judgement:
Civil Appeal No. 1172 of 1973.
From the Judgment and Order dated the 10th April, 1973 of the Punjab & Haryana High Court at Chandigarh in Election Petition No. 1 of 1971.
Hardayal Hardy, Bishamber Lal and Mrs. Indira Sahni, for the appellant.
H. L. Sibal, Kapil Sibal, P. H. Parekh, Mrs. section Bhandare, Miss Manju Jaitley and section section Kang, for respondent No. 1.
The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This appeal relates to the election to the Parliament from the Fazilka constituency in Punjab held on 5th March 1971.
The Parliamentary constituency consisted of eight assembly constituencies of Malout, Muktsar, Gidderbha, Fazilka, Jalalabad, Abohar, Lambi and Faridkot.
The votes were counted on 10th and 11th of March at five different places.
The counting of the votes of the Malout Assembly constituency was held on 10th March by Mr. Aggarwal, Assistant Returning Officer, of Muktsar and Gidderbha on 10th and 11th by Mr. Sayal, of Fazilka and Jalalabad on the 10th and 11th by Mr. Mahajan, of Lambi and Abohar on the 10th and 11th 886 by Mr. Ram Lal and of Faridkot on the 11th by Mr. Garg.
6,409 votes were declared invalid and the 1st respondent was declared elected having secured 1,52,677 votes.
The appellant obtained 1,47,354 votes.
There were six other candidates about whom it is not necessary to refer.
A number of allegations were made in the election petition about many irregularities that took place on the date of the polling.
It is not necessary to refer to them as the issues concerned with them were not pressed even before the High Court.
Only two issues, issue 1 and 4 were considered by the High Court and those are the issues urged before us also.
They are: "1.
Whether the respondent No. 1 is guilty of corrupt practices specified in paras 19, 20, 22 and 23 and 26 to 29 of the election petition as amended ? If so, what is the effect ? 4.
Whether 15000 ballot papers were invalid and were wrongly polled and counted ? If so, with what effect ?" It is also necessary to refer to issues 3 and 6 for they have some relevance in discussing issues 1 and 4: "3.
Whether the petitioner is entitled to the scrutiny of the ballot papers alleged to have been illegally rejected and those of the respondent alleged to have been illegally accepted and on that account is entitled to a recount? 6.
Whether the allegations made in para 7 of the petition are correct, and if so, what is the effect ?" As issue 6 was not pressed the various allegations of irregularities at the time of polling including collusion by Polling Officers and consequent false voting and stuffing of ballot boxes could not be considered.
As issue 3 was not pressed recount cannot be asked for on the allegation of wrong counting of votes that is that the appellant 's votes were wrongly rejected and the 1st respondent 's votes were wrongly accepted.
With regard to issue 1 the allegation was that corrupt practice of bribery was committed in the interest of the 1st respondent by his brother Shri Parkash Singh Badal, who was at that time the Chief Minister of Punjab.
One of the items of bribery alleged was that large sums of money were distributed to Harijans in the form of contributions towards construction of Dharamshalas for the purpose of inducing them to vote in favour of the 1st respondent.
The second allegation was that Shri Parkash Singh Badal directed Mr. Sayal, one of the Assistant Returning Officers, to issue 3,304 gun licences for furthering the prospects of the 1st respondent 's election and that this was a gratification for inducing the electors to vote for the 1st respondent.
Similarly, Mr. O. P. Garg, another Assistant Returning Officer was alleged to have issued 485 gun licences in the months of February and March, 1971.
Shri Parkash Singh Badal was alleged to have arranged and addressed a number of meetings in various 887 villages promising to help the voters in many ways if they would vote for his brother.
There were certain other allegations of corrupt practices but the only ones canvassed before us were those relating to gun licences and grants in respect of construction of Dharamshalas to Harijans.
The allegations which relate to issue 4, as found in the petition, were that at least 15,000 invalid and void votes had been included and counted in favour of the returned candidate, which should have been rejected and not counted at all and that in addition at least 3,000 invalid ballot papers which should have been rejected under rule 56 had been wrongly counted as valid votes in favour of the returned candidate.
The distinction between 15,000 and 3,000 votes was this: The 15,000 ballot papers were said to consist of (i) spurious ballot papers (ii) ballot papers not bearing serial number or design authorised for use at the particular polling stations, and (iii) ballot papers not bearing booth marks and the full signatures of the Presiding Officer.
The 3,000 ballot papers were said to have been so marked as to render it doubtful to which candidate the vote is given, or the ballot papers bore marks with instrument other than the one supplied for the purpose, or ballot papers marked in favour of more than one candidate had been wrongly counted in favour of the returned candidate.
No evidence in fact was let in respect of the 3,000 votes.
The attack was concentrated on the 15,000 invalid and void votes.
In view of issues 3 and 6 having been given up, the effect of which we have earlier referred to, the only question that arises is whether these 15,000 votes should not have been counted at all, whether for the appellant or for the 1st respondent on the basis that they bore neither the stamp nor the signature of the Polling Officer.
The whole of the evidence let in was of a uniform type that a number of ballot papers did not bear the signature of the Polling Officer or the stamp of the booth.
Indeed the allegation in the petition on this point is "ballot papers not bearing booth marks and full signatures of the Presiding Officer were wrongly counted as valid votes".
It is not said that the ballot papers bore neither the mark nor the signature of the Presiding Officer.
The rule in question, rule No. 56, was amended in 1971 providing that only a ballot paper which did not contain both the mark and signature would be deemed invalid but even then it is not as though it automatically became invalid.
The Returning Officer had to scrutinise it in order to see whether the ballot paper was a genuine ballot paper.
This provision was apparently put in because under pressure of work the Polling Officer might have failed either to affix the stamp or his signatur.
If the Returning Officer was satisfied that the failure to affix the stamp or the signature was due to the fault of the Polling Officer but the ballot paper was itself genuine he could include it among the valid ballot papers.
Therefore, merely by giving evidence that the ballot papers did not contain both the signature and the stamp it would not be established that the ballot paper concerned was not a valid ballot paper.
But that is the only type of evidence which has been let in.
Apart from this the number 15,000 seems to be a case of wild guess.
The appellant 's voting agents were alleged to have kept a note 888 of the number of invalid ballot papers that they had noticed but none was produced.
Some of the counting agents gave evidence that they brought it to the notice of the chief counting agent who sat on the dais along with the Assistant Returning Officer at the time of the counting.
Neither the counting agents nor the chief counting agent had complained in writing to the Assistant Returning Officer.
It is impossible to believe that if there were as many as 15,000 invalid ballot papers, which amount to about two thousand from every assembly constituency they would have kept quiet without raising hell.
On both the days of counting an observer deputed by the Election Commissioner had gone round all the places where the votes were counted.
No serious infirmities were pointed out to him.
One or two ballot papers which did not bear either the signature of the Polling Officer or the stamp were shown to him only in the Lambi constituency and he scrutinised them and found that the serial numbers tallied and he was satisfied about their genuineness.
He as well as the various Assistant Returning Officers had offered that if there were any complaints the candidates could ask for a recheck.
No such recheck was asked for.
It was argued on behalf of the appellant that the recheck offer meant only a check on whether the number of votes had been correctly added.
We find it impossible to accept this suggestion.
The reference to the checking in the observer 's report shows that the checking meant also scrutiny as to whether the ballot paper was signed by the Presiding Officer.
The Returning Officer has also mentioned in his order on the application made by the appellant for a recount that he was asked to specify as to whether in any assembly segment he or any of his agents had asked for the recheck or pointed out any discrepancy in the figures and that the appellant had failed to cite any such specific instance, and that he was also asked as to whether he wanted the recounting of any specific assembly segment but he reiterated that he wanted a total recount.
Four of the Assistant Returning Officers, Mr. Sayal, Mr. Ram Lal, Mr. Garg and Mr. Aggarwal have been examined and they did not support the appellant 's case that there were such a large number of invalid ballot papers or that it was brought to their notice even orally.
Mr. Ram Lal said that at the most there might be 200 such votes which were objected to; that is in respect of the two constituencies in which he was the Assistant Returning Officer.
This would mean that there might have been about one thousand invalid ballot papers at the most and we have already mentioned that 6,409 votes had been declared invalid.
We do not know how many of them were ballot papers which did not contain either the signature or the stamp.
The way the appellant 's case has been developed is also very interesting.
We have pointed out that votes of four constituencies were counted on the 10th and of four other constituencies on the 11th.
The first move of the appellant was to send a telegram on the 11th.
By that time half the number of votes had been counted and probably more than half because we do not know at what time on the 11th the telegram, exhibit B 2 was sent.
Even assuming that nearly half the number of votes had been counted the appellant probably had an inkling of the possibility of his being defeated.
In this telegram he re 889 ferred to about fifteen thousand ballot papers which did not contain either the signature of the Presiding Officer or the Polling Officer of the polling station and booth numbers.
He also mentioned that about six thousand three hundred votes had been wrongly rejected.
Apparently he wanted to imply that they would otherwise have gone in his favour.
But his case of six thousand votes which ought to have gone to him, but had been wrongly rejected, had been completely given up later.
Another telegram sent on the 13th March 1971 was similar to the telegram sent on the 11th.
A similar telegram was sent by the appellant to the General Secretary of the Congress Party as also the Prime Minister.
But in the petition given to the Returning Officer asking for a recount on the same day the complaint was that some of the ballot papers did not bear the official stamp on their back as provided by rules and they seem to have been smuggled illegally and the number given in "thousands".
Another complaint was that some of the ballot papers did not bear the signatures of the Presiding Officer on the back, which were also "in thousands" and even more than five thousand.
