judgement:
Civil Appeal No. 465 of 1985.
From the Judgment and Order dated 20.9.1983 of the Andhra Pradesh High Court in Appeal No. 858 of 1976.
G. Ramaswamy, Additional Solicitor General and P. H.Parekh for the Appellant.
T.V.S.N. Chari, Ms. Vrinda Grover, Charanjeet, V.D. Miracee and B.P. Maheshwari for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
This appeal by special leave is at the instance of the appellant, the Bank of India, a nationalised Bank, and is directed against the judgment and decree of the Andhra Pradesh High Court in so far as they direct that the appellant is entitled to recover the amounts claimed by it against the respondent firm only after the scaling down of the debt in accordance with the provisions of the Madras Agriculturists Relief Act IV of 1938 which, after the creation of the State of Andhra Pradesh, was made applicable to that State as the Andhra Pradesh (Andhra Area) Agriculturists Relief Act IV of 1938, hereinafter referred to as `the Act '.
965 The appellant Bank filed a suit being O.S. No. 12 of 1979 in the Sub Court, Eluru, on February 10, 1975 against the respondents including the respondent firm and its partners to recover a sum of Rs.18,14,817.91 being the balance (inclusive of interest) of three principal amounts of Rs.3.00,000, Rs.7,00,000 and Rs.80,000 severally advanced by the Bank to the firm under cash credit account on 28 11 1967, 3 4 1968 and 17 2 1972 respectively.
It may be noticed here that the Bank was nationalised on July 7, 1969 under the Banking Companies (Acquisition and Transfer of Undertakings) Act V of 1970, hereinafter referred to as `the Banking Companies Act '.
The sum of Rs.80,000 was admittedly advanced by way of loan by the Bank after its nationalisation.
The respondent firm owns certain motor vehicles which are mentioned in A and Schedules to the plaint of the said suit.
The firm was carrying on its business at Madras as fleet owners and gasolene carriers.
It had two partners, namely, one section Doranna Choudhury, since deceased, the father of the respondent No. 3 and the respondent No. 2, Sunkavali Rajlaxmi.
The case of the Bank was that in addition to the hypothecation of the A and Schedule properties made in its favour to secure the repayment of the aforesaid amounts of loan, the other partner, the respondent No. 2, created an equitable mortgage in favour of the Bank on December 22, 1969 in respect of C Schedule properties of the plaint.
section Doranna Choudhury, since deceased, also created an equitable mortgage in favour of the Bank on February 28, 1970 in respect of D Schedule properties of the plaint.
The respondent No.3 also created another equitable mortgage on September 6, 1974 in respect of E Schedule properties of the plaint.
The respondents No. 4 to 12 are alienees of the mortgaged properties.
In the suit the Bank prayed for the sale of the said properties for the recovery of the amounts claimed by it on account of the loan together with interest due thereon.
The respondents including the firm contested the suit by filing written statements, inter alia, denying the creation of any equitable mortgage by the deceased partner and the respondents Nos. 2 & 3 in favour of the Bank.
The respondents Nos. 4 to 12, the alienees, while denying the creation of the mortgages contended that they were bona fide purchasers for valuable consideration and the Bank was bound by the alienations and transfers made in their favour of the properties alleged to be under mortgage.
The firm and its partners, namely, the said section Doranna and the respondent No. 2 also filed a counter claim against the Bank for a sum of Rs.34,48,799.
It is not necessary for us to 966 state in details the respective cases of the parties including the case of the firm and its partners in making the counter claim against the Bank, inasmuch as the scope of this appeal is limited to the consideration of the question as to whether the High Court was justified in decreeing the Bank 's claim only after the scaling down of the debt in accordance with the provisions of the Act.
Be that as it may, the learned Subordinate Judge held that no equitable mortgage was created in favour of the Bank and, accordingly, dismissed the suit against the respondents Nos. 4 to 12 and refused to direct sale of the properties alleged to have been mortgaged to the Bank.
The learned Subordinate Judge also found that the claim of the Bank, except to the extent of Rs.1,00,418.55, was barred by limitation.
The counter claim of the firm and its partners for the sum of Rs.34,48,799 was decreed and the Bank was directed to pay the same to the firm and its partners.
Being dissatisfied with the judgment and decree of the learned Subordinate Judge, the Bank preferred an appeal to the High Court.
The High Court, after elaborately considering the facts and circumstances of the case and the evidence adduced by the parties, set aside the judgment and decree of the learned Subordinate Judge including the decree allowing the counter claim of the firm and its partners and decreed the suit instituted by the Bank.
In decreeing the suit, the High Court held that the Bank was entitled to recover the amount claimed by it only after the scaling down of the debt in accordance with the provisions of the Act.
Hence this appeal.
The Act contains provisions granting reliefs to indebted agriculturists.
One of such reliefs is that as contained in section 13 of the Act providing for the scaling down of the debt of an agriculturist.
It is not disputed that the partners of the respondent firm are agriculturists.
Mr. G. Ramaswamy, learned Additional Solicitor General appearing on behalf of the appellant Bank, submits that in view of section 4(e) of the Act, the provisions of the Act were not applicable to the Bank and, as such, the Bank was entitled to recover the entire amount without the same being scaled down as provided in section 13 of the Act.
Before the High Court also the Bank placed reliance on the provision of section 4(e) of the Act, but the High Court negatived the contention relying upon a Division Bench decision in Indian Bank, Alamuru vs Krishna Murthy, AIR 1983 Andhra Pradesh 347.
We shall presently refer to that decision, but before we do that it is necessary to 967 refer to the provision of section 4(e) of the Act, which is extracted below: "S.4.
Nothing in this Act shall affect debts and liabilities of an agriculturist falling under the following heads: . . . . . . . . . . . . . . . . . . . . . . (e) any liability in respect of any sum due to any cooperative society, including a land mortgage bank, registered or deemed to be registered under the Andhra Pradesh (Andhra Area) Co operative Societies Act, 1932, or any debt due to any corporation formed in pursuance of an Act of Parliament of the United Kingdom or of any special Indian law or Royal Charter or Letters Patent.
" In view of section 4(e), the provisions of the Act will be inapplicable to any debt due to any corporation formed in pursuance of an Act of Parliament of the United Kingdom or any special Indian law or Royal Charter or Letters Patent.
The question is whether the Banking Companies Act by or under which the appellant Bank was constituted, is a `special Indian law ' or not.
It is submitted on behalf of the Bank that the words `special Indian law ' in section 4(e) of the Act refers and relates to law made by an Indian Legislature.
It is not disputed that the Banking Companies Act is a special law enacted by the Indian Parliament.
It has, however, been urged by Mr. Mirasee, learned Counsel appearing on behalf of the respondents, that the said words mean a special Indian law enacted by the Parliament of the United Kingdom.
Indeed, in Krishna Murthy 's case (supra), it has been held by the Andhra Pradesh High Court that section 4(e) while speaking of any special Indian law, is only speaking of special Indian law made by the British Parliament as different from any Act enacted by the British Parliament that might have application to India also in common with the rest of the British colonies.
The learned Counsel, while placing strong reliance upon the said interpretation of the words `special Indian law ' as made in Krishna Murthy 's case (supra), also submits that the expression should be interpreted in the light of the setting of the same in the words of the provision of section 4(e).
In support of the contention, the learned Counsel has drawn our attention to an obser 968 vation made by this Court in R.L. Arora vs State of Uttar Pradesh, ; that a literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning of the words used.
Accordingly, it is submitted by the learned Counsel that as the words `special Indian law ' are placed after the words `an Act of Parliament of the United Kingdom ' and before the words `Royal Charter or Letters Patent ', it must be held in view of the setting that the expression`special Indian law ' refers or relates to a special law enacted by an Act of British Parliament for India.
We are unable to accept the contention.
It may be that interpreting the words of the provision of a statute, the setting in which such words are placed may be taken into consideration, but that does not mean that even though the words which are to be interpreted convey a clear meaning, still a different interpretation or meaning should be given to them because of the setting.
In other words, while the setting of the words may sometimes be necessary for the interpretation of the words of the statute, but that has not been ruled by this Court to be the only and the surest method of interpretation.
In the instant case, the expression `special Indian law ' has a clear and unambiguous meaning and there is no need for its interpretation.
There is no reasonable justification to think that the expression `special Indian law ' must be an enactment of the British Parliament.
If, on the date the Act was passed, there was no Indian Legislature, such an interpretation might be justified, but when there were existence of Indian Legislatures including a Legislature at the Centre, it would be quite unreasonable to think that `special Indian Law ' must be a law enacted by the British Parliament.
