judgement:
Civil Appeal No. 140 of 1951.
Appeal from a Judgment and Decree dated 22nd Septem ber, 1947, of the High Court of Judicature at Bombay (Sen and Bavdekar JJ.) in Appeal No. 41 of 1943 arising out of decree dated 4th September, 1942, of the Court of the First Class Subordinate Judge at Poona in Civil Suit No. 808 of 1941.
Roshan Lal and B.S. Shastri for the appellant.
Hardyal Hardy for the respondent.
February 22.
The Judgment of the Court was deliv ered by BOSE J.
This is a defendant 's appeal in a suit on two mortgages.
The first was executed on the 7th of April, 1931, by the defendant and his father.
The second was dated the 17th of December, 1935, and was executed by the defend ant alone.
The first was for a sum of Rs, 9,500, the second for Rs. 3,500.
The same property was mortgaged each time.
The claim on the two deeds together was for Rs. 20,774 3 0.
These mortgages were in favour of one Narayan Gopal Sathe.
On the 28th of March, 1940, the mortgagee assigned them both to the plaintiff who now sues on them.
The defence was that both mortgages were satisfied.
The main evidence on which the defendant relied to prove satisfaction was an agreement dated the 17th of October, 1937, executed by the mortgagee Narayan Gopal Sathe in favour of the defendant.
The document has been excluded from evidence by the trial Court as well as by the High Court on appeal on the ground that it required registration.
If this document is excluded, then there is a concurrent finding of fact by both the Courts that the rest of the evidence is not good enough to prove satisfaction.
They have disbelieved it and decreed the plaintiff 's claim in full.
The only ques tions before us are (1) whether this document required registration and (2) whether, if it did, it 493 cannot still be used for what the defendant claims is a collateral purpose, namely proving full payment of the mortgage amount.
The agreement came about in this fashion.
The mortga gee, Narayan Sathe, was appointed Receiver of two Cinemas in Poona.
The Court appointing him required him to produce a surety in the sum of Rs. 10,000.
The defendant agreed to undertake this responsibility and as a consideration for that the mortgagee executed the agreement in question.
The portions of the document relevant for the present purpose are as follows.
The mortgages are there described as the "transactions of give and take." "(3) It is extremely necessary to explain beforehand the transaction of give and take outstanding between both of us. (4) Whereas two transactions have been done between you and me.
Therefore you have agreed to stand surety.
And only for that reason I am executing this agreement and giving it to you in writing and thereunder I am settling and formulating some new terms and I am confirming some very terms which were declared before.
(5) Although in the matter of the transaction relating to the aforesaid mortgage deeds the rate of interest men tioned in the documents purporting to be the mortgage deeds is 14 annas per mensem per centum, still the actual interest is to be received only at the rate of 8 annas per mensem per centum; so it is settled between you and me and I have also agreed to the same.
And even at that rate I have also been receiving the interest and I shall also receive hereafter. (6) As regards the transaction of the second mortgage deed. if as agreed at that time between you and me you pay me Rs. 1,800 in the lump then it will be understood that the transaction of give and take subsisting between you and me has been wholly completed and fully paid up.
As you have no sufficiency of funds to make up and pay in full the above sum at once it is settled that you are to pay to me Rs. 80 per 64 494 month and thus you are to make payment in full.
In accord ance with the agreement arrived at between us both subse quent to the document purporting to be the second mortgage deed the said documents and papers and the written receipts in respect of interest given to you by me relating to the payment in full made by you in respect of interest and principal on account of the first transaction dated 7 4 31 have been kept with me.
* * (8) As mentioned above (vide paras 5 and 6) no interest of any nature whatever has remained claimable by me from you in accordance with the agreement arrived at between us both from the date of your suretyship onward and prior to it and in like manner I understand that the whole of the principal has been fully paid.
(10) If you so wish or if necessity may arise then at any time you may ask for it and I shall give you this agree ment on being written out on stamped paper and on being registered.
" In our opinion, this is a document which limits and extinguishes interests in immoveable property in the present within the meaning of section 17(1) (b) of the Indian Regis tration Act.
Clause (4) of the agreement expressly says so.
Referring to the two mortgages it says "I am settling and formulating some new terms.
" This speaks from the present.
It does not say that this was some past agreement, and that fact is underlined in the next sentence which reads "and I am confirming some very terms which were declared before.
" Among the new terms is the following.
The rate of inter est agreed upon in the two mortgage deeds was 14 annas per cent per month.
Clause (5) reduces this to 8 annas.
It is true that according to clause (5) only 8 annas had actually been paid all along but that hardly 495 matters because the question is not what was paid but what was due and what the mortgagee could have enforced under his bond.
It is evident from clause (4) that it was the agree ment embodied in the document which effected the change and therefore it was the document itself which brought the altered terms into being.
The next question is whether this limits an interest in immoveable property.
We are of opinion it does.
We agree with the learned Rangoon Judges in U. Po Thin vs Official Assignee(1) that one part of the "interest" which a mortga gee has in mortgaged property is the right to receive inter est at a certain rate when the document provides for inter est.
If that rate is varied, whether to his advantage or otherwise, then, in our judgment, his "interest" in the property is affected.
If the subsequent agreement substi tutes a higher rate, then to the extent of the difference it "creates" a fresh "interest" which was not there before.
If the rate is lowered, then his original "interest" is limited.
The question of a higher rate was considered by their Lordships of the Privy Council in Tika Ram vs Deputy Commis sioner of Bara Banki(2).
There, the mortgagors gave the mortgagees an unregistered rukka or written promise simulta neously with the registered mortgage stipulating that they would pay an extra 6 per cent per annum over and above the 15 per cent entered in the mortgage.
their Lordships held that these rukkas could not be used to fetter the equity of redemption.
They did not decide whether the personal cove nant in the rukkas could be enforced because that point had not been raised in the plaint and pleadings, nor did they refer to the Registration Act, but we think the words "an unregistered instrument which the statute declares is not to affect the mortgaged property" can only have reference to that Act.
(1) (1938) R.L.R. 293: A.I.R. 1938 R. 285.
(2) (1899) 26 I.A. 97 at 100.
496 It was argued, on the strength of Mahim Chandra Dey vs Ram Dayal Dutta,(1) Ram Ranjan vs Jayanti lal(2) and Collec tor of Etah vs Kishori Lal(3), that it is always open to a mortgagee to release or remit a part of the debt, and when he does so he does not limit or extinguish an interest in immovable property any more than when he passes a receipt acknowledging payment of the whole or part of the money.
The effect of the payment, or of the release, may be to extin guish the mortgage but in themselves they do not limit the interest.
Extending this, the learned counsel for the defendant contended that when a mortgagee agrees to accept a lower rate of interest he does no more than release that part of the debt which would be covered by the difference in rate.
We do not agree.
There is a difference between a re ceipt and a remission or a release.
A receipt is not the payment, nor does the document in such a case serve to extinguish the mortgage or limit the liability.
It is the payment of the money which does that and the receipt does no more than evidence the fact.
Not so a release.
The extin guishment or diminution of liability is in that event ef fected by the agreement itself and not by something external to it.
If the agreement is oral, it is hit by proviso 4 to section 92 of the Evidence Act, for it "rescinds" or "modi fies" the contract of mortgage.
If it is in writing, it is hit by section 17 (1) (b) of the Registration Act, for in that case the writing itself "limits" or "extinguishes" the liability under the mortgage.
It is to be observed that when the mortgagor pays money due on the mortgage, in whole or in part, he is carrying out the terms of the bond and is not making any alteration in it, and even though the fact of payment may limit or extin guish the mortgagee 's interest that is only because the bond is working itself out by the force of its own terms and not by reason of some new agreement which seeks to modify it or limit or extinguish the interest which it creates.
A simple test (1)A.I.R. (3) A.I.R. 1930 All. 721 at 725 F.B. (2) A.I.R. 1926 Cal. 906.
497 is this: see whether the mortgagee can, in the face of the subsequent agreement, enforce the terms of his bond.
If he cannot, then it is plain that the subsequent undertaking has effected a modification, and if that has the effect of limiting or extinguishing the mortgagee 's interest, it is at once hit either by section 17 (1) (b) or section 92 proviso 4.
But when there is a mere payment of money, that is done under the terms of the bond, for the contract of mortgage postulates that the mortgagor should repay the money bor rowed and that when he does so the mortgagee 's interest in the property shall be "limited" to the extent of the repay ment or, when all is repaid, be wholly extinguished; nor, of course, does a payment have to be made by a written or registered instrument, or even evidenced by one.
Clause (xi) to section 17 (2) of the Registration Act is based on this principle.
It draws a distinction between a document which, by the force of its terms.
effects the extinguishment, or purports to do so, and one which merely evidences an exter nal fact which brings about that result.
Now apply the test just given to the present case.
Under the mortgages the mortgagee is entitled to interest at 14 annas per cent.
per month but the mortgagor says he cannot claim that.
Why ? Because, according to him, the subsequent agreement altered the terms of the bond and reduced his liability to only 8 annas.
It hardly matters what the agreement is called, whether a release or a remission, nor is it germane to the question that the mortgagee is enti tled to remit or release the whole or a part of the debt; the fact remains that his agreement to do so effects an alteration in the original contract and by the force of its terms or extinguishes his interest, Assume that the mortga gor repaid the whole of the interest at the altered rate and the whole of the principaL, would those repayments by them selves effect an extinguishment of the mortgage ? Clearly not, because unless the subsequent agreement is called in aid, more would be due under the terms of the bond on ac count of the higher rate of interest.
It is evident then that it is the 498 agreement which limits the mortgagee 's interest ' and serves to extinguish the mortgage and not mere payment at the reduced rate.
Similar observations apply to clause (6) of the agree ment.
It begins by reciting a past agreement in which the mortgagor had promised to pay Rs. 1,800 in a lump sum.
We are left to infer that this was to extinguish the mortgage.