So here we do not find the allegation that the ballot papers contained neither the signature nor the stamp.
In his petition before the Election Commission asking for recount he mentioned fifteen thousand ballot papers as having been found which bore no distinction mark or signature of the Presiding Officer.
He also mentioned the rejection of more than 6,000 votes.
As we have already pointed out, there is absolutely nothing on record to show how the figure 15,000 was arrived at.
We are, therefore, satisfied that the mention about 15,000 votes, 3,000 votes and 6,000 votes are only steps in the attempt to secure a recount at any cost and to fish for evidence.
As we have already pointed out, the allegation in the petition was that 15,000 invalid votes were counted in favour of the returned candidate but in the evidence as well as the arguments it was only claimed that there were 15,000 invalid ballot papers which were counted.
There is nothing to show how many of those 15,000 went to the appellant and how many to the 1st respondent.
Indeed as we have earlier explained what was asked for was elimination of the 15,000 votes altogether from the counting.
The whole thing is mere kite flying.
We are therefore, in agreement with the learned Judge of the High Court that the appellant has not succeeded in establishing the allegations covered by issue No. 4.
There are a large number of decisions of this Court on the question regarding the circumstances under which a recount can be ordered.
It has been recognised in all those decisions that there can never be any hard and fast rule as to the circumstances when an order of recount would be permissible and should always be dependent upon the circumstances of the case.
We do not therefore consider it necessary to refer to any of those decisions.
Suffice it to say that the facts of this case do not leave even the slighest justification for ordering a recount.
Now we come to the question corrupt practice.
We shall first of all deal with the grant for construction of Dharamshalas for Harijans.
The Punjab Government appears to have set apart a sum of Rs. 50,00,000 for this very purpose.
All that is established is that a sum of Rs. 3,00,000 was spent towards the end of the official 890 financial year 1970 71 in the district in which this Fazilka Parliamentary Consituency is situate.
Punjab has 11 districts and it cannot therefore be said that this sum is disproportionately large.
The anxiety to spend the money towards the end of the financial year is also natural.
If the end of the financial year also happens to be the period when an election is going on parties in power naturally bestir themselves to show that they are active in helping the people to get what they want.
The election time is the time when people in power as well as ordinary politicians are active in trying to show that they are out to help the people.
They address meetings and hold out all sorts of promises.
Where a large section of the people are concerned, who only get an amenity which they ought in any case to get and which they get probably a little more easily because it happens to be election time, it cannot be said that the person in authority making that promise and holding out that he would carry out many remedial measures to benefit the people was resorting to bribery or bargaining for votes.
It may not amount to setting up a very high standard and it may be very desirable that whatever is done for the people should be done by persons in authority throughout the period of their office.
But they naturally are more active at election time than other times.
That cannot be said to amount to corruption.
We then come to the question of gun licences.
It has been pointed out that during the months of January, February and March 1971 Mr. Sayal had issued 3,304 gun licences and Mr. Garg 485 gun licences, the usual number in an ordinary year being about 300.
When every explanation offered on behalf of the officials is taken into consideration, the fact remains that an unusually large number of gun licences had been issued during that period.
We are satisfied that to some extent at least this amounts to improper use of power.
We do not say that this is an abuse or misuse.
In fact there is evidence that the proper procedure has been followed in these cases.
In one case, for instance, a man who had applied for a gun licence long time back approached the Chief Minister when he had come to the village and he at once told the District Magistrate and the man got his licence.
We can see nothing improper in that instance.
But the gun licences themselves are issued by the officials and not by the Chief Minister.
It also appears that a large number of relatives of the Chief Minister as well as his Mukhtiar e Aam, his maternal uncle, and even the returned candidate had taken interest in the issue of gun licences.
It was sought to be proved that the Chief Minister had addressed a number of meetings promising to issue gun licences if they would vote for his brother.
But there was no allegation in the election petition relating to the meetings he addressed or his having held out the promise in those meetings that he would issue gun licences if the people voted for his brother.
The 1st respondent himself not having had notice of the specific allegation of meetings at which such promises were held out we have left out of consideration the evidence regarding the meetings and the promises held out by the Chief Minister in those meetings as inadmissible.
Assuming that it was the returned candidate or his agent that had held out an inducement to get gun licences issued for people who vote 891 for the returned candidate, does it amount to bribery under section 123(1) of the Representation of the People Act ? Bribery is defined thus: "123(1) 'Bribery ', that is to say, (A) any gift, offer or promise by a candidate or his agent or by any other person with the consent of a candidate or his election agent of any gratification, to any person whomsoever, with the object, directly or indirectly of in ducing (a) . . . . (b) an elector to vote or refrain from voting at an election, or as a reward to (i). . . . . (ii) an elector for having voted or refrained from voting; (B) the receipt of or agreement to receive, any gratification, whether as a motive or a reward (a). . . . . (b) by any person whomsoever for himself or any other person for voting or refraining from voting, or inducing or attempting to induce any elector to vote or refrain from voting, or any candidate to withdraw or not to withdraw his candidature.
Explanation.
For the purposes of this clause the term gratification ' is not restricted to pecuniary gratifications or gratifications estimable in money and it includes all forms of entertainment and all forms of employment for reward but it does not include the payment of any expenses bona fide incurred at, or for the purpose of any election and duly entered in the account of election expenses referred to in section 78.
" In order to understand the exact implication of the word 'gratification ' it may be useful to refer to another statute which has been in force for over a century, that is, the Indian Penal Code as most legislations tend to folow established precedents.
In section 161 of the Code, which deals with bribery, one of the explanations is as follows: "Gratification.
" The word "gratification" is not restricted to pecuniary gratification, or to gratification estimaable in money.
" Illustration (a) to the section is as follows: "(a) A, a munsif, obtains from Z, a banker, a situation in Z 's bank for A 's brother, as a reward to A for deciding a cause in favour of Z. A has committed the offence defined in this section.
" We may also quote section 171 B of the Code and section 171 E which find a place in the Chapter of Offences Relating to Elections, which was inserted in the Code in the year 1920: 892 "171 B. (1) whoever (i) gives a gratification to any person with the object of inducing him or any other person to exercise any electoral right or of rewarding any person for having exercised any such right; or (ii) accepts either for himself or for any other person any gratification as a reward to exercising any such right or for inducing or attempting to induce any other person to exercise any such right, commits the offence of bribery: Provided that a declaration of public policy or a promise of public action shall not be an offence under this section.
(2) A person who offers, or agrees to give, or offers, or attempts to procure, a gratification shall be deemed to give a gratification.
(3) A person who obtains or agrees to accept or attempts to obtain a gratification shall be deemed to accept a gratification, and a person who accepts a gratification as a motive for doing what he does not intend to do, or as a reward for doing what he has not done, shall be deemed to have accepted the gratification as a reward." "171 E. Whoever commits the offence of bribery shall be punished with imprisonment of either description for a term which may extend to one year or with fine, or with both.
Provided that bribery by treating shall be punished with fine only.
Explanation. "Treating" means that form of bribery where the gratification consists in food, drink, entertainment, or provision.
" It would be noticed that the Explanation to section 123(1) of the Representation of the People Act and the Explanation to section 161 of the Indian Penal Code relating to gratification are similar.
In addition, the Representation of the People Act refers to all forms of entertainment and all forms of employment for reward.
The employment for reward is covered by illustration (a) to section 161 of the Indian Penal Code.
The words "all forms of entertainment" in the Explanation to section 123(1) of the Representation of the People Act apparently refer to offence of treating found in section 171 E of the Indian Penal Code.
When Parliament enacted the provision regarding bribery in the Representation of the People Act it should have had before it the comparable provisions in the Penal Code.
It is to be noticed that the giving of any gratification with the object of inducing the receiver or any other person to vote is an offence while acceptance of gratification by a person either for himself or for any other person or for inducing any other person to vote is an offence.
In other words giving is an offence if paid to the voter or such giving induces another person to vote.
It is not giving a gratification in order that he may induce another person to vote that is an offence whereas 893 receipt of a gratification in order to induce another person to vote is an offence.
The reason for the distinction between the provision in section 123(1) (A) and 123(1) (B) seems to be this: In the former case a person standing for election has necessarily to have a number of people to work for him and he may have to bear their expenses.
That by itself should not be deemed to be bribery.
In the latter case when a person takes money offering to induce other people, of course, induce by wrong means, to vote for the person who pays him the money he is really poking his nose into something which is no business of his and that practice should be discouraged.
See Kalya Singh 's case(1) and our judgment in Harisingh Pratapsingh Chawda vs Popatlal Mulshanker Joshi & Ors.(2) So far as we are aware it has never been held that the issue of a gun licence amounts to bribery under section 171 B. We are of opinion that the word 'gratification ' should be deemed to refer only to cases where a gift is made of something which gives a material advantage to the recipient.
There is hardly any need to say that giving of anything whose value is estimable in money is bribery.
A gun licence gives no material advantage to its recipient.
It might gratify his sense of importance if he has a gun licence in a village where nobody else has a gun licence.
So might the conferment of an honour like Padma Bhushan.
A praise from a high quarter might gratify the sence of vanity of a person.
But the word 'gratification ' as used in section 123(1) does not refer to such gratifications any more than in section 171 B of the Indian Penal Code.
Taking the case of licences: Possibly the grant of a licence which enables a man to do some business and thus make money may confer a material advantage to him.
We are not here speaking of licences which are insisted upon merely for regulatory purposes like municipal licences.
But a licence given to a person to deal in fertilizers might confer a financial advantage to that person; so might an import licence or an export licence.
Such licences differ from licences for regulatory purposes.
Arms licence is a licence for regulatory purposes.
