judgement:
Appeals Nos. 660 and 811 of 1966.
Appeals by special leave from the award dated January 14, 1965 of the Industrial Tribunal, West Bengal in Case No. VIII260 of 1963.
H.R. Gokhale, B.P. Maheshwari and N.M. Shetye, for the appellant (in C.A. No. 660 of 1966) and respondent No. 1 (in C.A. No. 811 of 1966).
D.L. Sen Gupta, Janardan Sharma and S.K. Nandy, for the appellants in (C.A. No. 811 of 1966) and respondent No. 1 (in C.A. No. 660 of 1966).
A. S.R. Chari and D.N. Mukherjee, for respondent No. 2 (in both the appeals).
The Judgment of the Court was delivered by Vaidialingam, J.
In these two appeals, by special leave, the company and the workmen 's Union attack the award of the Industrial Tribunal, West Bengal, dated January 14, 1965, in so far as it is against each of them.
The Government of West Bengal, by its order dated November 5, 1963, referred for adjudication six issues, viz.: "1. Revision of dearness allowance.
Revision of the scheme of gratuity.
Age of superannuation.
Leave and holidays.
Canteen facilities; and 6.
Shift allowance for supervisors.
In both these appeals we are concerned only with issues nos.
1 to 3.
With regard to dearness allowance, the Tribunal had directed that it should stand revised from November 1963.
It provided a sliding scale for an increase or decrease of Re. 1/ for rise or fall of five points in the cost of living index, with retrospective operation from November 1963.
It further directed that the dearness allowance payable for each month from November 1963 shall be recalculated on that basis and additional amounts due to workmen should be paid in two monthly instalments after the date of publication of the award.
There was a further direction to the effect that the dearness allowance for any particular month shall be calculated on the basis of average cost of living index for three immediately preceding months.
Regarding gratuity, the Tribunal effected certain modifications to the then existing scheme of gratuity, under rules 1, 2 and 3.
The Tribunal increased the maximum gratuity payable to 15 months 116 salary, but deleted the provision contained in the scheme that the maximum should not exceed Rs. 4,000/ .
In rule 2, it further directed the deletion of the qualifying period of 10 years continuous and approved service.
It also modified the provisions of r. 3 by providing for payment of gratuity less any financial loss that has been caused to the employer as a result of misconduct which necessitated the termination of service.
It further provided that in case of a workman leaving service without notice or terminating his employment without the permission of the company, in order to enable him to get gratuity he should have put in service of ten completed years or more.
The Tribunal increased the existing age of superannuation from 55 years to 58 years.
The Union, in its appeal C.A. No. 811 of 1966, attacks the award in respect of all the above matters; but so, far as the company 's appeal C.A. No. 660 of 1966 is concerned, though it has challenged the award, again, in respect of all the above matters to the extent to which they are against it, this Court has granted special leave, by its order dated April 28, 1965, only on the question of dearness allowance.
Before we proceed to deal with the contentions of the parties regarding the award in question, we can straight away dispose of two applications filed by the company.
C.M.P. No. 329 of 1967 has been filed by the company for leave to.
urge additional grounds in the appeal.
By this application the appellant seeks permission to raise contentions regarding certain modifications effected by the Tribunal in the gratuity scheme.
That is, substantially, the company attempts to reopen the limited leave given by this Court on April 28, 1965.
The company has also filed C.M.P. 2860 of 1968 referring therein to certain subsequent proceedings and requesting this Court to take them into consideration in considering the question of dearness allowance.
Both these applications are opposed by the Union and we see no reason to grant the requests contained in each of them.
These two applications are accordingly dismissed.
We shall first take up the question of dearness allowance.
While, on the one hand, the appellant wants a substantial reduction in the dearness allowance granted by the Tribunal, the Union, in its appeal, seeks a substantial increase in the dearness allowance granted by the award.
We have already indicated the decision of the Tribunal in this regard.
Before we actually deal with the contentions of Mr. Gokhale, learned counsel for the company, and Mr. Chari and Mr. Sen Gupta, who followed him, for the Union, it is necessary to refer to certain previous awards, as well as agreements, with reference 117 to dearness allowance.
Though there have been certain awards prior to 1954, it is enough if we state the history, beginning from the agreement between the company and the Union, entered into on September 15, 1954.
Under clause 11 of this agreement it was provided that the then existing rate of dearness allowance would prevail, unless there was a substantial change in the working class cost of living index, in which case the rate would be suitably adjusted.
There is no controversy that the rate of dearness allowance, which was continued under this agreement, was Rs. 30/ .per month.
The issue relating to dearness allowance was referred, by the State of West Bengal, to Shri G. Palit, the Fifth Industrial Tribunal, West Bengal.
It is necessary to refer in some detail to the award of Shri Palit, dated August 26, 1957, because the Industrial Tribunal, in the present case, has not chosen to go behind the said award.
Shri Palit found that after the agreement of September 15, 1954, there had been a substantial increase in the cost of living index justifying the grant of an increased dearness allowance, as contemplated under cl. 11 of the agreement.
According to him, in August 1954 the working class cost of living index stood at 344.1 and in August 1955 it came down to 338.4; it again went up to 391.4 in August 1956.
Shri Palit has also stated that in May 1957 the cost of living index reached 400.6 points.
Accordingly he has noted that there has been a rise of 56 points, from 344.1 in August 1954 to 400.6 in May 1957 and that the said increase justifies a revision of the original rate of dearness allowance.
In considering the quantum of increase in dearness allowance that should be awarded, Shri Palit has again taken note of the fact that at 344 points in September 1954, at the time when the agreement was entered into, the dearness allowance was Rs. 30 per month, and that there is no dearness allowance up to 180 points of the cost of living index.
According to him, the dearness allowance of Rs. 30 per month, in September 1954, represented the dearness allowance for the points in excess of 180 points, viz., for 164 points and that this roughly worked out at Re. 1/ dearness allowance for every 51/2 points.
On this basis Shri Palit held that to cover 56 points ' rise (400 minus 344), the dearness allowance, which could be legitimately claimed by the Union, would be Rs. 10/ odd, as it in fact appears to have been claimed.
But, as normally only 75% neutralisation is granted and in view of the fact that the company, which was a chemical industry, was also in a tight corner, he held that full neutralisation should not be granted.
On this reasoning Shri Palit allowed Rs. 7/ as increase in dearness allowance on the pay scale up to Rs. 50/ and increased dearness allowance of Rs. 5/ , thereafter, for the next Rs. 50/in the pay scale.
In view of the fact that the company had 118 already allowed an increase of dearness allowance of Rs. 2/ , Shri Palit directed that the increase of dearness allowance, as ordered by him, should be adjusted against the amount already paid by the company.
Both the company and the Union appealed to this Court against this award of Shri Palit.
The decision of this Court is reported as Bengal Chemical & Pharmaceutical Works Ltd., Calcutta vs Their Workmen(1).
Referring to the agreement dated September 15, 1954, this Court.
observed that the rate of dearness allowance., continued under that agreement, was accepted by the parties as reasonable on the date of the agreement till there was a substantial change in the working class cost of living index.
This Court further stated that the findings given by Shri Palit were on facts and no permissible ground had been shown for interference with it in an appeal by special leave.
The award of Shri Palit was confirmed by this Court and the company 's appeal was dismissed with costs.
The Union did not press its appeal and that too.
was dismissed with costs.
On January 6, 1962 there was again a memorandum of settlement between the company and the Union, and under cl. 6 it was provided that the then existing slab of dearness allowance in relation to.
the basic pay of the employees would be increased by Rs. 3/ and that the increase was to have effect from November 1, 1961.
The Union made a demand, on May 21, 1962, for revision of the dearness allowance, scheme of gratuity and the age of superannuation.
It also.
presented its demands, on September 3, 1962, to the Assistant Labour Commissioner, West Bengal.
With reference to the revision of dearness allowance, the.
demand of the Union was that there should be hundred percent neutralisation.
As conciliation failed, a reference was made, by the State Government, on November 5, 1963.
We have already indicated the nature of the directions given in the award, in respect of dearness allowance.
The Tribunal, in the award in question, has, after elaborately referring to the agreement of September 15, 1954 as well as the award of Shri Palit and the settlement dated January 6, 1962, rejected the contention of the company that no, case had been made out for a revision of the dearness allowance.
In this connection the: Tribunal referred to.
the chart, filed by the Union, regarding the cost of living index during the years 1961 to 1964 and has noted that the correctness of the chart had not been disputed by the company.
It is of opinion that in January 1962, when the settlement was arrived at on January 6, 1962, the index number was 402 and, after referring to the index numbers in the various months between 1962 and 1964, it concluded that there (1) [1959] Supp. 2 S.C.R. 136. 119 had been a substantial increase in the cost of living index and hence a revision of the dearness allowance was necessary.