In this connection, we may refer to section 3(27)(a) of the , which defined `Indian law ' as meaning any Indian law enacted by the Indian Legislature.
In view of the said definition, the expression `special Indian law ' means a special Indian law enacted by the Indian Legislature.
In the face of the provision of section 3(27)(a) of the , as it stood on the day the Act was passed, we do not think that there is any justification for laying down that the expression `special Indian law ' in section 4(e) of the Act means a law enacted by the British Parliament specially for India.
We are, therefore, unable to accept the view of the Andhra Pradesh High Court in Krishna Murthy 's case (supra) and also the contention of the respondents made in that regard, which is rejected.
969 The next contention made on behalf of the respondents is that even assuming that the expression `special Indian law ' means a law enacted by the Indian Legislature and that the Banking Companies Act is such a law, still the provision of section 4(e) of the Act will not apply inasmuch as the appellant Bank was not formed in pursuance of any `special Indian law ', but by or under a `special Indian law ', that is, the Banking Companies Act.
It is submitted that there is a good deal of distinction between the formation of a corporation `in pursuance of ' and `by or under ', a special Indian law.
It is urged as the appellant Bank has been formed by or under and not in pursuance of the Banking companies Act.
it is not a corporation within the meaning of section 4(e) of the Act.
In support of this contention, the respondents have placed reliance on Krishna Murthy 's decision where it has been observed that the words `in pursuance of ' refer to the action taken under the law and not by the law itself, and that the phrase `formed in pursuance of ' in section 4(e) signifies a process of formation of a corporation under the law and not by the law itself.
Further, it has been observed that the words `in pursuance of ' can be said to have been used appropriately by the Legislature only to signify the activity or formation of a corporation carried on by an intermediary third party acting under a law as different from an activity of formation carried on by that law itself.
We are afraid, such a narrow and technical interpretation of the words `in pursuance of ' is contrary to the intention of the Legislature.
Although, theoretically, there may be a distinction between the words `in pursuance of ' and the words `by or under ', but by using the expression `in pursuance of ' in section 4(e) the Legislature, in our opinion, has not meant that the corporation in question should be formed by a third party in pursuance of the law and not by the law itself in order to come within the purview of section 4(e) of the Act.
The intention of the Legislature is very clear in that the provision of section 4(e) would apply to a corporation which is the creature of a special Indian law, whether it is created in pursuance of or by or under the special Indian law.
There is no difference or distinction whatsoever between the corporation formed in pursuance of a special Indian law and a corporation formed by or under a special Indian law.
It will be highly unreasonable and illogical to think that as a corporation has been formed by or under a special Indian law and not in pursuance of such a law, it will not come within the purview of section 4(e) of the Act.
Accordingly, we hold that the Banking Companies Act is a special Indian law and the provision of section 4(e) is applicable to the appellant Bank.
The learned Counsel for the respondents has drawn our atten 970 tion to the fact that the Banking Companies Act was first formed or created by the Ordinance VIII of 1969 promulgated on July 19, 1969.
The Ordinance was replaced by an Act of Parliament being Act XXII of 1969 with certain modifications.
This Court, however in R.C. Cooper vs Union of India, ; struck down the Act XXII of 1969 as unconstitutional.
Thereafter, a fresh Ordinance being Ordinance No. III of 1970 was promulgated on February 14, 1970 with certain further modifications and, thereafter, replaced by the present Banking Companies Act.
It is submitted that as the appellant Bank was nationalised and/or created under the Ordinance VIII of 1969 promulgated on July 19, 1969 and the present Banking Companies Act only ratifies the already created Bank under the said Ordinance, the appellant Bank was not, therefore, formed or created under any special Indian law.
This contention is devoid of any merit and fit to be rejected on the face of it.
Even assuming that the Bank was created under the Ordinance VIII of 1969 and not under the Banking Companies Act, still it must be held that it was created under a special Indian law, for an ordinance is as much a law as an enactment of Parliament or Legislature.
In this connection, it may also be pointed out that under sub section (2) of section 1 of the Banking Companies Act, the provisions of the Banking Companies Act (except section 21 which shall come into force on the appointed day) shall be deemed to have come into force on July 19, 1969.
Sub section (1) of section 3 of the Banking Companies Act provides that on the commencement of the Banking Companies Act, there shall be constituted such corresponding new Banks as are specified in the First Schedule.
Therefore, it is manifestly clear that the appellant Bank, which is mentioned in the First Schedule, has been created under the provisions of the Banking Companies Act with effect from July 19, 1969.
The contention of the respondents that the Bank has been nationalised or formed under the Ordinance VIII of 1969 is without any substance whatsoever and is rejected.
We may refer to a decision of this Court in Life Insurance Corporation of India vs Kota Ramabrahmam, ; Gupta J. while delivering the judgment of the Court, observes that there is no dispute that the corporation established under the is a corporation as contemplated by section 4(e) of the Act.
This decision has been strongly relied upon by the respondents in support of their contention that as the major part of the loan, that is to say, a sum of Rs. 10,00,000, was contracted before the nationalisation of the appellant Bank, the provision of section 4(e) is not applicable.
In Life Insurance Corporation 's case the loans were 971 advanced by the Andhra Insurance Company of Masulipatanam and by Nagpur Pioneer Insurance Company Limited, Bombay, admittedly, before the creation of the Corporation under the and it was held by this Court that the debts due to the insurers in these two cases were liable to be scaled down in accordance with the provisions of the Act.
In the instant case, the amounts of loan were advanced by the Bank to the firm under the cash credit account opened in favour of the firm.
Normally, the advances that are made from the cash credit account are repaid and, thereafter, fresh advances are made.
It is not known what was the actual balance on the date the Bank was nationalised.
It is true that in the judgment of the High Court it has been stated that the principal amounts of Rs.3,00,000, Rs.7,00,000 and Rs.80,000 were severally advanced by the Bank to the firm under the cash credit account on 28 11 1967, 3 4 1968 and 17 2 1972 respectively.
But, there is no further statement whether the first two amounts were repaid by the firm and, thereafter, fresh advances were taken out of the cash credit account.
The respondents did not advance any such contention either in their written statements or in the arguments before the Trial Court and the High Court.
It is for the first time before this Court that such a plea is raised in the argument of the learned Counsel for the respondents.
The contention involves a question of fact which has to be pleaded and proved.
In the absence of any such pleading, we are unable to allow the respondents to raise such a contention for the first time in argument before this Court.
At this stage, it may be stated that in Krishna Murthy 's case (supra) it has been held by the Division Bench that the latter part of section 4(e) of the Act containing the words `any debt due to any Corporation formed in pursuance of an Act of Parliament of the United Kingdom or any special Indian law or Royal Charter or Letters Patent ' is offensive to Article 14 of the Constitution and, accordingly, void.
The learned Counsel for the respondents submits that in view of the decision in Krishna Murthy 's case, this Court should declare the latter part of section 4(e) of the Act to be void as offending Article 14 of the Constitution, although no such point has ever been taken by the respondents up to this Court.
On the other hand, it is submitted by the learned Additional Solicitor General that the said finding of the Division Bench in Krishna Murthy 's case to the effect that the latter part of section 4(e) of the Act is void, is erroneous.
The reasons given by the Division Bench of the Andhra Pradesh 972 High Court in Krishna Murthy 's case for holding the latter part of section 4(e) of the Act as void, are that section 4(e) of the Act was enacted to protect the British economic interests and although such a law could permissibly be enacted under the Constitutional Scheme of the 1953 Government of India Act, that law after the inauguration of our Sovereign Democratic Republic cannot but be held to have become void as making invidious discrimination in favour of the British Corporation offending against the equality clause under Article 14 of the Constitution.
Before declaring the same as void, the Division Bench took the view that the words `any special Indian law ' could not have been intended to refer to any law made by any Legislature of our country, but to a law made by the British Imperial Parliament as a piece of special legislation applicable to India.
It has already been discussed by us that the words `any special Indian law ' refers and relates to a law made by the Indian Legislature and not by the British Parliament.
In that view of the matter, the reasons given by the Division Bench for holding the latter part of section 4(e) to be void as making a discrimination in favour of corporations created by British Parliament, will not apply to corporations formed or created by any special Indian law which, in the instant case, is the Banking Companies Act.
In our opinion, therefore, the Banking Companies Act is quite legal and valid.
No other point has been urged by either party in this appeal.
In view of the discussion made above, we hold that the provisions of the Act are not applicable to the appellant Bank and, therefore, there is no question of scaling down the debt due to the Bank by the respondents.
For the reasons aforesaid, the judgment and decree of the High Court in so far as the same direct the scaling down of the debts due to the Bank by the respondents, are set aside.