Its possession gives no material advantage to its possessor.
A licence in a prohibition area to deal in liqueur might confer a material advantage to the licensee.
But a licence enabling a person to imbibe liqueur in such area gives the licensee no material advantage.
Such a licence is only regulatory.
We must therefore distinguish between various kinds of licences and hold that where a licence gives a material advantage to the licensee the grant of such licences amounts to a gratification.
In that sense the grant of gun licences to voters in the Fazilka Constituency would not amount to bribery.
We have discussed this question on the basis that the authority to grant a licence is the returned candidate or his brother the Chief Minister.
We have already pointed out that there is no evidence regarding bargaining for votes by promise of gun licences.
A bargain for the purposes of this section does not mean that the candidate or his agent makes an offer and the voter accepts it in the sense that he promises to vote.
It is enough if the candidate or his agent makes the gift or promise on that condition.
If a candidate or his agent pays money to a voter saying that he wants him to vote it is a bargain for the pur 894 poses of this section.
It is not necessary that the voter should say that he would vote and thereafter the candidate or his agent should pay the money.
Even in such a case the voter after receiving the money might or might not vote.
The law regarding bribery in elections in our country has been discussed in various decisions of this Court.
In Maganlal Bagdi vs Hari Vishnu Kamath(1) the candidate offered to construct a well in a village if the voters voted for him and not for the rival candidate and money was actually deposited for this purpose and was to await the result of the election.
It was held that there was a clear bargain for votes.
In Khader Sheriff vs Munnuswami Gounder & Ors.(2)it was observed by this Court that it may be meritorious to make a donation for a charitable purpose but on the eve of an election such a gift may be open to construction that it was made with the intention of buying votes.
In Ghasi Ram vs
Dal Singh(3) it was held that the gift must be proved to have a direct or indirect connection with votes and this must admit of no other reasonable excuse.
In Radha Krishna Shukla vs Tara Chand Maheshwar(4) general promises by Ministers to redress certain public grievances or to erect certain public amenities like hospitals, if elected, were held not to amount to corrupt practice.
They were treated as promises of general public action.
In Amirchand vs Surendra Lal Jha(5) it was laid down that if a Minister redresses the grievances of a class of the public or people of a locality or renders them any help, on the eve of an election, it was not corrupt practice unless he had obtained promises from the voters in return, as a condition for their help.
The promise to grant gun licences would really amount to a redressal of the grievances of a class of the public or rendering them any help.
There is no evidence here of obtaining a promise from the voters in return.
The observations made in Ghasi Ram 's case (supra) regarding the action taken by a Minister which helps a class of the public may be noticed in this connection: "The position of a Minister is difficult.
It is obvious that he cannot cease to function when his election is due.
He must of necessity attend to the grievances, otherwise he must fail.
He must improve the image of his administration before the public.
If everyone of his official acts done bona fide is to be construed against him and an ulterior motive is spelled out of them, the administration must necessarily come to a standstill.
The State of Haryana came into existence on November 1, 1966.
With an election in the near future, the political party had to do acts of a public nature.
The grant of discretionary grants were parts of the general scheme to better community development projects and to remove the immediate grievances of the public.
The money was required to be spent in about 3 months ' time.
The action of the Minister had often the concurrence and recommendation of his subordinate staff.
It is for this reason 895 that the orders about the improvement of the supply of waters were not pressed.
They were incapable of being construed against the first respondent.
Therefore, emphasis was placed upon the distribution of money.
The money was not distributed among the voters directly but was given to Panchayats and the public at large.
It was to be used for the good of those for and those against the candidate.
No doubt they had the effect of pushinf forward his claims but that was inevitable even if no money was spent, but good administration changed the people 's condition.
We cannot, therefore, hold that there was any corrupt practice.
If there was good evidence that the Minister bargained directly or indirectly for votes the result might have been different but there was no such evidence.
" The issue for decision in Om Prabha Jain vs Abnash Chand & Anr.(1) was similar to the case here in respect of the grants for Dharamshalas for Harijans.
It was held that the action of the Minister could not be construed against her and that it was done in the ordinary course of her duties as Minister and there was no evidence that it was, directly or indirectly, part of a bargain with the voters.
In Bhanu Kumar vs Mohan Lal(2) it was alleged that the Chief Minister by ordering the covering of a nallah, the construction of a road, the installation of water taps and the grant of pattas to the inhabitants of a colony for construction of houses had made a bargain with the people for votes and thus committed corrupt practice as defined in section 123(1) of the Representation of the People Act.
This Court pointed out that ordinarily amelioration of grievances of the public is innocuous and cannot be construed against a candidate who is a Minister but that if there is evidence to indicate that any candidate at the election abused his power and position as a Minister in the Government by utilising public revenues for conferring advantage or benefit on a particular group of people for the purpose of obtaining their votes, different considerations will arise and it may be held to be a corrupt practice within the meaning of section 123(1).
In that case it was held that in all the instances relied upon by the appellant the evidence showed that there were long standing public grievances and the Government had from time to time made suggestions and recommendations for redress of the grievances and amelioration of the condition of the people and that it could not be said that on the eve of election there was any sudden or spontaneous outburst of public activity in the shape of 896 diverting money to win electors to the side of the Chief Minister by throwing baits or giving them any particular and specially favoured treatment.
These observations apply to the case of grants for Harijan dharamshalas.
We are therefore saisfied that the case of both the allegations of corrupt practice there was no gratification offered, that there was no bargaining for votes in the sense we have explained earlier and these issues must also be found against the appellant.
The appeal is, therefore, dismissed with costs.
V.P.S Appeal dismissed.

summary:
In the election to Parliament from a constituency in Punjab the respondent was declared elected.
The appellant filed an election petition alleging, inter alia, (i) that at least 15,000 invalid and void votes had been included and counted in favour of the respondent, and (ii) that the Chief Minister of Punjab, who was the brother of the respondent, directed, (a) the distribution to Harijans of large sums of money for construction of Dharamshalas, and (b) the issue of a large number of gun licences, as gratification for inducing voters to vote for the respondent and that thereby, the corrupt practice of bribery under section 123(1), Representation of the People Act, 1951, was committed.
The High Court dismissed the election petition Dismissing the appeal to this Court, ^ HELD: (1) On the evidence, the High Court was right in holding that the appellant had not succeeded in establishing the allegation regarding the 15,000 votes.
[889F] (a) Rule 56 of the Conduct of Elections Rules as amended in 1971, provides that only a ballot paper which did not contain both the mark and the signature of the polling officer would be invalid.
Even then it does not automatically become invalid.
If the Returning Officer was satisifed that the failure to affix the stamp or signature was due to the fault of the polling officer but the ballot paper was itself genuine he could include it among the valid ballot papers, because, under pressure of work, the polling officer might have failed either to affix the stamp or his signature.
[887F H] (b) The evidence adduced on behalf of the appellant is not consistent as to the ground of invalidity of the ballot papers; as to how the number of 15,000 was arrived at; and as to whether they were counted in favour of the respondent or both the appellant and the respondent.
[889E F] (c) There cannot be any hard and fast rule as to the circumstances when an order of recount would be permissible and it always depends upon the circumstances of the case.
On the facts of the present case, there is not the slightest justification for ordering a recount.
[889G H] (2) In the case of both the allegations regarding Dharamshalas and gun licences, there was no gratification offered and there was no bargaining for votes, and hence there was no corrupt practice.
[896B] (a) The word 'gratification ' in section 123(1) should be deemed to refer only to cases where a gift is made of something which gives a material advantage to the recipient.
There is a distinction between licences which give a material advantage and those which do not.
For example, a licence in a prohibition area to deal in liqueur confers a material advantage on the licensee, whereas a licence enabling a person to imbibe liqueur in such an area gives him no material advantage.
It is only the grant of the former that might amount to gratification.
Arms licence is a licence for regulatory purposes.
Its possession give no material advantage to its possessor.
[893C G] (b) To constitute the corrupt practice of bribery under section 123(1) there must be a bargain for votes.
But a bargain for the purposes of the section does not mean that the candidate or his agent makes an offer and the voter accepts it in the sense that he promises to vote.
It is not necessary that the 885 voter should say that he would vote and that thereafter only the candidate or his agent should pay the money.
It is enough if the candidate or his agent makes the gift or promise on that condition.
[889G 890A] (c) In the present case, the State Government had set apart a sum of Rs. 50 lacs for the purpose of construction of Dharamshalas for Harijans.
A sum of Rs. 3 lacs was spent towards the end of the financial year, in the district in which this particular parliamentary constituency was situate.
Punjab has 11 districts and it cannot, therefore, be said that, the amount is disproportionately large.
[889H 890A] (d) The anxiety to spend the money towards the end of financial year is also natural.
[890A B] (e) It may not be setting up a high standard and it may be very desirable that whatever is done for the people should be done by persons in authority throughout the period of their office and not when election time is approaching.
But where a large section of the people get an amentiy which they ought, in any case to get, and which they got probably a little more easily because it was election time, it cannot be said that the person in authority making a promise and holding out that he would carry out many remedial measures to benefit the people was resorting to bribery or bargaining for votes.
[890B D] (f) The issue of the unusually large number of gun licences may be an improper use of power.
But, there is no evidence regarding bargaining for votes by the promise of gun licences.
[890D G, 893G] (g) Maganlal Bagdi vs Hari Vishnu Kamath, Khadar Sheriff vs Munnuswami Gounder & Ors.
A.I.R. 1955 S.C. 775, Ghasi Ram vs Dal Singh ; , Radha Krsihna Shukla vs Tara Chand Maheshwar , amirchand vs Surendra Lal Dha E.L.R. 57, Om Prabha Jain vs Abnash Chand & Anr. ; ,Bhanu Kumar vs Mohan Lal ; , referred to.