The Tribunal no doubt took the view that the financial ability of the company to bear the additional burden, did not come in for consideration because by cl. 10 of the settlement dated January 6, 1962, the company had agreed to.
a modification of the dearness allowance if there was a substantial change in the working class cost of living index.
Regarding the rate of variation that had to.
be fixed, the company appears to have pressed for the acceptance of the principle laid down by this.
Court in The Hindustan Times Ltd., New Delhi vs Their Workmen(1) providing for the linking of the dearness allowance with the cost of living index.
It also appears to have urged that the provision made in the said decision regarding dearness allowance that it should be increased or decreased by Re. 1/ for a rise or fall in the cost of living index by 10 points should be adopted; that is, the appellant pressed that the variation should be linked to a variation of 10 points.
On the other hand, the Union appears to.
have pressed for the acceptance of the method adopted by this Court in a case from West Bengal in Workmen of Hindusthan Motors vs Hindusthan Motors(") viz. o.f providing a sliding scale of an increase or decrease of Re. 1/ for a rise or fall of every five points in the cost of living index.
The Tribunal has, after holding that it cannot go behind the award of Shri PaIit as the said award had been confirmed by this Court, accepted the Union 's contention that there should be an increase or decrease of dearness allowance by Re. 1/ for an increase or decrease of every 5 points in the cost of living index.
It has also held that the cost of living index at the time when the agreement of January 6, 1962 was entered into was 402 and the dearness allowance of Rs. 3/ fixed under the said settlement could be referred only to the said figure of 402.
The Tribunal then considered the question as to from what date the revision of dearness allowance should be given effect to.
Though the company contended that the award should become operative only from the date when it was given and the Union, on the.
other hand, contended that it should be given effect to from the date when the demand for revision was made by it, the Tribunal ultimately held that the increased dearness allowance granted by it should take effect from the month when the reference was made by Government, viz., November 1963.
Mr. Gokhale, learned counsel for the company, has urged that the linking of dearness allowance at the rate provided in the [1964] 1 S.C.R. 234.
(2) [1962] II L.L.J. 352.
120 award is not justified as it departs from the past practice evidenced by the various awards, as well as the agreements and settlements, entered into by the parties.
The Tribunal, counsel urges, has given no special reason to depart from the method adopted on previous occasions According to the learned counsel, the dearness allowance, if any, should have been given on an adhoc or lump sum basis as had been done on prior occasions.
Mr. Gokhale also urges that the financial position, or capacity to bear the additional burden, that will be cast on the company by the grant of increased dearness allowance, which has been held by decisions of this Court to be a relevant factor to.
be taken into account, has not been considered at all by the Tribunal.
In the alternative, counsel urges that even assuming that the method of linking, adopted by the Tribunal, was correct, a very serious mistake has been committed by the Tribunal when it has proceeded on the basis that the increase should be granted on the basis that there has been a rise over the cost of living index of 402.
According to Mr. Gokhale, the evidence clearly shows that on the date of the settlement, viz. January 6, 1962, the cost of living index for January 1962 could not have been available and the parties had before them only the cost of living index for the month of November 1961, which was 421 points and it is on that basis that an increase of Rs. 3/ was fixed in the settlement of January 6, 1962.
Therefore any dearness allowance that is granted must have reference to a rise of the cost of living index above 421 points.
Counsel also attacks the direction regarding effect being given to the award from November 1963.
While contesting the appeal of the company, Mr. Chaff, and Mr. Sen Gupta, learned counsel for the Unions concerned, have urged that at no stage has the dearness allowance been fixed, in this ,company, on any scientific basis.
According to the learned counsel, the agreement, entered into between the parties, should not be taken as indicative of the fact that complete neutralisation has been effected in the matter of fixing dearness allowance.
According to them, Shri Palit has committed a fundamental error in assuming that in the 1954 agreement full neutralisation has been given.
Counsel also point out that the extent or degree of neutralisation to be granted is not rigid and that though hundred per cent neutralisation is not normally given, nevertheless in the case of the lowest paid employees such neutralisation is permissible.
Counsel also urged that the Tribunal has committed a mistake in not accepting the claim of the Union that the question of dearness allowance will have to be considered entirely on the materials placed before it.
without in any manner being influenced by the award of Shri Palit.
It is also, pointed out that even the appellant wanted a sliding scale to be attached to the dearness allowance and provision made for the rate of dear 121 ness allowance being liable to be increased or decreased by Re. 1/ for a rise or fall in the cost of living index by every 10 points, as will be seen from the fact that it pressed for the acceptance of the 'principle laid down by this Court in the Hindustan Times Case(1).
It is further urged that the Tribunal was justified in granting dearness allowance for an increase over the cost of living index of 402, as that was the price .index in the month of January 1962 when the settlement between the parties was effected.
In the appeal, by the Union, regarding dearness allowance, Mr. Sen Gupta, learned counsel, urges that there should have been cent per cent neutralisation in the award of dearness allowance and that there should have been a complete de novo examination of the claim made by the Union for revision of dearness allowance, without being influenced by the award of Shri Palit.
In this connection counsel refers to the decision of this Court in Remington Rand of India vs Its Workmen(2) where it has been held that when a rise.
in the cost of living index has been established, the claim for a revision of dearness allowance cannot be rejected without examining its merits solely on the ground that because a provision has been made for adjustment from time to time, by agreement of parties in a scheme, that scheme ought to remain in force for all time and cannot be reopened or re examined.
Counsel further urges that in any event, the Tribunal should have given effect to its award from May 1962, when the Union had made the.
demand for revision of dearness allowance.
Before we deal with the contentions of the learned counsel, it will be desirable to refer to a few decisions of this Court laying down the principles that have to be borne in mind when a claim for dearness allowance or revision of dearness allowance is considered.
In Clerks of Calcutta Tramways vs Calcutta Tramways Co. Ltd.(3) it is observed: " 'We can now take it as settled that in matters of the grant of dearness allowance except to the very lowest class of manual labourers whose income is just sufficient to keep body and soul together, it is impolitic and unwise to neutralise the entire rise in the cost of living by dearness allowance.
More so in the case of the middle classes.
" (1) [1964] 1 S.C.R. 234.
(2) [1962] 1 L.L.J. 287.
(3) ; , 779.
C.I./69 9 122 In the Hindustan Times Case(1) it is stated at p. 247: "As was pointed out in Workmen of Hindusthan Motors vs Hindusthan Motors (2), the whole purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on rise in the cost of living and a decrease on a fall in the cost of living." In Greaves Cotton & Co. vs Their Workmen(a), after referring to the Hindusthan Motors Case(2) and French Motor Car Co. 's Case(4), this Court laid down that the basis of fixation of wages and dearness allowance is industry cum region and observed, at p. 368: "The principle therefore which emerges from these two decisions is that in applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind.
But where the number of industries of the same kind in a particular region iS small it is the region part of the industry cum region formula which assumes importance particularly in the case of clerical and subordinate staff, for, as pointed out in the French Motor Car Co 's Case(4), there is not much difference in the work of this class of employees in different industries. ' ' Again, at p. 374, it is stated: "Time has now come when employees getting same wages should get the same dearness allowance irrespective of whether they are working as clerks, or members of subordinate staff or factory workmen.
" In Ahmedabad Mill owners Association vs The Textile Labour Association(5) it has been emphasised that in trying to recognize and give effect to the demand for a fair wage, including the payment of dearness allowance to provide for adequate neutralisation, industrial adjudication must always take into account the problem of the additional burden which such wage structure would impose upon the employer and ask itself whether the employer can reasonably be called upon to bear such burden.
(1) [1964] 1 S.C.R. 234.
(2) [1962] II L.L.J. 352.
(3) ; (4) [1963] Supp.
(5) [1966] I S.C.R. 382.
123 In Kamani Metals & Alloys Ltd. vs 'Their Workmen(1) it has been noted that one hundred per cent neutralisation is not advisable as it will lead to inflation and therefore dearness allowance is often a little less than one hundred per cent neutralisation.
The following principles broadly emerge from the above decisions: 1.
Full neutralisation .is not normally given, except to the very lowest class of employees.
The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on the rise in the cost of living and a decrease on a fall in the cost of living.
The basis of fixation of wages and dearness allowance is industry cum region. ' 4.
Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workman.
The additional financial burden which a revision of the wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account.
Having due regard to the above principles, we are satisfied, in the instant case, that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness allowance.
We are not impressed with the contention of either the company or the Union that the Tribunal has committed an error in the matter of revising the dearness allowance.