If it was, then it would be hit by either section 92, provi so 4, of the Evidence Act or section 17(1)(b) of the Regis tration Act, but that does not matter because the present document varies even that agreement and substitutes a third agreement in its place, namely that payment of Rs. 1,800 by instalments at the rate of Rs 80 a month will effect "pay ment in full", that is to say, will extinguish the mortgage.
This speaks from the date of the document, for it says, referring to this agreement, that ' it is settled" etc.
Next we come to clause (8).
That refers us back to clauses (5) and (6) and says that "as mentioned there no interest of any nature whatever has remained claimable by me" and speaking of the principal says "and in like manner I understand the whole of the prin cipal has been fully paid".
We have already dealt with clauses (5) and (6).
Clause (8) carries us no further and merely states that because of clauses (5) and (6) neither interest nor principal is now claimable; and of course if neither interest nor principal is claimable that extinguish es the mortgage, and in this case the extinguishment is brought about, not by mere payment in accordance with the terms of the bond, but because of the fresh agreement.
Clause (10) remains for consideration.
It was argued that this brings the matter within section 17(2) (v) of the Registration Act because it gives the defendant the right to obtain another document which will effect the extinguish ment.
We do not agree because clause (v) of sub section (2) of section 17 of the Act postulates that the document shall not of itself create, declare, 499 assign, limit, extinguish any right etc., and that it shall merely create a right to obtain another document etc.
(The stress is on the words "itself" and "merely ". ) We agree with Sir Dinsha Mulla at page 86 of the 5th edition of his Indian Registration Act that "If the document itself creates an interest in immove able property, the fact that it contemplates the execution of another document will not exempt it from registration under this clause.
" As we have seen, this document of itself limits or extinguishes certain interests in the mortgaged property),.
The operative words are reasonably clear.
Consequently, the document is not one which merely confers a right to obtain another document.
It confers the right only in certain contingencies, namely, "if you so wish" or "if necessity may arise.
" Its purport is to effect an immediate alteration in the terms of the two bonds and because of that alteration to effect an immediate extinguishment and limitation.
Clause (10) merely confers an additional right, namely the right to obtain another document "if you so wish" or "if necessity may arise." Therefore, the document in question is not one which merely creates a right to obtain another.
An agreement to sell, or an agreement to transfer at some future date, is to be distinguished because that sort of document does not of itself purport to effect the trans fer.
It merely embodies a present agreement to execute another document in the future which will, when executed, have that effect.
The document in hand is not of that type.
It does not postpone the effect of extinguishment or limita tion of the mortgages to a future date.
It does not say that the agreement it embodies shall take effect in the future.
It purports to limit and extinguish the liabilities on the two mortgages at once by virtue of the document itself and merely adds that "if it is necessary or should you want another document, I will repeat the present 500 agreement in a registered agreement.
" By implication it means that if it is not necessary, or if the mortgagor does not want a registered instrument, the document itself will have effect.
Incidentally, one effect of holding that this document does not limit or extinguish the mortgagor 's li ability would be that there is no agreement to that effect yet in force, This may or may not give the mortgagor a right to obtain specific performance of his right to obtain such an agreement but until he does that there would be no bar to the mortgagee 's claim in this suit.
However, it is not necessary to go as far as that because we are of opinion that this document is not exempt from registration under section 17(2) (v), and we so hold.
The next question is whether the document can be used in evidence under the proviso to section 49 of the Registration Act.
We are clear it cannot.
This is not a suit for specif ic performance nor does any question of part performance under section 53A of the Transfer of Property Act arise.
It remains then to be seen whether the use now sought to be made of the document is to evidence a collateral transaction not required to be evidenced by a registered instrument.
But what is the 'transaction sought to be proved but the very agreement which the document not merely evidences but, by reason of its own force, creates ? That is not a collat eral transaction and even if it were a transaction of that type, it would require a registered instrument for the reasons we have already given.
Section 53A of the Transfer of Property Act was re ferred to but it has no application, for the agreement we are concerned with is not a transfer.
There are no words of conveyance in it; also the mortgagor is not continuing in possession in part performance of the contract.
Both mort gages were simple and the right to possession never resided in the mortgagee.
He might in due course have acquired it by process of law if he obtained a decree and purchased at the sale; on the other hand, a stranger might have purchased and the right to possession would 'in that event have passed elsewhere, But he had no right to possession at the 501 date of the agreement and having none he could not have transferred it.
The mortgagor 's possession was consequently not referable to the agreement.
The appeal fails and is dismissed with costs.
Appeal dismissed.

summary:
A suit to recover money based on two mortgages was resist ed by the defendant on the plea that the mortgages were satisfied as the assignor of the mortgages to the plaintiff had executed an agreement in favour of the defendant which proved satisfaction.
This agreement was not registered and the question for determination was whether it required registration and whether if it did, it could not be used for the collateral purpose of proving full payment of the mort gage amount.
The agreement contained, inter alia, the following terms: "(i) I am settling and formulating new terms and I am confirming some very terms which were de clared before; (iii Although the rate of interest mentioned in the mortgage deeds is 14 annas still the actual rate is to be received at the rate of 8 annas and so it is settled between the original parties; (iii) It was agreed that if you pay me Rs. 1,800 in a lump it will be understood that the transaction has been wholly completed and paid up.
As you have no sufficiency of funds. . . it is settled that you are to pay me Rs. 80 per month; (iv) As mentioned above no interest of any nature whatever has remained claimable by me. . and in like manner I understand whole of the principal has been fully paid; (v) If you so wish or if necessity may arise then at any time you may ask for it I shall give you this agreement written out on stamp paper and on being registered.
" Held, that the agreement was not exempt from registra tion because the document itself limited and extinguished an "interest ' ' in immoveable property in the present within the meaning of section 17 (1)(b) of the Indian Registration Act, and it was not exempt under section 17 (2) (v).
Held, also that the document could not be used under the proviso to section 49 of the Registration Act as the suit was not for specific performance and no question of part performance arose in the case and also no question of using the document for a collateral transaction arose because the document was to be used to prove the very agreement which it created itself.
U. Po Thin vs Official Assignee (A.I.R. 1938 Rang. 285) and Tikaram vs Deputy Commissioner of Bara Banki (26 I.A 97), Mahim Chandra Dey vs Ram Dayal Dutta (A.I,R. 1926 Cal. 170).
492 Ram Ranjan vs Jayantilal (A.I.R. and Collec tor of Etah vs Kishori Lal (A.I.R. 1930 All.
721) referred to.


judgement:
Appeal No. 145 of 1955.
Appeal from the judgment and decree dated the February 10, 1953, of the Bombay High Court in 65 Appeal No. 742 of 1951 from Original Decree, arising out of the judgment and decree dated July 31, 1951,, of the Court of the Senior Civil Judge, Poona, in Special ' Suit No. 89 of 1950.
H. D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for the respondent.
January 16.
The Judgment of the Court was delivered by DAS, C. J.
This is an appeal from the judgment and decree of the High Court of Bombay dated February 10, 1953, setting aside the judgment and decree of the Court of Civil Judge, Senior Division, Poona dated July 31, 1951, in Special Suit No. 89 of 1950 and dismissing the appellant 's suit against the respondent with costs throughout.
This appeal has been filed under a certificate of fitness granted by the High Court of Bombay.
The facts leading up to this appeal may shortly be stated.
The appellant is a public limited company registered under the Indian Companies Act, 1913.
It is a lessee of two cinema Houses known respectively as " West End " and " Capitol " situated within the limits of Poona cantonment area.
It exhibits in the said two Houses cinematograph films, both foreign and Indian.
On March 20, 1947, a notice was issued by the respondent whereby, in exercise of the powers conferred on it by section 60 of the (11 of 1924), the respondent proposed to make, with the previous sanction of the Central Government, certain amendments in the notification of the Government of Bombay in the General Department No. 4160 dated June 17, 1918, and intimated that the draft amendments would be considered by the respondent on or after April 21, 1947, and invited objection in writing within 30 days from the publication of that notice.
One of the items of amendments was as follows: "(ii) 'V Tax on Entertainments ' 9 66 1.
Cinemas, Talkies or Rs. 5 0 0 per dramas Rs. 10 0 0 show 2.
Circus Rs. 20 0 0 per show 3.
Horse Races Rs. 100 0 0 per day of race meeting. 4.
Amusement park Rs. 20 0 0 per day provided as follows: 1.
The said tax shall be levied at the rate of Rs. 10 0 0 per show in the case of the West End and Capitol Talkies and at the rate of Rs. 5 0 0 per show in other cases ".
It appears that the Cinematograph Exhibitors Association of India submitted certain objections to the proposals.
The Cantonment Executive Officer, Poona, by his letter dated July 8, 1947, informed the Secretary of the Cinematograph Exhibitors Association of India that the latter 's letter had been submitted to the Government of India in original along with the respondent 's proposals and that the imposition of the entertainments tax on cinemas had been approved by the Government of India, Defence Department notification No. 1463 dated May 7, 1947.
On June 17,1948, a notification was issued by the Government of Bombay to the effect that in supersession of the notifications of Government noted on the margin and of all other notifications on the same subject, the Governor in Council, with the previous sanction of the Governor General in Council was pleased to impose certain taxes in the Cantonment of Poona with effect from July 15, 1948.
One of the taxes thus imposed was as follows: " V Tax on entertainments.
Cinemas, Talkies or dramas Rs. 10.0 0 :in the case of the West End per show and Capitol In other cases Rs. 5 0 0 per show 2.
Circus Rs. 2 0 0 per show 3.
Horse Races Rs. 100 0 0 per day of race meetings. 4.
Amusement park Rs. 20 0 0 per day.
" 67 The appellant paid the tax under protest and on or about April 19, 1950, filed a suit (being suit No. 89 of 1950) against the respondent in the Court of the Civil Judge, Senior Division, Poona for a declaration that the levy, collection or recovery of the said tax by the respondent was illegal and invalid, for a permanent injunction restraining the respondent from levying, collecting or recovering the said tax, for refund of the sum of Rs. 45,802 0 0 being the total amount of tax collected from the appellant, for costs and interest on judgment.
