent with any provision in the new Act.
The notification must, therefore, be deemed to have remained in force and the State Government was competent in exercise of the power conferred upon it by section 4 of Act 15 of 1957 935 to include within the area of Town Committee any local area contiguous to the same.
We are here dealing only with the validity of the notification issued by the State Government, and not with the validity of the, demand for licence fee or other taxes levied by the notified Town Committee.
Nothing in this judgment will affect the right of the Company to challenge the validity of the demand for such taxes in appropriate proceedings.
The appeal is allowed and the order passed by the High Court is set aside.
The petition is dismissed with costs throughout.
In all these three appeals there will be one hearing fee.

dataset_name: IN-Abs

summary:
Under ss.4 and 5 of the Assam Municipal Act, 1923, the Provincial Government was authorised to signify its intention to include within a municipality any local area in its vicinity, and, after considering.
any objections to the proposed action to so include the area.
Section 328 provided for the constitution of notified areas.
Sections 4 and 5 were not applicable to a notified area but the Provincial Government could extend to any notified area any section of the Act by virtue of section 330(1)(d).
Under section 330(3), for the purpose of any section so extended, the town committee constituted for such notified area would be deemed to be a Municipal Board.
In 1957, the 1923 Act was repealed and was replaced by the Assam Municipal Act, 1957.
The respondent owned tea gardens in the village of Nazira.
In 1909, a town committee was constituted at Nazira adjacent to the tea garden.
In 1951, by a notification issued by the Government of Assam, s.4(1)(b) and (c), and s.5(1) and (2)(b) of the 1923 Act were extended to the notified area committee including the Nazira Town Committee.
On January 6, 1964, a notification was issued under the 1957Act to revise the boundaries of the notified area at Nazira, and after considering the objections of the respondent on September 30, 1964, by a final notification, a part of its tea estate was incorporated within the Nazira Town Committee.
On the question whether notifications dated January 6, 1964 and September 30, 1964 were unauthorised, because, sections 4 and 5 of 1957 Act, corresponding to sections 4 and 5 of the 1923 Act, were not extended to the notified area on these dates, HELD : There is no express provision in the 1957 Act which supersedes the notification issued in 1951 under the 1923 Act nor is the continuance of the notification inconsistent with any provision in the 1957 Act.
Therefore, under section 26 of the Assam General Clauses Art, 1915, the 1951 notification continues in force and must be deemed to have been issued under the 1957 Act.
Hence, the State Government was competent, in exercise of the power conferred upon it by the 1957 Act, to include within the area of the Town Committee any local area contiguous to it.
[934 H; 935 A]


judgement:
Appeal No. 36 of 1967.
Appeal by special leave from the judgment and order dated August 25, 1966 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 36 D of 1966.
Bishan Narain, R. Mahatingier and Ganpat Rai, for the appellant.
R. H. Dhebar and section P. Nayar, for respondent Nos. 1 and 3.
In 1943 he mortgaged the said property with possession in favour of one K. B. Bunyad Hussain but obtained a lease thereof at the same time from the mortgagee and continued to reside therein as tenant.
In November 1949, the mortgagee left for Pakistan a whereupon the Custodian of Evacuee Property under the (hereinafter referred to as the Administration Act) declared him to be an evacuee and his interest in the said property as the mortgagee as evacuee, property.
The appellant alleged that sometime in November 1949 the 853 Custodian forcibly dispossessed him and either allotted or let out, or allowed the said premises to be occupied by certain persons.
In 1954, the appellant made an application to the Competent Officer under the (hereinafter referred to as the Separation Act) for separating his interest as the mortgagor and tenant in the said property.
In those proceedings a sum of Rs. 1,45,735/ was ultimately held to be due as the mortgage debt under the said mortgage.
The appellant claimed that he was entitled to obtain vacant possession of the said property against payment by him of the mortgage debt.
The claim was rejected on the ground that there was no agreement between the appellant and the Custodian for getting the vacant possession and also on the ground that the Competent Officer, under the Separation Act, had no power to direct the Custodian to hand over to the appellant vacant possession.