The company appears to have been more intent upon pressing that there has been no substantial increase in the cost of living since the settlement, dated January 6, 1962 and that, m any event, the Union, n view of cl. 10 of the settlement, was not entitled to ask for a division of dearness allowance before the expiry of three years.
The Tribunal has referred to the rise in the cost of living index after the date of the settlement of January 6, 1962, and it has also, in our opinion, quite rightly held that cl.
10 of the settlement is no bar for entertaining the claim; therefore, its decision hat a revision of the dearness allowance should be made iS perfectly correct.
(1) ; 124 The Tribunal is also.
justified in rejecting the contention of the Union that the revision of the dearness allowance must be made de novo, ignoring the previous award of Shri Palit.
Though, normally, when a claim for revision of dearness allowance is made and a rise in the cost of living index has been established, such a claim has to be considered on its merits, as held by this Court in the Remington Rand Case(1), it cannot be lost sight of, in this case, that the decision of Shri Palit was affirmed by this Court and the appeals, filed by the company and the Union, were dismissed on the ground that the agreement of 1954 was reasonable ,and the findings of Shri Palit were all on facts.
In view of this, the Tribunal, in our view, was perfectly justified in proceeding on the basis that the award of Shri Palit should form the basis for considering the nature of the revision of dearness allowance that would be permissible.
We have already referred to the various matters, adverted to by Shri Palit in his award.
If really the case of the Union was, as is now sought to be put before us, that the dearness allowance on prior occasions had not been fixed on any scientific basis and that Shri Palit erred in proceeding on such an assumption with reference to previous agreements, the proper stage when these questions should have been canvassed was in the Union 's appeal, before this Court, against the award of Shri Palit.
Having allowed that appeal to be dismissed as not pressed, it is no longer open to the Union to raise those contentions now.
We are therefore satisfied that the Tribunal 's view that Shri Palit 's award should form the basis for further reconsideration of the claim for revision of dearness allowance is correct.
The Tribunal has no doubt stated that the financial ability of the company does not come in for consideration, as the company agreed, by the settlement of January 6, 1962, to pay increased dearness allowance if there was a substantial change in the cost of living index.
It is true that the additional financial burden that will be thrown on the company by reason of the revision of dearness allowance is a very material and relevant factor to be taken into account in such circumstances; but, in this case, we do.
not find in the written statement, filed by the company, am plea taken that if the claim of the Union, as made in its charte of demands in respect of dearness allowance is accepted, it will cast a very.
heavy financial burden on the resources.
of the corn pany.
In the absence of any such plea having been taken, w consider it unnecessary to pursue this contention of the appellan any further.
There is the additional circumstance of the provision for modification, as contained in the settlement of January 1962 (1) [1962] II.L.J. 287.
125 The appellant, so far as we can see, has not placed any material before the Tribunal regarding the comparable industries in the region.
As pointed out by the Union, the company seems to have pressed for the grant of dearness allowance being liable to be increased or decreased by Re. 1/ , as was done by this.
Court in the Hindusthan Times Case ( 1 ).
The Union appears to have pressed for an increase or decrease of Re. 1/ in dearness allowance with a rise or fall of every 5 points in the cost of living index.
It is therefore obvious that the appellant also wanted linking of Re. 1/ for every 10 points.
It must also be borne in mind that the alternative way, propounded by the Union, for grant of dearness 'allowance has been rejected by the Tribunal.
Under these circumstances, it cannot be stated that the Tribunal has committed any error in accepting the claim of the Union, supported as it was by the decision of this Court in the Hindusthan Motors Case(2).
Mr. Gokhale next urged that the view of the Tribunal that the increase of Rs. 3/ as.
dearness allowance, given in the settlement dated January 6, 1962, must have been on the basis that the index number was 402, was erroneous.
The settlement was made on January 6, 1962, on which date the index number for January 1962 could not have been available to the parties.
The last month for which the index number was available was for the month of November 1961 and it was 421.
The index number at the time when the award was given by Shri Palit was about 400 and it was really for an increase of 21 points that Rs. 3/ as increment was provided in the settlement.
Though when the Tribunal gave the present award the index number for January 1962 was already available, that figure could not have formed the basis of the settlement, and it is inconceivable that for a rise of only 2 points, i.e., from 400 in 1957 to 402 in 1962, a rise of Rs. 3/ in the dearness allowance would have been provided for.
Therefore the increase or decrease provided for by the Tribunal must really relate to the cost of living index of 421 points, and not to 402 points.
Mr. Sen Gupta, learned counsel for the Union, found considerable difficulty in supporting that reasoning in the award on this matter.
We are in agreement with the contentions of Mr. Gokhale in this regard.
Chart, Exhibit 4, furnished by the Union, clearly shows that the index number in November 1961 was 421 points.
It also shows that the index for January 1962 was 402 points, but the index for that month was not available till the end of January 1962 and it could not have been before the parties when the settlement was made on January 6, 1962.
Therefore, the index number of 421 must have been taken into (1) [1964] I S.C.R. 234.
(2) [1962] II I.L.J. 352.
126 account on the date of the settlement and it must have been really for the increase of 21 points, after the date of Shri Palit 'section award, that the additional sum of Rs. 3/ was fixed as dearness allowance.
If on the other hand, the Tribunal 's view is correct, there would have been only an 'increase of 2 points, from 400 to 402, and for that increase of 2 points, the sum, of Rs. 3/ was fixed, as dearness allowance.
In our opinion, that reasoning of the Tribunal cannot be accepted.
Therefore the award of the Tribunal will have to be modified, in this regard, by directing that the sliding scale providing for an increase or decrease of Re. l/for a rise or fall of every 5 points, must be related to the cost of living index of the base of 421 (that being the cost of living index for November 1961 ) and not of the base of 402, as.
directed by the Tribunal.
The last contention of Mr. Gokhale, bearing upon dearness allowance, is that the direction that the award will have retrospective effect from November 1963 is erroneous.
In this connection: Mr. Gokhale referred us to el.
10 of the settlement of January 6, 1962 stating that the settlement was to remain operative for three years.
According to learned counsel, any rise in dearness allowance should have effect only after the expiry of three years from January 6, 1962, or, at any rate, from the expiry of three years from November 1, 1961, the date on which the increase in the settlement had been given effect to.
Mr. Sen Gupta, in the Unions appeal, pressed for the award being given effect to from May 1962 when the Union had made a demand on the company for revision of dearness allowance, especially when the Tribunal had itself found that there had been a substantial rise in the price index after the date of the settlemeat.
It will be seen that both the parties have a grievance regarding the date from which the revision of dearness allowance should be given effect to, We are not impressed with the contentions of both the parties, in this regard.
The Tribunal has taken note of the rise in the cost of living index, as well as the demand having been made by the workmen, as early as May 21,.
It has also adverted to the fact that the reference, by the State Government, was made on November 5, 1963.
It has further adverted to.
the fact that though ' the cost of living index had increased considerably, the company did not choose to adjust the dearness allowance suitably.
It was, after having regard to all the circumstances that the Tribunal felt that the workmen should get dearness allowance commensurate with the cost of living index, at least from the month of reference, viz., November 1963.
As laid down by this Court in the Hindusthan Times Case(1), no general formula can be laid down as to the date from which a (1) [1964] 1 S.C.R. 234. 127 Tribunal should make its award effective and that that question has to be decided by the Tribunal On a consideration of the circumstances of each case.
In the said decision this Court declined to interfere with the Tribunal 's direction that reliefs given by it would become effective from the date of reference.
In Kamani Metals Ltd. Case(1) the workmen had made demands on July 1, 1961.
The Conciliation Board was moved on September 8, 1962 and, when conciliation failed, a reference was made on December 14, 1962.
The Tribunal made an award, retrospective from October 1, 1962, a date between the reference to conciliation and the reference to the Tribunal.
That decision of the Tribunal was accepted by this Court.
Recently, in Hydro (Engineers) Pvt. Ltd. vs The Workmen(2) this Court declined to interfere with the direction given by a Tribunal that its award should take effect from the date of demand made by the workmen.
It has also been pointed out, in the said decision, that it is a matter of discretion for the Tribunal to decide, from the circumstances of each case, from which date its award should come into operation, and no general rule can be laid down as to the date from ' which a Tribunal should bring its award into force.
Therefore it will be seen that when a Tribunal gives a direction regarding the date from which it has to become effective, no question of principle, as such, is involved.
From the above decisions of this Court, it will also be seen that this Court has declined to interfere with an award having effect from either the date of demand, or the date.
of reference, or even a date earlier than the date of reference but after the date of demand.
In fact, the direction given by the Tribunal, in the case before us, giving effect to its award from the date of reference, squarely comes within the decision of this Court in the Hindusthan Times Case(3) and, as such, that direction is correct.