By its judgment dated July 31, 1951, the trial court decreed the suit in full.
The respondent preferred an appeal before the High Court against the said judgment and decree of the trial court and the High Court by its judgment and decree dated February 10, 1953, allowed the appeal and dismissed the appellant 's suit with costs throughout.
The High Court, however, granted to the appellant a certificate of fitness for appeal to this Court and hence this final appeal questioning the validity of the said tax.
At all times material to this appeal the respondent was governed by the (Act 11 of 1924).
Section 60 of that Act runs as follows: " 60(1) The Board may, with the previous sanction of the local Government, impose in any Cantonment any tax which, under any enactment for the time being in force, may be imposed in any municipality in the province wherein the Cantonment is situated.
(2) Any tax imposed under this section shall take effect from the date of its notification in the official gazette ".
The enactment under which shortly after the date of passing of the , tax could be imposed by the municipal boroughs in the province of Bombay was the Bombay Municipal Boroughs Act, 1925 (Bom.
XVIII of 1925).
Therefore the powers of the respondent to.
levy and collect taxes under the provisions of the were co extensive with the powers of the Borough Municipalities under the Bombay Municipal Boroughs Act, 1925.
Section 73 of the last mentioned Act specified the taxes which 68 might be imposed by a municipality.
The relevant portions thereof, prior to its present adaptation, were as follows: " Subject to any general or special orders which the Provincial Government may make in this behalf and to the provisions of sections 75 and 76, a municipality may impose for the purposes of this Act any of the following taxes, namely: (xiv) any other tax (not being a toll on motor vehicles and trailers.
, save as provided by section 14 of the Bombay Motor Vehicles Tax Act, 1935) which under the Government of India Act, 1935, the provincial Legislature has power to impose in the province.
" The question is whether the provincial legislature of Bombay had power to impose the tax which is under consideration in this appeal.
Under section 100 of the Government of India Act, 1935 read with entry 50 in Sch.
VII thereto the provincial legislature had power to make law with respect to " taxes on luxuries, including taxes on entertainments, amusements, betting and gambling ".
Learned counsel for the appellant contends that the impugned tax is not covered by this entry at all.
This entry, according to him, contemplates a law imposing taxes on persons who receive or enjoy the luxuries or the enter tainments or the amusements and, therefore, no law made with respect to matters covered by this entry can impose a tax on persons who provide the luxuries, entertainments or amusements, for the last mentioned persons themselves receive or enjoy no luxury or entertainment or amusement, but simply carry on their profession, trade or calling.
Learned counsel urges that the impugned law is really one with respect to matters specified in entry 46, namely, taxes on professions, trades, callings and employments and, there fore, cannot exceed Rs. 100 per annum under section 142A of the Government of India Act, 1935 and Rs. 250 per annum under article 276(2) of the Constitution.
We are unable to accept this argument as sound.
69 As pointed out by this ' Court in Navinchandra Mafatlal vs The Commissioner of Income Tax, Bombay City (1), following certain earlier decisions referred to therein, the entries in the legislative list should not be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
It has been accepted as well settled that in construing such an entry conferring legislative powers the widest possible con struction according to their ordinary meaning must be put upon the words used therein.
In view of this well established rule of interpretation, there can be no reason to construe the words " taxes on luxuries or entertainments or amusements " in entry 50 as having a restricted meaning so as to confine the operation of the law to be made thereunder only to taxes on persons receiving the luxuries, entertainments, or amusements.
The entry contemplates luxuries, entertainments, and amusements as objects on which the tax is to be imposed.
If the words are to be so regard ed, as we think they must, there can be no reason to differentiate between the giver and the receiver of the luxuries, entertainments, or amusements and both may, with equal propriety, be made amenable to the tax.
It is true that economists regard an entertainment tax as a tax on expenditure and, indeed, when the tax is imposed on the receiver of the entertainment, it does become a tax on expenditure, but there is no warrant for holding that entry 50 contemplates only a tax on moneys spent on luxuries, entertainments or amusements.
The entry, as we have said, contemplates a law with respect to these matters regarded as objects and a law which imposes tax on the act of entertaining is within the entry whether it falls on the giver or the receiver of that entertainment.
Nor is the impugned tax a tax imposed for the privilege of carrying on any trade or calling.
It is a tax imposed on every show, that is to say, on every instance of the exercise of the particular trade, calling or employment.
If there is no show, there is no tax.
A (1) [1955] 1 S.C.R. 829.
70 lawyer has to pay a tax or fee to take out a license irrespective of whether or not he actually practises.
That tax is a tax for the privilege of having the right to exercise the profession if and when the person taking out the license chooses to do so.
The impugned tax is a tax on the act of entertainment resulting in a show.
In our opinion, therefore, section 73 is a law with respect to matters enumerated in entry 50 and not entry 46 and the Bombay legislature had ample power to enact this law.
The only other point urged before us is that the notification is violative of the equal protection clause of our Constitution in that it has picked out the appellant 's cinema houses for discriminatory treatment by imposing on it a tax at the rate of Rs. 10 per show, while a tax of only Rs. 5 per show is imposed on other cinema houses.
The meaning, scope, and effect of the provisions of article 14 of our Constitution have been fully dealt with, analysed and laid down by this Court in Budhan Choudhury vs The State of Bihar (1) and Shri Rama Krishna Dalmia vs Shri Justice section R. Tendolkar (2).
It appears, however, from the record that no issue was raised and no evidence was adduced by the appellant before the trial court showing that there were other cinema Houses similarly situate as that of the appellant 's cinema Houses.
It may not be unreasonable or improper if a higher tax is imposed on the shows given by a cinema house which contains large seating accommodation and is situate in fashionable or busy localities where the number of visitors is more numerous and in more affluent circumstances than the tax that may be im.
posed on shows given in a smaller cinema house containing less accommodation and situate in some localities where the visitors are less numerous or financially in less affluent circumstances, for the two cannot, in those circumstances, be said to be similarly situate.
There was, however, no material on which the trial court could or we may now come to a decision as to whether there had been any real discrimination in the facts and circumstances of this case.
It (1) (2) ; 71 may be that the appellant may in some future proceeding adduce evidence to establish that there are other cinema houses similarly situate and that the imposition of a higher tax on the appellant is discriminatory as to which we say nothing; but all we need say is that in this suit the appellant has not discharged the onus that was on him and, on the material on record, it is impossible for us to hold in this case that there has been any discrimination in fact.
For reasons stated above this appeal must be dismissed with costs.

dataset_name: IN-Abs

summary:
The appellant, a public limited company, was the lessee of wo cinema houses, " West, End " and " Capitol " situated within the Poona cantonment area.
, By a notification dated June 17, 1948, the Bombay Government with the sanction of the Governor General in Council imposed certain taxes in the cantonment of Poona including an entertainment tax of Rs. 10 per show on the appellant 's cinema houses and Rs. 5 per show on others.
The appellant, who paid the tax under protest, brought the suit, out of which the present appeal arose, for a declaration that the 64 imposition of the said tax by the respondent was illegal, for a permanent injunction restraining it from levying the tax and for the refund of Rs. 45,802, paid as tax by the appellant.
The trial Court decreed the suit but the High Court, on appeal by the respondent, reversed the decision of the trial Court and dismissed the suit. ' Under section 60(1) of the (11 Of 1924), read with section 73 (xiv) Of the Bombay Municipal Boroughs Act, 1925 (Bom.
XVIII of 1925), the respondent had the power to impose any other tax which the Bombay Provincial Legislature could impose on the province.
The question, therefore, was whether the Bombay Legislature had the power to impose the tax in question.
It was contended on behalf of the appellant that although the Provincial Legislature had undoubtedly the power under section 100 of the Government of India Act, 1935, read with Entry 50 in Sch.
VII thereto, to make law with respect to " taxes on luxuries, including taxes on entertainments, amusements, betting and gambling ", the said entry contemplated a law imposing taxes on persons who enjoyed the luxuries, entertainments or amusements and not on persons who provided them.
Such a tax, if levied on the latter would be one on profession, trade or calling as contemplated by Entry 46 of the said Schedule and could not exceed Rs. 100 per annum under section 142A of the Government of India Act, 1935, and Rs. 250 per annum under article 276(2) of the Constitution.
Held, that the contention must be negatived.
It is well settled that in construing an entry conferring legislative powers, the widest possible construction according to their ordinary meaning must be given to the words used.
There could be no reason, therefore, in construing Entry 50, to differentiate between the giver and the receiver of the luxuries, entertainments or amusements and both must be held to be amenable to the tax.
Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City, , referred to.
Although an entertainment tax was regarded as a tax on expenditure, there was no warrant for holding that Entry 50 contemplated only a tax on moneys spent on luxuries, entertainments or amusements.
What it had in view were these matters, and not either the giver or the receiver of them, as the real objects of legislation.
The impugned tax was distinguishable from a tax on a pro fession or calling.
It was a tax imposed on an actual show, and not on a profession or calling whether there was an exercise of it or not.


judgement:
ivil Appeal No. 565 of 1976.
629 From the Judgment and Order dated 5.8.1975 of the Bombay High Court in Special Civil Application No, 429 of 1970.
K. Rajgopal, pardeep Rajgopal, Ms. Rekha Rajgopal M.S. Ganesh and section Sukumaran for the Appellant.
Dr. V. Gauri Shankar, M. Arora and Ms. A. Subhashini for the Respondent, The Judgment of the Court was delivered by KULDIP SINGH, J.
The appellant company carries on the business of exporting manganese ore to England and United States of America.
The Income Tax Officer, Nagpur issued a notice dated March 20, 1970 under Section 148 of the Income Tax Act, 1961 (hereinafter called the 'Act ') stating that he had reasons to believe that the income of the appellant chargeable to tax for the assessment year 1953 54 had es caped assessment within the meaning of Section 147 of the Act.
The company was called upon to show cause why it should not be re assessed to.
income for the said year.
