judgement:
Civil Appeal No. 1831 of 1973.
Appeal by Special Leave from the Judgment and Order dated 4 5 1970 of the Allahabad High Court in Spl.
Appeal No. 453/69.
B. P. Maheshwari and Suresh Sethi for the Appellants.
Ex Parte for the Respondents.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal is directed against a judgment, dated May 4, 1970, of the High Court of Allahabad.
It arises in these circumstances: One Matadin, father of Ram Lochan, respondent 6 herein, was a fixed rate tenant of the plots in dispute measuring 2.11 acres.
One Ram Naresh Singh (deceased), brother of appellant 1 herein, 735 namely Mahadeo Prasad Singh, obtained a money decree against Matadin on February 18, 1953 from the Judge, Small Causes Court, Varanasi suit No. 847 of 1953.
Ram Naresh Singh sought to execute the decree.
As a consequence, the decree was transferred from the Court of the Judge of Small Causes to the Court of Munsif, Varanasi, for execution.
The plots in dispute were put to auction by the executing court, and were purchased by the decree holder on July 20, 1956.
The sale was confirmed on August 29, 1956 and the sale certificate was issued on September 8, 1956.
The decreeholder purchaser, Ram Naresh Singh, took delivery of possession over these plots on March 14, 1957.
Thereafter, he further sold the plots to appellant 2 and respondents 6 to 10.
Matadin, however, died sometime in 1960.
Thereafter his son Ram Lochan respondent 1, herein, instituted a suit on June 14, 1961 i.e. more than three years after the delivery of possession to the decree holder purchaser, Ram Naresh Singh, under section 229B read with Section 209 of the U. P. Zamindari Abolition and Land Reforms Act in the Revenue court against the present appellants, for a declaration that he is in possession of the suit land as Bhoomidar.
In the alternative, he claimed the relief of possession on the same basis.
He pleaded that his father, Ram Naresh Singh was the original Bhoomidar and remained in possession of the suit land till his death and thereafter, the plaintiff as the heir of the deceased continue in possession as Bhoomidar.
He further alleged that the sale in favour of Ram Naresh Singh was without jurisdiction and a nullity; as it had been made without the knowledge of or notice to his father.
The suit was resisted by the appellant, who is original defendant 1, and respondents 7 to 10, who are original defendants 2 to 5, inter alia on the ground that the suit was barred as res judicata and also under section 47 of the Code of Civil Procedure, and Article 181 of the Limitation Act.
Defendants 2 to 5 further pleaded that they were bona fide purchasers for value and, therefore, their rights in the suit land were protected under Section 41 of the Transfer of Property Act.
They also, alleged that they had made improvements on the suit land and were entitled to the benefit of Section 51 of the Transfer of Property Act.
The trial court, by its judgment, dated August 30, 1965.
dismissed the suit, holding, inter alia, that It was barred by the principle of constructive res judicata as also under Section 47 of the Code of Civil Procedure; that the Revenue Court had no jurisdiction to entertain and try the suit; that the appellants 6 to 736 10 were bona fide purchasers for value and, as such, were entitled to the benefit of Sections 41 and 51 of the Transfer of Property Act; that the suit was barred by Article 181 of the Limitation Act, 1908 as well as by Section 34(5) of the U.P. Land Reforms Act; and that Ram Naresh Singh had been in possession since March 14, 1967, i.e., the date on which he obtained delivery of possession in execution of his decree as auction purchaser.
Aggrieved, the plaintiff (respondent 1) preferred an appeal to the Court of the Additional Commissioner, Varanasi, who by his judgment dated December 28, 1965, allowed the appeal and held that the executing court had no jurisdiction to sell the suit land under Section 42 of the Code of Civil Procedure, as amended by the U.P. Civil Laws (Amendment) Act.
1954 and that the suit was not barred as res judicata or under Section 47 of the Code of Civil Procedure.
The Additional Commissioner further held that the possession of Ram Naresh Singh was unlawful as it was on the basis of the void sale, dated March 4, 1960, which could not confer any title on him; that the judgment debtor had no knowledge about the execution proceedings; that the suit property worth Rs. 6,000 was for a very meagre amount and the sale was vitiated by fraud in publishing and conducting the sale.
Ram Lochan and Ram Naresh Singh carried a second appeal against the decision to the Board of Revenue.
During the pendency of that second appeal, Ram Naresh Singh died and Mahadeo Prasad Singh, appellant 1, was substituted in his place.
The Board dismissed the appeal on the ground that the auction sale with regard to the suit land in pursuance of the decree of the Judge, Small Causes Court, was void and, as such, did not invest the decree holder purchaser with any title and consequently, the possession of the appellant was without any title.
The Board further held that the auction sale did not affect the suit under Section 209 of the U.P. Zamindari Abolition and the Land Reforms Act.
To impugn the judgment of the Board, Mahadeo Prasad Singh, appellant herein, as well as respondents 6 to 10 filed a writ petition under Article 226 of the Constitution in the High Court of Allahabad.
A learned Single Judge, who heard the writ petition, allowed it by his judgment, dated April 23, 1969, and quashed the judgments of the Board of Revenue as well as of the Additional Commissioner, who are respondents 2 and 3 herein.
Following an earlier judgment of a Division Bench of the same Court in Suraj Bux Singh vs Badri Prasad & Anr.
the learned Judge held 737 that the execution sale of the suit land was proper as per the provisions of Section 42 of the Code of Civil Procedure; that prior to its amendment in U.P. by the U.P. Civil Laws (Amendment) Act 1954, the executing court had the same powers in relation to execution as it would have had if the decree had been passed by itself; that the decree in the present suit was passed on February 18, 1953, i.e. prior to the coming into force of the Amendment Act of 1954 and, as such, the amended Section 42 did not apply to it; and that the decree having been passed prior to the date of the amendment, should be executed in accordance with the provisions of Section 42 as it stood prior to its amendment; and that as a result, the suit for declaration as well as for possession would have to fail.
The learned Single Judge did not go into the question as to whether the suit was barred by Section 47 of the Code of Civil Procedure.
Against the judgment of the learned Single Judge, respondent 1, herein, preferred a Special Appeal which was referred to a Full Bench of the High Court consisting of three learned Judges.
The two Judges, in majority, held that the Small Cause Court had no power to execute the decree by attachment and sale of immovable property; that the transferee court, namely, the court of the Munsif had the same powers as that of the Small Cause Court and, therefore, that court also had no jurisdiction to execute the decree by attachment and sale of the immovable property; that the right to execute a decree by attachment and sale of immovable property is a matter of procedure, while the right to realise the decretal amount by attachment and sale is a substantive right of the decree holder, that the date on which the decree was put into execution, the amendment of Section 42 had already come into force and the power of the transferee court had become co terminus with that of the transferor court; and that the amendment did not save the right of the appellant to execute the decree of the Small Causes Court by attachment and sale of immovable property.
Sinha, J. however, dissented.