The Bank will be entitled to realise the amount decreed in its favour by the High Court without any scaling down of the same under the provisions of the Act.
The appeal is allowed.
There will, however, be no order as to costs in this Court.
N.P.V. Appeal allowed.

summary:
% The appellant Bank filed a suit against respondents including respondent firm and its partners, who were agriculturists, for recovery of a sum of Rs.18,14,817.91 being balance of three principal amounts severally advanced by the Bank to the firm under cash credit account on three different dates.
The last loan was advanced by the Bank after its nationalisation on July 7, 1969.
The Bank alleged that, to secure repayment of the aforesaid amount of loan, in addition to hypothecation made in its favour of the properties in `A ' and`B 'Schedules of the plaint, equitable mortgage of properties in Schedule `C ', `D ' and `E ' was also created in its favour by respondent No. 2, respondent No. 3 and his deceased father.
The appellant Bank prayed for the sale of the said properties for the recovery of the amounts claimed by it.
The respondents, including the firm, and Respondents No.4 to 12, who were alienees, denied creation of any equitable mortgage in favour of the appellant Bank.
The respondent firm and its partners, namely, third respondent 's deceased father and the second respondent also filed counter claim against the appellant Bank.
Dismissing the suit against respondent Nos. 4 12, the Subordinate Judge held that no equitable mortgage was created in favour of the appellant Bank and that the claim of the appellant Bank, except to the extent of Rs.1,00,418.55, was barred by limitation.
The counter claim against the Bank was decreed.
962 Setting aside the Judgment and decrees of the Subordinate Judge, the High Court, in appeal, decreed the suit instituted by the appellant, but held that the Bank was entitled to recover the amount claimed by it, only after scaling down the debt in accordance with the provisions of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act IV of 1938.
In the appeal by special leave, it was submitted on behalf of the appellant Bank that in view of section 4(e) of the Act, the provisions of the Act were not applicable to the appellant Bank and as such, it was entitled to recover the entire amount without the same being scaled down as provided in section 13 of the Act, and that the words "special Indian Law" in section 4(e) referred to and related to law made by an Indian Legislature.
On behalf of the respondents, it was contended that the words "special Indian law" meant a special Indian Law enacted by the Parliament of the United Kingdom, that even assuming that the expression "special Indian law" meant a law enacted by the Indian Legislature and that the Banking Act was such a law, still the provision of section 4(e) of the Act did not apply inasmuch as the appellant Bank was not formed in pursuance of "special Indian law", but by or under "special Indian law", that is, the Banking Companies Act, and as such, it was not a Corporation within the meaning of section 4(e) of the Act, that as the appellant Bank was nationalised and/or created under Ordinance VIII of 1969 promulgated on July 19, 1969 and the Banking Companies Act only ratified the already created bank under the said Ordinance, it was not formed or created under any `special Indian Law ' and that since a major part of the loan was contracted before the nationalisation of the appellant Bank, the provision of section 4(e) was not applicable.
Allowing the appeal, ^ HELD: 1.
The provisions of the Act are not applicable to the appellant Bank, and there is no question of scaling down the debt due to the Bank by the respondents.
[972E] In the instant case, the amounts of loan were advanced by the Bank to the firm under the cash credit account opened in favour of the firm.
Normally, the advances that are made from the cash credit account are repaid and thereafter fresh advances are made.
It is not known what was the actual balance on the date the Bank was nationalised, and whether the first two amounts were repaid by the firm and, thereafter fresh advances were taken on the cash credit account.
[971B D] 963 2.4 The Banking Companies Act is a special Indian law and the provision of section 4(e) Andhra Pradesh (Andhra Area) Act IV of 1938 is applicable to the appellant Bank.[969G] 2.2 In interpreting the words of the provision of a statute, while it may sometimes be necessary to take into consideration the setting in which such words are placed, that is not the only and the surest method of interpretation, and when such words convey a clear meaning, a different interpretation or meaning need not be given to them because of the setting.
[968D] R.L. Arora vs State of Uttar Pradesh, ; , referred to.
In the instant case the expression `special Indian law ' has a clear and unambiguous meaning.
There is no reasonable justification to think that the expression must be an enactment of the British Parliament since there were in existence Indian Legislatures, including a Legislatures at the Centre.
[968E] Section 3(27)(a) of the General Clauses Act, as it stood on the day the Act was passed, defines `Indian Law ' as meaning any Indian law enacted by the Indian Legislature.
The expression `special Indian law ' therefore, means a special Indian law enacted by the Indian Legislature.
[968F G] Indian Bank, Alamuru vs Krishna Murthy, AIR 1983 Andhra Pradesh 347,over ruled.
2.3 Inasmuch as the words `any special Indian law ' in section 4(e) of the Act refer and relate to a law made by the Indian Legislature and not by the British Parliament, the Banking Companies Act is quite legal and valid.
[972C D] 2.4 Theoretically, there may be a distinction between the words `in pursuance of ' and the words `by or under ' but by using the expression `in pursuance of ' in section 4(e), the Legislature has not meant that the corporation, in question, should be formed by a third party in pursuance of the law and not by the law itself in order to come within the purview of section 4(e) of the Act.
The intention of the Legislature is very clear in that the provision of section 4(e) would apply to a corporation which is the creature of a special Indian law, whether it is created in pursuance of or by or under the special Indian law.
There is no difference 964 Or distinction whatsoever between the corporation formed in pursuance of,and a corporation by or under a special Indian law.
[969E F] 2.5 An Ordinance is as much a law as an enactment of Parliament or Legislature.
Therefore, it must be held that the bank was created under a special Indian law even assuming that the bank was created under the Ordinance VIII of 1969 and not under the Banking Companies Act.
It is also manifestly clear from sub section (1) of section 3 of the Banking Companies Act which provides that on the commencement of the Banking Companies Act there shall be constituted such corresponding new Banks as are specified in the first Schedule, that the appellantBank, which is mentioned in the first Schedule, has been created under the provisions of the Banking Companies Act with effect from July 19, 1969.[970C,E F] R.C. Cooper vs Union of India, ; and Life Insurance Corporation of India vs Kota Ramabrahmam, ; , referred to.


judgement:
Appeal No. 146 of 1955.
Appeal from the judgment and decree dated February 10, 1953, of the Bombay High Court in Appeal No. 953 of 1951, arising out of the judgment and decree dated November 36,1951, of the Court of 73 Joint Civil Judge, Senior Division, Poona, in Special Suit No. 76 of 1950.
H. D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for the appellant.
M. C. Setalvad, Attorney General for India, section N. Andley and J. B. Dadachanji, for the respondent.
January 16.
The Judgment of the Court was delivered by DAS, C. J.
The appellant is a public limited company registered under the Indian Companies Act, 1913.
It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as " Minerva ", " The Globe ", " Sri Krishna " and " The Nishat ".
It exhibits cinematograph films, both foreign and Indian, in the said four houses.
The respondent, a body corporate, was governed by the Bombay District Municipal Act, 1901 (Bom.
III of 1901) up to June 8, 1926, and from then by the Bombay Municipal Boroughs Act, 1925 (Bom.
XVIII of 1925) up to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal Corporation Act, 1949 (Bom.
LIX of 1949).
With effect from October 1, 1920, the respondent, with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee.
Rules for the levy and collection of the said tax were framed by the respondent.
Those rules were amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to Re.
I per show.
The rules were again revised on or about June 9,1948, under which the tax was enhanced from Re.
I per show to Rs. 5 per show.
At all material times the tax was being collected at the last mentioned rate.
Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality (a) after observing the preliminary procedure required by section 60, and (b) with the sanction of the authority therein mentioned, might 10 74 impose for the purposes of that Act any of the taxes mentioned in that section.
After enumerating ten specific heads of taxes, which a municipality could levy a residuary category was set forth in cl.
(xi) in the words following: "Any other tax to the nature and object of which he approval of the Governor in, Council shall have been obtained prior to the selection contemplated in sub clause (1) of clause (a) of section 60 ".
Ever since the appellant became a lessee of the said cinema houses, the appellant has been making payments of the said tax under protest.
After giving the necessary statutory notice to the respondent, the appellant, on or about March 31,1950, filed a suit in the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of 1950, against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1, 1920, were invalid and illegal; that the enhancement in the rates of the tax with effect first from June 3, 1941, and then June 9, 1948, was invalid and illegal and that the resolutions passed and rules framed in connection with the levy, imposition, enhancement and collection of the said impugned tax were invalid, illegal and ultra vires, for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest.
By its judgment dated November 30, 1951, the trial court held that the said tax was validly levied and imposed, but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires.
and that the suit was not barred under the Acts governing the respondent.
