judgement:
tion (Civil) No. 961 of 1988 Etc.
(Under Article 32 of the Constitution of India).
Kuldip Singh, Additional Solicitor General, Rajindra Lal Chopra, A.S. Pundir, Bharat Sangal, Dr. (Mrs.) Roxna section Swamy, M.C. Dhingra, Prem Malhotra and Ms. A. Subhashini for the Petitioners.
Madan Lokur, Manik Karanjawala, C.M. Nayyar and S.K. Mehta for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
These writ petitions relate to the allocation of seats in medical colleges in the MBBS/BDS Course pursuant to the result of the All India Entrance Examination conducted by the Central Board of Secondary Education, New Delhi, in respect of 15 per cent of the total number of MBBS/BDS seats in medical colleges of different States.
Before dealing with the individual writ petitions, we may refer to an application made by the Union of India being PG NO 907 C.M.P. No. 29264 of 1988 in Writ Petition (Civil) No. 348 52 of 1985 praying for suitable directions in the matter of allocation of vacant seats.
It has been stated in this application that the results of the All India Entrance Examination conducted by the Central Board of Secondary Education for admission in the MBBS/BDS Course were declared on July 15, 1988.
A merit list of 1,600 candidates together with a waiting list of 1,000 candidates was sent to the Director General of Health Services by the Central Board of Secondary Education for making allocations of candidates to various medical colleges for admission to MBBS/BDS Course, as the case may be.
The Director General of Health Services allocated 1,428 candidates to MBBS Course and 111 candidates to BDS Course in the various medical/dental colleges.
Further, it is stated that on the basis of information received in the office of the Director General of Health Services, 532 candidates have not joined in all these courses and, accordingly, the said 532 seats have been lying vacant.
In order to decide the criteria to be adopted for allocation of vacant seats as a result of drop outs in the number of candidates who had been allocated MBBS/BDS seats in various medical/dental colleges, a meeting was held under the chairmanship of the Secretary, Ministry of Health and Family Affair.
In this meeting, the Chairman of the Central Board of Secondary Education, Secretary, Medical Council of India, and representatives of the Ministry of Law and Justice participated, besides others from the Ministry of Health and Family Affair and the Directorate General of Health Services.
The Committee took a decision regarding the allocation of seats in the MBBS/BDS Course.
The Committee has also made certain suggestions regarding the guidelines to be followed for the purpose of filling up the vacant seats in the MBBS/BDS Course.
Mr. Kuldip Singh, learned Additional Solicitor General, submits that this Court may approve of the suggestions made by the said Committee or lay down the guidelines for the purpose of filling up the vacant seats.
After hearing the learned Counsel of the petitioners in these writ petitions and after considering the suggestions of the committee and the submissions made by the learned Additional Solicitor General, we direct that the following guidelines should be followed for the purpose of filling up the said 532 seats in the MBBS/BDS Course.
The candidates, who have been allocated seats to the Dhanbad Medical College which is not a recognised College by PG NO 908 the Medical Council of India after 1982, should first be reallocated to the recognised medical colleges having vacancies keeping in view the aspect of the minimum distance from their home towns.
Those candidates who have exercised their choice for MBBS Course only or to MBBS Course by way of first preference and to BDS Course by way of second preference and admitted to BDS Course for want of seats in the MBBS Course shall, if they or any of them desire to be admitted in the MBBS Course, be absorbed against the available vacant seats in order of merit.
The change from BDS Course to MBBS Course will, however, be at their own cost and responsibility.
The vacant MBBS or BDS seats, thereafter available, should be offered to the candidates on the waiting list in order of merit.
Allocation may be made to medical colleges on the basis of the five preference indicated by the candidates in the application forms.
Any allocation of seat made to a candidate in the waiting list either in the MBBS or BDS Course shall be final and no request for change from one course to the other will be entertained.
In the case of those candidates in the waiting list, who cannot be allocated to medical colleges on the basis of five preferences given by them in the application forms, the Director General of Health Services will allocate them colleges as near to their places of residence as possible subject to availability of seats in those nearby colleges.
The candidates will be given maximum time of twenty days to join the medical colleges allotted to them, failing which the seats will be declared vacant.
The allocation of MBBS seats already made shall not be disturbed.
The Director General of Health Services shall consider the question of allotment of medical colleges to candidates, who have been already admitted to MBBS or BDS Course, nearer to their home towns in order of merit.
Absorption in the said 532 vacant seats of candidates who have already been admitted in the BDS Course and reallotment of medical colleges to candidates also already admitted in the MBBS or BDS Course, as the case may be, PG NO 909 home towns, and the reallocation to the recognised medical colleges of candidates who have been already allocated seats to the Dhanbad Medical College, shall be made within a period of three weeks from today.
The petitioner Amanjit Singh Gill in Writ Petition (Civil) No. 961 of 1988 is a resident of Punjab.
He has been admitted in the MBBS Course in the Tamil Nadu Medical College.
He prays that the respondent may be directed to allot a seat in Patiala Medical College, Punjab, which is near to his residence.
The petitioner Shalu Sood in Writ Petition (Civil) No. 1110 of 1988 has been allotted a seat in the BDS Course in S.C.B. Medical College, Cuttack, and she has since joined the said College.
According to her two seats in BDS Course are lying vacant in Delhi.
No particulars have, however, been given by her as to in which medical college in Delhi, the two seats are lying vacant.
Be that as it may, she prays for the allotment of one of such seats to her in order of merit.
In Writ Petition (Civil) No. 1071 of 1988, the petitioner Vimal Mehta, who is a resident of Faridabad, Haryana, has been allotted a seat in the MBBS Course in Darbhanga Medical College, Bihar, which is far off from the place of residence of the petitioner.
On behalf of the petitioner preference has been given first to a medical college in Delhi and second to a medical college in Rohtak in the State of Haryana.
The grievance of the petitioner Mahesh Dutt in Writ Petition (Civil) No. 1056 of 1988 is that although 7 seats in the MBBS Course have been lying vacant in the Medical College Rohtak in respect of which he gave his first preference, he has been allotted a seat in the Medical College Dhanbad.
The home town of the petitioner is in Haryana and it is prayed by him that he should be allotted a seat in the MBBS Course in the Medical College Rohtak.
The petitioner has, however, already joined the Medical College Dhanbad.
The case of Kumari Shilpa Mehra, the petitioner in Writ Petition (Civil) No. 936 of 1988, is that she has been allotted a seat in the BDS Course at the Government Dental College, Bombay, although candidates who have secured less marks than her have been admitted in MBBS Course.
The petitioner has already joined the BDS Course in the said Government Dental College, Bombay.
It is prayed by her that she may be allotted a seat in the MBBS Course in any medical college in Bombay in order of merit.
PG NO 910 The guidelines for filling up the said 532 seats in the MBBS/BDS Course cover the cases of the petitioners in the different writ petitions mentioned above.
Instead of giving separate directions in each of the writ petitions, we direct the Director General of Health Services to deal with all the above cases and also the cases of other candidates in accordance with the above guidelines laid down by us.
All the cases shall be disposed of by the Director General of Health Services within a period of three weeks from today.
The Director General, after disposal of the representations of the writ petitioners and others with regard to the filling up of the said 532 vacant seats in the MBBS/BDS Course, shall submit a report to this Court within six weeks from today.
The writ petitions and C.M.P. No. 29264 of 1988 are disposed of as above.
There will, however, be no order as to costs in any of them.

summary:
Medical Colleges Admission to All India Entrance Examination for MBBS/BDS course Vacant seats as a result of drop out in number of candidates allocated seats Guidelines issued by Court for allocation of vacant seats.
The petitioners in the writ petitions had been allotted seats in MBBS/BDS courses in various Medical/Dental Colleges.
They sought change, and wanted admissions in colleges which were near their home towns.
The Union of India, respondent in the writ petitions also filed Civil Miscellaneous Petitions seeking directions of the Court in the matter of the allocation of 532 vacant seats in the medical colleges in the MBBS/BDS courses pursuant to the result of the All India Entrance Examination conducted by the Central Board of Secondary Education, New Delhi.