He took the view that the Amendment Act did not apply to the present suit and that a substantive right had accrued to Ram Naresh Singh on the passing of the decree to execute it by attachment and sale of the immovable property and that right was clearly saved to him by virtue of Section 3 of the Amendment Act.
In accordance with the view of the majority, the appeal of respondent 1 was allowed and the Order of the learned Single Judge was set aside.
Hence this appeal by special leave by the appellants.
738 Thus, the principal question that falls to be considered in this appeal is whether the High Court was right in holding that the execution sale of the land in dispute was totally without jurisdiction and null and void.
Some relevant dates may be noted.
Ram Naresh obtained the decree from the Court of Small Causes on February 18, 1953.
On the decree holder 's application under Section 39 of the Code of Civil Procedure, the decree was transferred to the Court of the Munsif on January 24, 1955 and was put into execution after the U.P. (Amendment) Act XXIV of 1954 had come into force.
This sale in favour of the decree holder himself took place on July 20, 1956.
It was confirmed on August 29, 1956 and the sale certificate was issued to the purchaser on September 8, 1956.
The auction purchaser took delivery of possession as per Dakhalnama on March 24, 1957.
The decree holder purchaser further sold the plots in dispute to defendants 2 to 5.
Next, at this stage, the relevant provisions of the Code of Civil Procedure and the U.P. Civil Laws (Reforms and Amendment) Act (Act No. XXIV of 1954) may be noticed.
Section 38 of the Code of Civil Procedure provides that "a decree may be executed either by the Court which passed it or by the Court to which it is sent for execution".
In the instant case, as already seen, the decree was passed by the Small Cause Court which was competent to execute it, but (in view of Order 21, Rule 82 of the Code) not by attachment and sale of the immovable property of the judgment debtor.
That is to say, that Court could execute it by attachment and sale of the movable property of the judgment debtor, if it was, of course, not exempt under Section 60 of the Code of Civil Procedure or under any other law.
Section 39 of the Code deals with transfer of decree.
Its material part reads thus: "39(1).The Court which passed a decree may, on the application of the decree holder, send it for execution to another Court of competent jurisdiction (a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or (b)if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property 739 within the local limits of the jurisdiction of such other Court, or (c)if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or (d)if the court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court.
(2)The Court which passed a decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction.
(3) . . . . . " In the instant case, the decree was transferred under clause (d) of sub section (1) of Section 39.
Unlike the other clauses (a) to (c) of the sub section, it seems that under clause (d), the Court has a rational discretion to transfer or not to transfer the decree passed by it.
This is apparent from the word "may" used in the opening part of sub section (1), and the requirement of recording reasons for the transfer under clause (d).
It follows therefore, that under Section 39 (1) a decree holder has no indefeasible right to get his application for transfer of decree to another Court ipso facto accepted by the Court which passed it, particularly in a case which is not covered by clauses (a), (b) and (c) of that sub section.
Section 42 of the Code indicates the powers of the transferee court for executing a transferred decree.
The material part of this section, prior to its amendment by the U.P. Act (No. XXIV) of 1954, reads as under: "The Court executing a decree sent to it shall have the same powers in executing such decree as if it had been passed by itself.
All persons disobeying or obstructing the execution of the decree shall be punishable by such Court in the same manner as if it had passed the decree.
And its order in executing such decree shall be subject to the same rules in respect of appeal as if the decree had been passed by itself.".
(emphasis added) The provisions in sub sections (2), (3) and (4) of the Section are not relevant for our purpose.
The U.P. Act (No. XXIV of 1954) amended with effect from November 30, 1954, Section 42 of the Code, and after that amendment sub section (1) of the Section read as under: 740 "The Court executing the decree sent to it shall have the same power in executing such decree as if it had been passed by itself.
All persons disobeying or obstructing the execution of decree shall be punished by such Court in the same manner as if it had passed the decree and its order in executing such decree shall be subject to the same rules in respect of appeal as if the decree had been passed by itself." (emphasis added) Thus, for the words "as if it had been passed by itself" occurring in the first sentence of sub section (1) of Section 42, the Amending Act 24 of 1954 substituted the words "as the Court which passed it".
The effect of such substitution was that the powers of the transferee Court in executing the transferred decree became coterminous with the powers of the Court which had passed it.
The result was that if the power of the transferor Court to execute its own decree were in any respect restricted, the same restriction would attach to the powers of the transferee Court in executing the transferred decree, notwithstanding the position that the powers of the transferee Court in executing its own decree were not so restricted.
Section 3 of the U.P. Civil Laws (Reforms and Amendment) Act, saves certain rights already acquired or accrued.
It is in these terms: "3(1)Any amendment made by this Act shall not affect the validity, invalidity, effect or consequence of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred or any release or discharge of or from any debt, decree, liability, or any jurisdiction already exercised, and any proceeding instituted or commenced in any Court prior to the commencement of this Act shall, notwithstanding any amendment herein made, continue to be heard and decided by such Court.
(2)Where by reason of any amendment herein made in the Indian Limitation Act, 1908, or any other enactment mentioned in column 2 of the schedule, the period of limitation prescribed for any suit or appeal has been modified or a different period of limitation will hereafter govern any such suit or appeal, then, notwithstanding any amendment so made or the fact that the suit or appeal would now lie in a different Court, the period of limitation applicable to a suit or appeal, as aforesaid, in which time has begun to run before the commencement of this Act, shall continue to be the period 741 which but for the amendment so made would have been available.
Before dealing with the contentions canvassed, we may remind ourselves of some well known principles of interpretation in regard to the retrospective operation of statutes.
As a general rule, a statute which takes away or impairs substantive rights acquired under the existing law is construed to have a prospective operation unless the language of that statute expressly or by inevitable intendment compels a contrary construction.
But this presumption as to prospective operation of a statute does not apply to an enactment affecting procedure or practice such as the Code of Civil Procedure.
The reason is that no person has a vested right in any course of procedure.
"The general principle indeed seems to be that alterations in the procedure are always retrospective, unless there be some good reason against it".
(See Mulla 's Code of Civil Procedure, 13th Edn.
I, page 6, and In the light of the above principles, the question posed for our decision, resolves itself into the two fold issue : whether the decree holder had acquired a substantive right (a) to get the decree passed by the Court of Small Causes, transferred to the Court of the Munsif and (b) thereafter to have is executed by the transferee Court in any of the modes provided in Section 51 of the Code of Civil Procedure, including the mode by attachment and sale of the immovable property of the judgment debtor.
As before the High Court, here also, it is contended on behalf of the decree holder that he had acquired this two fold substantive right before the coming into force of the U.P. (Amendment Act XXIV) of 1954, and, as such, it was saved by Section 3(1) of this Amendment Act.
It is maintained that the two fold right aforesaid is a substantive right and not merely a matter of procedure.
Support for this argument has been sought from a decision of this Court in Garikapati vs Subbiah Choudhry.
Reference has also been made to a Division Bench judgment of the Allahabad High Court in Suraj Bux Singh vs Badri Prasad.