The trial court decreed the suit in part by issuing an injunction restraining the respondent from levying, recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27,072 with interest and costs.
The respondent preferred an appeal and the appellant filed cross objections.
But the High Court by its judgment and decree dated February 10, 1953, 75 reversed the judgment of the trial court and dismissed the suit of the appellant with costs throughout.
The appellant 's cross objections were also dismissed.
On December 10, 1953, the High Court granted leave to the appellant to appeal to this Court from the said judgment.
Hence this final appeal questioning the validity of the impugned tax.
The first point urged in this appeal is that the law imposing this tax is not covered by entry 50 in List II of the Seventh Schedule to the Government of India Act, 1935, but is really a tax on the appellant 's trade or calling referred to in entry 46 and that, therefore, the amount of tax cannot under section 142 A of the Government of India Act, 1935 exceed Rs. 100 per annum.
This point need not detain us long, for it is covered by us in the appellant 's other appeal No. 145 of 1955.
The second point urged before us in support of this appeal is that section 59(1) (xi) is unconstitutional in that the legislature had completely abdicated its functions and had delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers.
Learned counsel for the appellant urges that the power thus delegated to the municipality is unguided, uncanalised and vagrant, for there is nothing in the Act to prevent the municipality from imposing any tax it likes, even, say, income tax.
Such omnibus delegation, he contends, cannot on the authorities be supported as constitutional.
We find ourselves in agreement with the High Court in rejecting this contention.
In the first place, the power of the municipality cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax, e.g., income tax which the provincial legislature could not itself impose.
In the next place, section 59 authorises the municipality to impose the taxes therein mentioned " for the purposes of this Act ".
The obligations and functions cast upon the municipalities are set forth in ch.
VII of the Act.
Taxes, therefore, can be levied by the municipality only for implementing those purposes and for no other purpose.
In other words it will be open to the municipality to levy a tax for giving any of the amenities therein mentioned.
76 The matter may be illustrated by reference to section 54 which enumerates the duties of municipalities.
The first duty mentioned in that section is that the Municipality should make provision for lighting public streets and nobody can object if it imposes alighting tax, which, indeed, is item (ix) in section 59(1).
Take another example: It is the duty of the Municipality to arrange for supply of drinking water and it may legitimately charge a water rate which, again, is item (viii) in section 59(1).
We do not for a moment suggest that the municipalities may only impose a tax directly in connection with the heads of duties cast upon it.
What we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act.
In the third place, although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case, for items (i) to (x) do not, strictly speaking, belong to the same genus, but they do indicate, to our mind the kind and nature of tax which the municipalities are authorised to impose.
Finally, the provincial legislature had certainly not abdicated in favour of the municipality, for the taxing power of the municipality was quite definitely made subject to the approval of the Governor in Council.
Under the Indian Council Act, 1861 (24 & 25 Vic. c. 67) the Governor in Council might mean the Governor in Executive Council or the Governor in Legislative Council.
If the reference in section 59(1)(xi) is to the Governor 's Legislative Council, then there was no improper delegation at all, for it was subject to the legislative control of the Governor in Legislative Council.
The Governor 's Legislative Council was composed of all the members of the Governor 's Executive Council besides a few other persons.
Therefore if the reference was to the Governor in his Executive Council even then, from a practical point of view, the ultimate control was left with the Governor 's Legislative Council.
We need not labour this point any further, for on the first three grounds the delegation of legislative authority, if any, is not excessive so as to make the exercise of it unconstitutional.
In our opinion the impugned section did lay down a principle and fix a standard 77 which the municipalities had to follow in imposing a tax and the legislature cannot, in the circumstances, be said to have had abdicated itself and, therefore, the delegation of power to impose any other tax cannot be struck down as being in excess of the permissible limits of delegation of legislative functions.
The last point urged by learned counsel for the appellant is that, under el.
(xi) of section 59(1), the enhancements of the rates of the tax in 1941 and again in 1948 were illegal in that the municipality had no power to do so under the Bombay Municipal Boroughs Act, 1925.
According to learned counsel for the appellant the judgment under appeal upholding the validity of such enhancements cannot be supported under s.60 of that Act.
That section runs as follows: " Power to suspend 60(1)Subject to the requirements of cl reduce or abolish ause (a)of the proviso to section any existing tax 58 municipality may except as otherwise provide in clause provided in clause (b) of the proviso to section 103 at any time for any sufficient reason, suspend, modify or abolish any existing tax by suspending, altering or rescinding any rule prescribing such tax.
" (2) The provisions of Chapter VII relating to, the imposition of taxes shall apply so far as may be to the suspension, modification or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax.
" Reference is made to the marginal note where the words used are " power to suspend, reduce or abolish any existing tax ".
It is suggested that the word it modify " in the body of the section in between the words " suspend " and " abolish " should be construed in the sense of reduction.
The marginal note, according to him, shows that the several words were used in the section to indicate a progressive diminution in the quantum of tax until it was completely gone.
Reference is made to the root meaning of the word " modify " which is to reduce or make less but does not cover the idea of enhancement.
In the first place, the marginal note cannot affect the construction of the language used in the body of the section if it is otherwise clear and unambiguous (see Commissioner of 78 Income Tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay) (1).
In the next place, it should be borne in mind that section 67 of the Bombay District Municipal Act (Bom.
III of 1901) which was formerly applicable to municipalities used the word " reduce " in between the words " suspend " and " abolish " and that that section had been reproduced is section 60 of the Bombay Municipal Boroughs Act, 1925, but that in the process of such reproduction the word "reduce" was dropped ,and the word "modify" was introduced.
In the marginal note, however, the word " reduce " was not substituted by the word " modify ", apparently through inadvertence.
If the word " modify " is to be read as "reduce", then there could be no point in the provincial legislature substituting the word " reduce " by the word "modify".
This change must have been made with some purpose and the purpose could only have been to use an expression of wider connotation so as to include not only reduction but also other kinds of alteration.
Section 76 of this very Act also refers to " modification not involving an increase in, the amount to be imposed which makes the sense in which the word " modify has been used in this Act perfectly clear, namely, that there may be a modification involving an increase.
Reference may also be made to the decision of the Court of Appeal in England in the case of Stevens vs The General Steam Navigation Company, Ltd. (2).
" Modification ", according to Collins M. R. in his judgment at p. 893, implied an alteration and the word was equally applicable whether the effect of the alteration was to narrow or to enlarge the provisions.
In our opinion the dropping of the word " reduce " and the introduction of the word 'modify" in the body of section 60, of the Act under consideration clearly indicate an intention on the part of legislature to widen the scope of this section and the High Court was right in so construing the same.
No other point was urged in this appeal and for reasons stated above this appeal must be dismissed with costs.
Appeal dismissed.
(1) ; at P. 353.
(2) L.R. (1903) 1 K.B. 890.

dataset_name: IN-Abs

summary:
The appellant, a public limited company, was a lessee of four cinema houses situated within the municipal limits of Poona City where it used to exhibit cinematograph films.
The respondent, the Municipal Corporation of Poona, in exercise of its power under section 59(1) (XI) of the Bombay District Municipal Act, 1901, levied with effect from October 1, 1920 a tax of Rs. 2 per day as license fee on the owners and lessees of cinema houses.
That Act governed the Municipality till 1926 and thereafter it was governed by the Bombay Municipal Boroughs Act, 1925.
The tax was enhanced to Re. 1 per show on June 3, 1941, and to Rs. 5 per show on June 9, 1948.
By the suit, out of which the present appeal arose, the appellant sought for a declaration that the levy of the said tax, the rules framed in connection therewith and the enhancement of the tax as aforesaid were illegal and ultra vires.
The trial court decreed the suit in part but the High Court in appeal reversed the decision of the trial court 72 and dismissed the suit.
It was contended on behalf of the appellant that (1) the tax was not one covered by Entry 50 in List 11 of Seventh Schedule to the Government of India Act, 1935, but was one on trade or calling covered by Entry 46 thereof, and, was as such governed by section 142A of the said Act and that (2) section 59(1)(XI) Of the Bombay District Municipal Act, 1901, was unconstitutional in that the legislature had thereby delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers and completely abdicated its function, leaving such power wholly unguided.
Held, that both the contentions must fail.
The first point was covered by the decision given in the appellant 's other appeal, Civil Appeal No. 145 Of 1955 which must also govern this case.
It was not correct to contend that the power delegated to the Municipality under section 59(1)(XI) Of the Bombay District Municipal Act, 1901, was unguided.
That section authorised the imposition of such taxes alone as were necessary for the purposes of the Act.