Disposing of the Writ and Civil Miscellaneous petitions the Court laid down guidelines to be followed: HELD: 1.
The candidates, who have been allocated seats to the Dhanbad Medical College which is not a recognised College, by the Medical Council of India should first be reallocated to the recognised medical colleges having vacancies keeping in view the minimum distance from their home towns.
[907H;908A] 2.
Those candidates who have exercised their choice for MBBS course only or to MBBS course by way of first preference and to BDS course by way of second preference and admitted to BDS Course for want of seats in the MBBS Course shall, if they or any of them desire to be admitted in the MBBS Course, be absorbed against the available vacant seats in order of merit.
[908B C] PG NO 905 PG NO 906 3.
The vacant MBBS or BDS seats, thereafter available should be offered to the candidates on the waiting list in order of merits.
[908C] 4.
The candidates will be given maximum time of twenty days to join the medical colleges, failing with the seats will be declared vacant.
[908F] 5.
The allocation of MBBs seats already made shall not be disturbed.
[908F] 6.
The Director General of Health Services, shall consider the question of allotment to candidates, who have been already admitted to MBBS or BDS Course, nearer to their home town in order of merit.
[908G] [The Director General of Health Services to deal with the cases of the petitioners in the different writ petitions and also the cases of the other candidates in accordance with the above guidelines and dispose of the same within a period of three weaks.] [910B]


judgement:
Special Leave Petition (Civil) No. 10264 of 1988 From the Judgment and Order dated 26.5.1988 of the Karnataka High Court in M.F.A. No. 52 of 1982.
PG NO 886 S.K. Kulkarni and Mrs. Kiran Suri for the Petitioner.
Jagdish G. Yadwad and section Srinivasan for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is a petition for leave to appeal against the judgment and order of the High Court of Karnataka dated 26th of May, 1988.
By the said judgment the High Court affirmed the order of the learned Civil Judge, Hubli.
To appreciate the controversy, a few facts may be necessary.
On or about 18th September, 1972 a partnership firm was constituted which included the petitioner and the respondents Nos. 1 to 9 to run a cinema theatre and Hubli in the State of Karnataka.
The said firm was reconstituted in August, 1973 for a period of 25 years with one partner retiring from the first firm.
In the said reconstituted firm the 1st respondent had 12 paise share.
On 8th November, 1980 the 1st respondent had issued a notice calling for dissolution of the firm alleging mismanagement,loss and exclusion from the management.
In 1981, the 1st respondent filed a suit in the Court of the Civil Judge, Hubli for (i) dissolution of the firm and (ii) accounts.
On 4th November, 1981, the 9th respondent who is defendant No. 7 in the suit filed an application under Section 34 of the .
l944 (hereinafter referred to as 'the Act ') for stay of the said suit.
The learned Trial Judge after referring to the facts and the relevant decisions referred to the order sheet in this matter and observed that there is a clear record in the order sheet that the counsel appearing for the applicant had "sought adjournment specifically for filing written statement The order sheet further recorded that the matter was posted to 4th November, 1981 "for arguments".
The learned Trial Judge was of the view that the petitioner herein who is defendant No. 4 in the suit had sought and secured several adjournments to file a written statement.
In that view of the matter, the learned Trial Judge was of the view that the petitioner had taken steps in the proceedings in the suit by seeking and securing adjournment to file the written statement.
In that view of the matter of declined to exercise his jurisdiction to stay the said suit under Section 34 of the Act.
There was an appeal.
The Division Bench of the High Court was of the view that in view of the facts mentioned in the order of the Trial Judge, it appeared that the petitioner herein had taken steps in the suit and had thereby disentitled himself from asking for the stay of PG NO 887 the said suit.
The High Court, therefore, confirmed the order of the learned Trial Judge.
Aggrieved thereby, the petitioner seeks leave to appeal under Article 136 of the Constitution from the said decision.
Arbitration is an alternative procedure for speedy adjudication of disputes between the parties and should normally be encouraged and parties have bound themselves to have their disputes adjudicated by arbitration, so they should be held bound by the agreement between the parties.
Section 34 of the Act is the statutory provision which deals with the powers to stay legal proceedings where there is an arbitration agreement.
Section 34 of the Act which is relevant for our present purpose is as follows: "34.
Power to stay legal proceedings where there is an arbitration agreement.
Where any part to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings.
" An analysis of the aforesaid section makes it clear that in order to have the proceedings in the suit stayed, there must be an arbitration agreement between the parties covering the disputes in question.
The section stipulates that in order that stay may be granted under the section, it is necessary that the following conditions are fulfilled: (i) The proceedings must have commenced by a party to an arbitration agreement against any other party to the agreement; (ii) the legal proceeding, in this case the suit, which is sought to be stayed must be in respect of a matter agreed to be referred; PG NO 888 (iii) the applicant for stay must be a party to the legal proceeding, the suit in this case.
(iv) the applicant must have taken no steps in the proceeding after appearance; (v) the applicant must satisfy that only the applicant was at the time when the proceedings were commenced, ready and willing to do everything necessary for the proper conduct of the arbitration; and (vi) the Court must also be satisfied that there was no sufficient reason why the matter should not be referred to arbitration.
Several decisions of this Court and the decisions of the High Court have laid down the aforesaid position in law.
See, in this connection, the observations in the "Law of Arbitration" by R.S Bachawat (1st Edn. ) at pages 498 499.
Indisputably, in this case, the proceeding was commenced by a party to an arbitration agreement against the other party to the agreement and the legal proceeding which was sought to be stayed was in respect of a matter agreed to be referred to.
It is also clear that the petitioner is a party to the arbitration agreement.
The only question that was agitated before the learned Trial Judge as well as before the High Court was, whether the petitioner had taken no steps after appearance.
The section requires that the application must he filed before the filing of the written statement or taking any other step in the proceeding.
In the case of State of Uttar Pradesh & Anr.
Janki Saran Kailash Chandra & Anr.,[1974] 1 SCR 31, the palintiff instituted a suit for recovery of damage for breach of contract impleading the State U.P. as the first defendant and the Divisional Forest Officers, Bijnor as the second defendant.
The summons in the said suit issued to the State of U.P. were served on the District Government Counsel.
On 2nd September.
1966 the said counsel filed an appearance slip in the Court and also put in a formal application praying for one month 's time for the purpose of filing written statement.
That prayer was granted.
On 1st October, 1966 the District Government Counsel filed an application under Section 34 of the Act pleading that there was an arbitration clause in the agreement between the parties to the suit and the State of U.P. being willing to refer the matter to arbitration the suit should be stayed.
The trial PG NO 889 court held that the dispute was subject to arbitration clause and since the State of U.P. had not taken any steps in the suit proceedings and had also not filed the written statement the suit was liable to be stayed.
On appeal the High Court held that the action of the District Government Counsel in applying for time to file the written statement amounted to taking a step in the proceedings within the meaning of section 34 of the Act.
On this view, the defendant was held disentitled to claim the stay of the suit.
By special leave, the defendant applied to this Court.
This Court dismissed the appeal and observed at page 37 of the report as follows: "The District Government Counsel in the present case was thus fully empowered to appear and act for and on behalf of the Government and also to make applications on its behalf.
If the said counsel wanted time for the purpose of having fuller instructions, he could have asked for it specifically, for he was not a layman ignorant about the legal position but a professional lawyer retained by the Government for the purpose of acting and pleading on behalf of the Government as a recognised agent.
He, however, chose instead to ask for time specifically for filing written statement and this act he purported to do on behalf of the State Government which he was fully empowered to do.
The State took benefit of his appearance and his successful prayer for adjournment of the case by one month for the purpose of filing the written statement.
In those circumstances, it is hardly open to the State Government to plead that the District Government Counsel was not authorised to seek adjournment on its behalf for this purpose.
An oblique suggestion thrown on behalf of the appellant that the District Government Counsel had merely volunteered to appear without instructions, presumably taking the cue from the decision of the Punjab High Court in the case of Moji Ram, is merely to be stated to be rejected.