From that time onwards the appellant made diverse applications to the Competent Officer and the Appellate Officer under the Separation Act for obtaining vacant possession against payment of the mortgage debt.
In one such application made in 1958 he alleged that a compromise had been arrived at between him and the Custodian under which he would pay the, mortgage, debt and the Custodian thereupon would simultaneously hand over to him vacant possession.
By his order dated March 23, 1959, the Appellate Officer, however, held that no such compromise had been entered into by the Custodian and that the correspondence between the appellant and that authority merely indicated that what was agreed to was that upon the appellant lodging certain verified claims an open portion shown as A, B, C and D in the plan of the property would be handed over to him.
On this finding the Appellate Officer dismissed the appellant 's application as he had neither paid the mortgage money nor put in the verified claims as suggested in the said correspondence and confirmed the order of the Competent Officer under which the property had been ordered to be sold in the absence of any agreement with the ' Custodian or the payment of the mortgage debt.
The appellant then filed a writ petition in the High Court of Punjab (in the Circuit Bench at Delhi) for quashing the said order of sale and for a direction to the Competent Officer to hand over vacant possession against payment by him of the mortgage debt.
A learned Single Judge dismissed the petition holding that the Competent Officer had no jurisdiction to order such vacant possession against the Custodian or against the tenants or allottees inducted on the property by the Custodian.
The Letters Patent appeal against that judgment and order was also dismissed.
The appellant then filed the present appeal after obtaining special leave from this Court.
854 It is not disputed that until the time when the Competent Officer passed his order for sale of the property and the Appellate Officer confirmed it the appellant had not paid the mortgage amount, nor was there any agreement between him and the Custodian where under the latter would hand over vacant possession of the property against payment of the mortgage debt.
However, it is conceded by counsel for respondents 1 and 3 that the appellant has since then paid the entire mortgage debt and the Competent Officer has under section 10 of the Separation Act accepted that amount.
Two questions on these facts, therefore, arise, for deter mination; (1) whether the order for sale passed by the Competent Officer and confirmed by the Appellate Officer was rightly passed although the appellant had repeatedly offered to pay the mortgage debt on condition, however, that he would be given vacant possession at the same time, and (2) assuming that the Competent Officer had no power to direct the Custodian to hand over vacant possession, what was the effect of the repayment of the mortgage debt by the appellant since then and the acceptance thereof by the Competent Officer.
The rights in the property in question which vested in the Custodian were those of the mortgagee on his being declared an evacuee and his rights as such mortgagee in the property in question as evacuee property.
Under the the interest which the Custodian could claim was the interest in the property transferred to the mortgagee for securing repayment of the money advanced by him.
Since the mortgage was usufructuary, the mortgagee, and after his having been declared an evacuee, the Custodian, could claim and retain possession till the mortgage debt was paid and the mortgage was discharged.
If the property is let out in the meantime, the mortgagee and those claiming his interest therein are entitled to receive the rents and profits accruing front the property in lieu of interest or towards part payment of the mortgage debt.
Under section 60 of that Act, the mortgagor has a right at any time after the principal amount has become due to require the mortgagee on payment or tender of the mortgage debt (a) to deliver to him the mortgage deed and all other documents relating to the mortgaged property which are in the mortgagee 's possession or power, (b) to deliver possession where the mortgagee is in possession of the mortgaged property and (c) to retransfer the mortgaged property to him or to such third person as he may direct at his cost.
Under section 76, the mortgagee in possession.
has to manage the property as a person of ordinary prudence would manage it if it were his own.
Under section 83, the mortgagor, provided his right of redemption is not barred, may deposit in the court where he might have instituted a suit for redemption to the account of the mortgagee the mortgage debt then due.
The court thereupon has to issue a notice to the mort 855 gagee and on the mortgagee stating the amount due to him and his willingness to accept the money so deposited in full discharge of the mortgage debt, pay the amount to the mortgagee on his depositing the mortgage deed and all other documents relating to the mortgaged property.