To conclude, on this aspect of dearness allowance, excepting for the direction that the rate of increase or decrease awarded by the Tribunal should be related to the cost of living index of 421 and not 402 (as directed by the Tribunal), in all other respects the decision of the Tribunal on this point will stand.
This closes ' the discussion on the appeal of the company and the appeal of the Union, in so far as they relate to dearness allowance.
There are two further points, taken by the Union, in its appeal, one relating to the modifications effected to the gratuity scheme, and the other relating to the age of superannuation.
The provisions in the gratuity scheme, which came up for consideration before the Tribunal, were as follows: (1) ; (2) [1969] 1 S C.R. 156.
(3) [1964] 1 S.C.R. 234. 128 "1.
On the death of an employee while in the service of the company, one month 's salary for each completed year of service subject to a maximum of 12 months salary not exceeding Rs. 4,000 on the average of the last three years salary to be paid to his heirs or dependants as the Board may in their discretion decide.
On voluntary retirement due to illness or termination of service by the company after 10 years continuous and approved service one month 's pay for each year of service subject to a maximum of 12 months pay not exceeding Rs. 4,000.
No employee shall be entitled to claim any gratuity if he is dismissed for dishonesty or misconduct or if he will have left service without notice or terminated his employment without the permission of the Company.
" The Tribunal has effected certain modifications.
to r. 3 which, in our opinion, are quite consistent with the decision of this Court in Management of Wenger & Co. vs Workmen(1).
Therefore the Union cannot have any grievance regarding the Tribunal 's directions, in this 'regard.
So far as rr. 1 and 2 are concerned, the Tribunal modified them by increasing the ceiling from 12 months ' salary to 15 months ' salary and deleted the pecuniary limit of Rs. 4,000.
In r. 2, the Tribunal further directed the deletion of 10 years ' continuous and approved service, to enable a workman to get gratuity in the circumstances mentioned therein.
Mr. Sen Gupta, learned counsel for the Union, urged that the Tribunal committed an error in prescribing the ceiling of 15 months ' basic wages and that the Tribunal should have modified r. 1 by providing that the average last one year 's salary should be taken into account for the purpose of calculating gratuity, instead of the three years ' period provided in the rule.
Mr. Gokhale, learned counsel for the company, pointed out that his client has been prejudiced by the modifications effected by the Tribunal, but the company had now been precluded from raising these objections because of the limited leave given by this Court.
Nevertheless, the counsel pointed out, inasmuch as the Tribunal was increasing the ceiling from 12 months to.
15 months and deleting the further pecuniary limit of Rs. 4,000/ , as well as the qualifying period to enable a worker to earn gratuity, the Tribunal must have felt that no further modifications were necessary.
In our opinion no case has been made out by the Union for interfering with the directions given by the Tribunal and we are also satisfied that there has been no improper exercise of discretion by the Tribunal in this regard.
It has effected certain modifications in favour of the (1) [1953] supp.
2 S.C.R. 862.
129 workmen and obviously it did not think it necessary to make any further .modifications as pressed by the Union.
Therefore, the objections to the: modifications, raised on behalf of the Union have to be rejected.
The last point that has been agitated by the Union, in its appeal, is regarding the age of.
superannuation.
The provision regarding age of superannuation, as obtaining then in the company, was as follows : "The age of retirement as mentioned in the Company 's Standing Orders under r. 9 will henceforth be strictly followed in case of all employees.
The employees.
henceforth shall retire at the age of 55.
Extension, if any, will depend on Company 's discretion.
" The Tribunal increased the age of superannuation to 58 years from 55 years.
It has relied upon two circumstances in coming to this conclusion: (a) that this Court has raised the age of retirement from 55 to 58 years in Jessop 's Case(1) which was a case from West Bengal, with regard to clerical and subordinate staff, other than those who.
were workers under the Factories Act.
The appellant 's industry, which is of a different nature, being a chemical and pharmaceutical industry, all the workmen of such a company factory workers or non factory workers should have the same age of superannuation.
(b) The fixation of the age of retirement for its employees, by the Government of West Bengal, at 58 years.
Mr. Sen Gupta urged that the age of superannuation should have been raised to 60 years.
It is not necessary to refer to the earlier decisions of this Court, on this point.
Recently, in The Management of Messrs. Burmah Shell Oil Storage and Distributing Co. Ltd. vs Its Workmen(2), this Court, after a review of the prior decisions, held that in fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular area.
Applying this test, we are satisfied that the Tribunal 's fixing of the age of retirement at 58 years is justified.
As already noted, it has relied upon Jessop 's Case(1) which related to West Bengal and the age of retirement fixed by the State Government.
Therefore the Tribunal has taken note of the trend in the particular area, viz., West Bengal, when it increased the age of superannuation from 55 to 58 years.
Therefore the Union 's claim that it should be further increased to 60 years cannot be sustained.
(1) [1964] I L.L.J. 451.
(2) Civil Appeal No. 44 of 1968, decided on May 1, 1968.
130 In the result, excepting for the modification indicated by us with regard to the cost of living index in respect of dearness allowance, in all other respects we confirm the award.
The appeal, by the company, is therefore partly allowed to the extent of the modification noted above.
The appeal of the Union is dismissed.
Parties will bear their own costs.
G.C. C.A. No. 660/66 partly allowed.
No. 811 / 66 dismissed.

summary:
In 1954 the Bengal Chemical and Pharmaceutical Works Ltd. entered into an agreement with its workmen about dearness allowance.
In 1957 dearness allowance was again fixed by an award of the Fifth Industrial Tribunal, Bengal on the basis of the cost of living index in May 1957 which stood at 400.6.
The company as well as the workmen 'appealed against the said award to this Court.
The company 's appeal was dismissed and the workmen did not press their appeal.
On January 6, 1962 there was a fresh settlement between the company and the workmen whereby dearness allowance was raised by Rs. 3.
On a fresh industrial dispute arising in May 1962 the State Government made a reference to the Industrial Tribunal which gave its award on January 14, 1965.
In respect of dearness allowance the award provided a sliding sale for an increase or decrease of Re. 1/ for rise or fall of five points in the cost of living index, with retrospective operation from November 5, 1963 i.e. the date when the reference was made.
It further made certain modifications in the company 's gratuity scheme and raised the age of superannuation from 55 years to 58.
The company as well as the workmen appealed to.
this Court against the Tribunal 's award.
HELD: (1) (i) The following broad principles relating to fixation of dearness allowance emerge from the earlier decisions of this Court: 1.
Full neutralisation is not normally given, except to the very lowest class of employees, 2.
The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase in the rise in the cost of living and decrease on a fall in the cost of living.
The basis of fixation of wages and dearness allowance is industry cum region.
Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workmen.
The additional financial burden which a revision of wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account.
[123 B E] Clerks of Calcutta Tramways vs Calcutta Tramways Co. Ltd. ; , 779, The Hindustan Times Ltd. New Delhi vs Their Workmen, [1964] 1 S.C.R. 234, Greaves Cotton & Co. vs Their Workmen ; , French Motor Car Co. Ltd. vs Workmen,.
[1963] Supp. , Ahmedabad Mill Owners ' Association v, The Textile Labour Association; , and Kamani Metals & Alloys Ltd. vs Their Workmen, ; , referred to.
Having regard to the above principles, in the present case, the Tribunal had made a substantially correct approach in considering the claim for revision of dearness allowance.
[123 E F] 114 (ii) The Tribunal rightly held that cl. 10 of the settlement of January 6, 1962 providing that the union was not entitled to ask for a revision of dearness allowance before the expiry of three years, was not a bar for entertainment of the claim.
Its decision that in view of the rise in the cost of living a revision of the dearness allowance should be made was perfectly correct.
[123 G H] (iii) The Tribunal was also justified in rejecting the contention of the ' union that the revision of the dearness allowance must be made de novo, ignoring the previous award of the Fifth Industrial Tribunal.
It could not be lost sight of that the said award had been challenged in this Court and the appeals filed by the company 'as well as the workmen were dismissed.
[124 A B] Remington Rand of India vs Its Workmen, [1962] I L.L.J. 287 distinguished.
(iv) The additional financial burden that would be thrown on the company by reason of the revision of dearness allowance was a very material and relevant factor to be taken into account but the contention of the company in this respect could not be considered in the absence of a plea in its written statement to the effect that it would not be able to bear the burden.
[124 F G] (v) In view of the Hindustan Motors Case it could not be said that the Tribunal had committed 'any error in accepting the claim of the union for increase or decrease of Re. 1/ for every rise or fail of five points in the cost of living index.
[125 B C] Workmen of Hindusthan Motors vs Hindusthan Motors , followed.
(vi) The Tribunal was in error in holding that the cost of living index for January 1962 which was 402 was the basis of the settlement of January 6, 1962.