The appel lant company challenged the notice by way of writ petition under Article 226/227 of the Constitution of India before the Nagpur bench of the Bombay High Court.
The High Court by its judgment dated August 5, 1975 dismissed the writ peti tion with costs.
This appeal via special leave petition is against the said judgment of the High Court.
The relevant facts are hereinafter.
The appellant: is a non resident company having its office in London.
It has its office in India at Nagpur.
The appellant is assessed to income tax at Nagpur and it has been the practice of the ,appellant company to produce before the Income Tax Officer the relevant books which are kept by the local office at Nagpur, the balance sheets, the trade account and the prof it/ loss account from their head office in London.
It ap pears that sometime in 1958 the customs authorities came to know that the appellant company had declared very low prices in respect of all the consignments of manganese ore exported by them out of India.
It was also found that most of the export was only to three buyers who in turn did not purchase manganese ore from any other company except the appellant.
After due enquiries investigation the custom authorities found that the appellant was systematically showing lesser value for the manganese ore exported as com pared with the prevailing market price for the same grade of manganese ore.
630 The Collector, Customs, Visakhapatnam, by an order dated March 2, 1959 held that there was under invoicing by the appellant to.
the tune of Rs.78 lacs.
The said order of the collector was, however, set aside in appeal and the matter was remanded to the Collector for re hearing.
In the final order passed by the Collector of Customs dated November 16, 1972, under invoicing was shown to the tune of about Rs.44/45 lacs.
It is thus obvious that the custom authori ties came to the conclusion that the prices mentioned in the relevant contracts between the appellant and the buyers were lesser than the contemporaneous market prices.
The custom authorities thus found as a fact that the appellant company was indulging in under invoicing.
The Income Tax Officer, on coming to know about the pendency of proceedings before the Collector of Customs, issued a notice dated March 20, 1970 under Section 148 of the Act.
In the notice the reasons on the basis of which he entertained the necessary belief as required under Section 147 of the Act, were not given, however, alongwith the return filed on behalf of the revenue before the High Court, the reasons which led to the issue of notice under Section 148 on the grounds mentioned under Section 147(a) of the Act were disclosed.
It is not disputed that the reasons need not be set out in the notice and the same can be produced before the court.
Section 147 of the Act provides for assessment or re assessment in cases where income has escaped assessment.
The Revenue 's right to take action under the section is subject to the conditions laid down therein.
The requisite condi tions provided under Section 147(a) at the relevant time were as under: The income tax officer should have reason to believe that income has "escaped assess ment" by reason of omission or failure on the part of the assessee: (i) to make return of his income under the relevant provisions of the Act; or (ii) to disclose fully and truly all material facts necessary for his assessment for the year.
SeCtion 147(b) of the Act on the other hand required that 'the Income Tax Officer should have, in consequence of information in .his possession reason to believe that income has "escaped assessment".
631 It is not disputed in the year 1970 the Income Tax Officer had no jurisdiction to issue notice under Section 148 on the grounds contained under Section 147(b) of the Act as the period of limitation for the issue of such notice provided under the Act had expired.
There was however no bar at that point of time to issue the said notice on the grounds under Section 147(a) of the Act.
Mr. V. Rajagopal, Senior Advocate, learned counsel for the appellant has contended that the Income Tax Officer could not have reason to believe that there was omission or failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment and that 'the income chargeable to tax had escaped assessment.
According to him, it was not the practice with the appellant to produce the account books from their head office in London before the Income Tax Officer.
The appellant company produced before the Income Tax Officer the balance sheets, profit and loss account and all other necessary records required for the purpose of assessment.
According to the learned counsel the only material before the Income Tax Officer was the original order of the Collector of Customs wherein it was held that the appellant had indulged in under invoicing, resulting in declaring lesser price than the prevailing market price.
The learned counsel contended that the order of the Collector could at the most be an information within the ambit of Section 147(b) of the Act but it could not be the basis or the reason to entertain the belief as requires under Section 147(a) of the Act.
The only question which arises for our consideration is whether the two conditions required to confer jurisdiction on the Income Tax Officer under Section 147(a) of the Act have been satisfied in this case.
The first is that the Income Tax Officer must have reason to believe that the income chargeable to income tax had been under assessed and the second that Such under assessment has occurred by reason of omission or failure on the part of the assessee to dis close fully and truly all material facts necessary for its assessment for the year 1953 54.
So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Custom Authorities that the appellant under invoiced the goods he exported.
It is no doubt correct that the said finding may not be binding upon the Income Tax Authorities but it can be a valid reason to believe that the chargeable income has been under assessed.
The final outcome of the proceedings is not relevant.
What is relevant is the existence of reasons to make the Income Tax Officer believe that there 632 has been under assessment of the assessee 's income for a particular year.
We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied.
As regards the second condition the appellant did not produce the books of accounts kept by them at their head office in London nor the original contracts of sale which were entered into at London with the buyers.
The appellant did not produce before the income Tax OffiCer any of the accounts which related to the foreign buyers.
No reasons Were given for the supply of manganese ore at a lower than the market rate.
It is for the assessee to disclose all the primary facts before the Income Tax Officer to enable him to account the true income of the assessee.
The proven charge of under invoicing per se satisfy the second condition.
The appellant 's assessable income has to be determined On the basis of the price received by it for the goods exported.
If the true price has not been disclosed and there was underin voicing the logical conclusion prima facie is that there has been failure on 'the part of the appellant to disclose fully.and truly all material facts before the Income Tax Officer.
We are therefore, satisfied that both the condi tions required to attract the provisions of Section 147(a)have been complied with in this case.
Mr. V. Rajagopal further argued that in fact the notice was issued under Section 147(b)of the ACt and not under Section 147(a) of the Act.
We are unable to accept this contention.
Although the notice only mentioned Section 147 of the Act without indicating whether it was under Section 147(a) or 147(b), but the reasons recorded by the Income Tax Officer on February 26, 1970 which run into more than 20 pages specifically state that the proposed action was under Section 147(a) of the Act.
Even otherwise we are satisfied that the material on the record and the reasons recorded by the Income Tax Officer justify the issue of the notice under Section 147(a) of the Act.
We therefore, dismiss the appeal with costs which we quantify as Rs. 15,000.
N.P.V. Appeal dis missed.

summary:
The appellant, a non resident company, was carrying on the business of exporting manganese ore, and was assessed to income tax for the assessment year 1953 54.
Subsequently, on coming to know that proceedings for under invoicing were pending against the appellant before the Customs Authori ties, the respondent, the Income Tax Officer issued a notice under Section 148 of the Income Tax Act, 1961 to the appel lant stating that he 'had reasons to believe that the income of the appellant chargeable to, tax for the assessment year 1953 54 had escaped assessment within the meaning of Section 147 of the Act and called upon the appellant to show cause as to why it should not be re assesseed to income.
The appellant 's writ petition challenging the notice was dis missed by the High Court.
In the appeal before this Court on behalf of the appel lantcompany, it was contended that the only material before the Income Tax Officer was the original order of the Collec tor of Customs wherein it was held that the appellant had indulged in under invoicing, resulting in declaring lesser price than the prevailing market price, which could at the most he an information within the ambit of Section 147 of the Act, but could not be the basis or the reason to enter tain the belief, as required under Section 147(a) of the Act and that the notice had been issued under Section 147(b) and not under Section 147(a).
Dismissing the appeal, this Court, HELD: 1.1 Two conditions are required to confer juris diction on the Income Tax Officer under Section 147(a) of the Income Tax Act, 1961.
The first is that the Income Tax Officer must have reason to. 628 believe that the income chargeable to income tax had been underassesseed and the second that such under assessment has occurred by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the year 1953 54.
[631F] 1.2 In the instant case, the Income Tax Officer in his recorded reasons, has relied upon the facts as found by the Customs Authorities that the appellant under invoiced the goods he exported.
Though the said finding may not be bind ing upon the Income Tax Authorities, it can be a valid reason to believe that the chargeable income has been under assesseed.
The final outcome of the proceedings is not relevant.
There should be existence of reasons to make the Income Tax Officer believe that there has been under assess ment of the assessee 's income for a particular year.
Thus, the first condition was satisfied.
Secondly, the appellant company did not produce the books of accounts kept by it at its head office located outside the country, nor the origi nal contracts of sale which were entered into with the buyers at that place, or .any of the accounts which related to the foreign banks.
No reasons were given for the supply of manganese ore at lower than the market rate.
It is for the assessee to disclose all the primary facts before the Income Tax Officer to enable him to account the true income of the asessee.
Thus, the proven charge of under invoicing per se satisfies the second condition.
[631G H, 632A C] 1.3 The appellant 's assessable income has to be deter mined on the basis of the price received by it for the goods exported.
If the true price had not been disclosed and there was under invoicing, the logical conclusion prima facie is that there has been failure on the part of the appellant to disclose fully and truly all material facts before the Income Tax Officer.
In the circumstances, both the condi tions required to attract the provisions of Section 147(a) have been complied with.
[632D] 2.
Although the notice only mentioned Section 146 of the Act without indicating whether it was under SUb Section(a) or Sub.
Section (b) the reasons recorded by the Income Tax Officer specifically state that the proposed action was under Section 147(a)i of the Act.
Even otherwise, the material on record and the reasons recorded by IncomeTax Officer justify the issue of the notice under Section 147(a) of the Act.
[632F]


judgement:
ivil Appeal Nos.
1852 & 4772 of 1989.
From the Judgment and Order dated 25.5.1988 & 11.11.1988 of the Punjab and Haryana High Court in R.S.A. Nos.
2404 of 1987 and 2246 of 1988.
666 A.S. Sohal and G.K. Bansal for the Appellants.
Atul Nanda, ,Francis Victor, S.K. Mehta (N.P.), Subhash G. Jindal and N.A. Siddiqui for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY , J.
These appeals against the decision of the High Court of Punjab & Haryana raise a short issue, concerning limitation governing the suit for declara tion by a dismissed employee that he Continues to be in service since his dismissal was void and inoperative.