Where the mortgagee is in possession of the property, the court before paying the amount has to ask him to deliver possession thereof to the mortgagor.
When the mortgagor has tendered or deposited in court the.
mortgage debt together with interest thereon and has done all that is to be done by him to enable the mortgagee to take such amount out of court, and a notice, as aforesaid, has been served on the mortgagee under section 83 interest ceases to run.
If the mortgagee thereafter refuse& to accept the amount so deposited or to deliver the mortgage deed and other documents or possession of the property where it is in his possession, the remedy of the mortgagor is to file a suit for redemption.
The position, therefore, is that upon the mortgage being paid off, the mortgagor is entitled to have the property restored to him free from the mortgagee 's security.
The repayment of the debt would be made against delivery of possession and of the mortgage deed and other documents, and these have to be simultaneous transactions.
A tender of the mortgage deed or a deposit thereof in court conditional upon the mortgagee than and there delivering possession or executing reconveyable, if required, and handing over the deeds would be a good tender so that if it were to be refused interest would cease running.
It follows that a mortgagee is not permitted to deal with the property in such a way that upon discharge of the debt the property cannot be restored.
[see Fisher.
& Lightwood 's Law of Mortgage (8th ed.) p. 482].
Is the position of a mortgagor any the different than under the by reason of the evacuee property legislation ? In other words, could not the appellant have tendered to the Competent Officer the mortgage amount due by him on condition that he should be given physical and not merely symbolical possession of the mortgaged property.
Upon the mortgagee being declared an evacuee and his interest as such mortgagee in the premises in question evacuee property, his interest in the mortgaged property vested under section 8 of the Administration Act in the Custodian from the date of the notice issued under section 7 of the Act.
Under section 8 (4) any person in possession of the mortgaged property would be deemed thenceforth to be holding the property on behalf of the Custodian and would be bound on demand by him to surrender possession to him.
The Act having under section 4 an overriding effect on any other law for the time being in force or any instrument having effect by virtue of any such Act, the Custodian, under the powers conferred on him by, section 10, could take all such measures he might consider necessary, 856 for securing, administering, preserving and managing any evacuee property including transferring "in any manner whatsoever" the evacuee property "notwithstanding to the contrary contained in any law or agreement relating thereto".
Under s.12, the Custodian is empowered, notwithstanding anything contained ,in any other law for the time being in force, to cancel any allotment, terminate any lease or amend the terms of such lease or agreement under which any evacuee property is held or occupied by a person whether such allotment, lease or agreement was granted or entered into before or after the commencement of the Act.
Under sub section
3, he is authorised to eject such person and take possession, if such person fails to surrender possession on demand made by him in the manner provided by section 9 i.e., by even using such force as would be necessary for taking possession.
It is conceded by the respondents that under these powers the Custodian had taken over posses sion of the mortgaged property and the property has since then been in possession of persons who were either allotted portions of it or, who were inducted therein as tenants by the Custodian.
It is also conceded that the Custodian has refused, notwithstanding demands made by the appellant, to evict these persons from the property and hand over vacant possession to the appellant even on the appellant tendering the mortgage amount.
This was presumably done by reason of the fact that though section 12 empowers him ' to cancel an allotment or a tenancy made or created by him, r. 14(2) of the Administration of Evacuee Property (Central) Rules, 1950 lays down that in the case of a lease or an allotment granted by the Custodian he may evict a person on a ground justifying eviction of a tenant under a law relating to the Rent Control or for any violation of the conditions of the lease or allotment.
From the provisions dealing with the vesting of the evacuee property, the powers of the Custodian, appeals and revisions from his order and the overriding nature of the provisions of the Act it is clear that the Administration Act is a self contained code.
In 1951, Parliament passed the , LXIV of 1951 (hereinafter referred to as the Separation Act).
The statement of objects and reasons shows that it was passed on account of the difficulty of administering evacuee properties in which there were both evacuee and non evacuee interests and to solve the hardship felt by non evacuees, who by reason of such properties being in possession of the Custodian, were unable to obtain satisfaction of their claims in view of the prohibitive provisions of the Administration Act and in particular its section 17.
