judgement:
Nos. 189 to 193 of 1955.
Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
G. section Pathak, (Rameshwar Nath and Rajinder Narain, with him) for the petitioners in Petition No. 189 of 1955.
Rameshwar Nath and Rajinder Narain, for petitioners in Petition No. 190 of 1955.
Sri Narain Andley and Rajinder Narain, for petitioners in Petitions Nos.
191 to 193 of 1955.
T. L. Shevde, Advocate General of Madhya Pradesh (I. N. Shroff, with him), for respondents in all petitions.
September 29.
This judgment will dispose of all the five petitions (Nos. 189 to 193 of 1955) which have been heard together and which raise the same question as to the constitutional validity of the C.P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948).
The facts are short and simple.
Each of the petitioners has been 'carrying on business as stage carriage operator for a considerable number of years under permits granted under section 58 of the (Central Act IV of 1939) as amended by the C.P. & Berar Motor Vehicles (Amendment) Act.$ 1947 (Act III of 1948).
Prior to the amendment section 58 of the Motor tVehicles Act, 1939 was in the following terms: "58(1).
A permit other than a temporary permit issued under section 62 shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority, may in its discretion specify in the permit.
Provided that in the case of a permit issued or renewed within two years of the commencement of this Act, the permit shall be effective without renewal 75 for such period of less than three years as the Provincial Government may prescribe.
(2) A permit may be renewed on an application made and disposed of as if it were an application for a permit: Provided that, other conditions being equal, an application for renewal shall be given preference over new applications for permits".
It will be noticed that under the section as it originally stood the permit granted thereunder was for a period of not less than 3 years and not more than 5 years and a permit holder applying for renewal of the permit had, other things being equal, preference over new applicants for permit over the same route and would ordinarily get such renewal.
Very far reaching amendments were introduced by the C.P. & Berar Motor.
Vehicles (Amendment) Act, 1947 into the in its application to Central Provinces and Berar.
By section 3 of the amending Act, item (ii) of subsection (1) of section 43 of the Central Act was replaced by the following items: " (ii) fix maximum, minimum or specified, fares or freights for stage carriages and public carriers to be applicable throughout the province or within any area or any route within the province, or (iii)notwithstanding anything contained in section 58 or section 60 cancel any permit granted under the Act in respect, of a transport vehicle or class of such permits either generally or in any area specified in the notification: Provided that no such notification shall be issued before the expiry of a period of three months from the date of a notification declaring its intention to do so: Provided further that when any such permit has been cancelled, the permit holder shall be entitled to Such compensation as may be provided in the rules; or (iv)declare that it will engage in the business o road transport service either generally or in any area specified in the notification".
593 The following subsection (3) was added after subsection (2) of section 58 of the Central Act by section 8 of the amending Act, namely: "(3) Notwithstanding anything contained in subsection (1), the Provincial Government may order a Regional Transport Authority or the Provincial Transport Authority to limit the period for which any permit or class of permits is issued to any period less than the minimum specified in the Act".
Section 9 of the amending Act added after section 58 a new section reading as follows: "58 A. Notwithstanding.
anything herein before contained the Provincial Government may by order direct any Regional Transport Authority or the Provincial Transport Authority to grant a stage carriage permit to the Provincial Government or any undertaking in which the Provincial Government is financially interested or a permit holder whose permit has been cancelled under section 43 or any local authority specified in the order".
The result of these amendments was that power was given to the Government (i) to fix fares or freights throughout the Province or for any area or for any route, (ii) to cancel any permit after the expiry of three months from the date of notification declaring its intention to do so and on payment of such compensation as might be provided by the Rules, (iii) to declare its intention to engage in the business of road transport generally or in any area specified in the notification, (iv) to limit the period of the license to a period less than the minimum specified in the Act and (v) to direct the specified Transport Authority to grant a permit, inter alia, to the Government or any undertaking in which Government was financially interested.
It may be mentioned here that in the State of Madhya Pradesh there are two motor transport companies known as C. P. Transport Services Ltd., and Provincial Transport Co. Ltd., in which, at the date of these writ petitions, the State of Madhya Pradesh and the Union of India held about 85 per cent.
of the share capital.
Indeed, since the filing of these petitions the entire undertakings of these 594 companies have been purchased by the State of Madhya Pradesh and the latter are now running the services.
on some routes for which permits had been granted to them.
A cursory perusal of the new provisions introduced by, the amending Act will show that very extensive powers were conferred on the Provincial Government and the latter were authorised, in exercise of these powers, not only to regulate or control the fares or freights but also to take up the entire motor transport business in the province and run it in competition with and even to the exclusion of all motor transport operators.
It was in exercise of the powers under the newly added sub section (3) of section 58 that the period of the permit was limited to four months at a time.
It was in exercise of powers conferred on it by the new section 43 (1) (iv) that the Notification hereinafter mentioned declaring the intention of the Government to take up certain routes was issued.
It is obvious that these extensive powers were given to the Provincial Government to carry out and implement the policy of nationalisation of the road transport business adopted by the Government.
At the date of the passing of the amending Act (III of 1948) there was no such thing as fundamental rights of the citizens and it was well within the legislative competency of the Provincial Legislature to enact that law.
It has been conceded that the amending Act was, at the date of its passing, a perfectly valid piece of legislation.
Then came our Constitution on the 26th January 1950.
Part III of the Constitution is headed "Fundamental Rights" and consists of articles 12 to 35.
By article 19(1) the Constitution guarantees to all citizens the right to freedom under seven heads.
Although in article 19(1) all these rights are expressed in unqualified language, none of them, however, is absolute, for each of them is cut down or limited by whichever of the several clauses (2) to (6) of that article is applicable to the particular right.
Thus the right to practise any profession or to carry on any occupation, trade or business conferred by article 19(1)(g) was 595 controlled by clause (6) which, prior to its amendment to which reference will presently be made, ran as follows: "(6) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it prescribes or empowers any authority to prescribe, or prevent the State from making any law prescribing or empowering any authority to prescribe, the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business".
The fundamental rights conferred by articles 14 to 35 are protected by the provisions of article 13 the relevant portions of which are as follows: "13.
(1) All laws in force in the territory of India immediately before the commencement of this "Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
(2)The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void" The amending Act (III of 1948) was, at the commencement of the Constitution, an existing law.
The new provisions introduced by the Act authorised the Provincial Government to exclude all private motor transport operators from the field of transport business.
Prima facie, therefore, it was an infraction of the provisions of article 19 (1) (g) of the Constitution and would be void under article 13(1), unless this invasion by the Provincial Legislature of the funda mental right could be justified under the provisions of clause (6) of article 19 on the ground that it imposed reasonable restrictions on the exercise of the right under article 19(1)(g) in the interests of the general 596 public.
In Shagir Ahmad vs The State of U.P. & Others(1) it was held by this Court that if the word "restriction" was taken and read in the sense of limitation and not extinction then clearly the law there under review which, like the amending Act now before us, sanctioned the imposition of total prohibition on the right to carry on the business of a motor transport operator could not be justified under article 19(6).
It was further held in that case that if the word "restriction" in clause (6) of article 19 of the Constitution, as in other clauses of that article, were to be taken in certain circumstances to include prohibition as well, even then, having regard to the nature of the trade which was perfectly innocuous and to the number of persons who depended upon business of this kind for their livelihood, the impugned law could not be justifled as reasonable.
In this view of the matter, there is no escape from the conclusion that the amending Act, in so far as it was inconsistent with article 19 (1) (g) read with clause (6) of that article, became, under article 13(1), void "to the extent of such inconsistency" and if there were nothing else in the case the matter would have been completely covered by the decision of this Court in that case.
On the 18th June 1951 however, was passed the Constitution (First Amendment) Act, 1951.
By section 3(1) of that Act for clause (2) of article,19 a new sub clause was substituted which was expressly made retrospective.
Clause (6) of article 19 was also amended.
That clause, so amended, now reads as follows: "(6) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of, the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to, (1) ; 597 (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise".
It will be noticed that clause (6), as amended, was not made retrospective as the amended clause (2) had been made.
The contention of the respondents before us is that although the amending Act, on the authority of our decision in Shagir Ahmad 's case (supra), became on and from the 26th January 1950 void as against the citizens to the extent of its inconsistency with the provisions of article 19(1)(g), nevertheless, after the 18th June 1951 when clause (6) was amended by the Constitution (First Amendment) Act, 1951 the amending Act ceased to be inconsistent with the fundamental right guaranteed by article 19(1) (g) read with the amended clause (6) of that article, because that clause, as it now stands, permits the creation by law of State monopoly in respect, inter alia, of motor transport business and it became operative again even as against the citizens.
The petitioners, on the other hand, contend that the law having become void for unconstitutionality was dead and could not be vitalised by a subsequent amendment of the Constitution removing the constitutional objection, unless it was re enacted, and reference is made to Prof. Cooley 's work on Constitutional Limitations, Vol.
I, p. 384 Note referred to in our judgment in Shagir Ahmad 's case (supra) and to similar other authorities.
The question thus raised by the respondents, however, was not raised by the learned Advocate General in that case, although the notification was published by the U. P. Government on the 25th March 1953 and the proposed scheme was published on the 7th April, 1953, i.e., long after the Constitution (First Amendment) Act, 1951 had been passed.