In the alternative, it is submitted that assuming the sale was without jurisdiction, then also, that question would relate to the execution, discharge or satisfaction of the decree and, as such, the remedy of the judgment debtor was to proceed by an application 742 under Section 47 of the Code of Civil Procedure and not by a suit as has been done by the plaintiff in the instant case.
In short, the argument is that in any event, the present suit was barred by Section 47 of the Code.
It appears to us that none of these contentions stands a close examination.
It may be noted that the fasciculus of Sections 51 to 54 of the Code of Civil Procedure appear under the heading "PROCEDURE IN EXECUTION".
Section 51 is captioned "Powers of Court to enforce execution".
It reads thus : "Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree holder, order execution of the decree (a) by delivery of any property specifically decreed; (b) by attachment and sale or by sales without attachment of any property; (c) . . . . . . . . (d) by appointing a receiver; or (e) in such other manner as the nature of the relief granted may require : Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment debtor an opportunity of showing cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied. . . ." This Section "merely enumerates the different modes of execution in general terms while the conditions and limitations under which alone the respective modes can be availed of are prescribed further on by different provisions".
I.R. Commentaries Vol.
I, 9th Edn.
p. 863).
The opening words of the Section "Subject to such conditions and limitations as may be prescribed" put it beyond doubt that there is no wide or unrestricted jurisdiction to order execution or to claim execution in every case in all the modes indicated therein. 'Prescribed ' has been defined in Section 2(16) of the Code to mean "prescribed by rules", and "rules", under Section 2(18) means "rules and forms" contained in the First Schedule of the Code or framed by the respective superior Courts in different States under Section 122 or Section 125.
743 We are one with the High Court (majority) that this phrase cannot be construed to mean that the powers of the executing Court under this Section are not subject to the other conditions and limitations enacted in the other sections of the Code.
For instance, the mode, (b), by attachment and sale of the property of the judgment debtor, may not be available in respect of property which falls within the exemption of section 60 of the Code.
Although ordinarily the decree holder has an option to choose any particular mode for execution of his money decree, it will not be correct to say that the Court has absolutely no discretion to place any limitation as to the mode in which the decree is to be executed.
The option of the judgment debtor, for instance, to apply under Order 21.
Rule 30, C.P.C. for execution of a decree simultaneously against both the person and the property of the judgment debtor is subject to exercise by the Court of a judicial discretion vested in it under Order 21, Rule 21, C.P.C. We have already noticed, that under Section 39(1) (d), the decree holder has no indefeasible, substantive right to get a decree of a Court of Small Causes passed in his favour transferred to another Court.
Cases are conceivable where the decree is of such a petty amount that the Court of Small Causes thinks that it can easily be executed by it by attachment and sale of the movable property of the judgment debtor.
In the instant case, also the decree was for a small amount of Rs. 300 and odd and we understand that the application for transfer was made under clause (d) of Section 39(1).
Thus, the decree holder 's right to make an application for transfer of his decree under section 39(1) (d) is a mere procedural right.
The Court of Small Causes could in its discretion, for reasons to be recorded, refuse to transfer it to the Court of the Munsif.
In other words, the decree holder had no vested or substantive right to get the decree transferred to the Court of the Munsif for execution.
The first limb of the issue is therefore answered against the appellant.
As regards the second limb of the issue, we find ourselves entirely in agreement with the High Court that the provisions of Section 51 are merely procedural in character.
A decree holder gets a right to execute the decree only in accordance with the 744 procedure provided by law in force at the time when the execution is sought.
If a mode of procedure different from the one which obtained at the date of the passing of the decree, has been provided by law, the decree holder is bound to proceed in execution according to the altered procedure.
The Amendment Act XXIV of 1954 had taken away the power of the transferee court to execute the transferred decree by attachment and sale of the immovable property by making it coterminous with that of the transferor Court which, in the instant case, was the Small Cause Court and in view of the prohibition contained in Order 21, Rule 82, Code of Civil Procedure, had no power to execute its decree by sale of immovable property.
That being the position, the Court of the Munsif to whom the decree had also been transferred for execution, had also no jurisdiction to order sale of the immovable property of the judgment debtor.
Thus considered, the sale of the immovable property ordered by the Munsif in execution of the decree of the Court of Small Causes transferred to him, was wholly without jurisdiction and a nullity.
Once we come to the conclusion that the sale in question was totally null and void, the alternative contention of the appellants with regard to the suit being barred by Section 47 of the Code of Civil Procedure, does not survive.
This is not a case of an irregular or voidable sale which continues to subsist so long as it is not set aside, but of a sale which was entirely without jurisdiction.
It was non est in the eye of law.
Such a nullity does not from its very nature, need setting aside.
As pointed out by this Court in Kiran Singh vs Chaman Paswan, ". it is a fundamental principle, well established that a decree passed by a Court without jurisdiction, is a nullity; and that its invalidity could be set up whenever it is sought to be enforced or relied upon, even at the stage of execution, and even in collateral proceedings".
Most of the rulings which have been cited in support of their alternative contention by the appellants, were also cited before 745 the High Court and have been rightly distinguished.
We need not go into the same.
Before we part with the judgment, we may, however, note that the amendment made by the U.P. (Act XXIV) of 1954 was deleted by another U.P. (Amendment) Act XIV of 1970, and the unamended sub section (1) of Section 42, as it existed before the amendment of 1954, was revived.
But, this Amendment Act (XIV of 1970) was not given retrospective operation.
It did not affect the previous operation of the Amendment Act XXIV of 1954 or anything suffered or done thereunder.
For the foregoing reasons, we uphold the impugned judgment and dismiss this appeal.
In view of the law point involved, we leave the parties to pay and bear their own costs.
P.B.R. Appeal dismissed.

summary:
A decree, according to section 38 of the Code of Civil Procedure, may be executed either by the Court which passed it or by the Court to which it is sent for execution.
Section 39(1)(d) provides that the Court which passed a decree may, on the application of the decree holder, send it for execution to another Court of competent jurisdiction, if the Court, which passed the decree, considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court.
Section 42 of the Code, which indicates the powers of the transferee Court for executing the transferred decree, before its amendment in 1954, provided that the Court executing the decree sent to it, shall have the same powers in executing such decree "as if it had been passed by itself." After the amendment the words "as the Court which has passed it" were substituted for the words "as if it has been passed by itself".
Section 3 of the U.P. Civil Laws (Reform and Amendment) Act saved certain rights already acquired or accrued.
In February, 1953 the brother of appellant No. 1 obtained a decree from the Court of Small Causes which on his application under section 39 of the Code, was transferred to the Court of Munsif in January, 1955 and put into execution after the U.P. (Amendment) Act XXIV of 1954 had come into force.
In the sale the decree holder himself purchased the land in July, 1956 and took possession of the property.
He later sold the property to defendant nos.
2 to 5.
The suit of respondent No. 1 for a declaration that the sale in favour of appellant No. 1 was without jurisdiction and therefore a nullity was dismissed by the trial Court.