On the facts of the case the settlement must be taken to have been based on the index for November 1961 which was 421.
[126 A C] (vii) From the decisions of the Court it is seen that this Court has declined to interfere with an 'award having effect from either the date of demand, or the, date of reference or even a date earlier than the date of reference but after the date of demand.
The direction given by the Tribunal in the present ease giving effect to its award from the date of reference, squarely came within the decision of this Court in the Hindustan Times Case.
1127 E F] The Hindustan Times Ltd. New Delhi vs Their Workmen [1964] 1 S.C.R. 234, Karoant Metals & Alloys Ltd. vs Their Workmen; , and Hydro (Engineers) Pvt. Ltd. vs The Workmen, ; referred to.
(2) There was no improper exercise of discretion by the.
Tribunal in making modifications in the company 's gratuity scheme, 'and there was no ground for interfering with its directions in this regard.
[128 G] Management of Wenger & Co. vs Workmen, [1963] Supp.
2 S.C.R. 862, applied.
(3) In fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular case.
Applying this test the fixation of the age of superannuation of 58 years was justified.
[129 G] Jessop 's case, and Management of M/S. Burmah Shell Oil Storage and Distributing Co. Ltd. vs Its Workmen, C.A. No. 44/68 dated 1 5 68, applied. 115


judgement:
Appeals Nos. 586588 of 1967.
Appeals from the judgment and order dated April 20, 1965 of the Rajasthan High Court in D.B. Civil Writ Petitions Nos.
51 F of 1964, and 26 and 67 of 1965.
M.C. Chagla, Bishambar Lal, H.K. Puri, M.K. Garg and K.K. Jain, for the appellants.
S.T. Desai, N.D. Karkhanis, R.N. Sachthey and B. D. Sharma, for the respondents.
The Judgment of the Court was delivered by Shah, J.
Jaipur Udyog Ltd. a Company registered under the Indian Companies Act, 1913, established in 1953 a cement factory at Sawai Madhopur in the State of Rajasthan.
From time to time the Company filed its returns under the Income tax Act, 1922, and after the repeal of that Act under the Act of 1961.
The following chart sets out the income or loss returned by the Company for the years 1954 55 to 1964 65 and the 195 income or loss computed for the years by the Income tax Officer on assessment: Year of Income or loss returned Income or loss compu Assessment by the Companyted by the1.
ted bythe T.0.
1954 55 61,24,270 (Loss)22,53,457(LOSS) 1955 56 14,59,963(Profit)19,84,447(Profit) 1956 57 12,92,958(Profit)16,88,480(Profit) 1957 58 23,05,305(Loss)12,53,222(Loss) 1958 59 46,44,779(Loss)31,48,707(Loss) 1959 60 28,77,487(Loss)20,62,180(Loss) 1960 61 11,35,365(Loss)Assessmentpending.
1961 62 66,086 (Loss) 1962 63 44,93,236 (Profit) 1963 64 7452402 (Profit) 1964 65 59,89,757 (Profit) Against the orders of assessment made by the Income tax Officer for the years 1954 55 to 1959 60 determining its net income or loss as set out in the chart the Company appealed to the Appellate Assistant Commissioner, and the appeals were pending at the dates of commencement of the petition, in the High Court of Rajasthan which give rise to the proceedings in this Court.
Assessments for the years 1960 61, 1961 62, 1962 63, 1963 64 and 1964 65 were however then not completed.
In its return of income for the assessment year 1963 64 the Company claimed to set off against the income returned Rs. 1,03,03,935 being the aggregate amount of loss which it claimed it had suffered in the previous years and was entitled to set off against the income of that year.
The Income tax Officer made a provisional assessment of tax under section 141 of the Incometax Act, 1961, and against the income returned by the Company he allowed deduction of Rs. 39,89,731 as loss carried forward from the earlier years, and made a demand for Rs. 8,73,873 as tax provisionally due and Rs. 87,387 as penalty for default in compliance with the demand.
The Company moved petition No. 51 of 1964 in the High Court of Rajasthan and challenged the order claiming that the Income tax Officer was bound to accept the return made by the Company and could not assess it to tax on income not admitted.
For the assessment year 1964 65 the Company returned a net income of Rs. 59,89,757 as profit, and claimed to set off against that amount Rs. 36,01,735 as loss of the previous years and paid Rs. 12,12,596 65 as tax due by it in accordance with section 140A (1) of the Act.
But the Income tax Officer made a provisional assessment and computed the tax on the total income of Rs. 59,89,757 returned by the Company without allowing any deduction claimed and ordered the Company to pay an additional amount of Rs. 17,32,768 60.
Against that order the Company moved petition No. 26 of 1965, for an order quashing the demand 196 of tax and for an injunction restraining the Income tax Officer from enforcing the demand.
For the assessment year 1965 66 the Income tax Officer relying upon section 210(3) of the Act called upon the Company to pay Rs. 29,45,365 25 as advance tax.
The Company moved petition No. 67 of 1965 in the High Court of Rajasthan, for an order quashing the demand.
The High Court rejected the three petitions.
Against the orders passed by the High Court, these three appeals have been preferred by the Company.
Section 141 of the Income tax Act, 1961, authorises the Income tax Officer to make a provisional assessment of the income of the assessee on the basis of the return made under section 139 and the accounts and documents, if any, accompanying the return.
The assessment so made is summary and is based only on the return and the accounts and documents filed by the assessee.
The Income tax Officer is not bound to make any enquiry before making a provisional assessment: he is not bound even to give to the assessee any notice of his intention to make a provisional assessment, nor to hear the assessee.
He may, if he desires, call upon the assessee to elucidate the return or the entries posted in the accounts and documents, but he is not obliged to do so.
Section 141 has been enacted with the object of expediting collection of tax on the basis of the return made by the assessee.
The Act contains several provisions for collection of tax before regular assessment, e.g. payment of advance tax, deduction of tax at source from salary and dividends, provision for self assessment etc.
The object of these provisions is to collect tax on certain classes of income before regular assessment.
The provisional assessment does not bind the assessee nor the Department: the quantum of tax computed and levy thereof are not binding upon the assessee and the Revenue.
Tax paid pursuant to provisional assessment is liable to be adjusted in the light of the final order in the regular assessment.
An appeal against the order is expressly prohibited.
The Income tax Officer must, however, apply the rate operative in the assessment year by virtue of the Finance Act and give effect to the allowances mentioned in sub section
(2) of section 141 whether the assessee has claimed them or not.
But the assessee has no right to be heard or to explain or elucidate and has no right of appeal against the computation or the levy of tax.
The Company claimed that it was entitled to deduct the aggregate of losses which it had suffered since the year 1954 55 year after year from the profits of the year 1963 64.
It is true that the loss returned by the Company year after year was in excess 197 of the amount of loss determined by the Income tax Officer.
But in respect of the orders of assessment appeals were pending.
Counsel for the Revenue concedes that assessment under section 141 being provisional, the Income tax Officer cannot make an enquiry into disputed questions of fact or law, but he submits, relying upon sub section
(2) of section 141, that the assessee cannot claim, and the Income tax Officer cannot allow, loss in respect of previous years in excess of the loss certified by the Income tax Officer.
That he says is the effect of sections 72 and 80 of the Income tax Act, 1961.
Section 72 provides: "( 1 ) Where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, . and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, . or where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and (i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year: Provided that the business or profession for which the loss was originally computed continued to be carried on by him in the previous year relevant for that assessment year; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.
(2) (3) No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.
" Section 80 of the Act provides: "Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 139, shall be carried forward and set off under sub section (1 ) of section 72 or " Under section 72(1) read with section 80 loss of a previous year under the head of income from profits and gains of business, profession 198 or vocation may be carried forward to the next succeeding year only if it has been determined in pursuance of a return filed under section 139.
If it is not so determined in the assessment of the subsequent year the loss cannot be carried forward and set off against the profit of the subsequent year or years.
By sub section
(2) of section 141 the Income tax Officer is enjoined to give effect to the loss so certified and carried forward.
But it does not follow therefrom that when the assessee claims that out of the income of the year returned by him certain amounts are liable to be deducted in computing the taxable total income, the Income tax Officer may adjudicate upon the validity of the claim in making a provisional assessment.
In our judgment, if it be granted that the Income tax Officer has jurisdiction to hold an enquiry into disputed matters, the expression "provisional assessment" may lose all significance: the income tax Officer may under a summary assessment without giving an opportunity to the assessee to explain his claim negative it and the assessee has no redress under the Act against any erroneous or arbitrary action.
The Court would not, unless compelled by the phraseology of the statute or by the clear implication arising therefrom, be justified in accepting that view.