This question was not considered by this Court in Shagir Ahmad 's case, for it was there conceded (see p. 720 of the report) that the validity of the U. P. Act which, in this res 598 pect, was similar to the C. P. '& Berar Act now under consideration.
, was not to be decided by applying the provisions of the amendea clause (6).
Nor was this problem raised before or considered by this Court in Behram Khurshed Pesikaka vs The State of Bombay(1) We, therefore, conceive it to be open to us to go into the new question that has now been mooted before us and to consider what effect the amended clause (6) has on the impugned Act.
This involves a question of construction of article 13 of the Constitution.
The meaning to be given to the word "void" in article 13 is no longer res integra, for the matter stands concluded by the majority decision of this Court in Keshavan Madhava Menon vs The State of Bombay(1).
We have to apply the ratio decidendi in that case to the facts of the present case.
The impugned Act was an existing law at the time when the Constitution came into force.
That existing law imposed on the exercise of the right guaranteed to the citizens of India by article 19 (1) (g) restrictions which could not be justified as reasonable under clause (6) as it then stood and consequently under article 13 (1) that existing law became void "to the extent of such inconsistency".
As explained in Keshavan Madhava Menon 'section case (supra) the law became void not in toto or for all purposes or for all times or for all persons but only "to the extent of such inconsiatency", that is to say, to the extent it became inconsistent with the provisions of Part III which conferred the fundamental rights on the citizens.
It did not become void independently of the existence of the rights guaranteed by Part III.
In other words, on and after the commencement of the Constitution the existing law, as a result of its becoming inconsistent with the provisions of article 19(1)(g) read with clause (6) as it then stood, could not be permitted to stand in the. way of the exercise of that fundamental right.
Article 13(1) by reason of its language cannot be read as having obliterated the entire operation of the inconsistent law or having wiped it out altogether from (1) (1955] 1 S.C.R. 613.
(2) ; 599 the statute, book.
Such law existed for all past tran sactions and for enforcement of rights and liabilities accrued before the date of the Constitution, as was held in Keghavan Madhava Menon 's case.
The law continued in force, even after the commencement of the Constitution, with respect to persons who were not citizens and could riot claim the fundamental right.
In short, article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1) (g) read with clause (6) as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the commencement of the Constitution.
Therefore, between the 26th January 1950 and the 18th June 1951 the impugned Act could not stand in the way of the exercise of the fundamental right of a citizen under article 190(1) (g).
The true position,is that the impugned law became, as it were, eclipsed, for the time being, by the fundamental right.
The effect of the Constitution (First Amendment) Act 1951 was to remove I the shadow and to make the impugned Act free from all blemish or infirmity.
If that were not SO.
, then it is not intelligible what "existing law" could have been sought to be saved from the operation of article 19(1)(g) by the amended clause (6) in so far,as it sanctioned the creation of State monopoly, for, ex hypothesi, all existing laws creating such monopoly had already become void at the date of the commencement of the Constitution in view of clause (6) as it then stood.
The American authorities refer only.
to post Constitution laws, which were inconsit tent with the provisions of the Constitution.
Such laws never came to life but were still born as it were The American authorities, therefore, cannot full apply to pre Constitution laws which were perfectly valid before the Constitution.
But apart from this distinction between re Constitution and post Constitution laws on which, however, we need not rest on decision, it.
must, be held that these American authorities can have no application to our Constitution All laws, existing or future, which are inconsistent 76 with the provision s of Part III of our Constitution are by the express provision of article 13, rendered void "to the extent of such, inconsistency".
Such 'laws were not dead for all purposes.
They existed for the purposes of pre Constitution tights and liabilities and they remained operative, even after the Constitution, as against non citizens.
It is only as against the citizens that they remained in a dormant or moribund condition.
In our judgment, after the amendment of clause (6) of article 19 on the 18th June 1951, the impugned Act ceased to be unconstitutional and became revivified and enforceable against citizens as well as against non citizens.
It is true that as the amended clause (6) was not made retrospective the impugned Act could have no operation as against citizens between the 26th January 1950 and the 18th June 1951 and no rights ' and obligations could be founded on the provisions of the impugned Act during the said period whereas the amended clause (2) by reason of its being expressly made retrospective had effect even during that period.
But after the amendment of clause (6) the impugned Act immediately became fully operative even as against the citizens.
The; notification declaring the intention of the State to take over the bus routes to the exclusion of all other motor transport operators was published on the 4th February 1955 when it was perfectly constitutional for the State to, do so.
In our judgment the contentions put forward by the respondents as to the effect of the Constitution (First Amendment) Act, 1951 are well, founded and the objections urged against them by the petitioners are untenable and must be negatived.
The petitioners then contend that assuming that one impugned Act cannot be questioned on the ground of infringement of their fundamental right under article 19(1)(g) read with clause (6) of that article, there has been another infraction of their fundamental right in that they have been deprived of their property ' namely, the right to ply motor vehicle ' s for gain which is an interest in a commercial undertaking and, therefore, the impugned Act does Conflict with the provisions of article 31 (2) of the Constitution and 601 again they rely on our decision in Shagir Ahmad 's case.
Here, too if there were nothing else in the case this contention may have been unanswerable.
But unfortunately for the petitioners there is the Constitution (Fourth Amendment) Act, 1955 which ' came into farce on the 27th April 1955, By section 2 of that Act article 31 of the Constitution was amended and for clause (2) of that article the following clauses were substituted: "(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the mariner in which the compensation is to be determined and given; and no such law shall be called in question in any :court on the ground that the compensation provided by that law is not adequate.
(2 A) Where a, law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation, owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property".
Article 31 A of the Constitution was also amended.
There can be no question that the amended provisions, if they apply, save the impugned law, for it does not provide for the transfer of the ownership or right to possession of any property and cannot, there, fore, be deemed to, provide for the compulsory acquisition or requisitioning of any property.
But the petitioners contend, as they did with regard to the Constitution (First Amendment) Act, 1951, that these amendments which came into force on the 27th April 1955 are not retrospective and can have no application to the present case.
It is quite true that the impugned AN became inconsistent with article 31 as soon as the Constitution came into force on the 26th January 1950 as held by this Court in Shagir Ahamad 's case (supra) and continued to be so inconsistent right 602 up to the 27th April 1955 and therefore, under article, 13(1) became void "to the extent of such inconsistency ".
Nevertheless, that inconsistency was removed on and from the 27th April 1955 by the Constitution (Fourth Amendment) Act, 1955.
The present writ petitions were filed on the 27th May 1955, exactly a month after the Constitution (Fourth Amendment) Act.
1955 came into force, and, on a parity of reasoning here in before mentioned, the petitioners cannot be permitted to challenge the constitutionality of the impugned Act on and from the 27th April 1955 and this objection also cannot prevail.
Learned counsel for the petitioners sought to raise the question as to the invalidity of the impugned Act even before the advent of the Constitution.
Prior to the Constitution, when there were no fundamental rights, section 299 of the Government of India Act, 1935 which corresponds to article 31 had been construed by the Federal Court in Rao Bahadur Kunwar Lal Singh vs The Central Provinces and Berar(1) and in other cases referred to in Rajah of Bobbili vs The State of Madras(2) and it was held by the Federal Court that the word "acquisition" occurring in section 299 had the limited meaning of actual transference of ownership and not the wide meaning of deprivation of any kind that has been given by this Court in Subodh Gopal Bose 's case(3) to that word acquisition appearing in article 31(2) in the light of the other provisions of the Constitution. ' It is, therefore, not clear at all that the impugned Act was in conflict With section 299 of the Government of India Act,1935.
Besides, this objection was not taken or even hinted at in the petitions and cannot be permitted to be raised at this stage.
The result, therefore, is that these petitions must be dismissed.
In the circumstances of this case we make no order as to costs.
(1) [1944]F.C.R. 284.
(2) , 193 194".

summary:
The petitioners who carried on their business as stage carriage operators of Madhya Pradesh for a considerable number of years challenged the constitutional validity of the C.P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948) which amended the (Central Act IV of 1939) and conferred extensive powers on the Provincial Government including the power to create a monopoly of the motor transport business in its favour to the exclusion of all motor transport operators.
In exercise of the powers conferred by new section 43(1)(iv) a notification was issued on the 4th of February, 1955, declaring the intention of the Government to take up certain routes.
The case of the petitioners was that the passing of the Constitution and the grant of fundamental rights rendered the Act void under article 13(1) being inconsistent with the provisions of articles 19(1)(g) and 31(2), and reliance was placed on the decision.
of the Supreme Court in Shagir Ahmad vs The State of U.P. & others.
On behalf of the respondents it was contended that although as a result of the said decision the impugned Act was rendered void, the Constitution (First 'Amendment) Act, 1951, and the Constitution (Fourth Amendment) Act, 1955, bad the effect of removing the inconsistency and the Amending Act (III of 1948) became operative again.
It was, however, contended on behalf of the petitioners that the impugned Act being void under article 13(1) was dead and could not be revivified by any subsequent amendment of the Constitution.
It must be re enacted.
Held that Shagir Ahmad 's case had no application and the contentions put forward by the respondents were well founded and must be accepted.
That it is well settled: that the word 'void ' In article 13 means void to the extent of the inconsistency with a fundamental right and the language of the article makes it clear that the entire operation of an inconsistent Act is not wiped out.
It applies to past transactions and the rights and liabilities accruing therefrom and continues even after the commencement of the Constitution to apply to non citizens.