A recognised agent like the District Government Counsel can scarcely be considered to appear volutarily in a case On behalf of the Government in the sense of being unauthorised by his client for the simple reason that he is authorised by virtue of statute to appear, act and make applications on behalf of the Government.
Indeed in the present case the District Government Counsel also filed in court the usual appearance slip.
If he wanted time for further consultatioins, he could and should have specifically PG NO 890 made a prayer to that effect.
It is, however, idle to contend that he can be considered to have merely volunteered without authority to appear and ask for time for filing the written statement.
The argument of appearance by a recognised agent as a mere volunteer is extremely difficult to appreciate.
The State, as already observed, took the benefit of the adjournment.
It will be somewhat irrational and perhaps incongruous to permit the State, after having taken the benefit of this adjournment, to plead that the application for adjournment was not made on instructions and was unauthorised.
To accede to the State Government the right to do so would clearly be unjust to the opposite party which could have rightfully objected to the adjournment, had there been any indication that the prayer was not being made on instructions from the State Government.
September 2, 1966 was fixed in the summons for filing written statement.
Failure to do so would have entailed consequences prejudicial to the State Government.
Those consequences were avoided by making an application for extension of time for filing written statement which must have been understood by the opposite party, as also by the court, to be on instructions by the State Government.
" It may be noted that thereafter in U.P. there was amendment which added an explanation which provided that a mere application for time to file a written statement or a mere contest to an interlocutory application for injuction, would not amount to taking any steps in the proceedings.
In the aforesaid view of the matter, without the aid of Explanation 2 added to the U.P. Act, we have to proceed to find out the conditions required to be fulfilled in order to be entitled to stay under section 34 of the Act.
As mentioned hereinbefore, it is imperative to find out whether "any other steps in the proceedings have been taken before making an application for stay of the suit in this case.
In our opinion, proceeding without being embroiled in the facts and the circumstances of the case with the controversy whether the said exprression should be construed ejusdem generis, it i5 necessary to determine whether the party had evinced or indicated any intention to proceed unequivocally with the suit and not to proceed with the arbitration.
This position was examined by this Court in Food Corpn.
of India & Anr.
vs Yadav Engineer & Contractor, ; , where this Court referred to the decision of Uttar Pradesh PG NO 891 vs Janki Saran Kailash Chandra, (supra), and after setting out the provisions of section 34 of the , this Court observed that apart from written statement "some other step" mentioned in the Section, must indisputably be such step as would manifestly display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration.
Each court must find out from the context of each case whether this has happened or not.
The Court further observed therein that "a step taken in the suit which would disentitle the party from obtaining stay of proceeding must be such step as would display an unequivocal intention to proceed with the suit and to abandon the benefit of the arbitration agreement or the right to get the dispute resolved by arbitration" .
In our opinion, that is a correct position in law as declared by this Court, and it is in consonance with the principles that have been followed under section 4 of the English Arbitration Act, 1889.
At page 106 of the said report this Court observed that the "general words" taking any other steps in the proceedigs ' just follow the specific expression 'filing a written statement ' and both are used for achieving the same purpose".
Hence, this Court was of the opinion that the latter expression must be construed ejusdem generis with the specific expression just preceding to bring out the ambit of the latter.
The expression 'written statement ' is a term of specific connotation ordinarily signifying a reply to the plaint filed by the plaintiff.
The expression 'taking any other steps in the proceeding ' does not mean that every step in the proceedings would come in the way of enforcement of the arbitration agreement.
The step must be such as would clearly and unambiguously manifest the intention to waive the benefit of arbitration agreement.
From the Order sheet in this case and as noted by the learned Trial Judge, it appears that the counsel appearing for the petitioner has sought adjournment "specifically for filing written statement" and obtained time for more than one occasions for such purpose.
It was not only the time taken to consider whether written statement should be filed as a defence to the plaint to enter into an arena of controversy,but it was time taken to have the matter decided by the suit.
The party evinced an intention to have the matter adjudicated by the Court.
If that is the position, then in our opinion, in view of the principle enunciated hereinbefore, the party has disentitled itself to ask for PG NO 892 stay of the said suit.
The High Court was, therefore, right in affirming the order of the learned Trial Judge.
Apart from the same, from the conduct of the petitioner and the narration of the events mentioned hereinbefore, it does not appear that the petitioner was ever keen to have the matter adjudicated by arbitration.
If that is the position then the petitioner cannot have any grievance.
In that view of the matter this application under Article 136 of the Constitution must fail and is accordingly dismissed.
On the prayer of the counsel for the petitioner, we direct that the petitioner would have eight weeks ' time from today for filing the written statement to the plaint.
N.V.K. Petition dismissed.

dataset_name: IN-Abs

summary:
The petitioner and the respondents in the S.L.P. were partners in a partnership firm.
On 8th November, 1980, respondent No. l issued a notice calling for dissolution of the firm alleging mismanagement, loss and exclusion from the management, and later filed a civil suit for: (i) dissolution of the firm, and (ii) accounts.
On 4th November, 1981, respondent No. 9 who was defendant No. 7 in the suit, filed an application under Section 34 of the for stay of the suit.
The Trial Judge after referring to the order sheet in the matter and noticing that the counsel for the petitioner had taken steps in the proceedings in the suit, by seeking and securing adjournments for filing the written statement, held that there was no jurisdiction to stay the suit under On appeal, the Division Bench of the High Court confirmed the order of the Trial Judge, and held that the petitioner having taken steps in the suit, had thereby disentitled himself from asking for the stay of the said suit.
Dismissing the petitioner 's Special Leave Petition, HELD: 1.
Arbitration is an alternative procedure for speedy adjudication of disputes between the parties and should normally be encouraged as parties have bound themselves to have their disputes adjudicated by arbitration, so they should be held bound by the agreement.
[887B] 2.
Section 34 of the is the statutory provision which deals with the powers to stay legal proceedings where there is an arbitration agreement.
One of PG NO 884 PG NO 885 the requirements is that the application for stay must be filed before the filing of the written statement or 'taking any other steps in the proceedings '.[887C; 888E] 3.
The expression 'taking any other steps in the proceedings ' does not mean that every step in the proceedings would come in the way of enforcement of the arbitration agreement.
The step must be such as would clearly and unambiguously manifest the intention to waive the benefit of arbitration agreement, and display an unequivocal intention to proceed with the suit giving up the right to have the matter disposed of by arbitration.
[891E F;B] 4.
Each Court must find out from the context of each case what has happened, and whether a step was taken in the suit which would disentitle the party from obtaining stay of proceedings.
[891C] In the instant case, it is indisputable that the proceeding was commenced by a party to an arbitration agreement against the other party to the agreement and the legal proceedings which was sought to be stayed was in respect of a matter agreed to be referred to arbitration.
From the order sheet in the case as noted by the Trial Judge, it appears that the counsel appearing for the petitioner had sought adjournment 'specifically for filing written statement ', and obtained time on more than one occasion for such purpose.
It was not only the time taken to consider whether written statement should be filed as a defence to the plaint, but it was time taken to have the matter decided by the suit.
The party evinced an intention to have the matter adjudicated by the Court and not keen to have the matter adjudicated by arbitration.
If that is so, the party has disentitled itself to ask for the stay of the said suit.
The High Court was, therefore.
right in affirming the order of the Trial Judge.
[891F H;892A] State of Uttar Pradesh & Anr.
vs Janki Saran Kailash Chandra & Anr., [1974] 1 SCR 31 and Food Corpn.
of India & Anr.
vs Yadav Engineer and Contractor, ; , referred to.
Law of Arbitration by R.S. Bachawat (Ist Edn.), pp.
498 499, referred to.


judgement:
vil Appeal No. 3212 of 1979 etc.
From the Judgment and Order dated 20.8.1979 of the Delhi High Court in Civil Writ Petition No. 426 of 1978.
PG NO 927 Rajinder Sachar, G.B. Pai, Narayan Shetty, K.T. Anantharaman, Mrs. P.S. Shroff, section Shroff, Ms. Girija Krishan, C.C. Mathur, A.M. Mittal, D.N. Mishra, Dalbir Bhandari, Ms. C.K. Sucharita and Ms. A. Subhashini for the appearing parties.