The Act, as its long title declares, was passed for the separation of interests of evacuees from those of non evacuee persons in composite properties.
Sections 4 and 5 of the Act provide for the appointment of Competent Officers and their jurisdiction.
Sec. 7 provides for submission of claims by a person claiming interest in 857 a composite property.
(e) of sub section 2 requires that where a claim is made by a mortgagor the total amount due on the mortgage debt and the particulars necessary to determine the same should be set out in such a claim.
Sec. 8 provides for an inquiry to be made by the Competent Officer and provides that the order to be made by him shall contain, amongst other things, the amount due to the evacuee in a case where the claim is made by a mortgagor.
Sub section
2 of section 8, however, provides that where the Custodian has determined that the property in question or any interest therein is evacuee property, such determination is binding on the competent officer.
The proviso to that sub section lays down that nothing contained in sub section 2 shall debar the competent officer from determining the mortgage debt in respect of, such property or any interest therein or from separating the interest of the evacuee from that of the claimant under section provides that notwithstanding anything to the contrary in any law or contract or any decree or order of the civil court or other authority, the competent officer may, subject to any rules that may be made in this behalf, take all such measures as he may consider necessary for the purpose of separating the interest of the evacuee from those of the claimant in any composite property and in particular may "(b) in the case of any claim of a mortgagor or a mortgagee, (i) pay to the Custodian or the claimant the amount payable under the mortgage debt and redeem the mortgaged property; or (ii) sell the mortgaged property for satisfaction of the mortgage debt and distribute the sale proceeds thereof; or (iii) partition the property between the mortgagor and the mortgagee having regard to the share to which the mortgagee would be entitled in lieu of his claim;" Cl.
(c) empowers him to adopt a combination of all or some of these measures.
The proviso to the section provides that in any case where the claimant is a mortgagor and tenders the amount due, the competent officer shall accept the same in full satisfaction of the mortgage debt.
The competent officer, by virtue of the proviso, is thus under an obligation, where the claimant is a mortgagor and tenders the mortgage amount due, to accept such amount in full satisfaction of the mortgage debt and thereupon interest on the mortgage amount would cease to run.
Under cl.
(b), he is also empowered in such a case to redeem the mortgaged property.
The argument was that where the mortgage amount is tendered by the mortgagor and the competent officer accepts it in satis 858 faction of the debt due under the mortgage, the mortgage debt is satisfied, interest thereon ceases to run and the mortgage is discharged.
Consequently, there would be no question of the com , petent officer adopting any of the measures provided in sub cls.
(ii) and (iii) of cl.
(b) of the section, that is to say, there could be no occasion for him either to sell the property for satisfaction of the mortgage debt or to partition the property between the mortgagor and the mortgagee, as, on satisfaction of the mortgage debt the mortgage is discharged and the mortgagee 's interest in the mortgaged property ceases or comes to an end.
The only measure which in that event he can adopt would be that, under cl.
(b) (i), i.e, to pay to the Custodian the mortgage debt and redeem the mortgaged property.
It was said that that being the position under section 10, the appellant was entitled to tender the mort.
gage amount in satisfaction of the debt due under the mortgage on condition that the mortgage should be redeemed and possession of the property given to him.
The Competent Officer in the proceedings before him under section 7 was bound to accept the mortgage amount and redeem the mortgaged property.
The argument would be valid if section 10 had been untrammelled and the powers given therein to the Competent Officer were not made subject to the rules which may be made under the Act.
The Legislature, it seems had a purpose in making the powers contained in section 10 and their exercise by the Competent Officer subject to the rules.
It must have been aware of (i) that the Administration Act is, as aforesaid, a self contained code, (ii) that the Custodian appointed thereunder is not an authority subject to the power or control of the Competent Officer, and (iii) that the Administration Act, by sections 10 and 12 thereof, confers several powers on the Custodian including the power to transfer the property vested in him.
He can therefore, create a lease or grant allotment and thus induct on the property tenants or allottees.