Keshavan Madhava Menon vs The State of Bombay [1961] S.C.R. 288, relied on.
The true effect of article 13(1) is to render an Act, inconsistent with a fundamental right, inoperative to the extent of the 'inconsistency.
It is overshadowed by the fundamental right ' and remains dormant but is not dead.
With the amendment made in cl.
(6) of article 19 by the first Amendment Act the provisions of the impugned Act were no longer inconsistent therewith and the result was that the impugned Act began to operate once again from the date of such amendment with this difference that, unlike amended clause (2) of article 19 which was expressly made retrospective, no rights and obligations could be founded on the provisions of the impugned Act from the date of the Commencement of the Constitution till the date of the amendment.
The notification declaring the intention of the State to take over the bus routes to the exclusion of all other motor transport operators was, therefore, perfectly valid.
Shagir Ahmad vs The State of U.P. & Others, ; and Behram Khurshed Pesikaka vs The State of Bombay, [1965] 1 S.C.R. 613, distinguished and held inapplicable.
American authorities held inapplicable.
Nor can the impugned Act, on a parity of reasoning be held to infringe, any longer the fundamental rights of the petitioners under article 31(2) in view of the amendment effectd there in by the Constituation (Fourth Amendment) Act of 1956 which came into force on the 27th April, 1955, these petitions having been filed thereafter, and the petitioners could not be allowed to challenge the validity of the impugned Act on that ground.
Semble.
It is not clear at all that the impugned Act was in conflict with section 299 of the Government of India Act, 1935, before the advent of the Constitution.


judgement:
Appeal No.1539 of 1971.
(From the Judgment and Order dated 5 8 1969 of the Allahabad High Court in Special Appeal No. 58/65).
B.B. Ahuja and R.N. Sachthey, for the Appellant.
A.T.M. Sampath and Ram Lal, for Respondent No. 1. 215 The Judgment of the Court was delivered by SARKARIA, J.
This appeal on certificate is directed against an appellate judgment, dated August 5, 1969, of a Bench of the High Court of Allahabad.
It arises as follows: M/s. S.B. Singar Singh and Sons (hereinafter called the assessee) were assessed to Excess Profits tax for the chargeable accounting periods, ending March 31, 1945 and March 31, 1946.
under two assessment orders dated August 26, 1949.
The previous years 193637 was chosen by the assessee as his standard period.
" The profits of that year were Rs. 38,703/ .
After deducting the profits of the standard year, the Excess Profits Tax Officer, assessed the tax on the remaining amounts of profits.
The Excess Profits Tax thus assessed for the accounting years, was to the tune of Rs. 1,06,181.5 and Rs. 48,978/ , respectively.
In his orders, the assessing Officer said that "for reasons detailed in the earlier assessment orders no adjustments are made for capital variations in the standard period and the chargeable accounting period".
These reasons as given in the earlier assessment order, dated October 30, 1947, per taining to the chargeable accounting period ending March 31, 1944, were: "As complete and regular accounts are not maintained by the assessee, it is not possible to make any adjustment for variations in average capital which cannot be accurately ascertained".
Against the orders of assessment, the assessee preferred two appeals on September 24, 1949 to the Assistant Appellate Commissioner.
By two separate applications dated October 24, 1949, the assessee took an additional ground of appeal which obvious ly he had not taken in the original memorandum of appeal that the Excess Profits Tax Officer had erred in not allowing adjustments on account of the increase and decrease of capital in the relevant chargeable accounting period.
The assessee added that he "was always prepared to file his computa tions of average capital".
Dismissing the appeals by his orders, dated November 24, 1949, the Assist ant Appellate Commissioner negatived the assessee 's contention, in these terms: "As in these years no regular accounts have been maintained and it is not possible to make any adjustment for variations in average capital which cannot be exactly ascertained.
No figures have been shown to me, nor has any exact working been fur nished at this stage.
The accounts are left in the same manner as for the earlier years.
Profits in the major accounts had to be worked out by the application of a rate to the turnover.
I am, thus, unable to allow this contention.
" Aggrieved, the assessee carried appeals to the Income tax Appellate Tribunal.
In the memoranda of appeals, one of the specific grounds taken was, that "the Excess Profits Tax Officer and the Assistant Appellate Commissioner had erred in not allowing to the assessee proper standard profits in accordance with the standard period subject to the adjust ment on account of the increase and decrease of capital in the relevant chargeable accounting period.
" It was reiter ated that "the 216 appellant was always prepared to file his computation of average capital.
" This ground relating to standard profits was not dis cussed by the Tribunal and no finding was recorded thereon.
The Excess Profits Tax Appeals and other Income tax appeals filed by the assessee were heard together by the Tribunal and disposed of by common orders dated February 24, 1951.
In the Income tax appeals, some relief was granted, but in the Excess Profits appeals, no relief was granted due to the variation of the capital in the chargeable accounting period of 1945 46 and 1946 47.
The assessee on July 27, 1951, made an application under section 35 of the Income tax Act, 1922 for rectification of its order to the Tribunal on grounds other than the one regarding variation in the standard profits due to increase and decrease of the capital.
This application was dismissed on August 27, 1951 by the Tribunal on the ground that there was no mistake apparent on the record.
No grievance was made in this application that the Tribunal did not consider and decide the ground relating to adjustment of standard profits according to variation in capital during the relevant peri od.
On March 11, 1954, the assessee made a representation to the Central Board of Revenue praying for reopening of the assessments.
In this representation, also, he did not take up Ground No. 1.
Subsequently however on May 24, 1954 he wrote a letter to the Income tax Officer saying that he was sorry to omit 'one important point ' i.e., Ground No. 1, from his representation to the Board, and that the Income tax Officer should "supplement the same while making (his) report to the higher authorities. '
His representation dated March 11, 1954 and the petition dated May 24, 1954, both were rejected and the Commissioner communicated those rejec tions to the assessee by a letter dated May 25, 1955, saying that he did not see any justification for re opening the assessments which had become final and closed.
Thereafter on April 2, 1956, the assessee made a second application to the Tribunal (which in substance was one for review of its orders, dated .February 24, 1951), contending that Ground No. 1 raised in his two appeals, relating to the standard profits of the two chargeable accounting periods and pointing out the failure of lower authorities to make necessary adjustments in such profits according to section 6 of the Excess Profits Tax Act (hereinafter referred to as Ground No. 1 ) was not disposed of by the Tribunal.
It was prayed that the appeals relating to excess profits tax matters which should be deemed to be still pending owing to the non decision of Ground No. 1 be disposed of after hear ing the assessee.
The Tribunal rejected this contention with the remark that the appeals were decided as early as 24th February, 1951 and it is now futile to contend that the matter was pending when the Tribunal had already passed orders and the orders were served on the assessee.
" The Tribunal further observed that the absence of a reference "to the contention of the assessee regarding the standard profits and the necessary adjustments would not render the Tribunal 's order a nullity, nor would it mean that the Tribunal had partially disposed of the appeals and some residue is pending".
In the alternative, it held that even on the assumption that 217 Ground No. 1 was argued and was not disposed of by the Tribunal, the proper remedy for the assessee was either to apply for rectification under section 35 or to move an applica tion under section 66.
The Tribunal refused to treat this application as one for rectification because, in its opinion, such an application would be much too time barred.
In the result, the Tribunal dismissed that application by an order dated June 9, 1956.
The assessee had filed a reference application, also under section 66(1) the Income tax Act in these cases.
That application was dismissed by the Tribunal on August 28, 1951.
The assessee then made applications under section 66(2) of the Income tax Act before the High Court requesting for reference on certain question of law arising out of the order, dated February 24, 1951, of the Tribunal.
In these applications, alsO, he did not ask for reference on a question relating to Ground No. 1 (regarding adjustment of standard profits).
These applications were allowed by the High Court by an order, dated April 12, 1956, whereby the Tribunal was directed to state a case and refer for decision certain questions of law to the High Court.
Thereafter, during the proceedings before the Tribunal for preparation of the statement of the case, the assessee moved an application, dated July 23, 1957, requesting it to refer the question of adjustment of standard profits on account of increase and decrease in the capital in the relevant periods to the High Court, in addition to the questions of law directed by the High Court to be referred to it.
This application was rejected for the reason that the question had not been raised in the reference applica tion, nor did it arise out of the appellate orders of the Tribunal.
On July 24, 1957, the Tribunal stated the case and made a reference on the other question to the High Court in compliance with that Court 's order, dated April 12, 1956.
On November 4, 1968, the assessee filed a writ petition in the High Court praying for a writ of Mandamus requiring the Tribunal to consider his Ground No. 1 mentioned in the Excess Profits Tax Appeals Nos. 651 and 660 of 1949 and 1950 and his subsequent application dated April 2, 1956.
The writ petition was heard by a learned single Judge of the High Court who held that while disposing of the appeals, it was the duty of the Tribunal to record a finding on Ground No. 1 which had been specifically raised in the memoranda of appeals before it, that the Tribunal therefore, could and should have reviewed its orders and rectified its mistake in the exercise of its inherent powers when that mistake was brought to its notice by the assessee by his application dated April 2, 1956; that section 35 of the Income tax Act which provides a period of four years ' limitation for seeking rectification of mistakes in assessment orders, was not applicable to assessment orders made by the.