judgement:
Civil Appeal No. 30 of 1971.
Appeal by special leave from the judgment and order dated the 19th February, 1970 of the Andhra Pradesh High Court in case Reference No. 2 of 1967.
R. M. Mehta and section P. Nayar for the appellant.
P. Ram Reddy and A.V.V. Nair for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Keynote thought.
Politics and philanthropy may well fall victims to the contruction of section 5(a) and (j) of the Expenditure.
Tax Act, 1957 (the Act for 1018 short) if we fall victim to the submission naively made, at the first stage, by counsel for the State.
In fairness to him, we must state that later he retracted from that position, and rightly so, for the Act, in spirit and letter, does not intend this blow on the profession of politics or the disposition for donations.
A fair reading of the provisions in question convincingly excludes from 'taxable expenditure ' sums wholly and exclusively incurred for the purpose of a profession or occupation carried on by the assessee and no modern man may dispute that politics is a profession or occupation.
Likewise, expenditure by way of gift or donation incurred by the assessee is also excluded and no politically conscious soul will deny that donation to the party in a democracy squarely comes within this exclusionary provision.
The factual matrix Expenditure tax under the Act was sought to be levied from the assessee PVG Raju, the respondent before us.
Paradoxical, perhaps, it may appear but here is a case of a rich Maharaja practising the politics of socialism, spending lavishly for furthering his party 's popularity and the prospects of his fellow candidates at the elections to the Andhra Pradesh Legislative Assembly.
This expenditure, falling under two heads, was taxed by the assessing authority and upheld up to the Tribunal level.
The High Court, on reference, reversed the findings on both counts and the Commissioner of Expenditure Tax, the appellant, challenges the legality of this verdict.
The best beginning in stating the facts may well be to extract the questions of law referred by the Tribunal in its own words: "(1) Whether on the facts and in the circumstances of the case the expenditure of Rs. 38,832/ claimed to be the amount incurred by the assessee for the benefit of other candidates for election is excludible from the taxable expenditure either under Section 5 (a) or under Section 5 (j) of the Expenditure Tax Act ? (2) Whether on the facts and in the circumstances of the case the sum of Rs. 47,867/ claimed to be party expenses could be excluded from the taxable expenditure of the assessee either under Section 5(a) or under Section 5(i) of the Expenditure Tax Act ? We have to assume the following facts as implied in the very questions referred to the High Court and from the attendant circumstances.
They are: (a) that the respondent, during the relevant period was the Chairman of the State Socialist Party which was interesting itself in electoral politics; 1019 (b) the respondent was a wealthy socialist; (c) that he was meeting not only the expenditure of his own elections but spending moneys for the benefit of other candidates belonging to his party; (d) that he was issuing cheques to the Secretary and other office bearers of his party to meet the expenses involved in party work.
He expended Rs. 38,832/ for propelling the election prospects of other party candidates during the election.
Likewise, he gave Rs. 47,867/ to his party through its office bearers.
On these facts the question is whether he is eligible for exclusion of the two sums from expenditure tax either under section 5(a) or under section 5(j) of the Act.
Consideration of the legal issue It is appropriate to start with reading the relevant portion of s 5 of the Act: "section 5.
No. expenditure tax shall be payable under this Act in respect of any such expenditure as is referred to in the following clauses, and such expenditure shall not be included in the taxable expenditure of an assessee.
(a) any expenditure, whether in the nature of revenue expenditure or capital expenditure, incurred by the assessee wholly and exclusively for the purpose of the business, profession, vocation or occupation carried on by him or for the purpose of earning income from any other source; (b) to (i). (j) any expenditure incurred by the assessee by way of, or in respect of any gift, donation or settlement on trust or otherwise for the benefit of any other person.
" The assessee was Party Chairman and politics was undoubtedly his profession or occupation, it being admitted that his interest in politics was not causal nor sporadic but abiding and ambitious.
The contention of the respondent which met with success before the High Court was that the election expenses of other candidates set up by him as Chairman of the Socialist Party, loosely described as 'party expenditure ', were incurred wholly and exclusively for the purpose of his 'profession ' or 'occupation '.
So, the first point which arrests our attention in examining this contention is as to whether politics of the socialist brand or otherwise is a profession or occupation.
There can hardly be any doubt that it is either, or both.
Harold Laski treated politics as a science and wrote his well known book on the Grammar of Politics, but the art of politics at a practical level has also been the subject of comment and has been praised and denounced on the basis that it is a profession.
To Gandhiji it is sacred as religion.
In Lincoln it rises to noble heights of statesman 1020 ship.
Lenin, Nehru and a galaxy of other great visionaries and makers and moulders of the modern world have dedicated themselves to politics as a profession.
Of course in its vulgar and vicious manifestations, this occupation has been regarded by literary giants like Dr. Johnson as the last refuge of a scoundrel '.
Robert Louis Stevenson has used barbed words: 'Politics is perhaps the only profession for which no preparation is thought necessary (Familiar studies of Men and Books, 'Yoshida Torajiro ').
George Bernard Shaw uses stinging language in Major Barbara: 'He knows nothing; and he thinks he knows everything.
That points clearly to a political career '.
It is thus clear, without reference to the wealth of case law relied on by the High Court, that politics has been a profession and, indeed, under modern conditions in India, perhaps the most popularand uninhibited occupation with its perils, of course.
Law cannot take leave of realities and therefore section 5(a) must bear the construction that politics is a profession or occupation.
The next question is whether the expenditure incurred by the assessee for the election of candidates set up by him as Chairman of his party can be legitimately regarded as incurred 'wholly and exclusively ' for the purpose of his profession or occupation.
We have grave doubts whether meeting the expenses of other candidates can be fulfilment of his professional expenses, but this question deserves no deeper probe for the simple reason that section 5(j) embraces the expenditure as it does answer the description of a donation.
When a person gives money to another without any material return, he donates that sum.
An act by which the owner of a thing voluntarily transfers the title and possession of the same from himself to another, without any consideration, is a donation.
A gift or gratuitous payment is, in simple English, a donation.
We do not require lexicographic learning nor precedential erudition to understand the meaning of what many people do every day, viz., giving donations to some fund or other, or to some person or other.
Political donations are not only common, but are assuming deleterious dimensions in the public life of our country.
It is therefore clear that when this Raja assessee gave money to the candidates of his Party for them to meet their election expenses, he made donations.
Even if he met their election expenditure, it was money gratuitously given on their behalf and therefore amounted to donation.
Without straining language, we reach the natural conclusion that what the respondent expended for the other candidates during the elections was 'donation ' in the language of the law.
There is no suggestion nor evidence that any material return was in contemplation when he spent these sums.
Being a politically important man with plenty of money and vitally interested in boosting his Party 's standing in the State, he donated liberally for candidates set up by the party.
In this view section 5(j) aplies to these donations which earn exemption from the expenditure tax.
The next item relates to sums gives to the Socialist Party.
It is reasonable to assume that the amounts paid to the office bearers 1021 of the party were without an eye on any material return other than loyalty or gratitude.
They were outright gifts.
Indeed, many rich people out of diverse motives make donations to political parties.
The hope of spiritual benefit or political goodwill, the spontaneous affection that benefaction brings, the popularisation of a good cause or the prestige that publicised bounty fetches these and other myriad consequences or feelings may not mar a donation to make it a grant for a quid pro quo.
Wholly motiveless donation is rare, but material return alone negates a gift or donation.
We need not investigate the propriety or political donations 'unlimited ' and often invisible.
All that we need consider is whether such sums are gifts and donations or are non gratuitous payments with a tag of return.
We have no doubt that on the question as framed, and on the facts and circumstances present, these sums were paid purely as gifts and donations to his Party by the respondent.
It is not surprising either, because he was the Chairman of the said party, had a long and liberal purse from which to draw and a large circle of support to build up in the long run.
The inevitable conclusion from our discussion is that both the heads of expenditure fall under s.5(j) of the Act and, therefore, flow out of the assessable zone.
The High Court 's conclusion is sound and the appeal deserves to be and is hereby dismissed, but without costs.
V.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary:
Under section 5 (a) and (j) of the Expenditure Tax Act, 1957, no expenditure tax shall be payable on any expenditure incurred by the assessee wholly and exclu sively for the purpose of his business profession or vocation, and on any expenditure incurred by the assessee by way of donation.
The respondent assessee was the Chairman of the State Socialist Party and politics was his profession or occupation.
He is a wealthy socialist and spent Rs. 38,832/ towards election expenses of other candidates of his party, and gave Rs. 47,867/ to the office bearers of his party to meet the expenses involved in party work.
^ HELD: The two amounts are eligible for exclusion from expenditure tax.
[1021 B] (1) Under modern conditions, politics is a profession or occupation.
[1020 C] (2) But the expenses incurred on behalf of other candidates cannot be the assessee 's professional expenses.
[1020 D] (3) The amounts, however, fall under section 5(j) of the Act.
When a person gives money to another without any material return, he donates that sum.
Therefore, when the assessee gave money to the candidates of his party for their elections expenses, it was money gratuitously given, that is he made donations.
[1020 E G] (4) Similarly, the amounts paid to office bearers of the party were not for any material return.
They were for loyalty or gratitude.
Wholly motiveless donation is rare but material return alone negates a gift or donation.
Therefore, they also were outright gifts.
[1021 A C]


judgement:
Civil Appeal No. 2104 of 1969.
Appeal by Special Leave from the Judgment and order dated the 27th February, 1969 of the Industrial Tribunal, Bihar, Patna in reference No. 54 of 1966.
section V. Gupte and U. P. Singh for the Appellant.