On appeal the Additional Commissioner held that the executing court had no jurisdiction to sell the suit land under section 42 of the C.P.C. as amended by the U. P. Civil Laws (Amendment) Act, 1954 Dismissing the appeal, the Board of Revenue held that the auction sale in pursuance of the decree of the Judge, Small Causes Court was void and did not invest the decree holder purchaser with any title.
733 On the appellant 's writ petition a single Judge of the High Court quashed the judgment of the Revenue Board as well as of the Additional Commissioner holding that the execution sale of the land was proper under section 42 of the Code, that prior to its amendment by the U. P. Civil Laws (Amendment) Act, 1954, the executing court had the same powers in relation to execution as it would have had if the decree had been passed by itself and the decree having been passed prior to the amendment of section 42 this section did not apply and the decree should have been executed in accordance with the provisions of section 42 prior to its amendment.
On appeal a Full Bench of the High Court (by majority) held that since the Small Causes Court had no power to execute the decree by attachment and sale of immovable property, the Munsif 's Court to which the decree was transferred for execution, possessing the same powers as the Small Causes Court, had no jurisdiction to execute the decree by attachment and sale of the immovable property.
It was contended before this Court on behalf of the decree holder that he had acquired a substantive right to get the decree of the Court of Small Causes transferred to the Court of Munsif for execution and thereafter to have it executed by the transferee court in any of the modes provided in section 51 C.P.C. and this two fold substantive right having accrued to him before the coming into force of the 1954 Amendment, it was saved by section 3 of this Amendment Act.
Dismissing the appeal, ^ HELD: 1 (a) Under section 39(1)(d) a decree holder has no indefeasible substantive right to get his application for transfer of a decree to another Court ipso facto accepted by the Court which passed it, particularly in a case which is not covered by clauses (a), (b) & (c) of that sub section.
The effect of substitution of the words "as the court which passed it" for the words "as if it had been passed by itself" was that powers of the transferee Court in executing the transferred decree became co terminus with the powers of the Court, which passed it.
Therefore, if the power of the transferor Court to execute its own decree were in any respect restricted, the same restriction would attach to the powers of the transferee Court in executing the transferred decree notwithstanding the position that the powers of the transferee Court in executing its own decree were not so restricted.
[739E; 740C D] (b) The opening words of section 51 (subject to such conditions and limitations as may be prescribed) put it beyond doubt that there is no wide or unrestricted jurisdiction to order execution or to claim execution in every case in all the modes indicated therein.
The High Court (per majority) was right in construing it to mean that the powers of the executing court under this section are not subject to the other conditions and limitations enacted in the other sections of the Code.
Although ordinarily a decree holder has an option to choose any particular mode for execution of his money decree it may not be correct to say that the Court has absolutely no discretion to place any limitation as to the mode in which the decree is to be executed.
[742G, 743A B] In the instant case, the decree holder 's right to make an application for transfer of his decree under section 39(1)(d) is a mere procedural right.
The Court of Small Causes could, in its discretion for reasons to be recorded, 734 refuse to transfer it to the Court of Munsif.
In other words the decree holder had no vested or substantive right to get the decree transferred to the Court of the Munsif for execution.
[743F G] (c) The well settled principle in regard to the retrospective operation of statutes is that as a general rule, a statute which takes away or impairs substantive rights acquired under the existing law is construed to have a prospective operation unless the language of that statute expressly or by inevitable intendment compels a contrary construction.
But this presumption as to prospective operation of a statute does not apply to an enactment affecting procedure or practice such as the Code of Civil Procedure because no person has a vested right in any course of procedure.
[741 B C] 2.(a) The High Court was right in holding that the provisions of section 51 are merely procedural in character.
A decree holder gets a right to execute the decree only in accordance with the procedure provided by the law in force at the time when execution is sought.
If a mode of procedure different from the one which obtained at the date of passing of the decree has been provided by law, the decree holder is bound to proceed in execution according to the altered procedure.
[744A B] (b) The Amendment Act XXIV of 1954 had taken away the power of transferee Court to execute the transferred decree by attachment and sale of the immovable property by making it co terminus with that of the transferor Court (the Small Cause Court) and in view of the prohibition contained in Order 21 Rule 82 C.P.C. it had no power to execute its decree by sale of immovable property.
That being the position, the Court of the Munsif to which the decree had been transferred for execution had no jurisdiction to order sale of the immovable property of the judgment debtor.
The sale ordered by the Munsif in execution of the decree of the Court of Small Causes transferred to him was, therefore, wholly without jurisdiction and a nullity.
[744 B D] Kiran Singh vs Chaman Paswan, ; referred to.


judgement:
Civil Appeals Nos.
56 & 57 of 1954.
Appeal from the judgment and order dated the 25th day v of March 1951 of the Madras High Court in Case Referred Nos. 32 of 1948 and 31 of 1950.
K.S. Krishnaswami Iyengar, (K. R. Choudhry, with him) for the appellants.
G.N. Joshi and P. G. Gokhale, for, the respondent.
May 9.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant is a firm which was constituted under a deed of partnership dated 10 2 1941, and consists of two partners, Subba Rao and Hariprasada Rao.
On 21 3 1942 it was registered under section 26 A of the Indian IncomeTax Act No. XI of 1922, hereinafter referred to as the Act, for the assessment year 1942.
Sometime thereafter, one of the partners, Subba Rao, is stated to have left on a long pilgrimage, and the affairs of the partnership were then managed by Hariprasada Rao as his agent under a general power of attorney dated 1 7 1940.
Hariprasada Rao then applied under rules 2 and 6 of the rules framed under section 59 of the Act, for renewal of the registration certificate for the year 1942 43, and the application was signed by him for himself and again as the attorney of Subba Rao.
Those rules provide that an application for registration of a firm under section '26 A and for renewal of registration certificate "shall be signed personally by all the partners" '.
The Income tax Officer rejected the application for renewal on the ground that it was not personally signed by one of the partners, Subba Rao, and that the signature of Hariprasada Rao as his agent was not valid The order was taken in appeal, and was ultimately the subject of a reference under section 66(1) of the Act to the High Court of Madras, which held that the word "personally" in rule 6 required that the partner 579 should himself sign the application, and that the principles of agency under the general law were exclude.
(Vide Commissioner of Income tax vs Subba Rao(1)).
While these proceedings were pending, Hariprasada Rao filed the two applications, out of which the present appeals arise, for renewal of the registration certificate for the assessment years 1943 44 and 1944 45.
Both of them were signed by him for himself and as attorney for Subba Rao.
At the hearing of these petitions the appellant, apart from maintaining that rules 2 and 6 did not, on their true construction, exclude signature by an agent on behalf of a partner, raised a further contention that the rules themselves were ultra vires the powers of the rulemaking authority.
The Income tax Officer overruled both these contentions, and rejected the applications, and his orders were confirmed on appeal by the Appellate Assistant commissioner and then by the Appellate Tribunal.