The Judgment of the Court was delivered by DUTT, J.
Of these three appeals by special leave.
we may first of all deal with Civil Appeal No. 3214 of 1979 for.
admittedly, the disposal of that appeal will virtually mean the disposal of the other two appeals.
The said Civil Appeal No. 3214 of 1979 is directed against the judgment of the Delhi High Court whereby the High Court has quashed a circular dated March 8, 1978 issued by the Board of Directors of Caltex Oil Refinery (India) Ltd. (for short `CORIL '),a Government Company, on the writ petition filed by the employees of CORIL being Writ Petition No. 426 of 1978.
The Caltex (Acquisition of Shares of Caltex Refining (India) Ltd. and of the undertakings in India of Caltex (India) Ltd.) Act 17 of 1977, hereinafter referred to as `the Act ', was enacted by the Union Parliament and came into force with effect from April Z3.
the Act provides for the acquisition of shares of CORIL and for the acquisition and transfer of the right, title and interest of Caltex (India) Ltd. in relation to its Undertakings in India with a view to ensuring co ordinated distribution and utilisation of petroleum products.
Under section 3 of the Act, the share in the capital of the CORILS stood transferred to and vested in the Central Government On the appointed day being December 30, 1976.
Under section 5, the right.
title and interest of Caltex (India) Ltd. in relation to its Undertakings in India stood transferred to and vested in the Central Government on the appointed day.
Section 9 of the Act provides that the Central Government may by a notification direct that the right, title and interest and the liabilities of Caltex (Inida) Ltd. in relation to any of its Undertakings in India shall, instead of continuing to vest in the Central Government, vest in the Government Company either on the date of the notification or on such earlier or later date not being a date earlier than the appointed day, as may be specified in the notification.
Section 11(2) provides that subject to rules made in this behalf under section 23, every whole time officer or other employee of CORIL would on the appointed day continue to be an officer or other PG NO 928 employee of CORIL on the same terms and conditions and with the same rights to pension, gratuity and other matters as are admissible to him immediately before that day and shall continue to hold such office unless and until his employment under CORIL is duly terminated or until his remuneration and conditions of service are duly altered by that company.
The Chairman of the Board of Directors of CORIL issued the impugned circular dated March 8, 1978, inter alia, stating therein that consequent upon the take over of the Caltex (India) Ltd. by the Government, the question of rationalisation of the perquisites and allowances admissible to Management Staff had been under consideration of the Board for sometime, and that as an interim measure, the Board had decided that the perquisites admissible to the Management Staff should be rationalised in the manner stated in the said circular.
At this stage, it may be mentioned that by the Caltex Oil Refinery (India) Ltd. and Hindustan Petroleum Corporation Ltd. Amalgamation Order, 1978 which was published in the Gazette of India, Extraordinary, dated May 9, 1978, the Undertaking of CORIL was transferred to and vested in Hindustan Petroleum Corporation Ltd. which thus became a Government Company referred to in section 9 of the Act.
After the issue of the said circular, the respondent 's Nos. 1 to 4, who were some of the employees of CORIL, filed a writ petition in the Delhi High Court being Civil Writ Petition No. 426 of 1978 challenging the legality and validity of the impugned order.
It was submitted by the said respondents that under the said circular the terms and conditions of service of the employees of CORIL had been substantially and adversely altered to their prejudice.
At the hearing of the said writ petition before the High Court it was contended on behalf of the respondents Nos.
I to 4 that the notification issued under section 9 of the Act vesting the management of the Undertakings of Caltex (India) Ltd. in CORIL was ultra vires subsection (1) of section 9.
It was contended that the provision of subsection (1) of section 11 of the Act offended against the provisions of Articles 14, 19 and 31 of the Constitution of India and, as such, it should be struck down.
Further, it was contended that there was no valid classification between the contracts referred to in section 11(1) and Section 15 of the Act.
It was urged that unguided and arbitrary powers had been vested in the of official by sub section (1) of section 11 for the PG NO 929 alteration of the terms and conditions of service of the employees.
Besides the above contentions, another contention was advanced on behalf of the respondents Nos. 1 and 4, namely, that the employees not having been given an opportunity of being heard before altering to their prejudice the terms and conditions of service, the impugned circular should be struck down as void being opposed to the principles of natural justice.
All the contentions except the last contention of the respondents Nos. 1 to 4 were rejected by the High Court.
The High Court, however, took the view that as no opportunity was given to the employees of CORIL before the impugned circular was issued, the Board of Directors of CORIL acted illegally and in violation of the principles of natural justice.
In that view of the matter, the High Court quashed the impugned circular.
Hence this appeal by special leave.
It is not disputed that the employees were not given any opportunity of being heard before the impugned circular dated March 8, 1978 was issued.
It is, however, submitted by Mr. Pai, learned Counsel appearing on behalf of CORIL, that there has been no prejudicial alteration of the terms and conditions of service of the employees of CORIL by the impugned circular.
It is urged that nothing has been pleaded by the respondents Nos. 1 to 4 as to which clauses of the impugned circular are to their detriment.
The High Court has also not pointed out such clauses before quashing the impugned circular.
It appears that for the first time before us such a contention is advanced on behalf of CORIL.
In this connection we may refer to an observation of the High Court Which is "Admittedly, the impugned order adversely affects the perquisites of the petitioners.
It has resulted in civil consequence".
The above observation clearly indicates that it was admitted by the parties that the impugned circular had adversely affected the terms and conditions of service of the respondents Nos. 1 to 4 who were the petitioners in the writ petition before the High Court.
Mr. Sachhar learned Counsel appearing on behalf on the respondents spondents Nos. 1 to 4. has handed over to us a copy of the writ petition filed by the respondents Nos. 1 to 4 before the High Court being Civil Writ Petition No. 426 of 1978.
In paragraph 12 of the writ petition it has been inter alia stated as tollows: "The petitioners respectfully submit that under the said circular the terms and conditions of service of the employees of the second respondent including the petitioners herein have been substantially and adversely altered to the PG NO 930 prejudice of such employees.
The same would be clear inter alia from the statements annexed hereto and marked as Annexure IV.
" Annexure IV is a statement of Annual Loss in Remuneration Income per person/employee posted at Delhi and U.P. Nothing has been produced before us on behalf of CORIL or the Union of India to show that the statements contained in Annexure IV are untrue.
In the circumstances, there is no substance in the contention made by Mr. Pai that there has been no prejudicial alteration of the terms and conditions of service of the employees of CORIL, and that nothing has been pleaded by the respondents Nos. 1 to 4 as to which clauses of the impugned circular are to their detriment.
On of the contentions that was urged by the respondents Nos.1 to 4 before the High Court at the hearing of the writ petition, as noticed above, is that unguided and arbitrary powers have been vested in the official by sub section (1) of section; 11 for the alteration of the terms and conditions of service of the employees.
It has been observed by the High Court that although the terms and conditions of service could be altered by CORIL, but such alteration has to be made `duly ' as provided in sub section (2) of section 11 of the Act.
The High Court has placed reliance upon the ordinary dictionary meaning of the word duly ' which.
according to Concise Oxford Dictionary, means rightly, properly, fitly ' and according to Stroud 's Judicial Dictionary Fourth Edition, the word `duly means 'done in due course and according to law '.
In our opinion, the word `duly ' is very significant and excludes any arbitrary exercise of power under section 11(2).
It is now well established principle of law that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a Government servant without complying with the rules of natural justice by giving the Government servant concerned an opportunity of being heard.
Any arbitrary or whimsical exercise of power prejudicially affecting the existing conditions of service of a Government servant will offend against the provision of Article of the Constitution Admittedly, the employees of CORIL were not given an opportunity of hearing or representing their case before the impugned circular was issued by the Board of Directors.
The impugned circular was therefore, be sustained as it Offends against the rules of natural justice.
It is, however, contended on behalf of CORIL that after the impugned circular was issued, an opportunity of hearing was given to the employees with regard to the alterations made in the conditions of their service by the impugned PG NO 931 circular.