Under section 12 of that Act the Custodian has been empowered to cancel or terminate a lease or allotment.
But no such power is conferred on the Competent Officer either under section 10 or under any other section of the Separation Act, nor have the powers of the Custodian been made subject to the powers of the Competent Officer or his orders.
On the other hand, it would appear from a reading of the provisions of the Separation Act that the object of enacting it was to enable non evacuees to have their interests separated in composite pro perties and to grant power to the competent officer to achieve that object.
But we do not find anywhere in either of the two Acts any provision by which the Custodian is made subject to the, power or control of the Competent Officer or enabling the Competent Officer to pass any order which would curtail or otherwise affect the powers of the Custodian.
It would seem that the two Acts have different objects and schemes and the authorities established under them are independent of each other.
The powers conferred 859 on the Competent Officer had, therefore, to be so provided that they could be exercised in harmony and consistently with the pro ' visions of the Administration Act and the duties and functions of the Custodian thereunder.
It was for that reason that the Legislature laid down in section 10 of the Separation Act that the powers conferred Thereunder on the Competent Officer were to be subject to the rules made under that Act.
Had it not been so, there would have resulted a conflict in the exercise of the respective powers given to the Custodian and the Competent Officer by the two.
Acts, and consequently, are in the smooth working out of the provisions of the two Acts.
Rule II B of the Rules made under the Separation Act pro vides that a Competent Officer "having regard to the provisions of the proviso to section 10 of the Act" shall, for the purpose of separating the evacuee interest from other interests in a composite property, adopt any of the measures in the order of preference set out therein.
(b) of that rule provides that in the case of a claim by a mortgagor or a mortgagee (1) where both the Custodian and claimant agree, the Competent Officer can exercise the powers.
conferred on him under sub cl.
(i) or sub cl.
(iii) of cl.
(b) of section 10 of the Act and (ii) where there is no such agreement, he can sell the mortgaged property for satisfaction of the mortgage debt and distribute the sale proceeds thereof.
The effect of this rule read in conjunction with section 10 of the Act, however harsh it may apparently seem to be, is that though the Competent Officer has to accept the mortgage amount tendered by a mortgagor and thus discharge the mortgage debt and interest thereupon ceases to run on the principal amount and though he can adopt any one of the measures set out in section 10, including redemption of the mortgage, he cannot order such redemption and direct the Custodian to deliver vacant possession of the property in the absence of an agreement between the Custodian and the mortgagor claimant.
It follows that in the absence of such agreement the mortgagor claimant cannot demand from the Competent Officer that the latter should accept the mortgage amount tendered by him and direct simultaneous delivery of possession of the mortgaged property.
The power to redeem the mortgaged property being subject to rule II B (b), the only thing that the Competent Officer can at the most do is to order symbolical possession, but he cannot direct the Custodian to give vacant possession.
The reason is clear, for, such an order would in effect be an order directing the Custodian to cancel the leases or allotments granted by him and eject the tenants or allottees from the property.
Such an order would at once be in conflict with r. 14 of the Administration of Evacuee Property (Central) Rules, 1950.
That rule provides that while, exercising his power under section 12 of that Act, namely, the power to cancel or vary the terms of a lease or allotment, the Custodian, 860 in the case of a lease or allotment granted by him, can evict a person only on any of the grounds justifying eviction of a tenant under any rent control law for the time being in force in the State concerned or for any violation of the conditions of the lease or the allotment.
4 of that rule further lays down that before cancelling or varying the terms of the lease or before evicting any less the Custodian must serve a show cause notice on such lessee and afford him a reasonable opportunity of being heard.
If the Custodian is satisfied on hearing the concerned lessee that he is not liable to eviction under a rent control Act in force in the State where the property is situate or has not contravened any of the provisions of the lease, he cannot cancel the lease nor can he evict the lessee except only as provided by cl.
(5) of that rule on the ground that such eviction is necessary or expedient for the preservation or proper administration or management of such property or for carrying out any other object of the Act.