Thereafter, on the application of the appellant, the Tribunal referred the following questions for the decision of the High Court: "(1) Whether the word 'personally ' in the Income tax Rules, as framed under section 59 of the Income tax Act would exclude a duly authorised agent of a partner from signing an application on behalf of the partner under section 26 A of the Income tax Act? (2)If the answer to the above question is in the affirmative, whether rules 2 and 6 are ultra vires the rule making authority?" The reference was heard by Satyanarayana Rao and Viswanatha Sastry, JJ.
Following the decision in Commissioner of Income tax vs Subba Rao(1), they answered the first question in the affirmative.
On the second question, however, they differed.
Satyanarayana Rao, J. held that the rules were ultra vires, and that the applications were in order, and ought to have been granted.
Viswanatha Sastry, J. was of the contrary opinion, and held that the rules were intra vires, and that the applications were properly (1) I.L R. ; 580 rejected as not being in accordance with them.
The learned Judges, however, granted a certificate under section 66 A of the Act, and that is how the appeals come before us.
The first question whether the word "personally" would exclude signature by an authorised agent on behalf of the partner was answered in the affirmative by the Madras High Court in Commissioner of Incometax vs Subba Rao(1).
This was one of the decisions quoted with approval by this Court in Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(2), where the question was whether a rule framed under the Bengal Agricultural Income tax Act that the declaration in the return should be signed by the individual himself required that he should sign it personally, and it was held that it did so require.
Sri K. section Krishnaswami Ayyangar, learned counsel for the appellant, did not urge any grounds for differing from the above conclusion, and we must therefore hold, in agreement with the views expressed in the above decisions, that the signature which is pres cribed by the rules is that of the partner himself, and that they are not complied with by the agent signing on his behalf.
Then we come to the second question and that is the substantial question that arises for our determination in this appeal whether rules 2 and 6 are ultra Vires the rule making authority.
The argument of the appellant in support of its contention that the rules are ultra Vires may thus be stated: Under the common law of England, a person has the right to do through an agent whatever he can do himself, and that right has also been conferred on him in this country by section 2 of the Powers of Attorney Act VII of 1882, which runs as follows: "The donee of a power of attorney may, if he thinks fit, execute or do any assurance, instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every assurance, (1) I.L.R. I.T.R. 232.
(2) ; 581 instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof "This section applies to powers of attorney created by instruments executed either before or after this Act comes into force".
Section 26 A of the Act confers on a partner the right to apply for registration of the firm, and that right could be 'exercised both under the common law and under section 2 of the Powers of Attorney Act through an authorised agent.
The sovereign legislature might, if it so chooses, abrogate the rule of common law, and repeal section 2 of the Powers of Attorney Act,.
and enact that the application to be presented under section 26 A should be signed by the partner himself and not by any other person; but it has not done so either expressly or by necessary implication, and, therefore, the application which was signed by Hariprasada Rao is as good as if it had been signed by Subba Rao.
The Rules no doubt require that the signature should be that of the partner and not that of ' his agent.
But in prohibiting what would be lawful under the section, the Rules go beyond the ambit of the authority conferred by section 26 A on the rule making authority, which is limited to framing Rules for giving effect to the principles laid down in the statute.
They are therefore ultra vires.
In the alternative, assuming that the mandate given to the rule Making authority under section 26 A is of sufficient amplitude to authorise the making of the Rules in question, even then, they must be held to be ultra vires, as they have the effect of abrogating the common law and of repealing section 2 of the Powers of Attorney Act, which confer on a person the right to act through an agent, and that being a legislative function cannot be delegated to a rule making authority.
and section 26 A, if it is to be construed as conferring such power on an outside authority, must be struck down as constituting an unconstitutional delegation by the legislature of its legislative function.
582 It is the correctness of these contentions, that now falls to be considered.
According to the law of England and that is also the law under the Indian Contract Act, 1872 "every person who is sui juris has a right to appoint an agent for any purpose whatever and that be can do so when he is exercising a statutory right no less than when he is exercising any other right".
Per Stirling, J. in Jackson and Co. vs Napper: In re Schmidts ' Trade Mark(1).
This rule is subject to certain well known exceptions as when the act to be performed is personal in character, or is annexed to a public office, or to an office involving fiduciary obligations.
But apart from such exceptions, the law is well settled that whatever a person can do himself, he can do through an agent.
It has accordingly been held that "at common law.
, when a person authorizes another to sign for him, the signature of the person so signing is the signature of the person authorizing it".
Per Blackburn, J. in The Queen V. Justices Of Kent(").
The appellant is therefore right in his contention that unless the statute itself enacts otherwise, an application which a partner has to sign would be in order and.
valid, if it is signed by his authorised agent.
The question then is whether there is anything in the Act, which requires that an application under section 26 A should be signed by the party personally.
Section 26 A is as follows: "(I) Application may be made to the Incometax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall (1) , 172.
(2) , 307.
583 be dealt with by the Income tax Officer in such manner as may be prescribed".
The section does not, it should be noted, provide that the application for registration should be signed by the partner personally, and it is this that forms the foundation of the contention of the appellant that the right which a person has under the general law and under section 2 of the Powers of Attorney Act to act through an agent has not been taken away or abridged by the section.
He relies in support of his contention on the following rules of construction: (1) Statutes which encroach on the rights of a subject should be interpreted if possible so as to respect such rights.
[Vide Maxwell on Interpretation of Statutes, 10th Edition, page 285; Craies on Statute Law,, 5th Edition, pages Ill to 114).
The law is thus stated by Lord Justice Bowen in In re Cuno: Mansfield vs Mansfield(1): "In the construction of statutes, you must not construe the words so as to take away rights which already existed before the statute was passed, unless you have plain words which indicate that such was the intention of the legislature".
(2)In the absence of clear and unambiguous language, an intention to alter the existing law should not be imputed to the legislature.
(Vide Craies on Statute Law, 5th Edition, pages 114 and 115).
(3)The law does not favour repeal of a statute by implication, and therefore a later statute should not be construed as repealing an earlier one without express words or by necessary implication.
(Vide Maxwell on Interpretation of Statutes, 10th Edition, page 170;.
Craies on Statute Law, 5th Edition, page.
"If it is possible", observed Farwell, J., "it is my duty so to read the section as not to effect an implied repeal of the earlier Act": Be Chance(2).
"Unless two Acts are so plainly repugnant to each other, that effect cannot be given to both at the same time, a repeal will not be implied".
Per A. L. Smith, J. in Kutner vs Phillips(3).
(1) , 17.
(2) , 270.
(8) , 272.
584 In the light of these principles, it is contended that the true scope of section 26 A is that it confers a right on a partner to register the firm, and leaves the modus of the exercise thereof to be regulated by the existing law, and that, therefore, far from showing an intention either to alter the general law as to the right of a person to act through his agent or to repeal section 2 of the Powers of Attorney Act, the section depends on their continued operation for its implementation.