In our opinion, the post decisional opportunity of hearing does not subserve the rules of natural justice.
The authority who embarks upon a post decisional hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post decisional opportunity.
In this connection, we may refer to a recent decision of this Court in K.I. Shephard & Ors.
vs Union of India & Ors., JT 1987 (3) 600.
What happened in that case was that the Hindustan Commercial Bank, The Bank of Cochin Ltd. and Lakshmi Commercial Bank, which were private Banks, were amalgamated with Punjab National Bank, Canara Bank and State Bank of India respectively in terms of separate schemes drawn under section 45 of the Banking Regulation Act, 1949.
Pursuant to the schemes, certain employees of the first mentioned three Banks were excluded from employment and their services were not taken over by the respective transferee Banks.
Such exclusion was made without giving the employees, whose services were terminated, an opportunity of being heard.
Ranganath Misra, J. speaking for the Court observed as follows: "We may now point out that the learned Single Judge of the Kerala High Court had proposed a post amalgamation hearing to meet the situation but that has been vacated by the Division Bench.
For the reasons we have indicated, there is no justification to think of a post decisional hearing.
On the other hand, the normal rule should apply.
It was also contended on behalf of the respondents that the excluded employees could now represent and their case could be examined.
We do not think that would meet the ends of justice.
They have already been thrown our of employment and having been deprived of livelihood they must be facing serious difficulties.
I here is no justification to throw them out of employment and then given them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action.
It is common experience that once a decision has been taken.
there is a tendency to uphold it and a representation may not really yield any fruitful purpose.
" The view that has been taken by this Court in the above observation is that once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose.
PG NO 932 Thus, even if any hearing was given to the employees of CORIL after the issuance of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution.
The High Court.
In our opinion was perfectly justified in quashing the impugned circular .
In the result, Civil appeal No. 3214 of 1979 is dismissed.
In view of the reasons given in Civil Appeal No. 3214 of 1979, Civil Appeal No. 3518 of 1979 is also dismissed.
Civil Appeal No. 3212 of 1979 has been preferred by the writ petitioners in civil Writ Petition No. 426 of 1978 filed before the High Court.
The writ petitioners succeded in getting the impugned circular quashed by the High Court.
As the High Court rejected some of the grounds of challenge to the impugned circular, the appeal has been preferred.
There is no merit in this appeal and it is wholly misconceived.
The appeal is, therefore, dismissed.
There will be no order as to costs in any of these appeals.
M.L.A. Appeal dismissed.

summary:
The Caltex (Acquisition of Shares of Caltex Refining (India) Ltd. and of the Undertakings in India of Caltex (India) Ltd.) Act 17 of 1977.
by Section 3 provides for the acquisition of shares of Caltex Oil Refinery (India) Ltd. (for short CORIL).
Section 11(2) of the Act provides that subject to rules made in this behalf under section 23, every whole time officer or other employee of CORIL would, on the day of acquisition, continue to be an officer or other employee of CORIL on the same terms and conditions and with the same rights to pension, gratuity and other matters as are admissible to him immediately before that day and shall continue to hold such office unless and until his employment under CORIL is duly terminated or until his remuneration and conditions of service are duly altered by that company.
Consequent upon the taking over of the CORIL on December 30,1976, the Chairman of the Board of Directors of CORIL issued a circular dated 8th March, 1978 to the effect that the perquisites admissible to the management staff of CORIL should be rationalised in the manner stated in the said circular.
At this stage the undertaking of CORIL was transferred and vested in the Hindustan Petroleum Corporation Ltd. the appellant in C.A. No. 3214 of 1979.
Respondent Nos. 1 to 4, employees of CORIL in the said appeal, filed a writ petition before the High Court challenging the legality and validity of the impugned PG NO 925 PG NO 926 circular on the ground, inter alia, that the employees had not been given any opportunity of being heard before altering to their prejudice the terms and conditions of service and therefore the impugned circular should be struck down as void being opposed to the principles of natural justice.
The High Court accepted the aforesaid contention of the respondents and quashed the impugned circular.
Hence this appeal by special leave.
Civil Appeal 3212 of 1979 has been preferred by the respondents.
Dismissing the appeals, HELD: 1.
The High Court was perfectly justified in quashing the impugned circular.
Even if any hearing was given to the employees of CORIL after the issuance of the impugned circular that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution.
[932A B] 2(i) It is now a well established principle of law that there can he no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a Government servant without complying with the rules of natural justice by giving the government servant concerned an opportunity of being heard.
Any arbitrary or whimsical exercise of power prejudicially affecting the existing condition of service of a government servant will offend against the provision of Article 14 of the Constitution.[930F G] 2(ii) The post decisional opportunity of hearing does not subserve the rules of natural justice.
The authority who embarks upon a post decisional hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post decisional opportunity.[931A B] K.I. Shephard & Ors.
vs Union of India & Ors., JT 1987 600, followed.
In view of the reasons given in the above appeals, the Court dismissed C.A. No. 3518 of 1979.
[932C]


judgement:
vil Appeal Nos.
379 1988 and 3660 82/1987.
From the Judgment and Order dated 26.10.87 of the Customs Excise and Gold (Control) Appellate Tribunal in Appeal Nos.
ED/943/83 D Order No. 838/87 D ED(SB) A. No. 411 and 412/81 D ' and 787/80 D in Order No. 786 to 788/6 D. Kuldip Singh, Additional Solicitor General, A.K. Srivastava and P.Parmeswaran and Mrs. Sushma Suri for the Appellants.
Soil J. Sorabjee, section Ganesh, J.R. Gagrat, P.G. Gokhale, B.R. Agarwala and C.M. Mehta for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI,J.
These appeals are under Section 35L(b) of the Central Excises and Salt Act, 1944(hereinafter to as 'the Act ') against the decision of the Customs Excise and Gold (Control) Appellant Tribunal, New Delhi ( 'Tribunal ' for short) dated 26the October,1987.
The respondent company has its factory at Chakala Andheri and is engaged in the manufacture of non alcoholic beverage bases falling under Tariff Item 68 of Central Excise Tariff.
During the course of enquiry, it was found that the company had during the period from Ist March, 1975 to 18th April,1979 manufactured non alcoholic beverage bases without holding proper Central Excise licence and had cleared the said goods without payment of the duty due thereon and had thereby evaded the duty amounting to PG NO 937 Rs.3,50,963.22.
According to the revenue, prima facie it appeared that the respondent had contravened the provisions of Rules 9(1), 53, 173 pp(I), 173 pp(3), ]73 pp(6) and 174 of the Central Excise Rules, 1944 (`Rules ' for short) inasmuch as during the period from 1st March, 1975 to 18th April, 1979 the respondent company had manufactured without valid licences required under Section 6 of the Act read with Rule 174 of the Rules, goods not elsewhere specified and falling under Tariff Item 68 of the First Schedule of the Act, viz., non alcoholic beverage bases.
The respondent company had further cleared the said goods without filing list of goods manufactured as required by Rule 173 pp(3) of the Rules.
The respondent had cleared the said goods without preparing gate passes as required under Rule 173 pp (6) of the Rules.
and had further cleared the said goods without maintaining accounts as required under Rule 53 of the Rules.
In the circumstances.
notices were issued by the relevant officer asking the respondent company to show cause for recovery of the dues and also for imposition of penalty.
When the matter came up for consideration before the Collector, Central Excise, he found that non alcoholic beverage bases were not themselves food or food products and accordingly did not quality for exemption under Notification No. 55/75 as amended.
He accordingly confirmed the demand of central excise duty of Rs.3,50,963.22 under Rule 9(2) read with Rule 10 of the Rules.
He also imposed a penalty of Rs.25,000 under Rule 173Q of the Rules.
Aggrieved thereby,the respondent company filed an appeal before the Tribunal and contended that the question of the dutiability of non alcoholic beverage bases manufactured by the respondent had been settled by the Tribunal in its decision in the case of respondent itself, i.e.