E A. K. Nag and D. P. Mukherjee for Respondents.
The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This appeal is by special leave granted by this Court against the award of the Industrial Tribunal, Bihar at Patna in reference No. 54 of 1966 made by the Government of Bihar on 25th November, 1966.
The special leave granted is limited only to the question whether there should be a contributory provident fund scheme on the basis of basic wages or total wages.
It was noted at the time of granting the special leave that the appellant Board is willing to extend that scheme to all the workers except the Government servants who are on deputation and those to whom the Employees Provident Fund Act applies.
Therefore the only item in reference No. 54 of 1966 which is relevant for the purpose of this appeal is the following: "Whether the benefit of the Employees ' Provident Fund Act, 1952 should be extended to any additional categories of workmen ? If so, what should be the terms and conditions and from what date ?" The Employees ' Provident Fund Act applies only to establishments which are factories.
It could be applied to establishments which are not factories if the Central Government by notification in the official 44 Gazette specifies in this behalf.
The industry in question" electricity including the generation, transmission and distribution thereof, is on to which the Act applies.
But as is well known only a small proportion of employees connected with the generation of electricity is in establishment which are factories.
The transmission and distribution is all over the State and the employees concerned with transmission and distribution and the maintenance of those lines of transmission and distribution are spread all over the State and probably far outnumber those working in establishments which are factories.
To them the Employees ' Provident Fund Act does not apply.
The Board maintains a Contributory Provident Fund where the contribution is on the basis of basic wage, the Board and the employees contributing equally.
The workmen claimed that all workmen of the Board should have the same and similar benefits and that therefore there should be no distinction between the Board 's Contributory Provident Fund scheme and the scheme under the Employees Provident Fund Act.
Moreover, the contribution under the Act is 8 per cent whereas under the Board 's scheme it is 6.25 per cent.
The employees also contended that the services of the workmen of the Board are liable to be transferred from one establishment to another both which may not he covered by the same scheme under the Act and therefore it will bring about serious injustice if they are deprived of their benefits under the Act, and such anomalies will be removed by making the benefits under both the schemes similar.
The Board 's contention was that this would impose additional financial liabilities which the Board would not be able to bear.
Therefore, the main question which the Tribunal had to consider was the Board 's financial capacity to implement the Provident Fund scheme as demand: ed by the workmen.
It seems to have been argued on behalf of the workmen that the State Government is the financier of the Board which charges interest now at the rate of 6.25 per cent as against the previous 4 per cent per annum.
It, was also contended that no scheme run by the Board was running at a loss.
Exhibit 17, purported to contain trading results of the Board., was shown to the Tribunal and it was argued that in the year ending March 1969 Board 's gross profits amounted to Rs. 305.12 lakhs and it had been continuously rising from Rs. 59.39 lakhs in 1961.
Exhibit 18 shows the loans which have been received from the Government by the Board and the balance sheet shows a very large amount in the shape of interest payable to the Government.
It was argued on behalf of the Union that this amount should be taken as dividend to be paid to the Government by the Board and should not be taken into consideration while deciding matters regarding benefits to be made available to its employees.
The validity of none of these contentions was considered by the Tribunal.
It referred to an award made by it in 1964 in reference No. 19 of 1960 in which it had held that if the interests realised by the State were excluded from consideration, there would be surplus in favour of the Board.
In that award it had been pointed out that it had not been explained by the management how the depreciation had been calculated.
That award also pointed out that one of the main reasons for the deficits shown was heavy interest on the capital investment, that in an electrical establishment capital investments are heavy in the initial stages, that the Board expected that after the load developed fully the scheme would start giving adequate 45 profits.
The Tribunal thought that the position at present was not worse than what it was earlier and that therefore the Board should extend the benefits of the Contributory Provident Fund to all workmen other than those who are covered by the Act.
It therefore ordered that the contribution should be 6.25 per cent but not on the basic wages but on the total wages.
The Tribunal has treated the whole matter in a very perfunctory manner.
The main question for consideration by the Tribunal was the financial capacity of the Board.
It has made no effort at all to analyse the balance sheet of the Board to show the actual results of its working.
It has made no effort to work out the financial implications of its order.
It has not made it clear what exactly are the total wages.
In Gramophone Co. vs Its Workmen(1) it was held by this Court that: "Before the real profit for each of the relevant years is ascertained amounts to be provided for taxation and for development rebate reserve could not be deducted in order to ascertain the financial capacity of the employer.
In considering the question of provident fund and gratuity which stands more or less on the same footing the industrial tribunal has to look at the profits made without considering provision for taxation in the shape of income tax and for reserves.
The provision for income tax and for reserves must take second place as compared to provision for wage structure and gratuity, which stands on the same footing as provident fund which is also a retiral benefit.
Payment towards, provident fund and gratuity is expense to be met by an employer like any other expense including wages and if the financial position shows that the burden of payment of gratuity and provident fund can be met without undue strain on the financial position of the employer, that burden must be borne by the employer.
It will certainly result in some reduction in profits; but if the industry is in a stable condition and the burden of provident fund and gratuity does not result in loss to the employer that burden will have to be borne by the employer like the burden of wage structure in the interest of social justice.
While on the one hand casting of this burden reduces the margin of profit, on the other hand it will result in the reduction of taxation in the shape of income tax." That case was a case of an ordinary commercial concern.
Even so it was noticed that the stability of the industry as well as the fact that the burden of provident fund and gratuity does not result in loss to the employer are to be taken into consideration.
the actual burden was calculated and it was pointed out that 63 per cent of it would be met by reduction in taxation.
Nothing of the sort has been done by the Tribunal in this case.
It is true that in that case it was said that the amounts to be provided for taxation and for development rebate reserve could not be deducted in order to ascertain the financial capacity of the employer.
Nothing was said there about the depreciation reserve (1) [1964] II L. L. J.131.
46 which is obligatory under section 68 of the the Electricity Board is not an ordinary commercial concern.
It is a public service institution.
It is not expected to make and profit.
It is expected to extend the supply of electricity to unserved areas without reference to considerations of loss that might be incurred as a result of such extension.
The Government makes subventions to the Board for the purposes of the Act.
Section 59 of the Electricity supply Act, 1948 provides that as far as practicable and after taking credit for any subventions from the State Government the Board shall carry on its operations so as not to incur a loss.
Under section 64 the State Government may advance loans to the Board and under section 65 the Board itself has the power to borrow.
Under section 66 the State Government may guarantee the payment of principal and interest of any loan proposed to be raised by the Board.
Under section 67 after meeting its operating maintenance and management expenses and after provision has been made for the payment of taxes on its income and profits the revenues of the Board have to be distributed as far as they are available in the following order, namely: (i) interest on bonds not guaranteed under section 66; (ii) interest on stock not so guaranteed; (iii)credits to depreciation reserve under section 68; (iv) interest on bonds guaranteed under section 66: (v) interest on stock so guaranteed; (vi) interest on sums paid by the State Government under guarantees under section 66; (vii)the write down of amounts paid from capital under the proviso to sections 59; (viii)the write down of amounts in respect of intangible assets to the extent to which they are actually appropriated in any year for the purpose in the books of the Board; (ix) contribution to general reserve of an amount not exceeding one half of one per centum per annum of the original cost of fixed assets employed by the Board so however that the total standing to the credit of such reserve shall not exceed fifteen per centum of the original cost of such fixed assets; (x) interest on loans advanced or deemed to be advanced to the Board under section 64, including arrears of such interest: (xi) the balance to be appropriated to a fund to be called the Development Fund to be utilised for (a) purposes beneficial, in the opinion of the Board, to electrical development in the State; (b) repayment of loans advanced to the Board under section 64 and required to be repaid: 47 Provided that where no such loan is outstanding, one half of the balance aforesaid shall be credited to the Consolidated Fund of the State.
Section 68 lays an obligation on the Board to make a credit to the depreciation reserve in the prescribed manner.
The facile assumption by the Tribunal that the interest should No. be taken into account in working out the profits is not borne out by the provisions of the statute.
Indeed the Tribunal did not look into the Act at all.
Whether in view of the statutory obligations laid on ii under the various sections just now referred to in analysing the capacity of the Board to bear any additional burden in the matter of provident fund or other amenities the same considerations that applied in the case of private commercial concerns could be applied is a rather difficult question.
In fact the decision might very often depend on a close analysis of the financial condition of the Board.
We do not want at present to express one view or the other.
one thing at least is obvious, that the various sums payable under the provisions of section 67 have to be deducted before the profits could he ascertained.
Even with regard to the depreciation reserve the provisions of section 68 may have to be taken into account.
If it is not it would have to be met by loans on which interest will have to be paid and deduction of interest so paid will have to be taken into account in calculating the profits.
The contribution to the depreciation reserve is a statutory obligation and is a definite proportion whereas it is open to an ordinary commercial concern to credit any amount to the depreciation reserve.
These and other matters cannot be properly decided in the absence of a detailed examination of the finances of the Board.
That is why we said that the Tribunal has dealt with the matter in a perfunctory way.
It should.
be directed to dispose of the matter afresh in the light of the observations made in this judgment.
The appeal is accordingly allowed.
There will be no order as to costs.
P.H.P. Appeal allowed.

summary:
Electricity Supply Act, 1948 section 59, 64, 65, 66 67 and 68.
The Employees Provident Fund Act applies only to establishments which are factories.
The industry in question electricity including generation, transmission and distribution thereof, is one to which the Act applies.
But only a small proportion of employees connected with the generation of electricity is establishments which are factories.
To the rest the Act does not apply.