Now, the rules of construction on which the appellant relies are well established.
But then, it should not be overlooked that they are only aids to ascertain the true intention of the legislature as expressed in the statute., and the question ultimately is, what in the context do the words of the enactment mean? The following passage from Crawford on "The Construction of Statutes", 1940 Edition, page 454 cited by the appellant may be usefully referred to in this connection: "Why should a statute be subjected to a strict or a liberal construction, as the case may be? The only answer that can possibly be correct is because the type of construction utilized gives effect to the legislative intent.
Sometimes a liberal construction must be used in order to make the legislative intent effective.
, and sometimes such a construction will defeat the intent of the legislature.
If this is the proper conception concerning the rule of construction to be adhered to, then a strict or a liberal construction is simply a means by which the scope of a sta tute is extended or restricted in order to convey the legislative meaning.
If this is the proper position to be accorded strict and liberal constructions, it would make no difference whether the statute involved was penal, criminal, remedial or in derogation of common right, as a distinction based upon this classification would then mean nothing".
That being the correct position, the question is whether on its true interpretation, the statute intended that an application under section 26 A should be ' signed by the partner personally, or whether it could 585 be signed by his agent on his behalf To decide that, we must have regard not only to the language of section 26 A but also to the character of the legislation, the scheme of the Act and the nature of the right conferred by the section.
The Act is, as stated in the preamble, one to consolidate and amend the law relating to income tax.
The rule of construction to be applied to such a statute is thus stated by Lord Herschell in Bank of England v: Vagliano(1): "I think the proper course is in the first instance to examine the language of the statute, and to ask what is its , natural meaning, uninfluenced by any considerations derived from the previous state of the law and not to start with inquiring how the law previously stood, ' and then, assuming that it was probably "intended to leave it unaltered. . . . . " We must therefore construe the provisions of the Indian Income tax Act as forming a code complete in itself and exhaustive of the matters dealt with therein, and ascerta in what their true scope is.
Turning then to the provisions of the Act, considerable light is thrown on their true import by the decision of this Court in Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(2).
There, the question was as to the meaning of Rule I 1 framed under the Bengal Agricultural Income tax Act, 1944 read with Form No. 5, which required that the declaration in the return should be signed "in the case of an individual, by the individual himself".
It was held by this Court on a review of the provisions of the statute that the intention of the legislature as expressed therein was to exclude the common law rule, qui facit per alium facit per se, and the declaration to be valid must be signed by the assessee personally.
It is argued for the appellant that Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(2) was a decision only on the interpretation of Rule No. 11 and not on its validity, and that the question whether the rule was ultra vires or not was not in issue.
That is so, but the materiality of the (1) , 141.
(2) ; , 76 586 decision to the present controversy lies in this that the interpretation which was put on Rule 11 as requiring personal signature was based on the conclusion which this Court reached on a consideration of the relevant provisions of the Bengal Agricultural Income tax Act that the intention of the legislature was to exclude the rule of the common law on the subject.
Now, the provisions of the Bengal Act which were construed in Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(1) as indicative of the above intention, are identical in terms with the corresponding provisions in the Indian Income tax Act, and are, in fact, based on them and it would therefore be logical to construe the latter as expressing an intention to discard the rule of common law on the subject.
The relevant provisions of the Bengal Agricultural Income tax Act may now be noticed.
Section 25(1) of the Bengal Act provides that if.
the Income tax Officer is not satisfied that the return made is correct and complete, he may require the assessee by notice either to attend at the Income tax office or to produce or cause to be produced any evidence on which he might rely.
This corresponds to section 23(2) of the 'Indian Income tax Act.
The point to be noted with reference to this section is that it contains an express provision for production of evidence by the assessee through his agent, a provision which would have been wholly unnecessary if the common law was intended to apply.
Sections 35 and 36 of the Bengal Act contain provisions as to who can represent the assessee and in what proceedings, and they follow section 61 of the Indian Income tax Act and form a code complete in themselves.
Then again, both the Bengal Act and the Indian Income tax Act provide that certain provisions of the Civil Procedure Code are applicable to the proceedings under the Act.
The provisions of Order 3 of the Civil Procedure Code enacting that parties may appear and act through recognised agents are not among them.
To cut the discussion short, the effect of the provisions of the (1) ; 587 Bengal Act is thus summarized in Commissioner of Agricultural Income tax vs Keshab Chandra Manda`(1): "The omission of a definition of the word 'sign ' as including a signature by an agent, the permission under section 25 for production of evidence by an agent and under sections 35 and 58 for attendance by an agent and the omission of any provision in the Act applying the provisions of the Code of Civil Procedure relating to the signing and verification of pleadings to the signing and verification of the return while expressly adopting the provisions of that Code relating to the attendance and examination of witnesses, production of documents and issuing of commission for examination and for service of notices under sections 41 and 60 respectively, cannot be regarded as wholly without significance".
This reasoning applies with equal force to the provisions of the Indian Income tax Act, and goes far to support the contention of the respondent that the common law is not intended to apply to proceedings under the Act.
Another factor material for the determination of this question is the nature of the right conferred by section 26 A. Under the common law of England, a firm is not a juristic person, the firm name being only a compendious expression to designate the various partners constituting it.
But, as pointed out by this Court in Dulichand Laxminarayan vs Commissioner of Income tax, Nagpur(2), inroads have been made by statute s into this conception, and firms have been regarded as distinct entities for the purpose of those statutes.
One of those statutes is the Indian IncomeTax Act, which treats the firm as a unit for purposes of taxation.
Thus, under section 3 of the Act the charge is imposed on the total income of a firm, the partners as such being out of the picture, and accordingly under section 23 of the Act, the assessment will be on the firm on its total profits.
Section 23(5) enacts an exception to this in the case of firms registered under the Act, and provides that, "(a). . the sum payable by the firm itseIf shall (1) ; (2) A.I.R. 1956 S.C. 354.
588 not be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined".
Thus, if a firm is registered, it ceases to be a unit for purposes of taxation and the profits earned by it are taken, in accordance with the general law of partnership, to have been earned by the individual partners according to their shares, and they are taxed on their individual income including their share of profits.
The advantages of this provision are obvious.
The rate of tax chargeable will not be on the higher scale provided for incomes on the higher levels but on the lower one at which the income of the individual partner is chargeable.
Thus, registration confers on the partners a benefit to which they would not have been entitled but for section 26 A, and such a right being a creature of the statute, can 'be claimed only in accordance with the statute which confers it, and a person who seeks relief under section 26 A must bring himself strictly within its terms before he can claim the benefit of it.
In other words, the right is regulated solely by the terms of the statute, and it would be repugnant to the character of such a right to add to those terms by reference to other laws.
The statute must be construed as exhaustive in regard to the conditions under which it can be claimed.
Thus, considering the question with reference to the character of the legislation, the scheme of the statute and the nature of the right conferred by section 26 A, the conclusion is irresistible that rules of common law were not intended to be saved, and that the right to apply for registration.
under that section is to be determined exclusively by reference to the prescriptions laid down therein.