,Parle Exports (P)Ltd. vs Collector of Central Excise, Baroda, which are the subject matter of the connected appeals, i.e. C.A. Nos. 3680 82 of 1987 The Tribunal following its earlier order allowed the appeal and hence the present appeal by the Revenue.
The First Schedule of the Act which provides for the dutiability and the rates of duty applicable to various goods mentioned therein contains the expressions "Food and Beverages It provides therein description of various types of goods and the rates of duties applicable thereto.
In the said description "Food and Beverages" many items are included, viz., sugar produced in a factory ordinarily using power in the course of production of sugar, (1A) confectionery, cocoa powder and chocolates, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power namely.
boiled sweets, toffees, caramels, candies, nuts (including almonds) and fruit kernels coated with sweetening agent, and PG NO 938 chewing gums, cocoa powder, drinking chocolates etc.
It also includes items (1B) prepared or preserved foods put up in unit containers and ordinarily intended for sale, including preparations of vegetables, fruit, milk, cereals, etc., and as item (1C) food products, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, namely, biscuits, pasteurised butter, pasteurised or processed cheese, aerated waters, whether or not flavoured or sweetened and whether or not containing vegetable or fruit juice or fruit pulp etc.
Tariff Item 68 of the First Schedule of the Act provides for duty on "All other goods not elsewhere specified and manufactured in a factory" but excluding, inter alia alcohol, all sorts, including alcoholic liquor for human consumption and other items not necessary for our present purpose.
The exemption Notification No. 55/75 C.E. dated 1st March, 1975 reads as follows: "In exercise of powers conferred by sub rule (10) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in the q Schedule annexed hereto and falling under Item No. 68 of the First Schedule to the (1 of 1944), from the whole of the duty of excise leviable thereon .
THE SCHEDULE 1.
All kinds of food products and food preparations,including (i) meat and meat products; (ii) dairy products; (iii) fruit and vegetable products; (iv) fish and sea foods; (v) bakery products; and (vi) grain mill products.
Electric light and power.
" PG NO 939 The question is, whether by the notification of exemption non alcoholic beverage bases have been exempted from payment of duty.
The only question, therefore, in other words, is whether non alcoholic beverage bases are `food products ' or `food preparations ' covered by the exemption notification No. 55/75 CE of Ist March, 1975.
We are not concerned with the question whether in a broad general sense non alcoholic beverage base is food or not.
In Brooke Bond (India) Limited vs Union of India, the question arose before a learned Single Judge of the High Court of Andhra Pradesh whether coffee chicory blend was food product and is an item which fell under Tariff Item 68 of the Tariff.
The identical notification involved herein came up for consideration in that case.
The question was whether it was food product or food preparation, and as such exempt from excise duty.
It was held by the learned Single Judge that what was exempt under the said notification was not food but food products and food preparations and it was further held that coffee chicory blend was neither food nor food preparation.
Therefore, it was not exempt from payment of excise duty under the said notification.
The word food has no definition of universal application and it varied from statute to statute.
In some cases the dividing line between the two might be thin and in some cases it might be varied but so far as coffee chicory blend was concerned there was little doubt that it was beverage and not food.
The learned Judge referred to paragraph 109 of Volume 18 of Halsbury 's Laws of England (4th Edn).
In that paragraph, coffee chicory products are mentioned under the general heading `Food, Dairies and Salaughter Houses ' and sub heading `Food generally.
Coffee chicory blend is also mentioned in that paragraph.
But the coffee and coffee products under the heading `Food generally were in the context of the law of Food Adulteration and the Coffee and Coffee Produce Regulations, q1967 in force in England.
Reference was also made by the learned Judge to Corpus Juris Secundum, Volume 36 at page 1041.
The learned Judge, in our opinion, rightly observed that the aforesaid passage from the Halsbury 's Laws of England and Corpus Juris Secundum could not be mechanically imported into the present case more particularly when we are concerned with the situation under the Tariff Schedule.
`Food ', as has been noted, has no fixed definition of universal application and its meaning varies from statute to statute.
The dividing line, the learned Judge observed, between the beverage and food might be thin and in some case it might overlap.
The learned Judge,, however, observed that it was beverage rather than food.
The accordingly held that the notification exempted not food but food products and food preparations and as such coffee chicory blend did not come within the purview of the exemption.
The said decision was affirmed by the Division PG NO 940 Bench of that Court in Brooke Bond (lndia) Limited vs Union of India & Ors., The Division Bench after exhaustively discussing the points in controversy and after referring to several authorities referred to the decision of Justice Vivian Bose of this Court in The State of Bombay vs Vir Kumar Gulabchand Shah, [1982] SCR/877, wherein he had observed in his own and inimitable language at pages 880 883 of the report as under: "Much learned judicial thought has been expended upon this problem what is and what is not food and what is and what is not a foodstuff, and the only conclusion I can draw from a careful consideration of all the available material is that the term 'foodstuff is ambiguous.
In one sense it has a narrow meaning and is limited to articles which are eaten as food for purposes of nutrition and nourishment and so would exclude condiments and spices such as yeast, salt, pepper, baking powder and turmeric.
In a wider sense, it includes everything that goes into the preparation of food proper (as understood in the narrow sense) to make it more palatable and digestible.
In my opinion, the problem posed cannot be answered in the abstract and must be viewed in relation to its background and context.
But before I dilate on this, l will examine the dictionary meaning of the words The Oxford English Dictionary defines foodstuff a follows: "that which is taken into the system to maintain life and growth and to supply waste to tissue".
In Webster 's international Dictionary `food is defined as: "nutritive material absorbed or taken into the body of an organism which serves, for purposes of growth.
work repair and for the maintenance of the vital processes".
Then follows this explanation: "Animals differ greatly from plants in their nutritive processes and require in addition to certain inorganic substances (water, salts etc.) and organic.
substances of unknown composition (vitamins) not ordinarily ' classed as food 'though absolutely indispensable to life, and contained in greater of less quantities in the substances eaten) complex organic substances which fall into three principal groups, Proteins, Carbohydrates and Fats.
" PG NO 941 Next is given a special definition for legal purposes, namely "As used in laws prohibiting adulteration etc.
, `food ' is generally held to mean any article used as food or drink by man, whether simple, mixed or compound, including adjuncts such as condiments, etc., and often excluding drugs and natural water.
" The definition given of `foodstuff ' is "1.
Anything used as food, 2.
Any substance of food value as protein, fat etc.
entering into the composition of a food.
" It will be seen from these definitions that "foodstuff" has no special meaning of its own.
It merely carries us back to the definition of "food" because "food stuff" is anything which is used as "food".
So far as "food" is concerned, it can be used in a wide as well as a narrow sense and, in my opinion, must depend upon the context and background.
Even in a popular sense, when one asks another "Have you had your food?", one means the composite preparations which normally go to constitute a meal curry and rice, sweetmeats, pudding, cooked vegetables and so forth.
One does not usually think separately of the different preparations which enter into their making, of the various condiments and spices and vitamins, any more than one would think of separating in his mind the purely nutritive elements of what is eaten from their non nutritive adjuncts.
So also, looked at from another point of view, the various adjuncts of what I may term food proper which enter into its preparation for human consumption in order to make it palatable and nutritive, can hardly be separated from the purely nutritive elements if the effect of their absence would be to render the particular commodity in its finished state unsavoury and indigestible to a whole class of persons PG NO 942 whose stomachs are accustomed to a more spicely prepared product.
The proof of the pudding is, as it were, in the eating, and if the effect of eating what would otherwise be palatable and digestible and therefore nutritive is to bring on indigestion to a stomach unaccustomed to such unspiced fare, the answer must, I think, be that however nutritive a product may be in one form it can scarcely be classed as nutritive if the only result of eating it is to produce the opposite effect; and if the essence of the definition is the nutritive element, then the commodity in question must cease to be food, within the strict meaning of the definition to that particular class of persons, without the addition of the spices which make it nutritive.
Put more colloguially, "one man 's food is another man 's poison".
I refer to this not for the sake of splitting hairs but to show the undesirability of such a mode of approach.
The problem must, I think, be solved in a commonsense way.
" Justice Bose noted that a comparison of war time measure in English and Indian Statutes might not be safe.