The obligations and functions cast upon the Municipalities by ch.
VII of the Act showed that taxes could be levied only for implementing those purposes and none others.
Nor could it be said that the Provincial Legislature had abdicated its function in favour of the Municipality.
The taxing power of the Municipality was made subject to the approval of the Governor in Council by the section itself.
The marginal note to a section could not affect the construction of the section if its language was otherwise clear and unambiguous and the word 'modify ' connoted not merely reduction but also other kinds of alteration including enlargement.
The substitution of the word I reduce ' by the word I modify ' in the body of section 6o of the Bombay Municipal Boroughs Act, 1925, notwithstanding the omission to do so in the marginal note, therefore, clearly indicated the intention of the Legislature to widen the scope of that section and, consequently, it could not be said that the enhancement of the tax was not sustainable thereunder.
Commissioner of Income Tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay, ; and Stevens vs The General Steam Navigation Company, Ltd., , referred to.


judgement:
Civil Appeal No. 3066 of 1987.
From the Judgment and Order dated 9.7.1986 of the Punjab and Haryana High Court in R.S.A. No. 163 of 1978.
Mala Ram Ghana and Dalveer Bhandari for the Appellant.
M.S. Gujral and Dr. Meera Aggarwal for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
The High Court in its judgment and order dated 9th July, 1986, has observed that the question of limitation has been canvassed before the High Court.
The High Court expressed the view that there was a lot of conflict between the various High Courts on the interpretation of Article 54 of the Limitation Act which governed the point of limitation.
The High Court, however, did not decide this question and expressed the view that due to passage of time prices of lands had gone up sky high and it would be unjust to enforce the agreement of sale entered into.
In other words, it appears that without deciding the question whether the claim of the plaintiff was barred by limitation or not, the High Court exercised its discretion in refusing to grant the relief on the ground that there has been good deal of delay and the parties would suffer if specific performance of the agreement was granted.
It appears from the facts that in this case the major portion of the agreed price had been paid long time ago and the balance thereof was to be paid at the time of execution of the documents was a sum of Rs. 75 only.
It further appears that possession of the premises was with the appellant for all these years in part performance of the agreement.
In those circumstances, the principle upon which the High Court refused to exercise its discretion, in our opinion, was not applicable and such discretion was not proper.
The High Court exercised discretion on wrong principles.
See in this connection Madamsetty Satyanarayana vs G. Yellogi Rao & Two others; , ; Dr. Jiwan Lal & Ors.
vs Brij Mohan Mehra & Another, ; and see also the observation in Debendra Nath Mandal vs Sakhilal Kar & Ors., AIR 1950 Calcutta 526 In that view of the matter, we cannot sustain the exercise of discretion in the manner done by the High Court.
This, however, does 1101 not decide the matter because the High Court declined to go into the facts and decide the question of limitation on merits, the High Court took the view in exercise of its discretion.
Since we are not sustaining the High Court 's exercise of discretion hence the order and the Judgment of the High Court are set aside but the matter is remanded to the High Court for its decision on the merits.
The matter should be disposed of by the High Court as early as possible.
The appeal is accordingly allowed with no order as to costs.
P.S.S. Appeal allowed.

summary:
% Under an agreement of sale entered into by respondents the appellant had paid the major portion of the agreed price long time ago and the balance thereof that was to be paid at the time of execution of the documents was a sum of Rs. 75 only.
Possession of the premises was with the appellant for all these years in part performance of the agreement.
Upon failure of the respondents to execute documents of title, the appellant sought specific performance of the agreement.
The respondents canvassed the question of limitation before the High Court.
The High Court, however, without deciding that question took the view that due to passage of time prices of lands had gone up sky high and it would be unjust to enforce the agreement of sale.
Allowing the appeal by special leave, ^ HELD: The High Court exercised discretion on wrong principles.
Without deciding the question whether the claim of the plaintiff was barred by limitation or not it proceeded to refuse to grant the relief on the ground that there has been good deal of delay and the parties would suffer if specific performance of the agreement was granted.
This principle was not applicable to the facts of the case and the exercise of discretion was not proper.
The matter remanded to the High Court for decision in merits.
[1100G; E; 1101B] Madamsetty Satyanarayana vs G. Yellogi Rao & Ors.
, ; ; Dr. Jiwan Lal & Ors.
vs Brij Mohan Mehra & Anr., ; and Debendra Nath Mandal vs Sakhilal Kar & Ors., AIR 1950 Calcutta 526, referred to.


judgement:
Civil Appeal No. 3004 of 1987.
From the Judgment and Order dated 18.2.1986 of the Allahabad High Court in C.M.W.A. No. 9895 of 1985.
R.K. Jain and Mrs. Shobha Dixit for the Appellant.
B.D. Agarwal, L.R. Singh and Pradeep Misra for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
Special leave granted.
The appeal is heard.
The appellant, Sudama Singh, and Respondent No. 1, Nath Saran Singh, were both appointed as Assistant Teachers in L.T. Grade in the Gandhi Inter College, Chilkahar, District Ballia with effect from the same date, i.e., July 8, 1967 and were placed on probation for one year.
Respondent No. 1 was promoted as Lecturer in Hindi on ad hoc basis with effect from March 1, 1976 by the Committee of Management and this action of the Committee of Management received the approval of the District Inspector of Schools on October 5, 1976.
On November 20, 1976 the District Inspector of Schools again made an order promoting both the appellant and Respondent No. 1 as Lecturers in Civics and Hindi respectively.
The promotions, referred to above, had been made on an ad hoc basis.
Likewise a large number of teachers, who were working in the educational institutions which were governed by the Uttar Pradesh Intermediate Education Act, 1921 (hereinafter referred to as 'the Act ') had been appointed or promoted on an ad hoc basis and the question of regularisation of their services was engaging the attention of the State Government during the relevant time.
As a consequence of the decision of the State Government an ordinance entitled the Uttar Pradesh Education Laws Amendment Ordinance, 1977 (U.P. Ordinance No. 5 of 1977) was pro 1052 mulgated on April 21, 1977.
By the said Ordinance a large number of provisions in four of the laws in force in the State of Uttar Pradesh concerning education were amended.
One of the laws which was amended by the said Ordinance was the Act.
By the Ordinance a new provision, namely, section 16GG was introduced into the Act.
The Ordinance was replaced by the Uttar Pradesh Education Laws Amendment Act, 1977.
Section 16GG, which was introduced into the Act by the Ordinance, was allowed to remain in operation by the Uttar Pradesh Education Laws Amendment Act, 1977.
The relevant part of section 16GG of the Act reads as follows: "16GG, Regularization of appointment of ad hoc teachers (1) Notwithstanding anything contained in Sections 16E, 16F and 16FF every teacher of an institution appointed between August 18, 1975 and September 30, 1976 (both dates inclusive) on ad hoc basis against a clear vacancy and possessing prescribed qualifications or having been exempted from such qualifications in accordance with the provisions of this Act, shall, with effect from the date of commencement of this Section, be deemed to have been appointed in a substantive capacity, provided such teacher has been continuously serving the institution from the date of his appointment up to the commencement of this section.
. . . . . . . . . (2) Every teacher deemed to have been appointed in a substantive capacity under sub section (1) shall be deemed to be on probation from the date of commencement of this section.
. . . . . . . . . (underlining by us) Section 16GG of the Act, which is reproduced above, provided that notwithstanding anything contained in sections 16E, 16F and 16FF, every teacher of an institution appointed between August 18, 1975 and September 30, 1976 (both dates inclusive) on ad hoc basis against a clear vacancy and possessing prescribed qualifications or having been exempted from such qualifications in accordance with the provisions of the Act, should, with effect from the date of commencement of the said section, be deemed to have been appointed in a substantive capacity, provided such teacher has been continuously serving the institution from the date of his appointment up to the 1053 commencement of the said section.
Sub section (2) of section 16GG of the Act provided that every teacher deemed to have been appointed in a substantive capacity under sub section (1) should be deemed to be on probation from the date of commencement of the section.
The services of the appellant and the 1st respondent, who were working as teachers on ad hoc basis during the relevant period, also came to be regularised by virtue of section 16GG of the Act.
After their services were so regularised dispute arose regarding the seniority between them.
The question of seniority between two or more teachers working in an institution governed by the Act is governed by regulation 3 in Chapter II of the Regulations made under the Act, the relevant part of which reads thus: "3(1).
The Committee of Management of every institution shall cause a seniority list of teachers to be prepared in accordance with the following provisions: (a) The seniority list shall be prepared separately for each grade of teachers whether permanent or temporary, on any substantive post; (b) Seniority of teachers in a grade shall be determined on the basis of their substantive appointment in that grade.