If that is the true construction, in authorising the rule making authority to frame rules as to who can apply for registration under section 26 A, and when and how, the statute has.
merely directed that authority to fill in details in the field of legislation occupied by it, and it is not denied that Rules a and 6 are within the mandate conferred 580 by the section.
In this view, section 59 (5) of the Act which enacts that "Rules made under this section shall be published in the official Gazette, and shall thereupon have effect as if enacted in this Act" directly applies, and the vires of the Rules is beyond question.
Vide the observations of Lord Herschell in Institute of Patent Agents vs Lockwood(1).
Then, there is the contention of the appellant that the Rules in question are repugnant to section 2 of the Powers of Attorney Act VII of 1882, and are therefore ultra wires.
In addition to the reasons given above in support of the conclusion that the rule of the common law was not intended to operate in the field occupied by section 26 A, there is a further and a more compelling reason why this contention should not be accepted.
It is that there is, in fact, no conflict between the two statutory provisions.
To un derstand the scope of section 2 of the Powers of Attorney.
Act, it is necessary to refer to the history of this legislation.
Under the common law of England, an agent having authority to execute an instrument must sign in the name of the principal if he is to be bound.
If the agent signs the deed in his name albeit as agent, he is the person who is regarded as party to the document and not the principal. , It is the agent alone that can enforce the deed, and it is be that will be liable on it.
Vide In re International Contract Company(2); Schack vs Antony(3), Halsbury 's Laws of England, 3rd Edition, Volume 1, page 217, and Bowstead on Agency, 10th Edition, page 93.
To remove the hardships resulting from this state of the law, the Conveyancing and Law of Property Act, 1881 (44 and 45, Vict, Chapter 41) enacted section 46, which is as follows: "(1) The donee of a power,of attorney may, if he thinks fit execute or do any assurance, instrument, or thing in and with his own name and signature and his own seal, where sealing is required, by the authority of the donor of the power; and every assurance, instrument, and thing so executed and done shall be (1) , 351.
(2) (3) I M. & section 573; ; 590 as effectual in law, to all intents, as if it had been executed or done by the donee of the power in the name and with the signature and seal of the donor thereof (2) This section applies to powers of attorney created by instruments executed either before or after the commencement of this Act".
The Indian Legislature immediately followed suit, and enacted the Powers of Attorney Act VII of 1882 incorporating in section 2 therein word for word, section 46 of the English Act.
The object of this section is to effectuate instruments executed by an agent but not in accordance with the rule of the common law and the enactment is more procedural than substantive.
It does not confer on a person a right to act through agents.
It presupposes that the agent has the authority to act on behalf of the principal, and protects acts done by him in exercise of that authority but in his own name.
But where the question is as to the existence or the validity of authority, the section has no operation.
Thus., the fields occupied by the two enactments are wholly distinct.
Section 26 A says that a partner cannot delegate the exercise of his rights under that section to an agent.
Section 2 of the Powers of Attorney Act says that if there can be and, in fact there is, delegation, it can be exercised in the manner provided therein.
There is accordingly no conflict between the two sections, and no question of repeal arises.
To sum up, the Indian Income tax Act is a self contained code exhaustive of the matters dealt with therein, and its provisions show an intention to depart from the common rule, qui facit per alium facit per se.
Its intention again is that a firm should be given benefit of section 23(5) (a), only if it is registered under section 26 A in accordance with the conditions laid down in that section and the rules framed thereunder.
And as those rules require the application to be signed by the partner in person, the signature by an agent on his behalf is invalid.
In the view which we have taken, the further queson raised by the appellant that the power to repeal 591 a law being a legislative function, can be exercised only by the legislature duly constituted and not by any outside authority, and that the delegation of such a power to an outside authority is unconstitutional.
, does not arise for decision.
In the result., we agree with Viswanatha Sastry, J. that rules 2 and 6 are intravires the powers of the rule making authority, and dismiss the appeals with costs.

dataset_name: IN-Abs

summary:
Rules 2 and 6 of the Rules framed under section 59 of the Indian Income Tax Act provide that an application for registration of a firm under section 26 A of the Act and for renewal of registration certificate "shall be signed personally by all the parties".
Held that the word 'personally ' in the Income Tax Rules, as framed under section 59 of the Income Tax Act would exclude a duly authorised agent of a partner of a firm signing an application on behalf of the partner under section 26 A of the Income Tax Act.
(2) That Rules 2 and 6 are not ultra vires the rule making authority.
To decide the question whether on its true interpretation the Indian Income Tax Act intended that an application under section 26 A should be signed by the partner personally, or whether it could be signed by his agent on his behalf the Court must have regard not only to the language of section 26 A but also Lo the character of the legislation, the scheme of the Act and the nature of the right conferred by the section.
The Indian Income Tax Act is a self contained code exhaustive of the matters dealt with therein, and its provisions show an intention to depart from the common rule, qui facit per alium tacit per se.
Its intention again is that a firm should be given benefit of section 23(5)(a), only if it is registered.
under section 26 A in accordance with the conditions laid down in that section and the rules framed thereunder.
And as those rules require the application to be signed by the partner in person, the signature by an agent on his behalf is invalid.
Commissioner of Agricultural Income tax vs Keshab Chandra Mandal, ([1950] S.C.R. 435), relied upon.
commissioner of Income tax vs Subba Rao, ([1947] I.L.R. Mad.
167) approved.
Other case law referred to.
75 578


judgement:
Civil Appeal No. 3345/1979.
Appeal by Special Leave from the Judgment and Order dated 31 7 1979 of the Assistant Commissioner (Judicial) Sales Tax.
Meerut in Appeal No. 1502 of 1978.
V. M. Tarkunde, P. H. Parekh and section B. Singh for the Appellant.
section Markendaya for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The appellant is a firm carrying on business at Mandi Anandganj, Barut, District Meerut in the State of Uttar Pradesh and is a dealer as defined in the U.P. Sales Tax Act, 1948 (Act No. XV of 1948) (hereinafter referred to as 'the Act ').
It has filed this appeal by special leave under Article 136 of the Constitution against the order dated July 31, 1979 passed in Appeal No. 1502 of 1978 on the file of the Assistant Commissioner (Judicial) Sales Tax, Meerut Range, Meerut upholding the inclusion of the market fee and the commission (otherwise called 'dami ') payable to the commission agent operating within a market area established under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (U.P. Act No. XXV of 1964) (hereinafter referred to as 'the Adhiniyam ') in the turnover of purchases of the appellant for purposes of levy of sales tax under section 3 D of the Act.
The assessment year in question is 1974 75.
The appellant was granted leave to appeal to file the above appeal directly against the order of the Assistant Commissioner (Judicial) since the question involved in this case had already been decided by the High Court of Allahabad in M/s. Durga Dass Narain Dass vs The State of Uttar Pradesh 710 Ors.
upholding the inclusion of the market fee and the Commission (dami) in the purchase turnover for purposes of levy of sales tax.