He, therefore, cannot evict a tenant or an allottee on the ground that it is necessary to do so for the separation of an interest of a non evacuee mortgagor as that would not be one of the purposes of the Administration Act.
The result which emerges from the discussion of the relevant provisions of the two Acts and the rules thereunder made is (i) that though the Competent Officer must accept the mortgage amount when tendered by a mortgagor and the mortgage debt thereupon would be satisfied, he cannot exercise the power to redeem the mortgaged property and order the Custodian to deliver up its vacant possession to the mortgagor in the absence of any ' :agreement between the mortgagor and the Custodian, and (ii) that in exercising his jurisdiction under section 10 the Competent Officer cannot direct the Custodian to cancel or vary the terms of the leases or allotments made or granted by him, firstly because he has no such power under section 10 or any other provision of the Separation Act, and secondly, because such an order would amount to compelling the Custodian to act in a manner contrary to the provisions of the aforesaid r. 14.
The exercise of the power to redeem being subject to the rules, it would not be competent for the Competent Officer, by reason of r. II B (b), to order delivery of possession by the Custodian in the absence of an agreement between him and the mortgagor claimant.
In view of this position, the appellant could not have insisted that he would tender or pay the mortgage debt only against delivery of vacant possession of the property in the absence of any agreement between him and the Custodian.
The only thing which, the Competent Officer could do in the circumstances was to accept the mortgage amount whereupon interest would cease to run.
It is not in dispute that the appellant, insisting as he was 861 all throughout upon being given vacant and not merely symbolical possession, did not actually tender or make payment of the mortgage debt.
The mortgage debt, therefore, remained outstanding.
The mortgage also stood intact, and therefore, the only measure which the Competent Officer could adopt and which in fact he, adopted was to order sale of the property and satisfy the mortgage debt from the sale proceeds thereof.
The order which he passed and which was confirmed by the Appellate Officer was in the circumstances then prevailing validly and competently made.
The appellant 's grievance against it, therefore, could not be sustained.
[of in this connection the position of an auction purchaser as decided in Ek Nawas Khan vs The Competent Officer(1)].
But it is conceded that since the passing of the said order the appellant has, paid up the full mortgage amount and the Competent Officer has, as he was bound to do under section 10, proviso, accepted that amount.
Presumably that amount has been paid by him to the Custodian.
Therefore, the mortgage debt is no longer outstanding.
Though this event has happened after the impugned order was passed,, we must in fairness take notice of the fact that the mortgage debt is no longer outstanding and the mortgaged property is now free from the mortgagee 's security, and therefore, from the interest vested in the Custodian.
It is true that the Com petent Officer, as already stated, can adopt any of the three measures set out in section 10(b) of the Separation Act or adopt a combination of all or some, of them, but as emerging from the discussion, above, he cannot redeem the property and order delivery of vacant possession in the absence of an agreement between the Custodian and the appellant.
That is quite clear.
But the order of sale passed by him and confirmed by the Appellate Officer also cannot secondly, because he can order sale only for satisfaction of the mortgage debt and for distribution of the sale proceeds thereof ' between the mortgagor and the mortgagee.
There being now no question of the satisfaction of the mortgage debt since it now stands satisfied and the property being now freed from the mortgagee 's security, the order for sale ' cannot stand and cannot be allowed to stand.
At the same time the Competent Officer cannot order the Custodian to deliver vacant possession although the appellant has paid the mortgage amount and the Competent Officer has accepted it in satisfaction of the mortgage debt.
In view of sections 10 and 12 of the Administration Act, the powers and duties of the Custodian thereunder and under the rules made under that Act, the provisions of section 10 of the Separation Act and r. II B of the rules made thereunder, the only thing that could be offered and given to the appellant was symbolical possession of the property.
Such a result, no doubt, would be inconvenient, and may even (1) A.T.R. 1960 All.
862 appear to be harsh and unfair as the appellant would be driven to file proceedings for eviction of tenants and allottees now in possession of the property.
(see The All India Film Corporation Ltd. vs Raja Gyan Nath) (1).