Tribunal under the Excess Profits Act; that consequently, the Tribunal was in error in refusing to treat the assessee 's application, dated April 2, 1956,.as one for rectification of a mistake of the Tribunal on 16 1003 8C1/76 218 the ground of limitation.
In the result, the learned Judge set aside the Tribunal 's order, dated June 9, 1956, and directed the Tribunal to dispose of the assessee 's applica tion dated April, 2, 1956, afresh in accordance with law.
The Revenue filed a Special Appeal against the order of the learned single Judge before the Appellate Bench of the High Court.
The Bench dismissed the appeal and affirmed the findings and orders of the learned single Judge.
Hence this appeal.
Mr. Ahuja, appearing for the appellant, con tends that the writ petition of the assessee should have been thrown out by the High Court on the preliminary ground that he had not come with clean hands.
In this connection Counsel has pointed out several circumstances which according to him, belie the main plea of the assessee that the Tribunal had not considered his Ground No. 1 although the same was urged before it at the hearing of the appeals.
It is stressed that .Ground No. 1 was not original ly taken by him in the grounds of appeal filed before the Assistant Appellate Commissioner, al though subsequently in the Additional grounds filed about one month after the institution of the ap peals, he, as an after thought, did introduce "Ground No. 1", that he did not make any grievance whatever on the score of Ground No. 1 in his appli cation for rectification of the Tribunal 's orders, filed on July 27, 1951; that for more than 5 years after the announcement of the appellate orders of the Tribunal, he made no application to the Tribu nal for review and rectification of its appellate orders in relation to Ground No. 1; that the assessee delayed the making of the application, dated April 2, 1956 presumably with a view to ensure that at the time of its presentation, none of the members of the Tribunal who had originally decided the assessee 's appeals, was there to hear the application; that even in this inordinately delayed application, review and rectification was not asked for in a straight forward manner but it was disguised as an application for decision of the appeals which on account of non decision of Ground No. 1 were alleged to be still pending; that the writ petition was filed after an abnormal delay of ten years; that a perusal of the assessment orders made by the Excess Profits Tax Officer and the Assistant Appellate Commissioner, and even the memoranda of appeals filed before the Tribunal shows that at no stage the assessee furnished complete accounts or even a statement showing variation in the capital during the relevant peri ods.
It is emphasised that all that the assessee said in the memoranda of appeals was that he was "prepared" to furnish a statement of such computa tion and accounts.
It is further pointed out that no certificate of Shri Surinderjit Singh, Advocate who is supposed to have argued the appeals before the Tribunal, was filed.
It is maintained that the only reasonable inference from these circumstances was that Ground No. 1 was not pressed or argued at all by Shri Surinderjit Singh before the Tribu nal who consequently, did not think it necessary to deal with it.
Mr. Sampath, appearing for the assessee respondent has not been able to deny the existence of the circumstances pointed out by Mr. 219 Ahuja.
His argument is that in the affidavit accompanying the writ petition, the deponent had sworn that Ground No. 1 was, in fact, argued before the Tribunal and that this sworn statement had been believed by the High Court.
This being the case, it is argued, this Court should not re open the question as to whether Ground No. 1 was, in fact, argued or not before the Tribunal.
According to Mr.Sampath, over 5 years ' delay in making the application dated April 2, 1956, partly stood explained by the circumstance that he had made a representation to the Board supplemented by the assessee 's letter of May 24, 1954 to the Income tax Officer, seeking relief on the basis of Ground No. 1.
We find a good deal of force in the submissions made by Mr. Ahuja.
The sheet anchor of the assessee 's case in the writ petition was that at the hearing of the appeals, his Counsel had argued Ground No. 1 set out in the memoranda of appeals, but the Tribunal did not consider it at all.
The question whether or not this Ground had been argued, was one of fact.
The tell tale circumstances enumerated by Mr. Ahuja, unerringly lead to the conclusion that, in all proba bility, Ground No. 1 was not argued by the Counsel, possibly because he was aware that in the absence of a complete statement of accounts showing variations in the capital during the relevant periods, a contention rounded on Ground No. 1 would be an exercise in futility.
It is noteworthy that at no stage before the Revenue authorities or the Tribunal, did the assessee categorically say that he had actually produced a complete statement of accounts and computation of the increase and decrease in capital.
All that he said in his Additional Grounds of appeal before the 'Assistant Appellate Commissioner and the Appellate Tribunal in Ground No. 1, was that he was prepared to file such a statement.
Shri Surinderjit Singh, Counsel who argued the appeals, has not thought it fit to certify that Ground No. 1 was actually argued, and not abandoned, by him.
The affida vit of another person who could not be the best informed person on this point, was of little value and could hardly displace the irresistible inference arising from the sur rounding circumstances and the conduct of the assessee, namely, that his Counsel had not argued on Ground No. 1, at all and had thus given it up.
In the light of what has been observed above, we are of opinion that the High Court could not justifiably interfere in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution with the appellate orders of the Tribunal.
In any case, the question as to whether the omission to record a finding on Ground No. I by the Tribunal was due to the failure of the appellant to urge that ground or due to a lapse on the part of the Tribunal, which de served rectification, was a .matter entirely for the author ities under those Taxation statutes.
It will be well to recall once more what this Court speaking through J.C. Shah J. (as he then was,) had stressed in Shivram Poddar vs Income tax Officer(1) "Resort to the High Court in exercise of its extraordi nary jurisdiction conferred or recognised by the Constitu tion in matters relating to assessment, levy and collection of income tax may be permitted only when questions of infringe ment of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess.
In attempting to bypass the provisions of the Income tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the revenue authorities, the party approaching the court has often to ask the Court to make assumptions of facts which remain to be investigated by the revenue authorities."
In the instant case, the High Court had assumed juris diction on the assumption that a certain ground had been urged before the Income tax Appellate Tribunal which had arbitrarily refused to consider the same and record a find ing thereon.
This assumption, in our opinion, stood thor oughly discounted by the concomitant circumstances of the ease, including the dilatory and questionable conduct of the assessee.
This was therefore not a fit ease for the exer cise of its special jurisdiction under Article 226 by the High Court.
Accordingly, on this short ground we allow the appeal and dismiss the writ petition.
As the appeal succeeds on a preliminary ground, we do not feel it necessary to express any opinion on the question as to whether or not the Appel late Tribunal under the Excess Profits Tax Act has statutory or inherent power to review and rectify mistakes in its orders.
The assessee shall pay one set of the costs of the appellant.
P.B.R. Appeal allowed.

dataset_name: IN-Abs

summary:
Since the assessee had not maintained complete and regular accounts for the purpose of Excess Profits tax, the Excess Profits Tax Officer assessed tax on the basis of accounts of certain previous years chosen by the assessee as his "standard period", pointing out that because of this position it was not possible to make any adjustment for variations in average capital.
The Assistant Appellate CommisSioner upheld the assessment order.
In appeal to the Appellate Tribunal one of the specific grounds taken by the assessee was that the Excess Profits Tax Officer and the Assistant Appellate Commissioner had erred in not allowing proper standard profits in accordance with the standard period subject to the adjustment on account of increase and decrease of capital in the relevant chargeable accounting period and that they were prepared to file computation of average capital.
Without discussing the ground relating to the standard profits the Tribunal disposed of the appeals.
The assessee 's second application alleging that the ground relating to the standard profits was not disposed of by it was rejected by the Tribunal.
In an application under section 66(2) of the Income Tax Act before the High Court, the assessee did not ask for a reference on this ground.
But during proceedings for preparation of statement of case, the assessee 's application requesting the Tribunal to refer this ground to the High Court was rejected by it.
The assessee 's petition for a writ of Mandamus requiring the Tribunal to consider the ground relating to standard profits was allowed by the High Court.
Allowing the Department 's appeal to this Court, HELD: The High Court could not justifiably interfere, in the exercise of its extraordinary jurisdiction under article 226 of the Constitution, with the appellate orders of the Tribunal.
The question as to whether the omission to record a finding on Ground No. 1 by the Tribunal was due to the failure of the appellant to urge that ground or due to a lapse on the part of the Tribunal, which deserved rectifica tion, was a matter entirely for the authorities under the statute to decide.
[219 G] Shivram Poddar vs Income tax Officer (1964) 51, I.T.R. 823, 829 (,S.C.) applied.
In the instant case the High Court had assumed jurisdic tion on the assumPtion that a certain ground had been urged before the Tribunal which had arbitrarily refused to consid er the same and record a finding thereon.
This assumption, stood thoroughly discounted by the concomitant circumstances of the case including the dilatory and questionable conduct of the assessee.
This was not a fit case for the exercise by the High Court of its ' special jurisdiction under article 226.
[220 C]


summary:
Section 22B of the Electricity Act, 1910, authorises the: State Government if it is of the opinion that it is necessary or expedient so to do for maintaining the supply and securing equitable distribution of energy to provide by an order for regulating the supply, distribution, consump tion or use of the electricity.
Section 18 of the Electricity Supply.
Act, 1948 provides that it shall the duty of the Board to provide electricity as soon as practicable to persons requiring such supply.
Under section 49 subject to the provisions.
of the Act and the regulations if any made, the Board may supply elec tricity to any person upon such terms and conditions as the Board thinks fit.
It further provides that in fixing the tariffs and terms and conditions for the supply of electric ity the Board shall not show undue preference to any person.
Under the prescribed agreement the Board is given unilateral right to vary from time to time the terms and conditions of supply under the agreement by special or general proceedings.