The appellant maintains a contributory provident fund for those employees who are not covered by the Act where the contribution is on the basis of basic wage the appellant and the employees contributing equally.
The contribution under the Act is 8 per cent whereas under the appellant 's scheme it is 6.25 per cent.
The workmen respondents claimed before the Industrial Tribunal in a reference made by the Govt.
Of Bihar (1) that all workmen of the appellant should have the same and the similar benefits and that, therefore.
there should be no distinction between the appellant 's contributory provident fund scheme and the scheme under the Employees Provident Fund Act.
(2) The services of the workmen of the appellant are liable to be transferred from one establishment to another both of which may not be covered by the same scheme and such anomalies can be removed by giving the same benefits to all the workmen; (3) That the State was the financier of the appellant which now charges interest at the rate of 61 per cent as against previous 4 per cent; (4) That no scheme run by the Board was running at a loss; (5) That a large amount was paid to the Government by me appellant in the shape of interest towards the loans received from the Government and that such amounts should be taken as dividends to be paid to the Government by the appellant and should not be taken into consideration while deciding the matters regarding benefits to be made available to its employees.
The appellant contended before the Industrial Tribunal that the demand of the workmen would impose additional financial liabilities which the appellant would not be able to bear The Tribunal did not consider the validity of the above submissions It merely relied on an earlier award in which it was observed that if the interest realised by the Government were excluded from consideration there would be surplus in favour or the appellant.
The Tribunal held that since the position of the appellant was not worse than what it was at the time of the earlier award, the appellant should extend the benefits of the contributory provident fund to all workmen who are not covered by the Act and that the contributions should be 6.25 per cent not on the basic wages but on the total wages.
Allowing the appeal, ^ HELD: (1) The Tribunal has treated the whole matter in a very perfunctory manner.
The main question for consideration by the Tribunal was the financial capacity of the Board.
It has made no effort at all to analyse the balance sheet of the appellant to show the actual results of his working.
It has made no effort to work out the financial implications of its order.
It has not made it clear what exactly are the total wages.
This Court in the case of Gramophone Company.
although it was a case of ordinary commercial concern, calculated the actual burden to protect the stability of the industry and to see that the imposition of the burden does not result in loss to the employer.
43 (2) The appellant is not an ordinary commercial concern.
It is a public service institution.
lt is not expected to make any profits.
It is expected to extend the supply of electricity to unserved areas without reference to considerations of loss that might be incurred is a result of such extension.
Section 59 of the provides that as far as practicable The Board shall carry on its operations so as not to incur loss.
section 64 enables the State Government to advance loans to the Board.
section 65 authorises the Board to borrow.
section 66 authorises the State Government to guarantee loans raised by the Board.
section 67 lays down the manner in which the profits have to be distributed.
section 68 imposes obligation on the Board to make a credit to the depreciation reserve in the prescribed manner.
[46 A C].
The assessment by the Tribunal that the interest should not be taken into account in working out the profits is not borne out by the provisions of the statute.
The Tribunal did not look into the Act at all.
Whether in view of the statutory obligations laid on the appellant under the aforesaid sections whether the same considerations which apply in the case of private commercial concerns could be applied to the Board while analysing the capacity to bear the additional burden is rather a difficult question.
We do not express any view on that question.
However various sums payable under section 67 have to be deducted before the profits could be ascertained and with regard to depreciation reserve, the provision of section 68 may have to be taken into account.
[47 C E].
The matter was remanded back to the Tribunal to be disposed of in the light of the observations made in the judgment.


judgement:
N: Petition for Special Leave to Appeal (Crl) No. 840 of 1975.
From the judgment and order dated 1st August, 1975 of the Andhra Pradesh High Court at Hyderabad in Criminal Writ Petition No. 4168 of 1975.
R. K. Garg section C. Agarwala V. J. Francis and Ram Panjwani, for the petitioners.
P. Ram Reddy and P. P. Rao for the respondent.
ORDER OF THE COURT The young petitioners held to be murderers by the Court and sentenced to death, having regard to the blood curdling ruthlessness of the guilt, crossed over from the jurisdiction of courts to the clemency zone of the President under Art 72.
This last chance to live appeal for mercy by men who mercilessly killed, allegedly 74 driven by the humanist urge for catalysing social justice through terrorist technology, found no compassionate response.
The refusal of the President to commute the death sentence rushed the petitioners back to the High Court to save their life through the Court 's writ.
Rejection by that Court has compelled them to seek judicial sanctuary in the Supreme Court as the final scene of the Fifth Act of the tragic drama is drawing near.
Shri Garg has grounded his arguments on two socio legal basics.
A politically motivated offence committed by the two frustrated men who were disenchanted by the die hard injustice of massive suffering and suppression, to shock and shake the custodians of the status quo ante, stands on a separate footing from the common run of crimes and the root humanity of their ruthless inhumanity, though pertinent, was blindly brushed aside by the President.
Thereby he excluded a crucially conscientious consideration from an essentially compassionate jurisdiction which rendered the rejection of commutation illegal and unconscionable.
Assuming a measure of validity in this socio poilitical submission, can the Court even the Supreme Court rush in where the Constitution has made the President the repository of a benignant life or death power, non justiciable without breaching the dykes of article 72 (or article 151, if it be the Governor) and non accountable except to the good conscience of the top Executive Justice is not always channeled through a Judge and what is out of bounds for and not enforceable through regular courts does not, ipso jure become arbitrary or unjust.
In our Constitutional order any system of jurisprudence the Judicature is a great instrumentality but not 'a brooding omnipotence in the sky '.
Shri Garg, undaunted by this inhibitive doctrine, insisted that the dynamics of power in a democratic polity must be governed by the rule of law, 'basic feature ' of the Constitution.
True, where law ends, tyranny begins.
Counsel 's contention is that the President 's 'mercy ' power is subject to this paramount obligation to reckon all relevant, and reject all irrelevant factors in reaching his verdict of death or life.
Here, urged Shri Garg, two vital digits have been overlooked that political offenders from Bhagat Singh to the Spanish five (whose execution recently quaked world public opinion) were not common criminals and, secondly, that there has been obliviousness to the growing great trend against death penalty as a legal barbarity now gleaned in pronouncements of this Court and the penal reform currently before Parliament.
The force of the twin submissions, together with a third noticed in Ediga Anamma [1974]3SCR329 viz., the secred, yet secular commandment "thou shall not kill" need not be under rated to undo their argumentative potency in this forum.
What is powerful as pre legislative campaign or post legislative reform, what is high ethics and noble humanism on Sunday pulpit and Political platform and what is sure to dawn tomorrow but is struggling to be born today all these are on the law moulding matrix but not law now and here.
We are not prophets of the Advent but pragmatic technicians using the tools and the know how handed down to Courts by the legislature.
Judges may have a creative role and do activist engineering 75 but obedient to the text of the Constitution.
Such a perspective informs our appraisal of both the contentions enumerated by him as nine, but condensed by us into two.
Patriots and others seeking of accomplish political goals or to attack the political order may commit acts which under municipal laws may be crimes but are designated in other jurisdictions like extradition laws and sometimes for purposes of reprieve as a class called political offences.
But the Penal Code which, by oath of office, we enforce, makes no such classification and in the cold stare of our criminal system, murder is murder.
Moreover, the capital punishment was imposed by a court in this case as early as 1972 and upheld right through.
As Judges, we cannot re write the law whatever our views of urgent reforms, as citizens, may be.
And the sentence of death having been awarded by the Court, the judicial frontiers have been crossed and, however regrettable and irrevocable, taking of human life by the States ' coercive apparatus, may be, our sympathies have no jural relevance.
So the new and expanding trend towards abolition of capital penalty, while true, cannot help the hangman 's rope in this case.
The surviving point about the assail on the exercise of the 'clemency ' power of President demands closer examination.
A constitutional order built on the founding faith of the rule of law may posit wide powers in high functionaries and validly exclude judge power from eating these forbidden fruits.
article 72 (and article 161) designedly and benignantly vest in the highest executive the humane and vast jurisdiction to remit, reprieve, respite, commute and pardon criminals on whom judicial sentences may have been imposed.
Historically, it is a sovereign power; politically, it is a residuary power; humanistically, it is in aid of intangible justice where imponderable factors operate for the well being of the community, beyond the blinkered court process.
In Nanavati(1) is Court half explored the area of 'mercy ' power but switched on to a different question without pronouncing on the Court 's review of Presidential exercise of commutation or respite power.
Sinha.
C.J. speaking for the Court, observed: Pardon is one of the many prerogatives which have been recognised since time immemorial as being vested in the sovereign" wherever the sovereignty might lie.
Whether the sovereign happened to be an absolute monarch or a popular republic or a constitutional king or queen, sovereignty has always been associated with the source power the power to appoint or dismiss public servants, the power to declare war and conclude peace, the power to legislate and the power to adjudicate upon all kinds of the disputes." (p. 516) x x x x 1) ; 76 The Rule of law, in contradiction to the rule of man, includes within its wide connotation the absence of arbitrary power, submission to the ordinary law of the land, and the equal protection of the laws.
As a result of the historical process aforesaid" the absolute and arbitrary power of the monarch came to be canalised into three distinct wings of the Government".
(p. 517) "We have thus briefly set out the history of the genesis and development of the Royal Prerogative of Mercy because Mr. Seervai has strongly emphasised that the Royal Prerogative of Mercy is wide and absolute, and can be exercised at any time.
Very elaborate arguments were addressed by him before us on this aspect of the matter and several English and American decisions were cited.
In fact we apprehend that entering into an elaborate discussion about the scope and effect of the said larger power, in the light of relevant judicial decisions, is likely to create confusion and to distract attention from the essential features of the very narrow point that falls to be considered in the present case.