If two or more teachers were so appointed on the same date, seniority shall be determined on the basis of age; . . . . . " While the 1st respondent claimed seniority over the appellant on the basis of his appointment or promotion made on March 1, 1976, the appellant claimed that he being older than the 1st respondent was entitled to be treated as senior to the 1st respondent by virtue of the second part of clause (b) of regulation 3(1) of the Regulations framed under the Act which provided that if two or more teachers were so appointed on the same date, seniority should be determined on the basis of age.
The above dispute regarding the seniority between the appellant and the 1st respondent was first considered by the District Inspector of Schools, Ballia.
After considering the history of the services of these two teachers, the District Inspector of Schools came to the conclusion that the fortuitous appointment or promotion of the 1st respondent on 1.3.1976 could not have any effect on the question of seniority bet 1054 ween the appellant and the 1st respondent.
He further observed that the promotions of the appellant and the 1st respondent had actually been made as per his letter dated November 20, 1976 which read as under: "Office of the District Inspector of Schools, Ballia Order No. 15993 94/76/76 Date 20.11.76.
PROMOTION Following Assistant Teachers of L.T. Grade are promoted to the Lecturer 's Grade on the posts mentioned against their names.
Promotions have been made under Para 5 of Regulations No. Secondary/5183/15/7/76/2(18)75 Lucknow date.
7.7.76 made for the appointment of Principals for Govt.
aided Private Secondary Schools.
____________________________________________________________ Sl Teacher 's Pay PromotionPost Remarks No. Name Scale in the Lecturer pay scale ____________________________________________________________ 1.
Nath L.T. Rs.400 750Lecturer On the post Saran Singh Rs.300 550 Hindi vacated by Order No. Ordinance 1849/651 dt. 7.2.76 issued by Director of Education, U.P., Allahabad 2.
Sudama L.T. Rs.400 750Lecturer Singh Rs.300 550 Civics Sd/ Illegible Tulsi Ram Jatar D.I.O.S.Ballia" He further observed that since the appellant and the 1st respondent had been accepted 'to be promoted in substantive capacity vide letter dated 20.11.1976 issued by the District Inspector of 1055 Schools, i.e., on the same date and since the appellant, whose date of birth was 1.4.1937 was older than Respondent No. 1, whose date of birth was 1.7.1942, the appellant should be considered as senior to the 1st respondent by virtue of the second sentence in clause (b) of regulation 3(1) of the Regulations made under the Act.
The above decision of the District Inspector of Schools was conveyed to the parties by his Letter No. 2858 60/85 86 dated 13.6.1985.
Aggrieved by the decision of the District Inspector of Schools, the 1st respondent filed a writ petition in Civil Miscellaneous Writ Petition No. 9895 of 1985 before the High Court of Allahabad.
The learned Judge, who heard the writ petition, allowed the writ petition and set aside the order of the District Inspector of Schools and declared that the 1st respondent was senior to the appellant on the ground that the 1st respondent had been promoted to the post of Lecturer on March 1, 1976 pursuant to certain orders which had been issued under the Act and which continued to be in operation until section 16GG brought into force.
This appeal by special leave is filed by the appellant against the decision of the High Court.
It is not disputed that until section 16GG of the Act came into effect the appellant and the 1st respondent were both functioning on an ad hoc basis as teachers and it was only by virtue of section 16GG of the Act that they came to be appointed as teachers in substantive capacity.
Section 16GG of the Act came into effect from 21.4.1977.
It provided that the teachers who were working on an ad hoc basis between August 18, 1975 and September 30, 1976 (both dates inclusive) against clear vacancies and possessing prescribed qualifications should 'with effect from the date of commencement of this section ' be deemed to have been appointed in a substantive capacity provided such teacher had been continuously serving the institution from the date of his appointment upto the commencement of this section.
There is no dispute that both the appellant and the 1st respondent satisfied the conditions prescribed by section 16GG of the Act for regularising their appointment in a substantive capacity but what is crucial for purposes of this case is the date from which the appellant and the 1st respondent should be deemed to be holding their posts in a substantive capacity.
Section 16GG of the Act clearly lays down that any teacher whose services are regularised should be deemed to have been appointed in a substantive capacity with effect from the date of the commencement of that section.
It does not say that the services of such teachers should be deemed to have been regularised with effect from the date from which they were continuously officiating in the posts in question.
The date of commencement of the section in the instant case being 21.4.1977 it 1056 should be held that both the appellant and the 1st respondent, who were by then holding the posts of Lecturers on an ad hoc basis were appointed in a substantive capacity of the same date, i.e., 21.4.1977.
The High Court omitted to consider the effect of the words 'with effect from the date of the commencement of this section ' in sub section (1) of section 16GG of the Act and also sub section (2) of that section which provided that every teacher deemed to have been appointed in a substantive capacity under sub section (1) should be deemed to be on probation from the date of the commencement of the section.
On the question of seniority between the appellant and the 1st respondent clause (b) of regulation 3(1) of the Regulations made under the Act, as already stated, provides that the seniority of teachers in a grade shall be determined on the basis of their substantive appointment in that grade and if two or more teachers were so appointed on the same date seniority should be determined on the basis of age.
Since it is admitted that both the appellant and the 1st respondent had been appointed in a substantive capacity by virtue of section 16GG of the Act they must be deemed to be holding their respective posts in the substantive capacity only from 21.4.1977 on which date section 16GG of the Act came into force.
Both of them should be deemed to be on probation from 21.4.1977 [Vide section 16GG(2)].
Any earlier appointment or promotion on an ad hoc basis has no bearing on the question of seniority.
The appellant and the 1st respondent should be deemed to have been appointed on a substantive basis on the same date for purpose of seniority and, therefore, the appellant, who is older than the 1st respondent, should be treated as senior to the 1st respondent by reason of the second sentence in clause (b) of regulation 3(1) of the Regulations framed under the Act.
We are, therefore, of the view that the High Court erred in declaring that the 1st respondent was senior to the appellant on the basis of the fortuitous promotion of the 1st respondent said to have been made on March 1, 1976.
The Judgment of the High Court is, therefore, liable to be set aside and the decision of the District Inspector of Schools has to be restored.
We accordingly allow the appeal, set aside the judgment of the High Court and make a declaration that the appellant is senior to the 1st respondent.
The appeal is accordingly disposed of.
No costs.
P.S.S. Appeal allowed.

summary:
% large number of teachers working in the educational institutions governed by the Uttar Pradesh Intermediate Education Act, 1921, were appointed or promoted on an ad hoc basis.
The question of regularisation of their services engaged the attention of the State Government and it was decided to amend the Act by an Ordinance.
Section 16 GG was accordingly introduced on April, 21, 1977.
The Ordinance was replaced by the Uttar Pradesh Education Laws Amendment Act, 1977.
The appellant and respondent No. 1 were both appionted as Assistant Teachers in an Intermediate College with effect from July 8, 1967.
Respondent No. 1 was promoted by the management as Lecturer in Hindi on an ad hoc basis with effect from March 1, 1976.
The District Inspector of Schools approved of it on October 5, 1976.
Subsequently on November 20, 1976 he again made an order promoting both the appellant and respondent No. 1 as Lecturers in Civics and Hindi respectively on an ad hoc basis.
Their services came to be regularised by virtue of the new provision.
section 16 GG, with effect from April 21, 1977.
After their services were so regularised, dispute arose regarding the seniority.
While the first respondent claimed seniority over the appellant on the basis of his appointment/promotion made on March 1, 1976, the appellant claimed that he being older than the first respondent was entitled to be treated as senior by virtue of the second part of clause (b) of regulation 3(1) of the Regulations framed under the Act.
The District Inspector of Schools came to the conclusion that the fortuitous appointment/promotion of the first respondent on March 1, 1976 could not have any effect on the question of seniority between 1050 them, and held that since the appellant and the first respondent had been accepted to be promoted in substantive capacity on the same day, and since the appellant was older than respondent No. 1, the appellant should be considered as senior by virtue of the second sentence in clause (b) of regulation 3(1) of the Regulations.
Aggrieved by the aforesaid decision the first respondent filed a writ petition before the High Court, which was allowed, the order of the Disctrict Inspector of Schools was set aside and it was declared that the first respondent was senior to the appellant on the ground that the first respondent had been promoted to the post of lecturer on March 1, 1976, pursuant to certain orders issued under the Act which continued to be in operation until section 16GG was brought into force.
Allowing the appeal by Special Leave.
^ HELD: 1.
The appellant is senior to the first respondent.