The State Government made an order under section 22B provid ing that the maximum demand limit will he 75 per cent of the average monthly maximum demand over a certain period.
It further provided that the supply to consUmers who violated the restrictions was liable to be cut off without notice.
Without prejudice to the right to disconnect the supply the Board was also authorised to bill the energy and maximum demand utilised in excess of the limits prescribed at double the tariff rates.
The order of the State Government was occasioned because the water position in the Hydro Electric Reservoirs in the State became very unsatisfactory because of failure of monsoon.
Secondly, sufficient power was not available to meet the needs of the State and thirdly it became necessary to conserve available water with a view to ensure regular and uniform supply of electrical energy during the coming months.
The State Electricity Board fixed quotas for consump tion because power generated was not adequate to meet the requirements.
An extra charge for consumption of energy beyond the limits of quotas was also introduced by the Board.
The Board further cut the quota and enhanced the extra charges.
Thereafter, the Board passed an order increasing the power cuts at different percentage in different industries.
The Board also increased charges to be paid for the excess consumption.
This action of the Board was necessitated because of great depletion of levels in the Hydel reservoirs and because no assistance was forthcoming from the neigh bouring States and because there was a heavy increase of agricultural loads.
The appellants filed writ petitions in the High COurt praying for a writ or direction that the respondent should be ordered not to collect from the appellants more than normal charges for consumption of electricity and not to disconnect their supply and for a declaration that the restrictions with regard to the imposition of quota and the levy of penalty charges was illegal.
134 The High Court held that the Board has power to fix quotas or otherwise to restrict consumption of electrical energy and collect charges at 4 times the normal rates.
The appellants obtained special leave limited to the question whether under section 22B of the Electricity Act, 1910 ', it is open to the Board to reduce the supply to anything less than 75 per cent and levy extra charges for excess supply.
In an appeal by special leave the appellants contended: 1.
Section 22B of 1910 Act empowers the State Govt.
to control the distribution and consumption of energy.
The State Government exercised its powers and reduced the quota to 75%.
Therefore, any further reduction by the Board would be ille gal.
Section 49 of the 1948 Act does not confer power on the Board to effect rationing of supply because that would involve excessive delegation of legislative power.
There is no guideline in section 49.
to reduce the supply and therefore, section is bad.
In the alternative, the contention was that unless the Board made regulations under section 79(j) it could not ration the supply in exercise of powers under section 49. 4.
The Board cannot fix different percentages of cuts in the supply to different consumers nor can the Board impose penalty.
Dismissing the appeal, HELD .
: (1) Section 49 which requires the Board not to show undue preference to any person embodies the principle enumerated in Article 14 of the Constitution.
It is the principle of equity or non discrimination.
However, it is fairly settled that equality before law does not mean that the things which were different will be treated as though they were the same.
It does not mean an economical equal treatment.
It would be justifiable to treat different industries and institutions with reference to their urgencY, social utility and also the impact on the conservation and economies in the available supply of electric power.
[142 B E] (2) The recognition of the fact that the Board can introduce rationing by making a regulation under section 79(j) of the 1948 Act necessarily involves a concession that the Board has a power to enforce rationing and to enunciate the principle and scheme.
of such rationing.
The making of a regulation is not a new source of power but is the exercise of power which exists.
The language of section 48 " 'if any" shows that the power can be exercised without making any regulation.
The powers conferred on the State Government under section 22B do not exhaust the power of the Board under section 49 of the 1948 Act.
There is no conflict in the existence of power at different levels.
The higher authority may have the power to override the order of the lower authoritY. Powers under section 22B of the 1910 Act and section 49 ' of the 1948 Act may have some overriding features.
Section 49,, howev er, contains a much larger power because the Board is the authority primarily charged with all aspects of development and supply under the 1948 Act.
[142 E G, 143 A D] (3) The appellants cannot be allowed to raise the con tention which was not raised in the High Court that the cut imposed by the State Government under section 22B was effective throughout.
If such facts were pleaded in the High Court, the Board could have produced materials denying such allega tions.
[143 D F] (4) The orders of the Government and the Board were cumulative ,and not contradictory.
The Board is empowered to fix different rates "having regard to" the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.
The expression "any other relevant factors ' is not to be construed ejusdem generis because there is no germs of the relevant factors.
[144 B D, E F] 135 (5) If there is shortage of electricity there has to be restriction on supply.
The Board can disconnect supply if the quota is exceeded.
The Board can also impose higher rates if the quota is exceeded.
The imposition of higher rates is only to sanction the rigour of ration by making persons who exceed the quota liable to pay higher rates.
[144 G H, 145 A]


judgement:
Appeal No. 882 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 13 12 1974 of the Madras High Court in Writ Appeal No. 101/73).
Gobind Das, and Girish Chandra, for the Appellant.
V.M. Tarkunde, K. Rajendra Chaudhury, Mrs. Veena Khan na, S.L. Setia & Miss Manek Tarkunde, for the Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal by special leave.
directed against a judgment dated December 13, [974, of the High Court of Madras, arises out of these facts: Respondent Rabia Bai, is a citizen of India.
She has her residence at Grange Yercund.
Salem District.
She came to know in 1949 that premises No. 20, Godown Street, G.T. Madras (known as Gani Market) was for sale.
Consequent ly, by a sale deed, dated April 29, 1949, she purchased this property from one Abdul Gani Jan Mohd. who had left for Pakistan in 1947, soon after the partition of the Indian sub continent.
Abdul Gani came to Madras in April 1949 and executed the sale deed in her favour for a consideration of Rs. 2,40,000/ out of which Rs. 1,50,000/ was paid immediately in the form of bank drafts.
Thereafter, the sale deed was duly engrossed and sent to.
Karachi for execu tion by the vendor.
who duly executed it and sent it back.
It was presented at the Collector 's Office, Madras and was duly stamped on June 27, 1949.
After obtaining the clear ance certificate from the Income tax Department.
the Regis trar registered it on August 11, 1949.
Rs. 30.000/ , the balance of the consideration was paid before the Registering Officer to Mr. M. H, Gani who held a power of attorney from the vendor.
On June 13, 1949.
Ordinance XII of 1949 was promulgated.
The Ordinance was extended to.
Madras on August 23, Ordi nance XII of 1940 was repealed by Ordinance 27 of 1949, which in turn was replaced by the Administration of the Evacuee Property Act, 1950 258 (Central Act 31 of 1950) (hereinafter referred to as the Act).
The Act had retrospective operation with effect from August 14, 1947.
Section 40 of the Act [corresponding to section 25(2) of Ord. 121, provided that no transfer made after the 14th day of August, 1947 but before the 7th day of May, 1954 by any person of any property belonging to trim which may subsequently be declared to be evacuee property, would be valid unless the transfer was confirmed by the Custodian.
General of Evacuee Property.
On December 19, 1949, the vendee Rabia Bai, applied for confirmation of the sale transaction in her favour.
The application was resisted by some tenants on several grounds.
On January 11, 1951, the Assistant Custodian Evacuee Proper ty, Madras City, declared the property in question as evacuee property under section 7( 1 ) of the Act.
The Assistant Custodian considered Rabia Bai 's applica tion for confirmation of the sale in the light of the decla ration already made by him, that the vendor being an evacu ee, the property was evacuee property.
He referred to the relevant features of the transaction and came to the conclu sion that he would not be justified in confirming it.
In reaching this conclusion, he relied on the provisions of section 40(4)(c) of the Act.
In his opinion, the feverish hurry disclosed that in making the sale, the vendor was not moti vated by good faith.
Accordingly on July 31, 1951, he made an order refusing to confirm the transaction.
Rabia Bai went in appeal against the order of the Assistant Custodian to the Custodian.
The Custodian found that the sale transac tion was supported by valuable consideration.
Even so, he proceeded to examine the question as to whether it could be said to have been entered into in good faith.
Relying On a letter written by the vendor to one Mohideen on July 4, 1949 wherein he had stated that "if the matter is delayed there would be many sort of new difficulties as you know the government are passing new rules every day", the Custodian took the view that the vendor 's intention was to dispose of and convert his properties in India into cash and to take them away to Pakistan as quickly as possible so as to evade the restrictions of the evacuee law which he apprehended could be extended to Madras any day.
On this reasoning, the Custodian came to the conclusion that the transaction had been entered into otherwise than in good faith, and so it could not be confirmed under section 40(4)(a) of the Act.
This appellate order was pronounced by the Custodian on February 4, 1953.
Rabia Bai then moved the Custodian General in revision, who dismissed the same.
Against that order Of the Custodi an General, Rabia Bai came in appeal by special leave to this Court.
While that appeal was pending, Rabia Bai on August 27, 1954, made an application under Rule 22 of the Administra tion of Evacuee Property (Central Rules) 1950 (for short the Rules) for registration of her claim for the return of the sale consideration of Rs. 2,40,000/The claim was registered by the Assistant Custodian On October 1, 1954.
Thereafter, the Act was amended by Act 91 of 1956.
By a notification, dated February 20, 1957, the aforesaid Rule 22 was deleted.
259 Rabia Bai 's aforesaid appeal (Civil Appeal No. 22 of 1956) was dismissed by this Court on January 12, 1961.
That judgment is reported as Rabia Bai vs Custodian General of Evacuee Property(1).
Rabia Bai repeatedly petitioned for the return of the sale consideration of Rs. 2,40,000/ to her but without success.