In view of the payment of the mortgage amount by the appellant and the acceptance of it by the Competent Officer, the order directing sale has now become untenable and has, therefore, to be set aside.
The mortgage stands discharged and the Competent Officer is bound to direct symbolical possession of the mortgaged property to the appellant.
To this extent the appeal succeeds.
The order for costs of the appeal would ordinarily follow the result, but in view of the fact that the Competent Officer was entitled to pass the order of sale in the circumstances then prevailing it is fair and equitable, though his order is set aside, that the parties should bear their own costs.
V.P.S Appeal allowed in part.
(1) (1970] 2 S C.R. 581.

summary:
The appellant executed a usufructuary mortgage of his house and continued to reside in it as a tenant under a lease obtained from the mortgagee.
In 1949, the mortgagee left for Pakistan.
He was declared an evacuee and his mortgagee interest in the mortgaged property vested in the Custodian under section 8 of the .
Under section 12, the Custodian evicted the appellant and allotted it to others as tenants.
In spite of demands by the appellant and the appellant tendering the mortgage amount, the Custodian refused to hand over vacant possession of the house to the appellant.
The appellant applied to the Competent Officer under the .
The Officer determined the mortgage debt due from the appellant and the appellant claimed vacant possession against tender of payment by him of the amount.
The Officer rejected the claim and ordered the sale of the property under s.10(b)(ii) of the Separation Act, for satisfaction of the mortgage debt.
Thereafter, the appellant paid the entire mortgage debt and the Competent Officer accepted the amount.
On the question whether the appellant was entitled to vacant possession and have the order of sale set aside, HELD:(1) Section 4 of the gives to that Act an overriding effect in relation to any other law for the time being in force, and hence the law under the Transfer of Property set, is not applicable.
Though s.12 of the Act empowers the Custodian to cancel an allotment or a tenancy, created by him, under r.14(2) of the Administration of Evacuee Property (Central) Rules, 1950, the Custodian can evict a person only on a ground justifying eviction of a tenant under a law relating to rent control or for any violation of the conditions of the lease or allotment.
The Custodian could not, therefore, give vacant possession of the property to the appellant on his tender of payment of the mortgage amount.
[855 H; 856 A B, D F] (2) The , was passed on account of the difficulty of administering evacuee properties in which there were both evacuee and non evacuee interests and to resolve the hardship felt by non evacuees, who by reason of such properties being in the possession of the Possession were unable to obtain satisfaction of their claims in view of the prohibitive provisions of that Act.
But there is no provisions by which the Custodian is made subject to the power or control of the Competent Officer or which enables the Competent Officer 852 to pass an order which would curtail or otherwise affect the powers of the Custodian.
Though under s.10(b)(i) of the Separation Act, the Competent Officer can pay to the Custodian the mortgage debt and redeem the mortgaged property, his power is subject to the rules made under that Act.
[856 F G; 858 B C, G H] (3) Reading the relevant provisions namely, section 12 of the and r. 14 of the Rules made thereunder, and section 10 of the Separation Act and r. 11B of the rules made thereunder, together, the position is : (i) that though the Competent ' Officer must accept the mortgage amount when tendered by a mortgagor and the mortgage debt is thereupon satisfied, he cannot exercise the power to redeem the mortgaged property and order the Custodian to deliver up its vacant possession to the mortgagor in the absence of any agreement between the mortgagor and the Custodian; (ii) that the Competent Officer can order sale only for satisfaction of the mortgage debt and for distribution of the sale proceeds between the mortgagor and mortgagee.
Since in the present case, the mortgage amount had been paid by the appellant and accepted by the Competent officer, the order directing sale is unten able and should be set aside; and (iii) that in exercising his jurisdiction under section 10, the Competent Officer cannot direct the Custodian to cancel or vary the terms of the leases or allotments made or granted by him.
Therefore the Competent Officer can direct only symbolical possession of the mortgaged,property to be given to the appellant, however, harsh and unfair it may apparently be.
[860 D G; 861 B, E H; 862 A C] The All India Film Corporation vs Raja Gyan Nath, referred to.