The clearest implication of section 141 bars an enquiry at the stage of making a provisional assessment into disputed questions of law and fact: it is a matter of no moment that the dispute raised is complicated or is easy of solution.
In our judgment, once a dispute is raised by the assessee the Income tax Officer has no discretion.
By sub section (2) of section 141 the Income tax Officer is enjoined to give effect to the provisions of section 32(2), 72(1), 73(2) and 74(1) of the Act: sub section
(2) does not enlarge his jurisdiction under sub section
The High Court was of the view that the basic scheme of the Act is that tax is to be charged at the rate or rates prescribed for the year on the total income of the assessee and in accordance with the provisions of the Act, and that this basic scheme applies alike to a provisional assessment as to a regular assessment.
Consequently in construing the provisions of section 141 of the Act, assessment of tax must also be made in accordance with and subject to the provisions of the Act, i.e. in making u provisional assessment the "necessary facts" about the income of the assessee must be taken by the Income tax Officer from the return and the documents accompanying it and he should not travel beyond, but in making the provisional assessment he cannot ignore the other statutory provisions: he must apply the law correctly to the admitted facts as per return.
The High Court proceeded to observe: "The combined effect of the two sections, namely, sections 72 and 80 of the Act, is that a business loss can be carried forward to the subsequent assessment years 199 only when it has been determined in pursuance of a return filed under section 139 of the Act.
" The claim of the Company that it was entitled to the benefit of carry forward losses of previous years, merely because it had shown such losses in the returns, could not, in the view of the High Court, be accepted: to give effect to the claim of the Company, in the view of the High Court, will be to ignore the provisions of section 80 which apply both to a regular assessment and a provisional assessment under section 14].
We are unable to accept the opinion of the High Court.
If it be assumed that provisional assessment has to be made in accordance with and subject to the provisions of the Act, distinction between a provisional assessment and a regular assessment gets completely blurred.
The scheme of section 141 is to call upon the assessee to pay tax provisionally at the appropriate rate on what he admits is his taxable income, subject to the benefit of the allowances under sub section
The section does not permit an enquiry to be made whether the total income returned by the assessee exceeds the amount admitted by him, nor whether the allowances or deductions claimed are admissible.
If there be a discrepancy between the return made and the accounts and documents accompanying the return, the Income tax Officer may ask the assessee to explain the discrepancy, but he must make a provisional assessment on the basis of the return initially made or clarified and the accounts and documents filed.
He cannot make a provisional assessment by holding that certain claims made by the assessee are in law unjustified.
If it transpires that the assessee has without reasonable cause concealed particulars of his income or has furnished inaccurate particulars of his income, it may be open to the Income tax Officer to impose penalty upon him after the regular assessment is completed.
But it is not open to him to determine whether there has been any concealment of particulars of income or to decide whether claims which have been made are unwarranted.
In the view we have expressed, the Income tax Officer was not justified in holding that the claim made by the Company for carrying forward and seeking to debit against Rs. 74 lakhs odd an amount of Rs. 103 lakhs odd was liable.
to be rejected.
For the same reasons in making the provisional assessment for the year 1964 65 the Income tax Officer was not entitled to ignore the claim made by the Company that against the income of Rs. 59,89,757 returned, Rs. 36,01,735 should be permitted to be debited.
The order demanding tax of Rs. 17,32,768 60 for the year 1964 65 also was, in our view, erroneous.
For the year 1965 66 the Income tax Officer demanded payment of advance tax on the provisional assessment for the year 1964 65.
It is true that under subs.
(3) of section 210 as inserted by of 1963 and later modified by Act 31 of 1964 the Income tax Officer is entitled to make an order for payment of advance tax on the basis of provisional assessment made under section 141, and he is not obliged to demand advance tax only for the amount provisionally assessed by way of regular assessment in respect of any previous year.
Sub section (3) of section 210, however, predicates a valid provisional assessment on the basis of which advance tax may be demanded.
But the provisional assessment for the year 1964 65 made by the Income tax Officer was invalid, and tax could not be demanded on that invalid assessment.
No order for payment of advance tax for the year 1965 66 could then be made, relying upon the provisional assessment for the year 1964 65.
The appeals will be allowed and the orders passed by the High Court set aside.
The orders of provisional assessment made by the Income tax Officer in respect of the years 1963 64 and 1964 65 will be set aside and the order for payment of advance tax for the year 1965 66 is also set aside.
There will be no order as to costs in these appeals.
The order of penalty in respect of the year 1963 64 is also quashed.
V.P.S. Appeals allowed.

dataset_name: IN-Abs

summary:
The appellant filed its returns for the assessment years 1954 55 to 1964 65.
The Income tax Officer passed orders of assessment for the years 1954 55 to 1959 60.
While the appeals to the Appellate Assistant Commissioner for those years, and the, assessment proceedings before the Income tax Officer for the years 1960 61 to 1962 63, were still pending, for the assessment year 1963 64 (the return for which was flied under section 139 of the Income tax Act, 1961), the Income tax Officer made a provisional assessment under section 141.
He held that the appellant was not entitled to deduct the aggregate amount of losses as claimed by it during the previous years and allowed only a much smaller sum as loss which could be carried forward from the earlier years.
For the assessment year 1964 65, the Income tax Officer made a provisional assessment without allowing any deduction of loss claimed by the appellant; and for the assessment year 1965 66 the Income tax Officer called upon the appellant to pay a certain sum as advance tax under section 210(3).
The appellant filed writ petitions in the High Court for quashing the orders of the Income tax Officer for each of the three years, but the petitions were dismissed.
The High Court held: (1) that under section 141 the provisional assessment of tax must also be made in accordance with and subject to the provisions of the Act, and that the combined effect of sections 72 and 80 was that a business loss can be carried forward to subsequent assessment years only when it has been determined in pursuance of a return flied under section 139; and (2) that under section 210(3) as inserted by Act 13 of 1963 and modified by Act 31 of 1964, the Income tax Officer was entitled to make an order for payment of advance tax for 1965 66 on the provisional assessment for the year 1964 65.
In appeal to this Court, HELD: (1) Section 141 bars an enquiry, at the stage of making a provisional assessment, into disputed questions of law and fact: it is immaterial that the dispute raised is complicated or easy.
Therefore the Income tax Officer was not justified.
in ignoring the appellant 's claim.
[198 D F] Under section 80 loss of a previous year under the head of income from profits and gains may be carried forward only if it has been determined in pursuance of a return filed under section 139; that is, if it is not so determined it cannot be carried forward and set off against the profit of the subsequent year or years.
But the section applies only to a regular assessment.
In the case of 'a provisional assessment under section 141, if there has been such a determination of the allowances mentioned in sub section 2 in a regular assessment for an earlier year, then under section 141(2) 194 the income tax officer must whether the assessee has claimed or not give effect to the allowances so determined.
But he has no power to adjudicate upon a claim for deduction made by the assessee when making a provisional assessment.
[196 G; 197 A 198 B; 199 B C] The section has been enacted with the object of expediting collection of tax on the basis of the return made by the assessee.
The assessment so made is summary and is based only on the return and the accounts and documents filed by the assessee.
If there be discrepancy between the return made and the accounts and documents accompanying the return the Income tax Officer may ask the assessee to explain the discrepancy but he must make a provisional assessment on the basis of the return initially filed or clarified, but cannot hold that certain claims made by the assessee are in law unjustified.
The provisional assessment does not bind the assessee nor the department and the tax paid pursuant to such provisional assessment is liable to be adjusted in the light of the final order in the regular assessment, and it is open to the Income tax Officer to impose a penalty in appropriate cases after the regular assessment is completed.
If it is held that the Income tax Officer has jurisdiction to hold an enquiry into disputed matters, the expression 'provisional assessment ' loses all significance: the Income tax Officer.
may, under such a summary assessment, without giving an opportunity to the assessee to explain his claim negative it and the assessee has no redress under the Act against any erroneous or arbitrary action because, the Income tax OffiCer is not bound to give notice to the assessee or hear witnesses and an appeal against a provisional assessment is expressly barred.
[196 D E; 198 B C; B C;199 (2) Under section 210(3) the Income tax Officer is entitled to make an order for payment of advance tax on the basis of provisional assessment under section 141, but it predicates a valid provisional assessment.
Since the provisional assessment in the present case, for the year 1964 65 is invalid, an order for payment of advance tax or the year 1965 66 could not be made.
[200 A C]


judgement:
No. 1 of 1968.
Petition under article 32 of the Constitution of India for the enforcement of the fundamental rights.
M.C. Setalvad and R. Gopalakrishnan for the petitioners.
C.K. Daphtary, Attorney General and U.P. Singh, for respondents No. 1 and 4.