She petitioned to the Prime Minister on May 16, 1966.
Thereupon, she was informed by a letter, dated August 1, 1966, by the Deputy Custodian, Evacuee Property, Bombay, that no third party claim against the immoveable property is payable by his office as Rule 22 of the Administration of Evacuee Property (Central) Rules has since been deleted as a result of the amendment of section 10(m) by Act 91 of 1956.
By an order, dated August 18, 1966, Government of India directed that all the 'surplus balance ' of the evacuee pool lying in the personal deposit account of the Custodian be transferred to the Dy.
Accountant General, New Delhi to form part of the compensation pool under section 14(1) (b) of the Displaced Persons Compensation and Rehabilitation Act of 1954.
In 1968, Rabia Bai filed a writ petition in the High Court for return of the sale consideration.
The writ peti tion was withdrawn on July 11, 1968.
Thereafter on August 3, 1968, she made a petition under section 10(2) (m) and (n) of the Act read with Rule 22 before the Custodian.
This peti tion was rejected by the Custodian under an order, dated November 2, 1968, mainly on the ground that the properties of the evacuee were acquired by the Central Government under section 12 of the Displaced Persons (C. & R.) Act, 1954 and the sale proceeds of the said properties have been credited to the compensation pool.
There is at present, no amount in the hands of the Custodian from which the petitioner 's claims would be paid".
In his view the words "out of funds in his possession" in section 10(2) (n) of the Act show that it would be attracted only where funds are lying with the Custodian.
To impugn this order, dated November 2, 1968, of the Custodian, Rabia Bai filed writ petition No. 1259 of 1971 in the High Court.
The petition came up for hearing before a learned single Judge (Ramaprasada Rao J.) who took the view that having regard to the scheme of the Rehabilita tion Act and the policy reflected therein and the transfer of the cash balances with the Custodian to the compensation pool, it was not open tO the writ petitioner to assail transfer funds or any orders passed in that behalf and therefore she was not entitled to a writ of certiorari sought for, much less a writ of mandamus.
On this ground, he dismissed the writ petition.
With regard to the petitioner 's claim for return of the sale price, it was held that she still continues to be entitled to get the money from and out of the funds that may subsequently come into the hands of the Custodian.
It was added that "the petitioner as at present, should only be satisfied with her entitlement to claim and await the collection of funds or accumulation of funds with the Custodian in future".
(1) ; 260 Aggrieved by that order, Rabia Bai appealed under C1.
15 of the Letters Patent to a Bench of the High Court.
The Bench held that since it was not denied or refuted by the respondents (Custodian, Evacuee Property, Bombay, Regional Settlement Commissioner and Union of India) that payment of Rs. 2,40,000/ was made by Rabia Bai to the evacuee in pursuance of the infructuous sale, "the payment is also not vitiated in any manner as the sale was refused confirmation, not because of want of bona fides in the transferee, but on account of want of bona fides in the transferor.
The re spondents are, therefore under a statutory obligation to refund to the appellant the sale price paid by her".
With regard to the argument that she could not be paid because the fund with the Custodian had been transferred in compliance with the orders of the Government of India to the compensation pool formed trader section 14(1)(b) of the Rehabili tation Act, it was held that the Custodian was competent to transfer only surplus fund left with him, in excess of what was required by him for meeting the outstanding claims registered under r. 22.
The Appellate Bench spelled out this conclusion from a construction of the words "such cash balances" occurring in section 14(1)(b), and the expression "surplus fund" used in the Central Government order asking the Custodian to transfer funds to the account of the Deputy Accountant General as part of the compensation pool.
In this view, the .Bench allowed the appeal and by a writ of certiorari quashed the impugned orders and notifications.
It was further directed that a writ of mandamus shall issue requiring the 1st respondent (Resp.
Custodian) to refund the sum of Rs. 2,40,000/to Rabia Bai.
The third Respondent, Union of India was further directed to place at the dis posal of the Custodian the said sum for the purpose of the refund.
It was specified that the direction regarding the refund and payment shall be complied with within three months.
Hence this appeal by the Custodian and the other re spondents before the High Court.
Let us now have a look at the relevant statutory provi sions.
The material part of section 10, as it stood before the amendment effected by Act 91 of 1956, read as follows: "10(1) Subject to the provisions of any rules that may be made in this behalf, the Custodian may take such measures as he considers necessary or expedient for the purposes of securing, administer ing, preserving and managing any evacuee property and generally for the purpose of enabling him satisfactorily to discharge any of the duties imposed on him by or under this Act and may, for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto.
(2) Without prejudice to the generality of the provision contained in sub section (1), the Custo dian may, for any of the purposes aforesaid, (a) to (1) . 261 (m) incur any expenditure, including the payment of taxes, duties, cesses, and rates to Government or to any local authority (or of any amount due to an employee of the evacuee or of any debt by the evacuee to any person).
(n) pay to the evacuee or to any member of his family or to any other person as in the opinion of the Custodian is entitled thereto, any sums of money out of the funds in his possession. " That part of clause (m), winch is shown within the brackets was deleted by Act 91 of 1956 with effect from October 22, 1956.
Section 40 reads as under: "40.
(1) No transfer made after the 14th of August, 1947, but before the 7th day of May, 1954, by or on behalf of any person in any manner whatso ever of any property belonging to him shall be effective so as to confer any rights or remedies in respect of the transfer on the parties thereto or any person claiming under them or either of them, if, at any time after the transfer, the transferor becomes an evacuee within the meaning of section 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act.
(2) * * * (3) An application under sub section (1) for the confirmation of any transfer may be made by the transferor or the transferee or any person claiming under or lawfully authorised by either of them to the Custodian within two months from the date of the transfer or within two months from the date of the declaration or notification referred to in sub section (1) whichever is later, and the provi sions of section 5 of the Indian Limitation Act, 1908 shall apply to any such application.
(4) Where an application under sub section (1) has been made to the Custodian for confirma tion, he shall hold an inquiry in respect thereof in the prescribed manner and may reject the appli cation if he is of opinion that (a) the transaction has not been entered into in good faith or for valuable consideration; or (b) the transaction is prohibited under any law for the time being in force; or (c) the transaction ought not to be confirmed for any other reason.
262 In this connection, Rule 22 may also be seen.
The material part of this rule ran as under: "Claim by third parties : (1 ) Any person claiming the right to re ceive any payment from any evacuee or from the property of such evacuee, whether in repayment of any loan advanced or otherwise may present a peti tion to the Custodian for registration of his claim . Explanation.
An application under this sub rule shall be in respect of a claim for refund of money paid as consideration for the transfer by an evacuee of any property, where such transfer is not confirmed by the Custodian under section 10 of the Act.
(2) (a) * * (i) to (iV) * * (b) Where such claim is of the nature re ferred to in the Explanation to sub rule (1) and the Custodian holds that the transfer of the property 'in respect of which the claim is made was a bona fide transaction, the Custodian may register the claim or such part thereof as has not been satisfied: Provided that in the case of a claim of the nature referred to in the Explanation to sub rule (1), the claim shah be registered only for that amount of money which is proved to have been paid as consideration for the transfer of the property.
2A. * .
(3) The mere registration of a claim shall not entitle the claimant to payment and the Custo dian may for reasons to be recorded refuse payment .
It may be noted that Rabia Bai had made an application under tiffs rule for the registration of her claim to the refund of the sale consideration.
Indeed, it was under this rule that her claim for Rs. 2,40,000/ was registered.
From a plain reading of Rule 22, it is clear that before a claim for refund of money paid as consideration for the transfer by an evacuee of any property is registered by the Custodian, he should be satisfied: (a) that such transfer has not been confirmed under section 40 of the Act; (b) that such transfer is a bona fide transaction; (c) that the amount for which the claim is being registered is proved to have been paid as consideration for the transfer of the property.
In the instant case, the validity of the Assistant Custodian 's order dated October 1, 1954, registering the claim of Rabia Bai appears to be unassailable because all the three conditions aforesaid to give 263 authenticity to the registration of her claim were satis fied.
The sale was not confirmed by the Custodian, but he found that the whole of the price had actually been paid by the claimant as under: "That by 29.4.1949, Rabia Bai had paid a sum of Rs. 1,50,000/ to the evacuee, and by 30.5.1949, she had paid Rs. 2,10,000/ to the evacuee, and a further sum of Rs. 30,000/ was paid to the evacuee 's agent on the date of registration of the document i.e. 11.8.1949 before the Sub Registrar.
" He further found that so far as the vendee was concerned, she had purchased the property in good faith for very valuable consideration and there was no mala fides on her part.
It was on these findings that he registered her claim under Rule 22 for Rs. 2,40,000/ against "Gani Market" No. 20.
Godown Street, G.T. Madras." Mr. S.N. Prasad, appearing for the appellants contends that the order of the Assistant Custodian registering Rabia Bai 's claim for Rs. 2,40,000/ was a nullity because the transaction was not a bonafide one there being lack of good faith both on the, part of the vendor and the vendee.
In any case, proceeds the argument, a sale which is not con firmed under section 40(4) (a) owing to the absence of good faith either in the vendor or the vendee, cannot be deemed to be a bona fide transaction for the purpose of registration of a claim made by the vendee, under Rule 22.