The High Court has observed that if the dismissal of the employ ee is illegal, void or inoperative being in contravention of the mandatory provisions of any rules or conditions of service, there is no limitation to bring a suit for declara tion that the employee continues to be in service.
The facts giving rise to these appeals, as found by the Courts below, may be summarised as follows: CA No. 1852/89 The respondent in this appeal was ap pointed as an ad hoc sub inspector in the District Food and Supply Department of Punjab State.
He absented himself from duty with effect from 29 September 1975.
On 27 January 1977, his services were .terminated.
On 18 April 1984, he insti tuted the suit for declaration that the termination order was against the principles of natural justice, terms and conditions of employment, void and inoperative and he con tinues to be in service.
The State resisted the suit con tending inter alia, that the plaintiff 's services were terminated in accordance with the terms and conditions of his ad hoc appointment and the suit was barred by time.
The trial court accepted the plea of limitation and dismissed the suit, but on appeal the Additional District Judge, Jullundhar decreed the suit.
He observed that the termina tion order though simpliciter in .nature ' was passed as a measure of punishment.
The plaintiff 's services were termi nated for unauthorised absence without an enquiry and he should have been given an opportunity to explain his conduct by holding proper enquiry.
On the plea of limitation, learned Additional District Judge held that no limitation is prescribed for challenging an illegal order.
Since the.
order of termination was bad, the suit was not barred by time.
In the second appeal preferred by the State the High Court agreed with the View following its earlier decisions.
CA No. 4772/89 The respondent in this appeal was a Railway 667 Police Constable.
He was appointed on 14 November 1977.
On 15 March 1979, he was discharged from service for some misconduct.
On 15 June 1979, his appeal was rejected by AIG, Railways, Patiala, Punjab.
On 30 November 1979, his revision petition was dismissed by the Inspector General of Police, Punjab.
On 12 February 1985 he brought a suit seeking declaration that the order discharging him from service and confirmed in the appeal and revision, was illegal, ultra vires, unconstitutional and against the principles of natu ral justice and he continues to be in service as constable.
The trial court dismissed the suit.
The appeal preferred by the plaintiff was accepted by the Additional District Judge who decreed the suit as prayed for.
He has inter alia stated that the plaintiff was discharged from service in contraven tion of the mandatory provisions of the rules and as such it has no legal effect.
There is no period of limitation for.
inStituting the suit for declaration that such a dismissal order is not binding upon the plaintiff.
While affirming that principle, the High Court dismissed the second appeal in limine.
These are not the only cases in which the Punjab and Haryana High Court has taken the view that there is no limitation for instituting the suit for declaration by a dismissed or discharged employee on the ground that the dismissal or discharge was void or inoperative.
The High Court has repeatedly held that if the dismissal, discharge or termination of services of an employee is illegal, uncon stitutional or against the principles of natural justice, the employee can approach the Court at any time seeking declaration that he remains in service.
The suit for such reliefs is not governed by any of the provisions of the Limitation Act [See: (i) State of.
Punjab vs Ajit Singh, and (ii) State of Punjab vs Ram Singh, First of all, to say that the suit is not governed by the law of Limitation runs afoul of our Limitation Act.
The statute of limitation was intended to provide a time limit for all suits conceivable.
Section 3 of the Limitation Act provides that a suit, appeal or application instituted after the prescribed "period of limitation" must subject to the provisions of Sections 4 to 24 be dismissed although limita tion has not been set up as a defence, Section 2(J) defines the expression "period of limitation" to mean the period of limitation prescribed in the Schedule for suit, appeal or application.
Section 2(J) also defines, "prescribed period" to mean the period of limitation computed in accordance with the provisions of the Act.
The Court 's function on the presentation of plaint is simply to examine whether, on the assumed facts the plaintiff is within time.
The Court has to find out when the 668 "right to sue" accrued to the plaintiff.
If a suit is not covered by any of the specific articles prescribing a period of limitation, it must fail within the residuary article.
The purpose of the residuary article is to provide for cases which could not be covered by any other provision in the Limitation Act.
The residuary article is applicable to every variety of suits not otherwise provided for.
Article 113 (corresponding to Article 120 of the Act 1908) is a residu ary article for cases not covered by any other provisions in the Act.
It prescribes a period of three years when the right to sue accrues.
Under Article 120 it was six years which has been reduced to three years under Article 113.
According to the third column in Article 113, time commences to run when the right to sue accrues.
The words "right to sue" ordinarily mean the right to seek relief by means of legal proceedings.
Generally, the right to sue accrues only when the 'cause of action arises, that is, the right to prosecute to obtain relief by legal means.
The suit must be instituted when the right asserted in the suit is infringed or when there is a clear and unequivocal threat to infringe that right by the defendant against whom the suit is insti tuted (See: (i) Mt. Bole vs Mt. Koklam and Ors., AIR 1930 PC 270 and (ii) Gannon Dunkerley and Co. vs The Union of India, ; In the instant cases, the respondents were dismissed from service.
May be illegally.
The order of dismissal has clearly infringed their right to continue in the service and indeed they were precluded from attending the office from the date of their dismissal.
They have not been paid their salary from that date.
They came forward to 'the Court with a grievance that their dismissal from service was no dis missal in law. ' According to them the order of dismissal was illegal, inoperative and not binding on them.
They wanted the Court to declare that their dismissal was void and inoperative and not binding on them and they continue to be in.
service.
For the purpose of these cases, we may assume that the order of dismissal was void inoperative and ultra vires, and not voidable.
If an Act is void or ultra vires it is enough for the Court to declare it so and it collapses automatically.
It need not be set aside.
The aggrieved party can simply seek a declaration that it is void and not bind ing upon him.
A declaration merely declares the existing state of affairs and does not 'quash ' so as to produce a new state of affairs.
But nonetheless the impugned dismissal order has at least a de facto operation unless and until it is declared to be void or nullity by a competent body or Court.
In Smith vs East.
Elloe Rural District Council, ; at 769 Lord Redcliffe observed: 669 " An order even if not made in good faith, is still an actcapable of legal consequences.
It bears no brand of invalidity upon its fore head.
Unless the necessary proceedings are taken at law to establish the cause of inva lidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.
" Apropos to this principle, Prof. Wade states: "the principle must be equally true even where the 'brand ' of invalidity ' is plainly visible; for their also the order can effectively be resisted in law only by obtaining the deci sion of the Court (See: Administrative Law 6th Ed.
p. 352).
Prof. Wade sums up these principles: "The truth of the matter is that the court will invalidate an order only if 'the right remedy is sought by the right person in the right proceedings and circumstances.
The order may be hypothetically a nullity, but the Court may refuse to quash it because of the plain tiff 's lack of standing, because he does not deserve a discretionary remedy, because he has waived his rights, or for some other legal reason.
In any such case the 'void ' order remains effective and is, in reality, valid.
It follows that an order may be void for one purpose and valid for another, and that it may be void against one person but valid against another." (Ibid p. 352) It will be clear from these principles, the party ag grieved by the invalidity of the order has to approach the Court for relief of declaration that the order against him is inoperative and not binding upon him.
He must approach the Court within the prescribed period of limitation.
If the statutory time limit expires the Court cannot give the declaration sought for.
Counsel for the respondents however, has placed strong reliance on the decision of this Court in State of M. P.v.
Syed Quamarali, The High Court has also relied upon that decision to hold that the suit is not governed by.
the limitation.
We may examine the case in detail.
The respondent in that case was a sub inspector in the Central Province Police Force.
He was dismissed from service on 22 December 1945.
His appeal against that order was dismissed by the Provincial Government, Central Prov inces and Berar on 9 April 1947.
He brought the suit on 8 December 1952 on allegation that the order of dismissal was contrary to the para 24 1 of the Central Provinces and 670 Berar Police Regulations and as such contrary to law and void, and prayed for recovery of Rs.4724/5 on account of his pay and dearness allowance as sub inspector of police for the three years immediately preceding the date of the insti tution of the suit.
The suit was decreed and.
in the appeal before the Supreme Court, it was urged that even if the order of dismissal was contrary to the provisions of.law, the dismissal remained valid until and unless it is set aside and no relief in respect of salary could be granted when the time for obtaining an order setting aside the order of dismissal had elapsed.
It was observed: "We therefore hold that the order of dismissal having been made in breach of a mandatory provision of the rules subject to which only the power of punishment under section 7 could be exercised, is totally invalid.
The order of dismissalhad therefore, no legal existence and it was not necessary for the respondent to have .the order set aside by a Court.
The defence of limitation which was based .only on the contention that the order.had to be set aside by a court before it became invalid must therefore be rejected.
" These observations are of little assistance to the plaintiffs in the present case.
This Court only emphasized that since the order of dismissal was invalid being contrary to para 241 of the Berar Police Regulations, it need not be set aside.
But it may be noted that Syed Qamarali brought the suit within the period of limitation.
He was dismissed on 22 December 1945.
His appeal against the order of dis missal was rejected by the Provincial Government on 9 April 1947.
He brought the suit which has given rise to the appeal before the Supreme Court on 8 December 1952.
The right to sue accrued to Syed Qamarali when the Provincial Government rejected his appeal affirming the original order of dismissal and the suit was .brought within six years from that date as prescribed under Article 120 of the Limitation Act, 1908.
The Allahabad High Court in Jagdish Prasad Mathur and Ors.
vs United Provinces Government, AIR 1956 All 114 has taken the view that a suit for declaration by a dismissed employee on the ground that his dismissal is void, is gov erned by Article 120 of the Limitation Act.
A similar view has been taken by Oudh Chief Court in Abdul Vakil vs Secre tary of State and Anr., AIR 1943 Oudh 368.
That in our opinion is the correct view to be taken.
A suit for declara tion that an order of dismissal or termination from service passed against the plaintiff is wrongful, illegal or ultra vires is governed by Article 113 of the Limitation Act The decision to the contrary taken by the Punjab & Haryana 671 High Court in.
these and other cases ((i)State of Punjab vs Ajit Singh,.
and (ii) State of Punjab vs Ram Singh, is not correct and stands overruled.