P.K. Chatterjee, for respondent No. 3.
R. Gopalakrishnan, for the interveners.
The Judgment of the Court was delivered by Hidayatullah, C.J.
The Principal and the Rector of St. Xavier 's Co,liege, Ranchi and two parents of students have filed the present petition under article 32 of the Constitution.
The petition also purports to be filed on behalf of St. Xavier 's College, Ranchi and the Association of St. Xavier.
The petitioners challenge section 48 A of the ' Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) Act, 1960 as amended by Second Amendment Act, 1961 as ultra vires articles 29 and 30 of the Constitution.
St. Xavier 's College was established by the Jesuits of Ranchi.
It was affiliated to Patna University in 1944.
The management of the college vests in a Governing Body consisting of 11 members.
They are: "(i) The Superior Regular of Ranchi Jesuit Mission President ex officio.
75 (ii v) Four Counsellors to the Superior Regular to be nominated by the Jesuit Mission authorities.
(vi) The Principal of the College Vice President and Secretary ex officio.
(vii) One representative of the teaching staff of the college elected by the members of the staff.
(viii) One representative of the Patna University.
(ix xi) Three persons to represent Hindu, Muslim and Aboriginal interests.
" The terms of service of Religious staff are determined by the Jesuit ' Mission Authorities, but those of the members of the Lay staff including their appointment are determined by the Governing Body.
All appointments to.
the teaching staff, both Religious and Lay are reported to the Syndicate of the Patna University.
The object of rounding the college inter alia is 'to give Catholic youth a full course of moral and liberal education, by imparting a thorough religious instruction and by maintaining a Catholic atmosphere in the. institution. ' The college is, however, open to all non catholic students.
All non catholic students receive a course of moral science.
The College was thus rounded by a christian minority and the petitioners claim they have a right to.
administer it, a constitutional right guaranteed to minorities by article 30.
The petitioners ' complaint is that the Bihar Legislature passed an amending Act and introduced in the Bihar Universities Act section 48 A to come into force from March 1, 1962, which deprives them of this protection and is, therefore, ultra vires.
The provisions of this section are as follows: "48~A. Establishment of a University Service Commission for affiliated colleges not belonging to the State Government and.
its powers and functions : (1 ) With effect from such date as the State Government may, by notification in the Official Gazette, appoint, there shall be established a Commission by the name of the University Service Commission.
(2) The said Commission shall be a body corporate having perpetual succession.
and a common seal, and shall by the said name sue and be sued.
(3) The commission shall consist of a Chairman and two other members to be appointed by the State Government who shah be whole time officers, 76 and shall hold office for a term of three years from the date of assumption of charge of office, on the expiration of which term they, or any of them, may be reappointed for only one more term which shall not exceed three years.
(4) There shall be a Secretary to the Commission who shall also be a whole time officer to be appointed by the State Government.
(5) Other terms and conditions of service of the Chairman members and the Secretary shall be determined by the State Government.
(6 ) Subject to the approval of the University, appointments, dismissals, removals termination of service or reduction in rank of teachers of an affiliated college not belonging to the State Government shall be made by the governing body of the college on the recommendation of the Commission.
(7) (i)In making recommendations for appointment to every post of teacher of any such affiliated college, the Commission shall have the assistance of two experts in the subject for which an appointment is to be made, of whom one shall whenever possible be a teacher of the University to be nominated by the Syndicate and the other shall be a person, other than a teacher of the University, to be nominated by the Academic Council.
(ii) The experts shall be associated with the Commission as assessors whose duty it shall be to give expert advice to the Commission but who shall have no right to vote.
(8) The Commission shall, wherever feasible, recommend to the governing body of a college for appointment to every post of teacher of the college names of two persons arranged in order of preference and considered by the Commission to be the best qualified ' therefore.
(9) In making appointment to a post of teacher of a college, the governing body of the college shall, within three months from the date of the receipt of the recommendation under sub Section (8), make its selection out of the names recommended by the Commission, and in no ease shall the 77 governing body appoint a person who is not recommended by the Commission.
(10) Notwithstanding anything contained in the preceding sub sections, it shall not be necessary for the governing body to consult the Commission if the appointment to a post of teacher is not expected to continue for more than six months and cannot be delayed without detriment to the interest of the College: Provided that if it is proposed to retain the person so appointed in the same post for a period exceeding six months or to appoint him to another post in the college the concurrence of the Commission shall be necessary in the absence of which the appointment shall be deemed to have been terminated at the end of six months.
(11) (ii) The Commission shall be consulted by the governing body of a college in all disciplinary matters affecting a teacher of the college and no memorials or petitions relating to such matters shall be disposed of nor shall any action be taken against, or any punishment imposed on, a teacher of the college otherwise than in conformity with the finding of the Commission: Provided that it shall not be necessary to consult the Commission where only an order of censure, or an order withholding increment, including stoppage at an efficiency bar, or an order of suspension pending investigation of charges is passed against a teacher of a college.
(12) It shah be the duty of the Commission to present annually to the University a report as to the work done by the Commission in relation to such colleges affiliated to the University and a copy of the report shall be placed before the Senate at its next meeting, and the University shall further prepare and submit to the State Government a memorandum explaining, as respects the cases, if any, where the advice of the Commission was not accepted, the reasons for such non acceptance and the State Government shall cause the same to be laid before the Legislature of the State".
This provision completely.
takes away the autonomy of the Governing Body of the College and virtually vests the control of 78 the college in the University Service Commission.
Long correspondence ensued into.
which it is not necessary to go because of what followed.
The University began enforcing Article 178(2) of the New Statutes.
That Article provides: "178(1) All appointments of teachers in admitted colleges shall be made by the Governing Body of the college concerned on the recommendation of the University Service Commission, and shall be subject to the approval of the Syndicate.
No such appointment shall be approved unless: (a) the post exists or the Vice Chancellor is satisfied and its creation is necessary; (b) the claims of teachers, possessing the requisite qualifications and serving in a lower grade in the college, for promotion have been examined and rejected; (c) the vacancy was duly advertised, except where promotion was recommended; (d) the person appointed possesses the minimum qualifications prescribed for the post; and (e) the appointment was made by the Governing Body at its meeting.
(2) Within a fortnight of the appointment of any teacher or teachers.
made by the Governing Body of any admitted college on the recommendation of the University Service Commission, the Secretary of the College shall forward to the University, along with a copy of the advertisement for the post, the following information: (a) Names of the candidates recommended by the University Service Commission together with the name or names of the candidates appointed by the Governing Body; (b) Age; (c) Home address; (d) Previous appointment held by them, if any; (e) Whether they are qualified to teach through the medium of Hindi; (f) Nature of the appointment and the vacancy against which the appointment has been made; (g) If the order of preference indicated by the University Service Commission has not been followed by the Governing Body, the reason for not 79 following the order of preference shall be indicated.
If no appointments were made against the recommendation received from the University Service Commission, the reason for not making the appointments shall also be indicated.
" More correspondence followed.
The University asked for an explanation under article 179 of the Statutes, how the Governing Body had by passed the University Service Commission and some teachers were appointed without prior consultation.
Finally the University by a letter, September 26, 1967, communicated to the College that the Senate had decided on September 24, 1967 to withdraw the affiliation of the College under Article 171 of the Statutes for violating the said provisions of the Act and the Statutes With effect from the session of 1969 70.
The Senate, however, was: generous enough to put on record its appreciation of the good work done by the college in the field of education.
The petition was then filed to.
impugn the offending section 48 A.
While this petition was pending in this Court, the Governor of Bihar promulgated an Ordinance o.n July 16, 1968.
It amended the Bihar State Universities Act, 1960 by inserting section 48 B after section 48 A.
The new section read: "48 B. College established and administered by a minority entitled to make appointments etc.
with approval of the Commission and the, Syndicate.
Notwithstanding anything contained ' in sub section (6), (7), (8), (9), (10) and (11) of Section 48 A, the Governing Body of an affiliated college established by a minority based on religion or language, which the minority has the right to administer, shall be entitled to make appointments, dismissals, removals, termination of service or reduction in rank of teachers.
or take other disciplinary measures subject only to the approval of the Commission and the Syndicate of the University".
Simultaneously the Magadh University Act, 1961 was also similarly amended.
The petitioners, therefore, claim the protection of section 48 B and submit that as an affiliated college established by a minority based on religion or language, they are exempt from the operation of section 48 A (6), (7), (8), (9), (10) and (11).
They say that if this position is accepted, they will withdraw the petition which has become superfluous.
The learned Attorney General while conceding that the Jesuits answer the description of minority based on religion, argues that the protection is available only if the institution was rounded to conserve 'language, script or culture ' and since the college is open to all sections of the people and there 80 is no programme of this kind, the protection of Article 30(1) is not available.