Reference in this connection has been made to the observations of this Court, in the judgment in the earlier appeal of Rabia Bai arising out of the Custodian 's order refusing to confirm the sale under section 40(4)(a) of the Act to the effect, that the vendor had not entered into the transaction in "good faith".
The contention is misconceived and cannot be accept ed.
Under section 40(4)(a) of the Act, one of the grounds on which the Custodian is bound to reject an application for confirmation of a transfer, is that if in his opinion, the transaction has not been entered into in good faith.
This clause came up for interpretation before this Court in the earlier appeal, Rabai Bai vs Custodian General (supra).
It was held that the expression "good faith" in section 40(4)(a) when construed in the context of section 40(1) means "that if a transaction is affected by absence of good faith either in the vendor or the vendee its confirmation may properly be rejected under section 40(4)(a); in other words, good faith is required both in the vendor and vendee".
With reference to the facts of the case, it was further observed: "Therefore the fact that the appellant paid valuable consideration for the transaction and is not shown to have acted otherwise than in good faith in entering into the transaction would not justify her claim for confirmation of the said transac tion if it is shown that the vendor had not acted in good faith in entering into the said transaction.
The fact that consideration was paid by the appellant and that she was acting in good faith may perhaps be relevant in determining the character of her conduct in regard to the transaction, but it would not be relevant or material in determining the character or the conduct of the vendor in relation to the transfer.
This position is not seriously disputed before us.
" 264 It is clear that in order to qualify for confirmation under section 40(4) (a) on the ground of good faith, a sale has to pass a much more stringent test than the one required to hold it "a bona fide transaction" for the purposes of Rule 22(e) (b).
While under section 40(4) (a) lack of good faith either in the transferor or the transferee would be suffi cient to disqualify the transfer for confirmation, the posi tion under Rule 22 is different.
Under Rule 22, it is the character of the conduct of the claimant which primarily determines the character of the transaction.
Therefore, if the Vendee claimant in purchasing the property acted in good faith, for the purposes of Rule 22, the sale would be a bona fide transaction, notwithstanding the fact that there was lack of good faith on the part of the vendor.
Again, the acid test of the vendor 's bona fides under this Rule would be, whether he had purchased the property for adequate valuable consideration ? In the instant case, the Assistant Custodian found that this test was amply satisfied.
This finding of fact was not and indeed could not be challenged before the High Court.
It is therefore too late in the day to urge that Rabia Bai 's claim was not duly registered in accordance with Rule 22.
Further question that falls to be considered is: What was the consequence of this registration ? According to Mr. Prasad, the registration was an admin istrative act required to be done merely for a statistical purpose.
Our attention has been invited to sub rule (3) of the Rule, which provided that "merely registration of a claim shall not entitle the claimant to payment . " While it is true that mere registration of a claim under this Rule does not ipso facto confer a right to payment, it is not correct to say that the only purpose served by such registration is statistical and nothing else.
As has been discussed already, before registering a claim the Custodian is required to determine objectively that the transaction is bona fide, the claimant having entered into it in good faith on payment of adequate valuable consideration.
The determination of this preliminary fact which is an essential pre requisite of registration is a judicial function en joined on the Custodian by the statutory provision.
Registration of claim of a vendee under this Rule, there fore, amounts to a preliminary adjudication as to the genu ineness of the claim.
and its eligibility for discharge under the relevant substantive provisions of the Act.
The next question to be considered is the effect of the deletion of r. 22 by notification dated February 20, 1957, and the omission by Act 91 of 1956 of the words "or of any amounts due to any employee of the evacuee or of any debt due by the evacuee to any person" from section 10(2)(m) of the Act.
It is contended by Mr. Prasad that since registration under the deleted Rule 22 did not confer a vested right on the claimant, the claim does not survive for consideration under section 10 (2) of the Act.
Clause (m) of section 10(2), accord ing to Counsel, would not cover the case because of deletion caused by the amending Act 91 of 1956.
Clause (n) of s.10(2), it is maintained, also 265 will be of no avail because firstly, as a result of the deletion of r. 22, the Custodian is no longer under any legal obligation to meet the claim, and secondly, the Custo dian has no funds with him for payment of the claim as those funds have since been transferred to the Compensation Pool formed under section 14 of the Displaced Persons Compensation and Rehabilitation Act 1954 (for short, the Rehabilitation Act).
It is contended that every penny in the Custodian 's account once transferred to the Compensation Pool, can be utilised only (a) to compensate displaced persons and (b) to compen sate the evacuee according to Indo Pak Agreement (s.15), and that no part of the Compensation Pool is available to satis fy the claims of third parties who are neither displaced persons, nor evacuees.
So far as the first contention relating to the effect of deletion of r. 22 and the amendment of s.10(2) is concerned, the same is no longer res integra.
In Raja Bhanupratap Singh vs Custodian,(1) a similar argument was advanced.
Shah J. (as he then was) speaking for the Court, negatived the argument, thus: "We are, however, unable to agree that be cause of the amendment made in s.10(2)(m) and the deletion of Rule 22 the power which is vested in the Custodian under s.10(2) (n) must be held re stricted.
Sub section (1) of section 10 sets out the powers of the Custodian generally, and the diverse clauses in sub section
(2) illustrate the specific purposes for which the powers may be exercised, and there is no reason to think that the clauses in sub section
(2) are mutually exclusive.
If power to pay the debts was derived both under cls.
(m) and (n) as it appears it was, deletion of the provision which authorised the Custodian to pay debts due by the evacuee to any person from el.
(m) and Rule 22 setting up the machinery for registration of debts did not, in our judgment, affect the power which is conferred by cl.(n) by sub s.(2) and also by section 10(1).
In our judgment, the power to administer is not merely a power to manage on behalf of the evacuee so as to authorise the Custodian merely to recover and collect the assets of the evacuee but to discharge his obligations as well.
" From the above enunciation, it is clear that the substantive provision which empowers the Custodian to recover and pre serve the assets of the evacuee and to discharge his obliga tions as well is in section 10(1).
The diverse clauses of subs section (2) are not mutually exclusive, and illustrate the various purposes which are included in the general power to adminis ter the properties of the evacuee conferred on the Custodi an by sub s.(1) of s.10.
Clause (n),of s.10(2) specifical ly authorises the Custodian to pay to "any other person as in, the opinion of the Custodian is .entitled thereto any sums of money out of the funds in his possession.
" As was explained in Bhanupratap Singh 's case (supra), the use of the expression "in the opinion of the Custodian" was not intended to invest the Custodian with arbitrary authority.
(1) ; 266 In forming his opinion, he was bound to act judicially.
in the instant case, the Custodian had, in accordance with the machinery provided in r. 22 for effectuating the exercise of the power conferred by section 10(2)(n), formed an opinion about Rabia Bais claim being genuine.
In the exercise of that power the only thing that remained to be done by the Custodian was to ascertain whether there were adequate "funds in his possession" to meet Rabia Bai 's claim which was a genuine liability of the evacuee.
The words "out of the funds in his possession" in cl.(n) of section 10(2) have reference only to the funds relatable to the particular evacuee against whom or against whose property, the claim for refund is made by a claimant.
in the case before us, it is pointed out, the property in question was fetching huge rental income.
The property was acquired under section 12 of the Rehabilitation Act by the Government on February 24, 1961.
It was thereafter sold by the Government on January 18, 1962 for Rs. 3,10,100/ , that is, for a consideration substantially in excess of Rabia Bai 's claim.
The sale proceeds were credited to the Compensation Pool.
At the material time, therefore, it could not be said that the Custodian was not possessed of sufficient funds to meet the claim of Rabia Bai.
Section 14 of the Rehabilitation Act, which came into force on October 9, 1954 conceives the constitution of a Compensation Pool.
It provides that such Pool shall consist of: (a) all evacuee property acquired under s.12, including the sale proceeds of any such property and all profits and income accruing from such property; (b) such cash balances lying with the Custodian as may, by order of the Central Government, be transferred to the compensation pool; (c) such contributions, in any form whatsoever, as may be made to the compensation pool by the Central Government or any State Government; (d) such other assets as may be prescribed.
Sub section
(2) further provides that the Compensation Pool shall vest in the Central Government free from all encum brances and shall be utilised in accordance with the provi sions of the Act and the rules made thereunder.
The controversy is about the true import of the expres sion "cash balances lying with the Custodian" used in cl.
(b) of sub section
(1) of section 14.
According to Mr. Prasad "such cash balances" will cover all funds in their entirety lying in the deposit account of the Custodian which may be transferred by an order of the Central Government to the Compensation Pool.
In our opinion, the expression "such cash balances" used in section 14(1)(b) cannot be interpreted so as to cover total cash deposits.
267 with the Custodian.
The use of the word "balances" is significant.
The connotation of the term "balances" is well known.
According to Websters ' Dictionary, it means "the difference, if any, between the debit and credit side of an account.
" It is the result of a comparative reckoning.
The expression "cash balances" in clause (b) therefore, has to be construed as the excess of credits over debits.
The word "balances" appears to have been advisedly used in preference to "deposits" because the intention was that only that much amount in deposit with the Custodian should be transferred to the Compensation Pool which would be in excess of the amounts required for meeting the due claims against the evacuees or their properties.
It is thus clear that what can be directed to be transferred to the Compensa tion Pool by the Government under section 14(1)(b) is the "cash balances" and not the total cash deposits with the Custodi an.
The above being the legal position, it is to be seen as to what was actually directed to be transferred to the Compensation Pool.