In the result, we allow the appeals, set aside the judgment and decree of the High Court and dismiss the suit in each case.
In the circumstances, however, we make no order as to costs.
V.P.R. Appeals allowed.

summary:
The respondent plaintiff in C.A. No. 18S2/89 was appointed as an ad hoc Sub inspector in the District Food and Supply Department.
He absented himself from duty from 29 September 197S. On 27 January 1977, his services were terminated.
On 18 April 1984, he instituted 'the mir for declaration that the termination order was against the principles of natural Justice, terms and conditions of employment, void and inoperative and be continued to be in service.
The State the appellant defendant contended that the plaintiff 'sservices were terminated in accordance with the terms and conditions of his ad hoc appointment and the suit was barred by time.
The trial Court dismissed the Suit on the ground of limitation, but on appeal the Additional District Judge decreed the suit, holding that the termination order though simplicitor in nature was passed as a measure of punishment without an 'enquiry and he should have been given an oppor tunity to explain his conduct by holding proper enquiry and that, since the order of termination was bad, the suit was not barred by time.
The second appeal preferred by the State was dismissed by the High Court holding that as the dismissal of the employee was illegal, 664 void or inoperative being in contravention of the mandatory provisions of any rules or.
conditions of service, there was.no limitation to bring a suit for declaration of contin uance in service.
The respondent plaintiff in C.A. No. 4772/89 was ap pointed on.
14 November 1977.
On 15 March 1979, he was discharged from service for some misconduct and against which appeal was made, which was rejected on 15.6.1979.
When his revision petition was dismissed on 30.11.1979 he brought a suit on 12.2.1985 seeking declaration that the order discharging him from service was illegal, ultra vires, unconstitutional against the principles of natural justice and continuance in service.
The trial court dismissed the suit.
The appeal preferred by the plaintiff was allowed by the Additional District Judge that the plaintiff was discharged from service in contravention of the mandatory provisions of the rules and as such it had no legal effect.
There was no period of limitation .for instituting the suit for declaration that such a dismissal order was not binding upon the plaintiff.
The High Court dismissed the second appeal in limine.
On the question, whether limitation governs the suit for declaration by a dismissed employee, if the dismissal was illegal, void or inoperative being in contravention of the mandatory provisions of any rules or conditions of service, this Court, allowing the appeals of the State the defendant, HELD: 1.
The Court 's function on the presentation of plaint is simply to examine whether, on the assumed facts, the plaintiff is within time.
The Court has to find out when the "right to sue" accrued to the plaintiff.
If a suit is not covered by any of the specific articles prescribing a period of limitation, it must fall within the residuary article.
[667H 668.
A suit for declaration that an order of dismissal or termination from service passed against the plaintiff is wrongful, illegal or ultra vires is governed by Article 113 of the Limitation Act.
[6TOG.H] 3.
The party aggrieved by the invalidity of the order has to approach the Court for relief of declaration that the order against him is inoperative and not binding upon him.
He must approach the Court within the prescribed.period of limitation.
If the statutory time limit expires the Court cannot give the declaration sought for.
[669E F] 665 4.
If an act is void or ultra vires it is enough for the Court to declare it so and it collapses automatically.
It need not be set aside.
The aggrieved party can simply seek a declaration that it is void and not binding upon him.
A declaration merely declares the existing state of affairs, and does not 'quash ' so as to produce a new state of af fairs.
[668F G] But none theless the impugned dismissal order has at least a de facto operation unless and until it is declared to be void or nullity by a competent body or Court.
[668H] Smith vs East Elloe Rural Disrict Council, ; at 769, referred to.
Prof. Wade: Administrative Law, 6th Ed.
P. 352, referred to.
State of M.P.v.
Syed Quamarali, , distin guished.
Jagdish Prasad Mathur and Ors.
United Provinces Government, AIR 1956 All 114 and Abdul Vakil vs Secretary of State and Anr , AIR 1943 Oudh 368, Approved.
State of Punjab vs Ajit Singh, and State of Punjab vs Ram Singh, , over ruled.
The words "right to sue" ordinarily mean the right to seek relief by means of legal proceedings.
Generally, the right to sue accrues only when the cause of action arises, that is, the right to prosecute to obtain relief by legal means.
The suit must be instituted when the right asserted in the suit is infringed or when there is a clear and une quivocal threat to infringe that right by the defendant against whom the suit is instituted.
[668C D] Mt. Bole vs Mt. Koklam and Ors., AIR 1930 PC 270 and Gannon Dunkerley and Co. vs The Union of India, ; followed.


judgement:
vil Appeal Nos.
93794 1 of 1980.
From the JUdgment and Order dated 22.2.1980 of the Madras High Court in C.R.P. Nos.
934/78, 602/77, 110/78 and 111/78 and dated 29.2.1980 in C.R.P. No. 601 of 1977.
A.V. Rangam for the Appellant.
section Srinivasan for the RespOndents.
The following Order of the Court was delivered: These are five Civil Appeals by Special Leave against identical orders of a learned Single Judge of the Madras High Court.
In relation to Civil Appeal No. 937 of 1980 the Regional Transport Authority, out of two permits, granted one permit on the route Salem to Poolambadi to the appellant State Transport Undertaking and the other to the first respondent, Safe Service Ltd. In Civil Appeal No. 938 of 1980 there was only one permit for the route Salem to Pallipatti which was granted to the State Transport Undertaking.
1n other words, it was denied to the Second respondent, R.P. David.
In Civil Appeal No. 939 of 1980, on the route Salem to Poolambadi, out of two permits, one permit was granted to the State Transport Undertaking and the other to another private operator, Suganeswara Motor Service denying the permit to R.P. David respondent herein.
In Civil Appeal No. 940 of 1980, on the route Salem to Erode, the objection of the State Transport Undertaking on the renewal sought by Parsu raman Pillai respondent was sustained and the permit was granted to the State Transport Undertaking, leaving the private operator aggrieved.
In Civil Appeal No. 94 1 of 1980, on the route Salem to Tiruchangode, the renewal appli cation of K. Ramaswamy respondent operator was declined on objection by the State Transport Undertaking, who in turn, on its application, was granted the permit leaving the private operator K. Ramaswamy respondent aggrieved.
All the aggrieved parties preferred appeals before the State Trans port Appellate Tribunal.
The Tribunal identically in all these Cases took the view that since a draft scheme under Section 68C of the had been pub lished by the ' State Government and was under 711 consideration at the time when the matter was pending in appeal, sub section 1 D of Section 68 F of the Act stood in the way for any relief 'being granted to the private opera tors and thus dismissed the appeals.
That provision forbids permits being granted or renewed during the period interven ing between the date of publication of any draft scheme under Section 68 C of the Act, and the date of publication of the approved or modified scheme, in favour of any person, or for any class of road transport service, in relation to an area, or route, or portion thereof, covered by such scheme.
However, the proviso thereto permits that where the period of operation of a permit in relation to any area, route or portion thereof specified in the scheme published under Section 68 C expires after such publication, such permit may be renewed for a limited period, but the permit so renewed shall cease to be effective on the publication of the scheme under sub section (3) of Section 68 D of the Act.
As is evident, the Appellate Authority applied sub section(1 D) of Section 68F to all the five cases and not the proviso.
The High Court on revision preferred by the private operators upset the orders of the Appellate Authori ty directing the Regional Transport Authority to re consider the matter on merit.
While doing so it relied on a judgment of the Madras High Court in K.A. Natarajan vs
M. Naina Mo hammed & Anr., AIR 1978 Madras 280 to the effect that appeal before the Appellate Authority was maintainable even though a draft scheme within the terms of Section 68C of the Act had appeared on the scene.
The State Transport Undertaking being aggrieved is before us by Special Leave.
We have heard learned counsel on both sides.
So far as Civil Appeal Nos. 937 939/80 are concerned, these are cases of non grant of permits to the aggrieved private operators.
To their cases sub section (D) of Section 68F of the Act was clearly attracted.
No permit could be granted on their asking in the presence of the draft scheme.
And when none could be granted the exercise of consideration of the claim of the aggrieved.
private operators on merit, was itself a futility.
When the law forbade the grant of a permit in the aforesaid duration, merits of grant stood nowhere.
In this view of the matter, we are inclined to take the view that the High Court was in error in accepting the related revi sion petitions of the private operators and remitting their cases to the Appellate Authority for reconsideration on merits.
And as a consequence it was further in error in ordering that till such orders were passed by the Appellate Authority, both the State Transport Under 712 taking and private operators could be allowed to run, in view of the facts which glare out on the record.
So far as Civil Appeal Nos.
940 941 of 1980 are con cerned, the respective private operators were functioning and had sought renewal of their existing permits on the routes in question and, on denial of the same, and corre sponding grant thereof to the State Transport Undertaking, grievance arose to those private operators to take the matter in appeal.
Theirs were cases which could perhaps fall within the proviso to sub section (1 D) to Section 68F of the Act.
Their permits were capable of being renewed for a limited period provided they had expired after the publica tion of the draft scheme under Section 68C of the Act.
The controverted plea of the State Undertaking however is cate goric that the renewal application was rejected on 30th August, 1974 in one case and on 19th October, 1974 in the other, and on such rejection both the permits were granted to the State Transport Undertaking, and when the matter was in appeal before the Appellate Tribunal, the draft scheme was, much later, published on 4.6.1976.
Mr. section Srinivasan, learned counsel appearing for the private operators in Civil Appeal NOs.
940 941 of 1980 contends that when an appeal was taken to the Appellate Authority, the provisions of subsection (1 A) of Section 134 of the Act were invoked and orders were obtained, notwith standing the expiration of the term of the permit, so as to continue the permit to be valid until the appeals before the Appellate Authority were disposed of.