" (p.519) It is apparent from these observations that the question of justiciability has not been affirmed or negatived in the aforesaid decision.
No power in a republic is irresponsible or irresponsive, the people in the last resort being the repositories and beneficiaries of public power.
But two limitations exist in our constitutional system.
The Court cannot intervene everywhere as an omniscient, omnipotent or omnipresent being.
And when the Constitution, as here, has empowered the nation 's highest Executive, excluding, by implication, Judicial review, it is officious encroachment, at once procedurally ultra vires and upsetting comity of high instrumentalities, for this Court to be a super power unlimited.
The second limitation conditions all public power.
whether a court oversees or No.
That trust consists in the purity of public authorities.
All power, however, majestic the dignitary wielding it, shall be exercised in good faith, with intelligent and informed care and honestly for the public weal.
Counsel 's contention that equality is denied in the matter of sentence where some get the benefit of clemency while others do not, has no foundation nor is there any trace of despotism involved in this matter in the case before us.
The court has deliberately awarded death sentence.
The President is expected to, and we are sure will, consider all facts and circumstances bearing on the just discharge of his high duty.
When the President is the custodian of the power, the Court makes an almost extreme presumption in favour of bona fide exercise.
We have not been shown any demonstrable reason or glaring ground to consider the refusal of commutation in the present case as motivated by malignity or degraded by abuse of power.
We therefore cannot find our way to interfere with what the President has done.
77 We must however sound a note of caution.
Absolute arbitrary, law unto oneself malafide execution of public power, if gruesomely established, the Supreme Court may not be silent or impotent.
Assuming as proved the case of a President gripped by communal frenzy and directing commutation of all the penalties where the convict belongs to a certain community and refusing outright where the convict belongs to a different community, there may be, as Shri Garg urged, a dilemma for the Court.
Assuming the Governor in exercise of his power under article 161 refusing to consider cases of commutation where the prisoner is above 40 years of age as a rule of thumb or arbitrarily out of personal vendatta rejecting the claim of clemency of a condemned prisoner, is the Court helpless ? This large interrogation is highly hypothetical and whether the remedy is in Court or by impeachment in Parliament or by rising resentment in public opinion,, it is not for us to examine now.
Enough unto the day is the evil thereof.
Before parting with this special leave petition which we reject we visualize the contingency of the petitioners invoking the merciful jurisdiction of the President or Governor.
as the case may be, setting out various factors with which the Court may not be concerned while imposing judicial sentence but may still have persuasive value before the concerned Executive.
The rejection of one clemency petition does not exhaust the power of the President or the Governor.
The circumstances pressed before us about the political nature of the offence, the undoubted decline in capital punishment in most countries of the world, the prospective change in the law bearing on that penalty in the new Penal Code Bill, the later declaration of law in tune with modern penology with the correctional and rehabilitative bias emphasized by this Court in Ediga Anamma (supra), the circumstances that the Damocle 's sword of death sentence had been hanging over the head of the convicts for around 4 years and like factors may, perhaps,, be urged before the President.
Over the centuries, society has moved away from the crueller forms of inflicting legal death and almost a revolutionary change in penology has taken place in England since, in 1801 AD a boy of 13 years old was hanged for stealing a spoon.
Not raw ferocity but warm humanity is the real heart of law.
A recent publication states with graphic grimness, " The man sits in a cage of steel and concrete under a single bright light that burns around the clock.
He has been tried by a jury of his peers, judged and sentenced to die.
He has killed and now society, through the anonymous machinery of the state, will kill him.
He has been brought here to keep that appointment with death." (The Life We Take A case against the Death Penalty by Trevor Thomas Friends Committee on Legislation, California) Our reflections on hanging,, our philosophy for mercy and our observations about death sentence being abolished in country after country and the irrevocable harm of a wrong execution these great facts cannot deflect us from our constitutional duty not to interfere where we have no jurisdiction.
We accordingly dismiss the special leave petition.
V.P.S. Petition dismissed.

summary:
The petitioners were found guilty of murder by the court and sentenced to death, Their petition to the President of India for commuting the death sentence was rejected, Thereupon, they filed a writ petition in the High Court to quash the order of the President on the ground that he had not taken into account two factors, namely, (1) the offences were 'political '; and (2) the prevailing trends against death sentence.
The High Court dismissed the petition, Dismissing the petition for special leave to this Court.
^ HELD: (1) Assuming that the offences are political offences, under the Indian Penal Code, murder is murder and judges cannot re write, the law whatever their views on death sentence, as citizens, may be, and interfere where they have no jurisdiction, [75 B C; 77 H], (2) All power however majestic the dignitary wielding it may be, shall be exercised in good faith with intelligent and informed care and honestly for the public weal.
But, when the Constitution has empowered the nation 's highest Executive as the repository of the clemency power, the Court cannot intervene and judicial review is excluded by implication.
Since, the contention, in this case, that equality is denied in the matter of sentence because some get the benefit of clemency while others do not, has no foundation.
nor is there any trace of despotism involved, it is not necessary to examine in whom the remedy lies if arbitrary exercise of public power is definitely established a particular case.
[76 E H].
The rejection, however, of one clemency petition does not exhaust the power of the President or the Governor.
Therefore, the petitioners may urge the circumstances pressed before this Court for clemency again before the President.] [77 D E].


judgement:
Civil Appeal No. 63 of 1971.
Appeal by Special Leave from the Judgment and order dated the 19th February 1970 of the Andhra Pradesh High Court in R.C. No. 50 of 1966.
section T. Desai and K. Rajendre Choudhary, for the Appellant G. C. Sharma and section P. Nayar, for the Respondent.
The Judgment of the Court was delivered by GUPTA, J.
This appeal by special leave is directed against an order of the High Court of Andhra Pradesh at Hyderabad answering in the negative and in favour of the revenue the following question referred to it under sec.
66(1) of the Indian Income Tax Act, 192 (hereinafter referred to as the Act).
"Whether the Assessee is entitled to registration under Section 26A of the Income Tax Act, 1922 for the assessment year 1961 62.
" The assessee is a firm.
The instrument of partnership was executed on January S, 1959 but the application for registration under sec.
26A remained undisposed of until the assessment for the year 1961 62 was taken up.
The instrument shows that three persons, Mandyala Narayana, Mandyala Venkatramaiah, Mandyala Srinivasulu and a minor, Mandyala Jaganmohan who was admitted to the benefits of the partnership, held the following shares: Narayana 31 per cent, Venkatramaiah 23 per cent, Srinivasulu 23 per cent, and minor Jaganmohan 23 per cent: Clause 2 of the instrument which sets out the 133 shares of the partners add that the profits of the above partnership A business shall be divided and enjoyed according to the shares specified above.
" There is no clause in the instrument specifying the proportion in which the three adult partners were to share the losses, if any.
Having set out all the terms of agreement, the instrument closes with clause 9 which states: "We (the partners) are bound to act according to the above mentioned stipulations and also according to the provisions of the Indian Partnership Act. " The High Court was of the view that unless the instrument of partnership specified the shares of the partners not only in the profits hut also in the losses, the firm would not be entitled to registration under sec.
26A, and negatived the contention raised on behalf of the assessee that clause 9 of the instrument indicated how losses were to be apportioned between the partners.
The correctness of this decision is challenged by the appellant firm.
It is not that a firm to be able to trade must be registered under sec.
26A. A firm, registered or unregistered, is an assessee under the Act and can do business as such.
However, registration under sec.
26A "confers on the partners a benefit", as would appear from the provisions of sec.
23 (5) of the Act, "to which they would not have been entitled but for section 26A, and such a right being a creature of the statute, can be claimed only in accordance with the statute which confers it, and a person who seeks relief under section 26A must bring himself strictly within its terms before he can claim the benefit of it": Rao Bahadur Ravulu Subba Rao and others vs Commissioner of Income tax, Madras.(1) The question in this case is whether in the absence of a specific statement in the instrument as to the proportion in which the partners were to share the losses, the requirement of sec.
26A can be said to have been satisfied.
Sec 26A reads: "26A. (1) Application may be made to the Income tax officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the Income tax officer in such manner as may be prescribed.
" The required particulars are specified in rules 2 and 3 of the Rules framed under the Act and the form of application including the Schedule annexed to rule 3.
Paragraph 3 of the Form requires the partners to ` 'certify that the profits (or loss if any) " of the relevant period were or will (1) 134 be, as the case is, '`divided or credited, as shown in Section 8 of the Schedule".
In Section 8 of the Schedule are to be recorded the "particulars of the apportionment of the income, profits or gains (or loss) of the business, profession or vocation in the previous year between the partners who in that previous year were entitled to share in such income, profits or gains (or loss)".
Note (2) appended to this Schedule states that if any partner is entitled to share in profits but is not liable to bear a similar proportion of any losses, this fact should be indicated.
It is clear therefore that the application for registration which has to be made in the prescribed form must include particulars of the apportionment of the loss, if any.
It does not appear to have been considered in this case whether the application for registration made by the firm conforms to the prescribed rules; the dispute is confined to the question whether sec.
26A requires the instrument of partnership to specify the individual shares of the partners in the profits as well as the losses of the business.
Section 23(5) of the Act provides different procedures in the assessment of a registered firm and a firm that is unregistered.
Without going into details, in the case of a registered firm the share of each partner in the firm 's profits is added to his other income and he is assessed on his total income which includes his share of the profits and the tax payable by him is determined accordingly.
There is a proviso which lays down that "if such share of any partner is a loss it shall be set off against his other income or carried forward and set off in accordance with the provisions of section 24".