The first order of such transfer made by the Central Government is dated March 19, 1956.
It purports to have been issued under s.14(1)(b) of the Reha bilitation Act.
Thereby the Government directed that a sum of Rs. 10 crores out of the balances centralised under the Head "S Deposits and advances Part II Deposits not bearing interest (C)other Deposits of the Custodians of Evacuee Property" be , 'transferred to the Compensation Pool.
The second order is dated February 26, 1957 whereby the sum of Rupees one crore was directed to be transferred out of the Custodian 's cash balances to the Compensation Pool.
The last order is dated August 18, 1966, whereby it was directed that all the surplus balances in the deposit account of the Custodians be transferred to the Compensation Pool.
The use of the word "surplus" in this Government order is sig nificant.
It puts the matter beyond doubt that only those balances which were surplus or in excess over what was required to meet the liabilities of the evacuees or the registered verified claims against the evacuees or their properties, were to be transferred to the Compensation Pool.
It was the duty of the Custodian therefore to keep back with him so much of the funds in his deposit as were neces sary to meet the verified claims against evacuees or their properties.
a course on his part would have been perfectly legal and also in conformity with the final direc tions issued for transfer of "surplus balances" by the Central Government.
Only the 'cash balances ' which were validly transferred could legally form part of the Compensa tion Pool.
On this point we agree with the High Court that the Custodian had neither ' the power nor the, authority to transfer the entirety of funds to the Compensation Pool.
Even if it is considered for the sake of argument that the last order of the Government was a direction to transfer the entirety of funds including those relating to the property of the evacuee, Abdul Ghani Jan Muhammad, without keeping back what was required for paying the registered claims of Rabia Bai, then the same would be contrary to the intendment of cl.(b) of section I4(1) to the extent of Rabia Bai 's claim.
268 We are of opinion that in the peculiar circumstances of the case, the Appellate Bench of the High Court was right in directing the Custodian to refund a sum of Rs. 2,40,000/ to the respondent, Rabia Bai, in 'payment of her claim and in further directing the Central Government to place at the disposal of the Custodian, appellant herein, the said sum for the purpose of refund.
The time for refund is further extended by 3 months from today, if the same has not already been done.
Accordingly, we dismiss this appeal.
The appel lant shall pay the costs of the respondents in this Court.
P.B.R. Appeal dismissed.

summary:
Section 40(1) of provides that no transfer of any property belong ing to an evacuee, which may subsequently be declared to be evacuee property, shall be effective unless the transfer was confirmed by the Custodian.
Sub section (4)(a) provides that where an application had been made to the Custodian for confirmation, he may reject the application if he is of opinion that the transaction had not been entered into in good faith or for valuable consideration.
In 1949 the respondent purchased house property from an evacuee and paid the consideration.
She made an application under section 40 to the Assistant Custodian for confirmation of the sale.
The application was rejected by him on the ground of want of good faith on the part of the vendor in entering into the transaction.
Her appeal to the Custodian and revision to the Custodian General were dismissed.
In the meantime, under r. 22, of the Administration of Evacuee Property (Central Rules) 1950, the respondent registered her claim for the return of the sale consideration to her.
Thereafter r. 22 was deleted.
She was informed by the Deputy Custodian that no third party claim against immovable property was payable since r. 22 was deleted.
In 1966 the Government transferred to Compensation Pool the 'surplus balance ' of the evacuee pool lying in the personal deposit account of the Custodian.
The respondent later made a petition to the Custodian, which was rejected mainly on the ground that the sale proceeds had been credited to the compensation pool, that there was no amount in the bands of the Custodian from which her claim could be paid and ' that the words "out of funds in his possession" occurring in section 10(2)(n) of the Act showed that the clause would be attract ed only where funds were lying with the Custodian.
The High Court held that payment made by the respondent to the evacuee in pursuance of the infructuous sale, was not vitiated in any manner as the sale was refused confirmation, not because of want of bona fides in the transferee, but on account of want of bona fides in the transferor, and as such the Custodian was under a statutory obligation to refund the sale price paid by her and that the Custodian was competent to transfer only surplus fund left with him, in excess of what was required by him for meeting the outstanding claims registered under r. 22.
In appeal to this Court it was contended that (i) the order of the Assistant custodian registering the claim was a nullity because since the sale was not confirmed under section 40(4)(a) it could not be deemed to be a bona fide transac tion for the purposes of registration of claim under r. 22; (i;) registration .
was an administrative act required to be done for statistical purposes; and (iii) as a result of the deletion of r. 22 the Custodian was no longer under an obligation to meet the claim and no part of the compensa tion pool was available to satisfy the claims of third parties who were neither displaced persons nor evacuees.
Dismissing the appeal, HELD: (1 ) The High Court was right in directing the Custodian is refund the sale price to the respondent in payment of her claim and in further directing 256 the Central Government to place at the disposal of the Custodian the said sum for the purpose of refund.
[268 A B] (1)(a) Under r. 22, before a claim for refund.
of money paid as consideration for the transfer by an evacuee of any property is registered by the Custodian, he should be satis fied: (i) that such transfer has not been confirmed under section 40 of the Act, (ii) that such transfer is a bona fide trans action; (iii) that the amount for which the claim is being registered is proved to have been paid as consideration for the transfer of the property.
[262 G] In the instant case, the validity of the, Assistant Custodian 's order registering the respondent 's claim is unassailable because all the three conditions aforesaid to give authenticity to the registration of her claim were satisfied.
The sale was not confirmed by the Custodian but he found that the whole of the price had actually been paid by the claimant.
[263 A] (b) In order to qualify for confirmation under section 40(4)(a) on the ground of good faith, a sale has to pass a much more stringent test than the one required to hold it "a bona fide transaction" for the purposes of r. 22.
While under section 40(4)(a), lack of good faith either in the trans feror or the transferee would be sufficient to disqualify the transfer for confirmation, the position under r. 22 is different.
Under r. 22 it is the character of the conduct of the claimant which primarily determines the character of the transaction.
Therefore, if the vendee claimant in purchasing the property acted in good faith, for the pur poses of r. 22, the sale would be a bona fide transaction, notwithstanding the fact that there was lack of good faith on the part of the vendor.
Again, the test of the vendee 'section bona fides under this Rule would be, whether he had pur chased the property for adequate valuable consideration.
[264 A B] Rabia Bai vs Custodian General of Evacuee Property ; followed.
In the instant case, the Assistant Custodian found that this test was amply satisfied.
This finding of fact was not challenged before the High Court.
It is therefore too late in the day to urge that the respondent 's claim was not duly registered in accordance with r. 22.
[264 C] (2) Registration of claim of a vendee under r. 22 amounts to a, preliminary adjudication as to the genuineness of the claim and its eligibility for discharge under the relevant substantive provisions of the Act.
While mere registration of a claim under this rule does not ipso facto confer a right to payment, it is not correct to say that the only purpose served by such, registration is statistical and nothing else.
Before registering a claim the Custodian is required to determine objectively that the transaction is bona fide the claimant having entered into it in good faith on payment of adequate valuable consideration.
The determi nation of this preliminary fact, which is an essential pre requisite of registration, is a judicial function enjoined on the Custodian by the statutory provision.
[264 E F] (3)(a) The words "out of the funds in his possession" in section 10(2)(n) have reference only to the funds relatable to the particular evacuee against whom or against whose proper ty, the claim for refund was made by a claimant.
The use of the expression 'in the opinion of the Custodian ' in section 10(2)(m) was not intended to invest the Custodian with arbitrary authority.
In forming his opinion, he was bound to act judicially.
[266 A B] Raja Bhanupratap Singh vs Custodian ; fol lowed.
In the instant case, the Custodian had formed an opinion about the respondents claim being genuine.
In the exercise of that power the only thing that remained to be done by the Custodian was to ascertain whether there were adequate 'funds in his possession ' to meet the respondent 's claim.
The property was ' sold by the Government for a consideration which had been far in excess of her claim, and the sale proceeds were credited to the compensation pool.
It could not be said that at the material time the Custodian was not in .
possession of sufficient funds to meet the respondent 's claim.
[266 B] (b) The expression 'such cash balances ' used in section 14(1)(b) of the Rehabilitation Act cannot be interpreted to cover total cash deposits with the Custodian.
257 The expression has to be construed as the excess of credits over debits.
The word 'balances ' had been advisedly used in preference to 'deposits ' because the intention was that only that much amount in deposit with the Custodian should be transferred to the Compensation Pool which would be in excess of the amounts required for meeting the due claims against the evacuees or their properties.
What can be di rected to be transferred to the Compensation pool by the Government under section 14(1)(b) is the 'cash balances ' and not the total cash deposits with the Custodian [267 A B] (c) The Custodian bad neither the power nor the authori ty to transfer the entirety of funds to the Compensation Pool.
The word 'surplus, ' used in the Government order puts the matter beyond doubt that only those balances which were surplus or in excess over what was required to meet the liabilities of the evacuees, were to be transferred to the Compensation Pool.
It was the duty of the Custodian, there fore.
to keep back with him so much of the funds in his deposit as were necessary to.
meet the verified claims against evacuees or their properties.
Such a course would have been perfectly legal and also in conformity with the final directions issued for transfer of 'surplus balances ' by the Central Government.
Only the 'cash balances ' which were validly transferred could legally form part of the Compensation Pool.
[267 E G]