On that basis it is contended that the proviso to sub section (1 D) of Section 68F of the Act comes to his rescue, on the strength of orders in terms of sub section (1 A) of Section 134 of the Act, as valid permits were continuing and were capable of being renewed for a limited period, so as to cease being effective on the publication of the final scheme under sub section (3) of Section 68D of.the Act.
It may not require examining the contention because it is fractionally factual.
The necessary factual data has not been placed before us in the form of a counter or the suggestive orders as such.
We are thus left in the dark.
Still, lest we cause any injus tice to Mr. section Srinivasan 's clients, we are goaded to take the view that even though these two appeals shall also meet the same fate as that of Civil Appeal Nos.
937 939 of 1980 they shall remain subjected to an alternate that in the event of orders under sub section (1 A) of Section 134 being existent, the Appellate Authority shall examine the question and pass such orders in relation to the appeals of these private operators in accordance with law; but in case there were no such 713 orders earlier, the view of the Appellate Authority dismiss ing the appeals shall stand affirm,ed.
In view of what has been said above, we allow Civil Appeal Nos.
937 939 of 1980 unqualifedly and Civil Appeal Nos.
940 941 of 1980 qualifiedly in the terms above stated.
Parties shall bear their own costs in all these appeals.
V.P.R. Appeals al lowed.

summary:
In Civil Appeal No. 937 of 1980 the Regional Transport Authority, out of two permits, Wanted one permit an the route Salem to Poolambadi to the appellant State Transport Undertaking and tie other to the first respondent.
In Civil Appeal No. 938 of 1980 them was only one permit for the route Salem to Pallipatti, which was Wanted to the State Transport Undertaking, denying the second respondent.
In Civil Appeal No. 939 of 1980, on the route Salem to Poolambadi, ant of two permits, one permit was granted to the State Transport Undertaking and the other to another private operator, denying the permit to the respondent therein.
In Civil Appeal No. 940 of 1980, on the route Salem to Erode, the objection of the State Transport Undertaking on the renewal sought by the respondent was sustained and the permit was granted to the State Transport Undertaking.
In Civil Appeal No. 941 of 1980, an the route Salem to Tiruchangode, the renewal application of the respondent was declined on objection by the State Transport Undertaking, who in turn, an its cation, was granted the permit.
All the aggrieved parties preferred appeals before the State Transport Appellate Tribunal, which dismissed the appeals, holding that since a draft scheme under Section 68C of the had been published by the State Government and was under consideration at the time when the matter was pending in appeal, subsection (1 D) of Section 68 F of the Act stood in the way for any relief being granted to the private operators.
709 The High.
Court allowing the revision preferred by the private operators, upset the orders of the Appellate Author ity, directing the Regional Transport Authority to re con sider the matters on merit against which the State Transport Undertaking approached this Court by Special Leave.
The appellants the private operators in C.A. Nos.
940 941 of 1980 contendeed that Section 68(F)(1 D), proviso of the was applicable to their cases on the strength of orders in terms of Section 134(1 A), as valid permits were continuing and were capable of being renewed for a limited period, so as to cease being effective on the publication of the final scheme under .section 68D(3).
Allowing C.A. Nos.
937 939 of 1980 unqualifiedly and C.A. Nos.
940 941 of 1980 qualifiedly, this Court, HELD 1.
To the cases of non grant of permits to the ag grieved private operates, sub section (1 D) of Section 68F of the Act was clearly attracted .No permit could be granted on their asking in the presence of the draft scheme.
And when none could be granted the exercise of consideration of the claim of the private operators on merit, was itself a futlifty.
When the law forbade the grant of a permit, merits of grant stood nowhere.
[711F G] 2.
The private operators in C.A. Nos. 940 941 of 1980 were functioning and had sought renewal of their existing permits on the routes in question and, on denial of the same, and corresponding grant thereof to the State Transport Undertaking, grievance arose to those private operators to take the matter in appeal.
Their cases fail within the proviso to sub section (1 D) to Section 68F of the Act.
Their permits were capaable of being renewed for a limited period provided they had exlpired after the publication of the draft scheme under Section 68C of the Act, [712B C] 3.
Even though the two appeals in C.A. Nos. 940 941 of 1980 shall also meet the same fate as that of C.A. Nos. 937 939 of 1980, they shall remain subjected to an alternate that in the event of orders under sub section (1 A) of Section 134 being existent the Appellate Authority shah examine the question and pass such orders in relation to the appeals of these private operators in accordance with law; but in case there were no such orders earlier, the view of the Appellate Authority dismissing the appeals shall stand affirmed.
[712G 713A] 710 K.A. Natarajan vs
M. Naina Mohammed & Ant., AIR 1978 Madras 28O, referred to.


judgement:
Petition Nos.
5704 and 8842 of 1990.
IN Writ Petition (Crl.) No. 1171 of 1986.
(Under Article 32 of the Constitution of India).
Altaf Ahmed, Additional Solicitor General, A.S. Nambiar, Laxmi Kant Pandey in person, Ms. A. Subhashini, Ms. Niranja na Singh, Ms. Shanta Vasudeva, P.K. Manohar, K.R. Nambiar, Jagdeep Kishore, T.V.S.N. Chari, Ms. Suruchi Aggarwal, Ms. Manjula Gupta, Bharati Reddy, Ms. Kusum Choudharv, Ms, Bina Gupta, Ms. Monika Mohil, Ms. Vandana Saggar, Gopal Singh, A.S. Pundir, Manoj Swarup, V. Krishnamurthy, Ms. H. Wahi, B.B. Singh, D.N. Mukherjee, P.H. Parekh, Ms. Chandan Rama murthi, Ms. Kamini Jaiswal, R.K. Mehta, Ms. Urmila Kapoor, M. Veerappa, Uma Nath Singh, A.S. Bhasme, Kailash Vasdev, G. Prabhakar, S.K. Bhattacharya, R.S. Suri, Ms. section Dikshit, Prabir Choudhary, K. Swamy, Aruneshwar Gupta, Ms. M. Karan jawala, H.K. Puri and Ms. Rani Chhabra for the appearing parties.
The following Order of the Court was delivered: In Laxmikant Pandey vs Union of India, ; this Court laid down the procedure to be followed in adop tion of children by foreigners.
The Court observed the fact that children are a supremely important national asset and the future well being of the nation 'depends upon ' how the children grow and develop.
It quoted with approval the report of the Study Team on Social Welfare where it was said: "The physical and mental health of the nation is determined largely by the manner in which it is shapped in the early stages.
" 571 This Court also quoted with approval from the National Policy for the Welfare of Children where it was Said: "The nation 's children are a supremely impor tant assets.
Their nurture and solicitude are our responsibility.
Children 's programme should find a prominent part in our national plans for the development of human resources, so that our children grow up to become robust citizens, physically fit, mentally alert and morally healthy, endowed with the skills and motivations needed by society.
Equal opportu nities for development to all children during the period ' of growth should be our aim, for this would serve our larger purpose of reduc ing inequality and ensuring social justice.
" Thus saying, this Court laid down the procedure to be followed and while doing so, the CoUrt referred to recog nised child welfare agencies and provided for their licens ing or registration by the Central Government.
Petitioners in this application ' are some of the licensed welfare agen cies contemplated under the judgment of this court and petition No. 2 is the Central Voluntary Adoption Resources Agency which is a coordinating unit based at Delhi.
In these applications petitioners have made the following prayers: (a)(i) All GOvernment/juvenile homes, nursing homes and hospitals Government or private, will apply for declaration of a child as abandoned and free for placement and if the parents of the child are not known, such children should be transferred to the recog nised institution/placement agency as request ed for by them within a fixed time frame; (ii) all recognised placement agencies 'de pending upon their capacity to accommodate and care for those children after accounting for their age and qualification should be allowed to seek transfer of those children ,from Government/juvenile courts and nursing 'homes/hospitals and such institutions should be obliged to transfer the children such placement agencies; 572 (iii) Juvenile Welfare Boards/Courts should allow the aforesaid transfers in favour of the recognised agencies for rehabilitation through guardianshiP/adoPtion from VCAs/ CVARAS or otherwise; (iv) Juvenile Welfare Boards/Courts should not disturb the custody of children abandoned directly with the recognised placement agen cies when approached for declaring them as abandoned and free for placement and such orders may be passed ex parte and confirmed after notice to the concerned parties; (b)(i) Quota fixed by the Central Government for placement of children with Indian families may be quashed as being contrary to the deci sion in Laxmikant Pandey 's case; (ii) in the alternative, if this Court upholds the validity of the circular fixing the quota, the percentsge may be suitably reduced; (iii) this court may direct that if the quota is to be fixed, children with handicaps, medical problems and other drawbacks should be excluded from the total count as also girls above one year and boys above two years of age should be exclude from counting; (c) The State Governments and the various Union Teritories should be directed to issue birth certificates based upon attested copies.
of court 's certificate (decree), adoption deed or on the basis of affidavits of officials of the licensed agencies; (d) This Court may approve by way Of revision of expenses by about 25% with effect from the date of the application and another 10% in crease annually to enable the agencies to maintain high Standards of care for the chil dren; (e) The Indian children adopted abroad or to be allowed to retain their citizenship/nation ality till they attain the age of majority.
wherever they should exercise their option one way or the other; (f)(i) The Central Government should be di rected to act 573 by itself or through the State/Union Territory Governments to issue show cause notice before refusing to extend recognition arid grant personal hearing before taking official action and reasoned orders should be made in support of such action; (ii) In the "event of cancellation of recogni tion, a time frame should be fixed to clear all the cases already in the pipeline for being processed; (ii) An appellate authority should be pre scribed for challenge of governmental action as stated above; (g)(i) The Court may direct stay of governmen tal action in the matter of setting up of Central Adoption Resource Agency (CARA) and ultimately hold that there was no longer any need for such as agency in view of the fact that many private agencies were not available to monitor the programme.
Notice was ordered on these petitions on September 21, 1990, and these several months that have followed have been taken by different State Governments and Union Territories and others to place their affidavits for consideration of this Court.
We have heard counsel for the appearing parties at length.