But food is one which nourishes and sustains human body for the purposes of growth, work or repair and for the maintenance of the vital process.
In the Brooke Bond Ltd. 's case (supra), the Division Bench considered the meaning of the expression "coffee chickory blend" and upheld the decision of the learned Single Judge as mentioned hereinbefore.
Mr. Sorabjee, learned counsel appearing for the respondent, drew our attention to several items including Item 68 and the Central Excise Trade Notice dated 18th June 1975 which deals with exemption.
The said Trade Notice, inter alia, reads as follows: "A number of doubts have been raised about the general scope of the terms `food products/preparations ' vide Entry No. I in the Schedule to Notification No. 55/75 dated 1.3.75.
Specific queries have also been raised as to whether items like oil cakes, rice bran.
scented chunam, katna, starch, quargum, gur, flour, ice cream and ice candy, ice, supari, groundnut kernels, and cashew kernels could be regarded as covered under the above entry as claimed by the manufacturers of these goods.
The matter has been examined and the following clarifications are used for the information of the trade.
PG NO 943 The word `food ' is a general term and applies to all that is eaten by men for nourishment and takes in subsidiaries, further; (i) preparations for use, either directly or after processing such as cooking, dissolving or oiling in water, milk etc.
for human consumption; and (ii) preparations used because of their nutritional or flavouring properties in the making of beverages or food stuffs for human consumption, are classiable as food preparations.
But such preparations which because of their ingredients and small proportion in which they are normally used, are clearly added for other purposes, or not classiable as food preparations." (underlined by us).
Mr. Sorabjee also drew our attention to the explanatory note in Heading No. 21.07 of CCCN which states, inter alis as follows: "21.07 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR lNCLUDED.
Provided that they are not covered by any other heading of the Nomenclature the present heading covers: (A) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption.
The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, lecithin etc.) with food stuffs (flour, sugar, milk, milk powder, etc.) for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance keeping qualities etc.)" Clause (2) of the said explanatory notes in heading No. 20.17 of CCCN contains the following: "(2) Flavouring powders for making beverages, whether or not sweetened with a basis of bicarbonate of soda and glycyrrhizin or liquorice extract (sold on the Continent as "Cocoa powder").
" PG NO 944 Our attention was also drawn to Item ( 12) of the same which runs as follows: "(12).
Non alcoholic compound preparations (often known as "concentrated extracts") used for making beverages (liqueurs, etc.) unless they are included elsewhere in the Nomenclature.
These preparations are obtained by compounding vegetable extracts of heading 13.03 with lactic acid, tartaric acid, citric acid, phosphoric acid, preserving agents, foaming agents, fruit juices, etc., and sometimes with essential oils.
Alcoholic preparations of this type are excluded (heading 22.09)" Mr. Sorabjee further drew our attention to the Appendix 17 of Import Policy of 1981 82 which was relied upon by the Tribunal in the second decision, i.e. the Parle Exports (P) Ltd. case which is the subject matter of the connected appeals, i.e. C.A. Nos. 3680 82 of 1987.
It was pleaded that it was always understood and treated as a part of the food product.
Reliance was also placed on the reports of the Chief Chemist of the Central Excise Regional Laboratory, Baroda to which Mr. Sorabjee drew our attention.
The reports dealing inter alia with some items stated as follow: "Gold Spot Base: S.R.No. 1 Base A (Lab. No.10) The sample is in the form of orange coloured liquid containing flavouring agents free from Alcohol.
(Please see note attached).
No 2 Base (Lab. No. 11) The sample is in the form of white powder.
It is sodium Benzoate a chemical known to be used as a preservative.
S.R. No.3 .
Base C (Lab. No. 12) The sample is in the form of white powder.
It is vitamin `C '(ascorbic acid) an organic chemical.
Limca Base: PG NO 945 S.R. No. 4 Base A (Lab. No. 13) The sample is in the form of white liquid containing flavouring agents.
It is free from Alcohol.
(Please see note attached.) S.R. No. 5 Base B (Lab. No. 14) The sample is in the form of white powder.
It is sodium Benvonate a chemical known to be used as a preservative.
" The note appended to these reports stated inter alia the following: "NOTE" "The term "food ' ' as defined in the meant any article used as food or drink for human consumption other than drugs and water and includes: (a) Any article which ordinarily enters into, or is used in the composition or preparation of human foods; and (b) any flavouring matter or condiments.
Food products which are excluded from item (C) would fall under Item 68 of Central Excise, Tariff read with the Notification 62/78 dated 1.3.78 excluded as amended.
The term "Food preparations" on the other hand would cover; (a) Preparation for use either directly or after processing (such as cooking, dissolving or boiling in water, milk etc.) for human consumption.
(b) Preparation consisting wholly or partly of food stuffs used in making of Beverages or food preparation for human consumption.
This would also include concentrated extract for making non alcoholic beverages.
B.T.N. heading 21.07) PG NO 946 In this connection attention is also invited to Bangalore Collectorate trade notice No. 103/75 dated 18.6.75.
In view of that has been stated above samples at Sl.
No. 1, 4, 8, 9, 13 and 15 may be deemed to fall in the category of food preparations.
However, before finalising the assessment, it may be worthwhile ascertaining whether the above products are also known as food preparations in common parlance and trade.
The views of the Director.
Drugs & Food Laboratory, Baroda may also sought, if necessary." Mr. Sorabjee submitted that the Tribunal has relied on the Bangalore Collectorate Trade Notice as referred hereinbefore, order of the Appellate Collector in the case of Bush Boake Allan (India) Limited, and Heading No. 21.07 of CCCN, Import Policy of the Government of India for 1981 82 as well as the observations in Encyclopaedia Britannica, Volume 13 at pages 420 421.
It was submitted that the said orders of the Tribunal had considered and taken into consideration all the relevant factors.
The Tribunal has acted on the varied materials, and therefore, such decision of the Tribunal should not be altered or deviated from.
Reliance was placed on the observations of this Court in Collector of Customs, Bombay v, Swastic Woollen (P) Ltd. and Ors., at paragraph 9.
The expression "food products" is not defined in the Act The product exemption includes `food and food preparations ' and provides an inclusive definition of `food products ' and 'food preparations '.
But the correct and the appropriate meaning of the expressions covered in the said notification has to be found out.
The question is whether non alcoholic beverage base is either `food product ' or `food preparation ' in terms of the notification in question.
Mr. Sorabjee tried to suggest that fruit and vegetable juice might become fruit or vegetable products to come under Item 1(iii) of the Schedule to the exemption notification.
Learned Additional Solicitor General, Mr. Kuldip Singh, on the other hand submitted that non alcoholic beverage base though having some food value, is not food product or food preparation, at any rate, in the context of the Act and notification as such.
lle drew our attention to the first heading in the First Schedule to the Act dealing with "Food and Beverages" and pointed out that items 1 to IC deal with Food and Food Products while item 1D deals with beverages separately.
He submitted before us that this indicates that PG NO 947 the expression "food products and food preparations" are used in contrast to "beverages" so far as the present Act and notifications thereunder are concerned.
There is force in the submissions of the learned Additional Solicitor General.
Our attention was drawn to a decision of the Government of India in Re: Asian Chemical Works, where the Government of India opined that `Food flavours ' and `food preparations, might improve taste or appearance of food products and/or food preparations, but by themselves could not be legitimately consumed directly or after processing such as cooking, dissolving, or boiling in water for human consumption independently.
Mr. Singh submitted that in ordinary common and commercial parlance also the goods in question are not known as food products and/or food preparations as such, therefore, these are not to be treated as exempt under the notification.
Mr. Singh submitted that when a person says "I have consumed food" he does not mean or says that he has consumed non alcoholic beverage bases.
Therefore, those goods cannot be understood as covered by the notification of exemption.
It was submitted that how Government understood a matter at the time of the notification, is a relevant factor and that is a factor which one should bear in mind in view of the principles enunciated by this Court in K.P. Verghese vs Income Tax Officer, Ernakulam & Anr., ; It is a well settled principle of interpretation that courts in construing a statute or notification will give much weight to the interpretation put up on it at the time of enactment or issue, and since by those who have to construe.
execute and apply the said enactments.