[1056E] 2.1 What is crucial for the purposes of the case is the date from which the appellant and the first respondent should be deemed to be holding their posts in substantive capacity.
Section 16GG of the Act clearly lays down that any teacher whose services are regularised should be deemed to have been appointed in a substantive capacity with effect from the date of its commencement.
It does any say that the services of such teachers should be deemed to have been regularised with effect from the date from which they were continuously officiating in the post in question.
The date of commencement of the section being April, 21, 1977 both the appellant and the first respondent, who were by then holding the posts of Lecturers on an ad hoc basis are to be deemed to have been appointed in a substantive capacity on the same date, that is, April 21, 1977.
[1055G H; 1056A] 2.2 On the question of seniority, cl.
(b) of Regulation (3)(1) of the Regulations provides that the seniority of teachers in a grade shall be determined on the basis of their substantive appointment in that grade and if two or more teachers were so appointed on the same date seniorty should be determined on the basis of age.
[1056C] In the instant case, the appellant is older in age than the first respondent.
He should, therefore, be treated as senior to the first respondent by reason of the second sentence in cl.
(b) of Regulations 3(1).[1056E F] 1051 3.
The High Court omitted to consider the effect on the words 'with effect from the date of the commencement of this section ' in subs.
(1) of section 16GG of the Act and also sub section
(2) of that section which provides that every teacher deemed to have been appointed in a substantive capacity under sub s.(1) should be deemed to be on probation from the date of the commencement of the section.
[1056B C]


judgement:
Civil Appeal No. 1510 of 1987 etc.
From the Judgment and Order dated 4.6.1987 of the Gauhati High Court in F.A. No. 19 of 1984.
Dr. Shankar Ghosh, Gobind Das, Ashok Sen, S.N. Mukharji, N.R. Choudhary and G.S. Chatterjee for the appearing parties.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These appeals by special leave 1072 relate to the affairs of M/s. Eastern Tea Estate (P) Ltd. It was of two branches namely, the Dutta 's and the Choudhury 'section Due to death and lack of cordiality between the erstwhile partners the two branches first drifted and then parted company as it unfortunately is the fate of so many Indian concerns and there were disputes and litigations in Court.
The Civil Appeal No. 1510 of 1987 arises from a judgment and decision of the Division Bench of the High Court of Gauhati dated 4th June, 1987.
It appears that that a petition was filed originally by the appellant under sections 397 and 398 read with section 403 of the (hereinafter called 'the Act ').
The company petition came to be disposed of on 4th February, 1977 in accordance with the compromise arrived at between the parties.
The said compromise comprised of inter alia, two relevant paragraphs, for the present purpose, which read as follows: "1.
Mrs. Arati Dutta will take over Chandana T.E. and Choudhury group will take over Martycherra T.E. On 25th January, 1976.
The Bank liability of the Company in respect to Martycherra T.E. amounting to Rs.2,20,000 (Approx.) shall be shared equally of which Rs.1,10,000 shall be paid by Mrs. Arati Dutta on 25th January, 1976 at Silchar in presence of Shri B.K. Das, Advocate and Shri S.K. Sen, Advocate.
The entire liability of the Company would be equally shared and for that purpose an independent Auditor shall be appointed by Shri S.K. Sen, Advocate who shall undertake to start the accounting from the 1st week of February, 1976.
The shares owned by Mrs. Arati Dutta and her sons and daughters will be sold to the Company on 25.1.76 and necessary permission shall be taken from Hon 'ble High Court in this regard.
The staff salary and gratuity of the employees of the Head Office of the Hon 'ble High Court is obtained shall be considered as the Liability of the Company and will be borne by the two parties equally.
1073 6.
Mrs. Arati Dutta shall have to pay another sum of Rs.12,500 to the Company in addition to her payment of 5% liability of the Company.
" Thereafter there were differences between the parties and it could not be adjusted as the parties could not agree as to audit.
On 9th November, 1982 the parties agreed that no auditor need be appointed in the matter of determination of liability and the matter of determination of liability as per the 1973 Balance sheet should be left entirely to the Court.
In accordance with the compromise the parties were asked to submit their Balance sheets regarding the payments made by them which related to liabilities in the Balance sheet as on 31st December, 1973.
The parties filed their Balance sheets and the learned Single Judge of the High Court computed the liabilities of the parties on that basis.
Aggrieved, however, by the said decision, the appellant preferred an appeal before the Division Bench of the said High Court.
The first question that was raised before the Division Bench was whether the appeal lay to the Division Bench under section 483 of the Act which dealt with appeals from orders.
The said section was as follows: "483: Appeals from orders Appeals from any order made or decision given in the matter of winding up of a company by the Court shall lie to the same Court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any other order or decision of the Court in cases within its ordinary jurisdiction.
" It was submitted by learned counsel that though the first application by the appellant was under sections 397 and 398 read with section 403 of the Act the same could be taken in the matter of winding up of a company to which the reference has been made in section 483.
On the other hand, it was submitted that no appeal lay.
It appears to us that though this present application was relating to sections 397 and 398 and as it arises in respect of the orders passed under sections 397 and 398 of the Act, the provisions of section 483 would be attracted and an appeal would lie to the Division Bench.
This conclusion seems to follow from an analysis of the sections as interpreted by the various decisions of this Court as well as one judgment of the Delhi High Court to which we will refer.
However, it is sufficient for the present purpose for us to refer to the observations of this Court in Shanta Genevienve Pommerat & Anr.
vs Papers Pvt. Ltd. & Ors.
A.I.R. 1983 S.C. 269 where this Court observed that an appeal under sections 397 and 398 read with 403 of the would lie to the same 1074 court to which, in the same manner in which, and subject to the same conditions under which the appeals lie from any order or decision of the court in cases within its ordinary jurisdiction.
This Court made the following observations at page 269 of the report: "Now an order under sections 397, 398 and 403 of the , on the face of it, cannot be said to be an order made or decision given, in the matter of the winding up of a company.
Relief, undoubtedly under section 397 and/or 398 is in fact an alternative to winding up.
No doubt order under sections 397 or 398 could be an order made or decision by the High Court.
Having jurisdiction under the the appeal will lie to the Division Bench of the same High Court.
This is not disputed.
Chapter XLII of the Bombay High Court Rules provides for appeals to appellate Court.
The Rules make provision for certain type of appeals to be placed in the first instance, for admission before a Bench of the High Court to be appointed by the Chief Justice.
It is not in dispute that the appeal preferred by the present appellants was not one such appeal which can be placed for admission under Rule 966 A and it follows from this Rule that the appeals other than those mentioned in that Rule are not to be placed for admission.
This point is no more res integra in view of the decision of this Court in M/s Golcha Investment (P) Ltd. vs Shanti Chandra Bafna., (A.I.R. wherein after considering the provision contained in Rule 966 A, it was held that appeals, other than those set out in the Rule are not to be placed for admission and they were entitled to be admitted as a matter of course.
This Court accordingly quashed the order dismissing the appeal in limine observing that the appellate court erred in summarily dismissing the appeal because it was bound to entertain the same and dispose it of on merits.
This observation will mutatis mutandis apply to the present appeal.
" References may also be made to the decisions of this Court in Shankarlal Aggarwal & Ors.
vs S.L. Poddar & Ors., A.I.R. 1965 S.C. 507; M/s. Golcha Investments (P) Ltd. vs Shanti Chandra Bafna (supra) and M/s. Tarapose & Co. vs Cochin Shipyard Ltd.; , The Delhi High Court in Gokulchand D. Morarka and another vs Company Law Board and others, 1075 correctly in our opinion explained the position.
There the High Court found that pending the petition for winding up of the company filed by two of its creditors for failure to pay a debt in spite of statutory notice, the Company Law Board had filed a petition under sections 397 and 398 of the and in an application applied for interim reliefs of removal of the sole Director and Constitution of a Board to manage the Company.
The Company Judge passed ex parte orders restraining the Company from disposing of its assets and restraining debenture trustees from enforcing their rights.
Thereupon, an application was filed under section 442 for stay of the petition and that petition under sections 397 and 398 was filed by 125 shareholders and a Bank has also filed another winding up petition claiming a large money.
Pending the winding up petitions the Company Judge heard two applications together and passed a common order for removal of the sole director and constitution of a Board of Directors with a retired Judge as the Chairman.
Appeals were taken to a Division Bench against another order of the Company Judge.
It was held over ruling the preliminary objections that the order passed by the Company Judge was appealable under section 483 of the because firstly, any order passed under section 397 or section 398 was one which was passed in lieu of winding up and hence, it was "in the matter of winding up" and, secondly, the order passed in C.A. No. 323 of 1971 expressly fell within the scope of section 442 as the order had been passed after at least two applications had been filed for the winding up of the Company.