Before we deal with ' several prayers placed before the Court for consideration it is perhaps necessary 'to refer to the provisions of the Children 's Act of 1960 and the Juvenile JUstice Act of 1986.
The ' scheme of these two Acts is not very different.
The definitions of. 'neglected child ' and 'neglected juvenile ' is absolutely 'the same.
The mechanism for:administering the statutes is also more or less the same.
Under section 4(1) of the Children 's Act, a Child Welfare Board is intended to take charge of neglected children.
Under section 4(1) of the Juvenile Justice Act, a Welfare Board for the neglected juveniles is similarly contemplated.
Sub sections (3) and (4) of either Act autho rise 'the Board to ' function as a Bench of Magistrates and confers on such Board certain powers under Criminal Proce dure Code conferable on a Metropolitan Magistrate or a Judicial Magistrate of the First Class.
Section 9 of the Children 'section Act contemplates of Children 's Homes and de tailed provisions have been made in the matter of setting up of such homes and management thereof.
Section 11 contem plates of Observation Homes.
Chapter III deals with neglect ed children.
574 Under Chapter II of the ACt of 1986 provision has been made for.
setting up of Juvenile Homes (section 9), Special Homes (section 10) and Observation Homes (section 11).
Both the Acts provide.
for After Care organisation.
Though these, two statutes in recognition of the impor tance of children to society have made these beneficial provisions, nothing concrete and substantial appears to have been done yet for implementing either statute in a serious way.
The Children 's Act has been operative for more than 30 years while the Act of 1986 is in force for about five years.
Yet most of the provisions in the two statutes are still to be worked out in a real way.
The Union of India has set up a Department of Women and Child Development and most of the States and Union Territo ries have corresponding departments, ,yet full coordination has not been achieved.
The responsibility of administering the two statutes is not properly shared.
Monitoring seems to be very much wanting.
In course of hearing of this petition we asked learned Additional Solicitor General appearing for the Union Govern ment to tell us as to what happens to the children both boys and girls who are lodged in the Homes when they cease to be children under the statute.
It may be pointed out that under the Children 's Act boys Upto 16 and a girl upto 18 years come within the definition of "child".
If 'children ' within the meaning of the. term are lodged in various, types of homes indicated in the two statutes what exactly happens to them when they cease to be children by passing of time has remained an,enigma in the absence of a clear answer.
Obviously no provision has been made in these two Acts to meet such a situation.
Is it the intention of the stautes then that once a boy.
Or girl ceases to be a child.
and does not come within the purview of the stautes he/she would have, to be thrown out from the home on to the street as no more cared for? What then would be the effect of such a situation? Since that is not very relevant for disposing of this petition, we do not intend to proceed with that aspect any longer.
We are inclined to keep the handicapped children out Of the purview of the judgment of this Court.
We do not, howev er, agree that Indian citizenship should continue until 'the adopted child attains the age of majority and is legally competent to opt.
Such a step ,would run counter to the need of quick assimilation and may often stand as a barrier to the requirements of the early cementing of the adopted child into the adoptive family.
In regard to the issue of the birth certificate 575 of the adopted child we are of the view that such certifi cate should be obtained on the basis of application of the society sponsoring adoption.
In most of these cases the registration of birth may not be available because that would not have been done.
We are of the view that on the basis of the application and such other material which may be, relevant to be found in an affidavit to accompany the application made by a responsible person belonging to the agency the local magistrate should have the authority to make an order approving the particulars to be entered in the birth certificate and on the basis of the Magisterial order the requisite certificate 'should be granted.
This process should.
be done only after adoption is finalised and the particulars of the adopting foreign parents are available to be inclined.
There is no point in having two birth certifi cates, one before the child is placed for adoption and another when adoption is completed.
If the procedure for taking out a birth certificate is deferred until adoption is finalised the certificate can be obtained once for all.
We are of the view that the 'Chief District Medical Officer (CDMO) may be involved in the matter of ascertainment of the age and the magistrate may ordinarily act on the certificate granted by the CDMO.
We gather that many of these agencies have indeed no child care facilities.
In the event of such facilities not being available maintaining children in hygienic condition and in an environment which would be healthy for the chil dren 's growth and mental development would indeed be diffi cult.
The licensing authority should ordinarily ensure that the registered agency has proper child care facilities so that an agency which does not have such facilities may over a period of years go out ,of the field.
The affidavit of the Union Government indicates that it never intended to fix any quota for the purpose of allowing renewal of registration or licence.
In view of the clear statement in the affidavit we must hold that it is not the policy of the Government of India require the agency to satisfy the condition of any quota.
In fact the Government of India 's circular letter is intended to emphasise on the feature that registered societies to entitle themselves for renewal of registration or licence should exhibit their involvement in the process of adoption and the authority should have evidence to satisfy that the agency is really involved in the activity, We would accept the stand taken by the petitioner that in the event of registration/licence being proposed to be cancelled, an opportunity should be granted to such agency.
That would answer the 576 requirements of natural justice and would uphold a healthy scheme of administration.
We have not been able to see any.
positive justification for opposition to the setting up of CARA.
Such an institution would be an organisation of prima cy and would work as a useful agency in the field.
While we agree that there should be no keen, competition for offering adoptions, regulated competition may perhaps keep up 'the system in a healthy condition.
Existence 'of CARA in that field is, therefore, welcome.
We do not agree with the stand of the petitioner that the scheme envisaged by the main judgment Should be altered in this regard.
The judgment laid down a scale of expenses to be recov ered by the agency offering placement for maintaining the child from the adoptive parents.
There was some modification in 1986.
Keeping in view the general rise in cost of living we are prepared to allow escalation of 30%.
We do not, however, agree to an escalation of 10% every year.
The matter may be reviewed once in three years so far as escala tion of expenses in concerned.
Only one aspect is left for consideration and that is the petitioner 's prayer for transfer of children from statu tory homes to recognised agencies for placement.
The chil dren who can be transferred for such purposes would be those whose parents are not known, orphans and perhaps those who are declared as abandoned children.
We have.
pointed out already that the homes are not set up in several States and areas.
Even Juvenile Boards have not been properly function ing and the recognised agencies do not have the facility of child care.
In these circumstances to order transfer of children from statutory homes to recognised agencies can indeed not be accepted as a rule.
We are prepared to observe that as and when such a request is received from recognised agencies, the Juvenile Court or the Board set up under the Act may consider the feasibility of such transfer and keep ing the interest of the child in view, the possibility of an adoption within a short period and the facilities available in the recognised agency as also, other relevant features, make appropriate orders.
A strait jacket formula may very often be injurious to the interest of the child.
This order disposes of the petitions.
V.P.R. Petition Partly al lowed.

summary:
The writ petitioners some of the licensed welfare agencies contemplated under the judgment of this Court in ; , and petitioner No. 2, the Central Volun tary Adoption Resource Agency prayed that the Indian chil dren adopted to he allowed to retain their citizenship till they attain the age of majority; that birth certificates to be issued based upon attested copies of Court 's certificate (decree), adoption deed or affidavits of the officials of the licensed agencies; that quota fixed for placement of children with Indian families he quashed; that show cause notice he issued before cancellation of registration/ li cence to the registered agency; that setting up of Central Adoption Resource Agency be stayed; that to enable the agencies to maintain high standards of care for the chil dren, expenses by about 25% be revised and annual escalation of 10% be made; and that transfer of children from Statutory homes to recognised agencies for placement he allowed.
Partly allowing the writ petition, this Court, HELD: 1.
If the Indian citizenship is allowed to contin ue until the adopted child attains the age of majority, it would run counter to the need of quick assimilation and may often stand as a barrier to the requirements of the early cementing of the adopted child into the adoptive family.
[574G H] 2.
The birth certificate of the adopted child be ob tained on the basis of application of the society sponsoring adoption.
On the basis of the application and such other material which may he relevant to he found in an affidavit to accompany the application made by a responsible person belonging to the agency, the local magistrate should have the authority to make an order approving the particulars to he entered in the birth certificate and on the basis of the magisterial order the requi 569 site certificate should be granted.
This process should be done only after adoption is finalised and the particulars of the adopting foreign parents are available to be included.
The Chief District Medical Officer (CDMO) may be involved in the matter of ascertainment of the age and the magistrate may ordinarily act on the certificate granted by the CDMO.
[574H 575D] 3.
Registered societies to entitle themselves for renew al of registration of licence should exhibit their involve ment in the process of adoption and the authority should have evidence to satisfy that the agency is really involved in the activity.
[575G] 4.
The licensing authority should ordinarily ensure that the registered agency has proper child care facilities so that an agency which does not have such facilities may over a period of years go out of the field.
[575E] 5.In the event of registration/licence being proposed to be cancelled, an opportunity should be granted to such agency.
That would answer the requirements of natural jus tice and would uphold a healthy scheme of administration.
[575H 576A] 6.
The setting up of CARA is justified.
Such an institu tion would be an organisation of primacy and would work as a useful agency in the field.
Although there should be no keen competition for offering adoptions, regulated competition may perhaps keep up the system in a healthy condition.
Existence of CARA in that field is, therefore, welcome.
[576A B] 7.
Keeping in view the general rise in cost of living an escalation by 30% is allowed.
The matter may be reviewed once in three years so far as escalation of expenses is concerned.
[576C D] 8.1.
The children, who can be transferred for the pur poses for placement, would be those, whose parents are not known, orphans and perhaps those who are declared as aban doned children.
The homes are not set up in several States and areas.
Even Juvenile Boards have not been properly functioning and the recognised agencies do not have the facility of child care.
In these circumstances to order transfer of children from statutory homes to recognised agencies can indeed nOt be accepted as a rule.
[576D F] 570 8.2.
As and when such a request is received from recog nised agencies, the Juvenile Court or the Board set up under the Act may consider the feasibility of such transfer and keeping the interest of the child in view, the possibility of an adoption within a short period and the facilities available in the recognised agency as also other relevant features, make appropriate orders.
A strait jacket formula may very often be injurious to the interest of the child.
[576F G]