In our opinion, this argument cannot be accepted.
Before we give our reasons we may read articles 29 (1 ) and 30 ( 1 ), which are involved: "29.
Protection of interests of minorities.
(1 ) Any section of the citizens residing in the territory of India or any p:art thereof having a distinct language, script or culture of its own shall have the right to conserve the same.
(2) "30.
Right of minorities to establish and administer educational institutions.
(1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice.
The learned Attorney General seeks to read into the protection granted by article 30(1) a corrollary taken from article 29(1).
He concedes that the Jesuits community is a minority community based on religion and that, therefore, it has a right to establish and administer educational institutions of its choice.
But he contends that as the protection to minorities in article 29 (1 ) is only a right to conserve a distinct language, script or culture of its own, the college does not qualify for the protection 'of article 30(1) because it is not rounded to conserve them.
The question, therefore, is whether the college can only claim protection of section 48 B of the Act read with article 30(1) of the Constitution if it proves that the college is furthering the rights mentioned in article 29 (1 ).
In our opinion, the width of article 30(1) cannot be out down by introducing in it considerations on which article 29 (1 ) is based.
The latter article is a general protection which is given to minorities to conserve their language,, script or culture.
The former is a special right to minorities to establish educational institutions of their choice.
This choice is not limited to institution seeking to conserve language, script or culture and the choice is not taken away if the minority community having established an educational institution of its choice also admits members of other communities.
That is a circumstance irrelevant for the application of article 30( 1 ) since no such limitation is expressed and none can be implied.
The two articles create two separate rights, although it is possible that they may meet in a given case.
81 The learned Attorney General refers to two cases of this.
Court which he thinks support his contention.
What we find in, them does not bear out this submission.
On the other hand, they point the other way.
In In re the Kerala Education Bill, 1957(1),1 articles 29 and 30 were considered in relation to an Education Bill referred by the President of India to the Supreme Court for its advisory opinion.
The points that arose in the case were different but certain passages from the opinion were brought to our notice.
The Court after pointing out that articles 29 and 30 are grouped together under the heading "Cultural and Educational Rights" points out that the articles are intended to confer certain fundamental rights on certain sections of the community which constitute minority communities.
Explaining clause (1 ) of article 29.
this Court observed at p. 1047: " .
It is obvious that a minority community can effectively conserve its language, script or culture by and through educational institutions and, therefore, the right to establish and maintain educational institutions of its choice is a necessary concomitant to the right to conserve its distinctive language, script or culture and that is what is conferred on all minorities by article 30(1) which has hereinbefore been quoted in full . ".
The learned Attorney General arguesues that here the two articles were read together.
But the other side relies on two other passages.
The first is at page 1050.
The argument on behalf of the State there appears to be that there are three conditions.
before the protection and privileges of article 30( 1 ) may be claim "( 1 ) there must be a minority community, (2) one or more of the members of that community should, after the commencement of the Constitution, seek to exercise the right to establish an educational institution of his or their choice, and ( 3 ) the educational institution must be established ' for the members of his or their own community." This Court repelled the contention that the protection and privilege of article 30(1) extended only to the educational institutions established after the Constitution.
Dealing with article 29 (1 ) this Court observed: "The real import of article 29(2) and article 30(1) seems to us to be that they clearly contemplate a minority institution with a sprinkling of outsiders admitted into it.
By admitting a non member into it the minority institution does not shed its character and cease to be (1) [1959] S.C.R. 995. 82 a minority institution.
Indeed the object of conservation of the distinct language, script and culture of a minority may be better served by propagating the same amongst non members of the particular minority community.
In our opinion,t it is not possible to read this condition into article 30(1) of the Constitution.
" While one side considers that the observation suggests that the two articles go together, the other side contends that mixing of the other communities with the minority community in the benefits of educational institution shows that the real test is not that there must be an institution purely of one community.
The learned Attorney General places great importance on the word 'sprinkling ' and says that the minority must found the institution for itself and not for others and the aim or object must be to conserve distinct language, script or culture.
In our opinion both sides are attempting to read far too.
much into.
these observations.
They are not intended to be read in every context.
On the other hand, in Rev, Sidhaibhai Sabhai and others vs State of Bombay and Another(1), there is the following passage : " .
The fundamental freedom is to establish and to administer educational institutions: it is a right to establish and administer what are in truth educational institutions, institutions which cater to the educational needs of the citizens, or sections thereof.
" The emphasis here was rightly placed not upon the needs of the community exclusively but .upon the educational needs of the citizens or sections thereof.
In other words, the suggestion that article 30( 1 ) is limited to the needs of a single community or that only its own culture, language or script need to be provided for is not the right approach.
Here too if we may say so, the point decided was different but the observation does make article 30 (1 ) much wider than the learned Attorney General would have us hold.
In our judgment the language of article 30(1 ) is wide and must receive full meaning.
We are dealing with protection of minorities and attempts to whittle down the protection cannot be allowed.
We need not enlarge the protection but we may not reduce a protection naturally flowing from the words.
Here the protection clearly flows from the words and there is nothing on the basis of which aid can be sought from article 29 (1 ).
We are, therefore, quite clear that St. Xavier 's College was rounded by a Catholic Minority Community based on religion and that this educational institution has the protection of article 30( 1 ) (1) ; , 850. 83 of the Constitution.
For the same reason it is exempted under section 48 B of the Act.
The petition will therefore be allowed with this declaration but in the circumstances of the case we make no order about costs.
R.K.P.S. Petition allowed.

summary:
The St. Xavier 's College was established by the Jesuits of Ranchi and was affiliated to Patna University in 1944.
The management of the College was in the hands of a governing body consisting of 11 members.
The terms of service of the religious staff of the College were determined by the Jesuit Mission authorities and those of the lay staff, including their appointment, were determined by the governing body of the College.
The object of rounding the college inter alia was "to give Catholic youth .a full course of moral and liberal education, by imparting a thorough religious instruction and by maintaining a Catholic atmosphere in the Institution".
However, the college was open to non Catholics and all non catholic students received a course of moral science.
The petitioners in the present petition under Article 32 contended that the college was rounded by a Christian minority and claimed the right to administer it as a constitutional right guaranteed to minorities by article 30.
The petitioner 's complaint was that the Bihar Legislature, by introducing section 48 A in the Bihar Universities Act with effect .from
March 1, 1962, deprived them of the right under article 30 in that Its provisions required, inter alia: that appointments, dismissals, reduction in rank, etc.
, of staff must be made by the Governing body on the recommendation of the University Service Commission for affiliated colleges; in no case could the Governing body appoint a person not recommended by the Commission; the Commission had to be consulted in all disciplinary matters and any punishment imposed on a teacher only in accordance with the findings of the Commission, etc.
Subsequent to the introduction of section 48 A, in view of differences arising between the University and the college, the University withdrew the affiliation of the college on September 26, 1967 for violating the provisions of the Act and the statute of the University.
While the present petition under article 32 of the Constitution was pending section 48 B was inserted into the Bihar Universities Act whereby it was provided that the Governing body of affiliated colleges established by a minority based on religion or language which .the minority had a right to administer, would be entitled to make appointments, dismissals, termination of service or reduction in rank of teachers or take other disciplinary measures subject only to the approval of the Commission and the Syndicate of the.
University.
The petitioners therefore also claimed the protection of section 48 B.
On behalf of the respondents it was conceded that the Jesuits answered the description of a minority based on religion; but it was contended that as the protection to minorities in article 29(1) is only a right to conserve a distinct language, script or culture of its own, the college did not qualify for the protection of article 30(1) because (i) it was not bounded Sup.
CI/69 6 74 to conserve them and (ii) it was open to all sections of the people.
The question therefore was whether the college: could only claim protection of section 48 B of the Act read with article 30(1) of the Constitution if it proved.
that it was furthering the rights mentioned in article 29(1).
HELD: The protection claimed by the petitioners clearly flowed from the words of Article 30(1).
The width of article 30(1) cannot be cut down by introducing in it considerations on which article 29(1) is based.
The latter article is a general protection which is given to.
minorities to, conserve their language, script or culture.
The former is a special right to minorities to establish educational institutions of their choice.
This choice is not limited to institutions seeking W conserve language, script or culture and the choice is not taken away if the minority community having established an educational institution of its choice also admits members of other communities.
This is a circumstance irrelevant for the application of article 30(1) since no such limitation is expressed and none can be implied.
The two.
articles create two separate rights, although it is possible that they may meet in a given case.
[80 G, H] In re the Kerala Education Bill, 1957, [1959] S.C.R. 995, Rev. Sidhajbhai Sabhai and Ors.
vs State of Bombay and Anr.
; , 850; considered.