Thus, the loss, if any, affects the assessment proceeding and therefore the Income tax officer has to know what are the respective shares of the partners in the losses before allowing the firm to be registered.
It is not disputed that the Income tax officer must be in a position to ascertain how losses are to be apportioned; the question is whether it is a condition for registration under sec.
26A that the instrument of partnership must specify the respective shares of the partners in the losses.
According to the appellant sec.
26A has no such requirement.
The appellant contends that sec.
26A does not require specification of the shares in losses in the instrument of partnership and it is sufficient if the proportion in which the losses are to be shared is otherwise ascertainable, and that, assuming the section did so require, clause 9 of the instrument satisfies that requirement.
The contention that clause 9 specifies the respective shares of the partners in the losses is obviously untenable.
This clause says that the partners are "bound to act according to the provisions of the Indian Partnership Act"; that they are in any case, and it is not clear which provision of the Partnership Act indicated the proportion in which the partners were to bear the losses in this case.
Counsel for the appellant refers to sec.
13(b) of the Partnership Act in this connection.
12(b) reads: "Subject to contract between the partners (a) x x x x (b) the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm :" 135 We shall refer to sec.
13(b) in more detail when we consider the other contention of the appellant, but assuming that this provision has any relevance to the facts of this case, which it has not, bringing in by implication sec.
13(b) from a general statement that the partners are to act in accordance with the Partnership Act does not amount to specification of the partners ' shares in the losses, and the instrument of partnership, it must therefore be held, fails to comply with sec.
26A of the Act, were this a requirement of that section.
The other contention of the appellant is that it is not essential for registration under sec.
26A of the Act that the shares of the partners in the losses must be specified in the partnership deed.
In support of this contention reliance is placed mainly on two decisions, one of the Mysore High Court: R. Sannappa and Sons vs Commissioner of Income tax, Mysore (1) and the other of the Allahabad High Court: Hiralal Jagannath Prasad vs Commissioner of Income tax, U.P. (2) on behalf of the revenue it is claimed on the authority of a decision of the Gujarat High Court, Thacker & Co. vs Commissioner of Income tax, Gujarat (3), that the shares in the profits and losses have both to be specifically stated in the instrument of.
partnership in order to comply with the conditions laid down in sec.
26A to obtain registration.
The view taken by the Gujarat High Court appears to have been followed by the Kerala High Court in the following cases among others: C. T. Palu & Sons vs Commissioner of Income tax, Kerala (4) and Commissioner of Income tax, Kerala vs Ithappiri & George (5), There is thus a conflict of opinion in the High Courts on the point.
It will not be necessary, however, for the purpose of this appeal to consider at any length the conflicting views of the different High Courts and decide which view is correct according to us because on the facts of the case the appeal is bound to fail on any view.
It is not, and it cannot be, disputed that the Income tax officer before allowing the application for registration must be in a position to ascertain the shares of the partners in the losses even if sec.
26A did not require the shares in the losses to be specified in the instrument of partnership.
Counsel for the appellant argues that clause 9 of the instrument refers to sec.
13(b) of the Partnership Act by implication and, accordingly, in the absence of any contrary indication, it must be held that the partners are liable to share the losses equally.
The argument is not based on a correct appreciation of the scope of sec.
13(b) and the facts of the case.
13(b), it seems plain to us, makes the partners liable to contribute equally to the losses only when they are entitled to share equally in the profits.
In this case the shares of the partners are not equal.
In the absence of any indication to the contrary, where the partners have agreed to share the profits in certain proportions, the presumption is that the losses are also to be shared in like proportions.
Jessel M. R. states the principle in In re Albion Life Assurance Society (G) as follows: (1) (2) (3)[1966] (4) (5) (6) 16 Ch.
83 (87).
10 L1276SCI/75 136 "It is said, as a general proposition of law, that in ordinary mercantile partnerships where there is a community of profits in a definite proportion, the fair inference is that losses are to be shared in the same proportion.
" In the case before us the partners having unequal shares in the profits, there can be no presumption that the losses are to be equally shared between them Sec.
13(b) of the reproduces the provisions of the repealed sec.
253(2) of the .
In K. Pitchiah Chettiar vs G.Subramaniam Chettiar(1), Ramesam J. explained the scope of sec.
253 (2) of the : "Section 253(2) of the lays down that all partners are entitled to share equally in the profits of the partnership business, and must contribute equally towards the losses sustained by the partnership.
As I read the section, it lays down two presumptions with which the Court should start.
The two presumption are clubbed in one sub section.
The first is, if no specific contract is proved, the shares of the partners must be presumed to be equal.
In the present case the plaintiff alleged unequal shares which were not denied by the defendants.
So the parties being agreed on their pleadings as to the shares possessed by them in the profits, there is no scope for the application of this first presumption.
The second presumption is that where the partners are to participate in the profits in certain shares they should also participate in the losses in similar shares.
Now the section says that both should be in equal shares but implies that if unequal shares are admitted by the partners as to profits that applies equally to losses.
In the absence of a special agreement, that this should be the presumption with which one should start is merely a matter of common sense and in India one has only to rely on section 114 of the Evidence Act for such a principle.
" The law stated here in the context of sec.
253(2) of the Contract Act, 1872 applies equally to sec.
13(b) of the Partnership Act, 1932: the two provisions are in identical terms.
On the facts of the present case, and having regard to the scope of sec.
13(b), the section has plainly no application.
(1) I. L. R. (28).
137 The other rule that where the shares in the profits are unequal, the A losses must be shared in the same proportions as the profits if there is no agreement as to how the losses are to be apportioned, does not also apply to this case.
In this case even if the adult partners bear the losses in proportion to their respective shares in the profits, the amount of loss in the minor 's share would still remain undistributed.
Will the partners between them bear this loss equally, or to the extent of their own individual shares ? To this the instrument of partnership does not even suggest an answer.
There is therefore no means of ascertaining in this case how the losses are to be apportioned.
For the reasons stated above, the appeal fails and is dismissed with costs.
P.H.P.Appeal dismissed.

summary:
The appellant assessee is a firm, having three Partners and one minor admitted to the benefits of the partnership.
One of the partners has 31% share and the remaining two partners and the minor have 23% share each in the profit of the firm but the partnership deed is silent about their shares in the losses.
Clauses 9 of the partnership deed provides that the partners are bound to act according to the provisions of the Indian Partnership Act.
The firm applied for registration under section 26A of the Income Tax Act, 1922 which was refused by the Income Tax officer.
The High Court in a reference under section 66(1) held that unless the instrument r of partnership specified the shares of the partners not only in the profits but also in the losses, the firm would not be entitled to registration under section 26A.
The High Court negatived the contention of the assessee that clause 9 of the instrument indicated how losses were to be apportioned between the partners.
On appeal by special leave it was contended by the appellant: (1) section 26A does not require that the instrument of partnership must specify the respective shares of the partners in the losses and it is sufficient if the proportion in which the losses are to be shared is otherwise ascertainable.
(2) Assuming that section 26A does require mentioning the proportion of losses in the instrument of partnership, clause 9 of the instrument read with s 13(b) of the Partnership Act satisfies that requirement.
Dismissing the appeal, ^ HELD: (1) A firm whether registered or unregistered is an assessee under the Act and can do business as such.
However, registration under section 6A confers on the partners a benefit to which they would not have been entitled but for section 26A and such a right being a creature of a statute can be claimed only in accordance with the statute which confers it and the person who seeks relief under section 26A must bring himself strictly within its terms before he can claim the benefit of it.
[133D E] Rao Bahadur Revulu Subba Rao and others vs Commissioner of Income Tax, Madras, , relied on.
(2) In the case of a registered firm the share of each partner in the profit or loss is added to or set off against, as the case may be, to the other income of the partner.
Thus, the loss, if any, affects the assessment proceedings and.
therefore, Income Tax officer has to know what are the respective shares of the partners in the loss before allowing the firm to be registered.
[134 C D] (3) There is a conflict of opinion amongst the High Courts whether it is essential for registration under section 26A that the shares of the partners must be specified in the partnership deed.
It is not necessary to decide for the purpose of this appeal which of the conflicting views is correct because in the present case the appeal is bound to fail on any view.
It is not disputed and cannot be disputed that the Income Tax Officer before allowing the application for 132 registration must be in a position to ascertain the shares of the partners in the losses.
even if section 26A did not require this to be specified in the instrument of partnership.
[135E F] (4) The contention that clause 9 brings in by implication section 13 (b) of the Partnership Act and thus specifies the shares of the partners in the losses is untenable.
section 13(b) makes the partners liable to contribute equally to the losses only when they are entitled to share equally in the profits.
ID this case the shares of the partners are not equal.
The case of K. Pitchiah Chettiar.
vs G. Subramaniam Chettiar I.L.R. and In re Albion Life Assurance Society, 16 Ch.
83, 87, applied.
[135 G H] The law stated in these cases in the context of section 253(2) of the contract Act applies equally to section 13(b) of the Partnership Act which is in identical terms.
In the absence of any indication to the Contrary, where the partners have agreed to share the profits in certain proportions, the presumption is that the losses are also to be shared in like proportions.
The other rule that where the shares in the profits are unequal the losses must be shared in the same proportions as profits in the absence of an agreement as to how the losses are to be apportioned, also does not apply to this case since there is a minor admitted to the benefits of the partnership.
Even if the adult partner bear the losses in proportion to their respective shares in the profits, the amount of loss in the minor 's share would still remain undistributed.
Whether the partners between themselves will bear this loss equally or to the extent of their own individual shares, is not even suggested in the instrument of Partnership.
TD There is, therefore, no means of ascertaining in this ease how the losses are to be apportioned.
[136 H, 137A C]