How then should the courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur.
The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them.
It is, however, necessary to bear in mind certain principles.
The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act.
The notification must be read as a whole in the context of the other relevant provisions.
When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself.
See in this connection the PG NO 948 observations of this Court in Orient Weaving Mills (P) Ltd. vs The Union of India, [1962] Supp.
3 SCR 481.
See also Kailash Nath vs State of U.P., AIR The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment.
But in this connection, it is well to remember the observations of the Judicial Committee in Coroline M. Armytage & Ors.
vs Federick Wilkinson, at 370 that it is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises.
The Judicial Committee reiterated in the said decision at page 369 of the report that in a taxing Act provisions establishing an exception to the general rule of taxation are to be construed strictly against those who invoke its benefit.
While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed.
It must, however, be borne in mind that absurd results of construction should be avoided.
In Hindustan Aluminium Corporation Ltd. vs State of Uttar Pradesh & Anr., [1982] l SCR 129 this Court emphasised that the notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context.
This Court reiterated that the expression should be construed in a manner in which similar expressions have been employed by those who framed relevant notification.
The Court emphasised the need to derive the intent from a contextual scheme.
In this case therefore, it is necessary to endeavour to find out the true intent of the expressions "food products and food preparations" having regard to the object and the purpose for which the exemption is granted bearing in mind the context and also taking note of the literal or common parlance meaning by those who deal with those goods, of course bearing in mind.
that in case of doubt only it should be resolved in favour of the assessee or the dealer avoiding, however.
an absurd meaning.
Bearing the aforesaid principles in mind, in our opinion, the revenue is right that the nonalcoholic beverage bases in India cannot be treated or understood as new `nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process ' and an average Indian will not treat non alcoholic beverage bases as food products or food preparations in that light.
PG NO 949 We have also noted how these goods were treated by the Government as mentioned hereinbefore.
There is no direct evidence as such as to how in commercial parlance unlike in ordinary parlance, non alcoholic beverage bases are treated or whether they are treated as food products or food preparations.
The purpose of exemption is to encourage food production and also give boost to the production of goods in common use and need.
After all the purpose of exemption is to help production of food and food preparations at cheaper price and also help production of items which are in common use and need, like electric light and power.
The question of interpretation involves determining the meaning of a text contained in one or more documents.
Judges are often criticised for being tied too closely to the statutory words and for failing to give effect to the intention of the Parliament or the lawmaker.
Such language, it has been said, in Cross 's "Statutory Interpretation" (Second Edn.) at page 21, appears to suggest that there are two units of enquiry in statutory interpretation the statutory text and the intention of the Parliament and the Judge must seek to harmonise the two.
This, however, is not correct.
According to the tradition of our law, primacy is to be given to the text in which the intention of the law giver has been expressed.
Cross refers to Blackstone 's observations that the fairest and most rational method to interpret the will of the law maker is by exploring his intentions at the time when the law was made, by signs the most natural and probable.
And these signs are either the words, the context, the subject matter, the effects and consequences, or the spirit and reason of the law.
We have no doubt, in our opinion, that having regard to the language used it would not be in consonance with the spirit and the reason of law to give exemption for non alcoholic beverage bases under the notification in question.
Bearing the aforesaid purpose, in our opinion, it cannot be contended that expensive items like Gold Spot base, Limca base or Thumps up base were intended to be given exemption at the cost of public exchequer.
For the aforesaid reasons, the appeals have to be allowed and the decision of the Tribunal reversed.
We, however.
need not go into the question of penalty as well as the question of limitation which have been left open by the Tribunal in its order.
It will be open for the parties to urge these points afresh before the Tribunal.
We express no opinion on these aspects.
The appeals to the extent indicated above are allowed.
There will, however, be no order as to costs.
R.S.S. Appeals allowed.

summary:
The respondent company was engaged in the manufacture of nonalcoholic beverage bases falling under Tariff Item 68 of Central Excise Tariff.
According to the Revenue, the company manufactured the nonalcoholic beverage bases without holding proper Central Excise Licence, and had cleared the said goods without payment of the duty due thereon.
The stand of the company was that the goods were exempt from duty under Notification No. 55/75 C.E. dated 1st March, 1975 which inter alia exempted "all kinds of food products and food preparations".
The Customs and Excise Collector confirmed the demand of central excise duty against the company.
In appeal, the Confirmed the demand of and Gold (Control) Appellate Tribunal accepted the contention of the company.
The Additional Solicitor General on behalf of the appellants contended that (i) non alcoholic beverage base though having some food value, was not food product or food preparation.
at any rate, in the context of the Act and notification as such; (ii) the expression "food products and food preparations" was used in contrast to "beverages" so far as the present Act and notifications thereunder were concerned; (iii) in ordinary common and commercial parlance also the goods in question were not known as food products and/or food preparations as such, and therefore these were PG NO 933 PG NO 934 not to be treated as exempt under the notification; and (iv) how Government understood a matter at the time of the notification, was a relevant factor and that was a factor which one should bear in mind.
K.P. Verghese vs Income Tax Officer Ernakulam, ; and Government of India 's decision in Re: Asian Chemical Works, , relied upon.
On behalf of the respondent it was contended that the Tribunal had acted on the varied materials, and therefore, such decision of the Tribunal should not be altered or deviated from.
Collector of Customs, Bombay vs Swastic Woollen (P) Ltd., , relied upon.
Allowing the appeals, it was, HELD: (1) The word `Food ' has no fixed definition of universal application and its meaning varies from statute to statute.
But food is one which nourishes and sustains human body for the purposes of growth, work or repair and for the maintenance of the vital process.[939D] Brooke Bond (India) Limited vs Union of India, ; Brooke Bond (India) Limited vs Union of India.
119%41 and The State of Bombay vs Virkumar Gulabchand Shah, ; , referred to.
(2) The expression `food products ' is not defined in the Act.
The exemption includes food products and food preparations ' and provides an inclusive definition of `food products ' and food preparations '.
[946E] (3) The words used in the provision, imposing taxes or granting exemptions, should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them.
[947F] (4) It is a well settled principle of interpretation that courts in construing a statute or notification will give much weight to the interpretation put upon it at the time of enactment or issue, and since by those who have to construe, execute and apply the said enactments.
l947E] PG NO 935 (5) The notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context.
The expression should be construed in a manner in which similar expressions have been employed by those who framed the relevant notification, [948E] Hindustan Aluminium Corporation Ltd. vs State of Uttar Pradesh, ; , referred to.
(6) The question of interpretation involves determining the meaning of a text contained in one or more documents.
Judges are often criticised for being tied too closely to the statutory words and for failing to give effect to the intention of the Parliament or the law maker.
[949C] (7) According to the tradition of our law, primacy is to be given to the text in which the intention of the law giver has been expressed.
[949D] (8) The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment avoiding, however, as absurd meaning.
[948F] Coroline M. Armytage & Ors.
vs Frederick Wilkinson, , referred to.
(9) The notification must be read as a whole in the context of the other relevant provisions.
When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself [947G H] Orient Weaving Mills (P) Ltd. vs Union of India, [1962] Supp.3 SCR 481 and Kailash Nath vs State of U.P., AIR 1975 SC 790, referred to.
(10) The purpose of exemption is to encourage food production and also give boost to the production of goods in common use and need.
After all, the purpose of exemption is to help production of food and food preparations at cheaper price and also help production of items which are in common use and need, like electric light and power.
[949A B] PG NO 936 (11) Having regard to the language used it would not be in consonance with the spirit and the reason of law to give exemption for non alcoholic beverage bases under the notification.
Bearing the aforesaid purpose, it cannot be contended that expensive items like Gold spot base, Limca base or Thumps up base were intended to be given exemption at the cost of the public exchequer.[949E F] (12) Non alcoholic beverage bases in India cannot be treated or understood as new 'nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process ' and an average Indian will not treat non alcoholic beverage bases as food products or food preparations in that light.[948G H]