The Court further held that there was nothing in section 483 of the , which took away or curtailed the right of appeal provided by section 5(1) of the , and clause 10 of the Letters Patent (Punjab) as applicable to the Delhi High Court; and that the jurisdiction conferred on the Bombay Judge of the High Court under section 10 of the was none other than its ordinary civil jurisdiction and appeal lay also under clause 10 of the Letters Patent to a Division Bench from the order of the Company Judge.
In this case in the High Court of Gauhati, however, unlike the Bombay High Court or the Calcutta High Court or the Delhi High Court, no Letters Patent was applicable to the Gauhati High Court.
It was therefore held that there was no provision for an appeal to the judgment of the learned Single Judge of the High Court.
In our opinion the decision in Shankar Lal Aggarwal & Ors.
vs Shankar Lal Poddar & Ors.
(supra) of this Court indicated the true position where 1076 this Court held that section 202 of the Companies Act, 1913 was in parimateria with the present section.
This Court preferred the view of the Chief Justice Chagla of the Bombay High Court reported in Bachharaj Factories Ltd. vs Hirjee Mills Ltd. A.I.R. 1955 Bombay 355 to the view expressed by the Calcutta High Court in Madan Gopal Daga vs Sachindra Nath Sen, A.I.R. 1928 Calcutta 295 wherein it was held that an order or the decision made or given in the matter of winding up of a company to be appealable had to satisfy the requirements of clause 15 of the Letters Patent.
This interpretation was not accepted by other High Courts and the Bombay High Court held differently.
The view of the Bombay High Court was preferred by this Court in the aforesaid decision and it was observed as follows: "We thus agree with Chagla C.J., that the second part of the section which refers to 'the manner ' and 'the conditions subject to which appeals may be had ' merely regulates the procedure to be followed in the presentation of the appeals and of hearing them, the period of limitation within which the appeal is to be presented and the forum to which appeal would lie and does not restrict or impair the substantive right of appeal which has been conferred by the opening words of that section.
" In our opinion this position is clear from the observation of this Court in Shankar Lal Aggarwal & Ors.
vs Shankar Lal Poddar & Ors., (supra) that the appeal lies to the same High Court irrespective of the powers under the Letters Patent.
Sections 397 and 398 read with section 483 indicate that the appeal would lie in the same manner to the same court and naturally and logically an appeal from the decision of the Single Judge would lie to the Division Bench.
This in our opinion follows logically from the ratio of decision of this Court in Shankarlal Aggarwal & Ors.
vs Shankarlal Poddar & Ors.
(supra) as well as other decisions referred hereinbefore.
It is true that there is perhaps no procedure to file an appeal from the decision of the learned Single Judge of the Gauhati High Court.
If that is so rules should be framed by the High Court in its jurisdiction of Rule making power for filing and disposal of such appeals.
But absence of the procedural rules do not take away a litigant 's right to file such appeals when the statute confers such a right specifically and the jurisdiction of the High Court to dispose of such an appeal if so filed.
We, therefore, propose to deal with the decision of the High Court.
Here, we are further helped by the fact that there is an appeal 1077 from the decision of the learned single judge being Appeal No. 1511/87.
In either view of the matter the view taken by the High Court is before us.
As noted, the learned single judge was asked by parties by agreement to compute the liabilities in view of the failure of the parties to agree to another auditor.
We have heard Sree Ghosh, learned counsel for the appellant and we have also heard Sree A.K. Sen, learned counsel for the respondent.
Sree Sen 's contention was that the current liabilities came to a sum of Rs.6,65,841.63.
He further submitted that the parties having agreed to divide the liabilities equally, the liability to the share of the appellant came to a sum of about Rs.3.32 lacs.
As the appellant had paid a sum of Rs.1.36 lacs the contention of the appellant was that the appellant has to pay a further sum of Rs.2 lacs.
In the alternative, it was urged by the appellant that what could be demanded from the appellant was the liabilities which were outstanding and not paid off by the time the settlement had been arrived at between the parties in January 1976.
But having regard to all the events and terms of settlement we are in agreement with the Division Bench of the High Court that so far as the Bank liability of Martycherra T.E. was concerned, the same had to be taken at the figure of Rs.2,20,000 as stated in clause (2) of the Agreement and not at Rs.6,28,000 and odd as given in the Balance sheet of 31st December, 1973.
The Division Bench computed the liability which came to a total of Rs.16,34,675.46 which has computed after deducting a sum of Rs.2,20,000 which was governed by clause (1) and it comprised of Bank Liability.
The Division Bench took into consideration that the appellant had paid a sum of Rs.1,36,038.06 after the compromise.
She had not paid anything more than this.
Therefore it follows that only a sum of Rs.6,81,299.67 was payable by the appellant to the respondent.
The Division Bench, in our opinion, correctly modified the determination on that figure and that is the sum which should be the liability of the appellant.
Sree Ghosh, learned counsel for the appellant tried to submit before us that a sum of Rs.1,36,038.06 should be given credit in computing the liability of the appellant and according to him the Division Bench fell into an error in not deducting this liability of his client.
We are unable to agree with this view.
In the aforesaid view of the matter we uphold the direction of the Division Bench in so far as they computed the liability and direct that the appellant would pay that sum to the respondent in settlement of the dues referred hereinbefore.
sum of Rs.1,36,038.06 was directed to be paid at the time of the admission of the appeal by the Division Bench of the High Court.
If that money has been paid or realised by the respondent the appel 1078 lant would pay the balance amount of Rs.6,81,299.67 and if the money is paid the respondent will by virtue of this order be entitled to withdraw the same and give credit to the appellant for the same.
The balance sum will be paid by 15th March, 1988.
In default of payment by that date the amount will carry 18% interest.
The appeal is disposed of accordingly by so holding.
In view of the aforesaid position, decision in C.A. No. 1511/87 which is from the decision of the learned Single Judge no longer survives and is disposed of accordingly.
SLP (C) No. 8152 of 1987 which is a cross petition filed against the decision of the Division Bench of the Gauhati High Court no longer survives and is disposed of accordingly.
Parties will pay and bear their own costs.
N.P.V. Appeal disposed of.

summary:
% The appellant filed a petition under Sections 397 and 398 read with Section 403 of the in respect of the affairs of the respondent firm which was disposed of in terms of the compromise arrived at between the parties.
The parties agreed that no Auditor need be appointed for the determination of the liability, and that the determination as per the 1973 balance sheet should be left entirely to the Court.
In accordance with the said compromise, the parties filed their balance sheets regarding the payments made by them which related to liabilities as on 31st December, 1973.
Single Judge of the High Court computed the liabilities of the parties on that basis.
The appellant preferred an appeal before the Division Bench against the aforesaid decision.
The Division Bench held that as no Letters Patent was applicable to the High Court there was no provision for an appeal against the judgment of the Single Judge and dismissed the appeal.
On the question: whether an appeal lies to the Division Bench under section 483 of the , against the orders of a Single Judge.
Disposing of the appeal, ^ HELD: Sections 397 and 398 read with section 483 of the 1071 indicate that an appeal would lie in the same manner to the same court.
Naturally and logically, therefore, an appeal from the decision of the Single Judge would lie to the Division Bench.
[1076E F] Shankarlal Aggarwal & Ors.
vs S.L. Poddar & Ors.
A.I.R. followed.
Shanta Genevienve Pommerat & Anr.
vs Papers Pvt. Ltd. & Ors., A.I.R. 1983 S.C. 269; M/s. Golcha Investment (P) Ltd. vs Shanti Chandra Bafna, A.I.R. 1970 S.C. 1350 and M/s. Tarapose & Co. vs Cochin Shipyard Ltd., A.I.R. 1984 S.C. 1072 referred to.
Absence of procedural rules does not take away a litigant 's right to file appeals against the decision of Single Judge when the statute confers such a right specifically, and the jurisdiction of the High Court to dispose of such an appeal, if so filed.
If there are no Rules, they should be framed by the High Court in its jurisdiction of Rule making power for filing and disposal of such appeals.
[1076G H] In the instant case, though the present application was relating to sections 397 and 398, and as it arises in respect of the orders passed under those sections, the provisions of section 483 would be attracted and an appeal would lie to the Division Bench.
[1073F G] [The High Court found that only a sum of Rs.6,81,299.67 was payable by the appellants to the respondent.
The Court is of the opinion that the High Court was right in its determination, and that is the sum which should be the liability of the appellant.
Appellant directed to pay the aforesaid amount to the respondent in full settlement of the dues.] [1077E G]