It is necessary at the out set to refer to some of the relevant provisions of law bearing on the questions involved in the case in order to appreciate the contentions urged on behalf of the appellant.
There is no dispute that the appellant is a dealer as defined in section 2(e) of the Act and is a purchaser of goods notified under section 3 D(1).
Section 3 D of the Act provides that except as provided in sub section (2) thereof, there shall be levied and paid for each assessment year or part thereof a tax on the turnover to be determined in the prescribed manner of purchases of such goods and with effect from such date as the State Government may be notification in the Gazette specify in relation to purchases made within Uttar Pradesh by a dealer (whether on his own account or on account of any one else) or through a dealer acting as a purchasing agent at the rate specified therein.
Sub section (4) of section 3 D of the Act provides that on the issue of a notification under sub section (1) thereof, no tax shall be levied under any other section in respect of the goods included in the notification.
The expression 'purchase price ' is defined in section 2(gg) of the Act as follows: "2(gg) 'purchase price ' means the amount of valuable consideration paid or payable by a person for the purchase of any goods, less any sum allowed by the seller as cash discount according to trade practice and shall include any sum charged for anything done by the seller in respect of the goods at the time of or before, delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged;" The expression 'turnover of purchases ' is defined in section 2(ii) of the Act thus: "2(ii) 'turnover of purchases ' with its cognate expressions means the aggregate of the amounts of purchase price paid of payable by a dealer in respect of purchase of goods made by or through him after deducting the amount, if any refunded to the dealer by the seller in respect of any goods returned to such seller within such period as may be prescribed;" 711 Section 3 F of the Act which provides for the levy of additional tax on certain dealers was introduced into the Act by U.P. Act No. 3 of 1971.
When it was so introduced it provided that every dealer liable to pay tax under section 3, section 3A, section 3 AA or section 3 D, whose total turnover of sales or of purchases, or of both in any assessment year exceeded rupees two lacs would, in addition to the said tax, be liable to pay for that assessment year an additional tax at the rates specified in respect of his turnover liable to tax subject to the other provisions contained in that section.
We shall hereafter refer to some of the provisions of the Adhiniyam and the Rules made thereunder.
Clauses (b) and (e) of section 2 of the Adhiniyam define the expressions 'broker ' or 'dalal ' and 'commission agent ' or 'arhatiya ' respectively. 'Broker ' or 'dalal ' means a person who, in the ordinary course of business, negotiates or arranges contracts for the purchase or sale of agricultural produce, on behalf of his principal on payment of commission or remuneration, whether in cash or kind, but does not include the servant of such principal whether engaged in negotiating or arranging such contracts. 'Commission agent ' or 'arhatiya ' means a person who, in the ordinary course of business, makes or offers to make, a purchase or sale of agricultural produce, on behalf of the owner or seller or purchaser of agricultural produce, for arhat or commission.
Section 10 of the Adhiniyam provides that as from the date to be notified by the State Government in the Gazette, no person shall, in a Principal Market Yard or Sub Market Yard, levy, charge or realise, any trade charges, other than those prescribed by rules or bye laws made under the Adhiniyam, in respect of any transaction of sale or purchase of the specified agricultural produce and no Court shall, in any suit or proceeding arising out of any such transaction, allow in any claim or counter claim, any trade charges not so prescribed, and that all trade charges shall be payable by the purchaser.
Sub clause (b) of clause (iii) of section 17 of the Adhiniyam empowers the market committee to levy market fees and to utilize such market fees and other fees collected by it under that section for purposes of the Adhiniyam.
Section 17(iii)(b) of the Adhiniyam, as it stood before its amendment in 1973, read as follows: "17.
A Committee shall, for the purposes of this Act, have the power to: . . . . (iii) levy and collect: 712 . . . . (b) market fees on transactions of sale or purchase of specified agricultural produce in the Principal Market Yard and Sub Market Yards from such persons and at such rates as may be prescribed, but not exceeding one half percentum of the price of the specified agricultural produce sold or purchased therein".
After clause (b) of section 17(iii) was substituted by a new clause by U.P. Act 13 of 1973 as re enacted by U.P. Act 20 of 1974, it read thus: "17. . . . (iii) . . . . (b) market fees, which shall be payable by purchasers, on transactions of sale of specified agricultural produce in the Principal Market Yard or a Sub Market Yard at such rates, being not less than one percentum and not more than one and a half percentum of the price of the agricultural produce so sold, as the State Government may specify by notification in the Gazette.
" The above clause was substituted by a new clause by U.P. Act No. 7 of 1978 with retrospective effect from June 12, 1973 as follows: "17. . . . . . . . (iii) . . . . . . (b) market fee, which shall be payable on transactions of sale of specified agricultural produce in the market area at such rates, being not less than one percentum and not more than one and half percentum of the price of the agricultural produce so sold, as the State Government may specify by notification, and such fee shall be realised in the following manner: (1) if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the Committee; 713 (2) if the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the Committee; (3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the Committee; and (4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee to the Committee.
" Rule 79(1) of the Rules framed under the Adhiniyam for purposes of section 10 of the Adhiniyam provides that as from the date notified by the State Government under section 10, no person shall, in a Principal Market Yard or Sub Market Yards, levy, charge or realize, in respect of any transaction of sale or purchase of the specified agricultural produce, any trade charges, other than those specified by the Market Committee under sub rule (2) thereof.
Sub rule (2) of Rule 79 of the Rules provides that the Market Committee shall specify in its bye laws the trade charges that may be charged or realized by a trader or a commission agent or a broker or a weighman or a measurer or a palledar holding licence under the Rules, but not exceeding the limits prescribed by that sub Rule.
Sub rule (3) of Rule 79 of the Rules also provides that all trade charges including commission shall be payable by the purchaser.
Three contentions are urged before us in support of the above appeal (1) that it is not open the assessing authority to demand any additional tax under section 3 F of the Act in view of the provision contained in sub section (4) of section 3 D of the Act which expressly prohibits the levy of tax under any other section of the Act in respect of purchase turnover of the goods notified under section 3 D(1); (2) that the market fees payable under the Adhiniyam, being a sum which can be collected from the purchaser by virtue of the provision contained in section 17(iii) (b) of the Adhiniyam by the commission agent who is required to pay the same to the Market Committee, cannot be considered as forming part of the consideration paid or payable by the purchaser to the commission agent in respect of purchase of goods at an auction held within a market area established under the Adhiniyam and, therefore, it cannot be included in the turnover of purchases for purposes of levy of tax under section 3 D of the Act and (3) that the commission (dami) payable by a purchaser of goods to the commission agent 714 operating within the market area being a trade charge payable by the purchaser by virtue of section 10(2) of the Adhiniyam read with Rule 79(3) of the Rules framed thereunder cannot also be included in the turnover of purchases.
In so far as the first contention is concerned, the appellant depends upon sub section (4) of section 3 D of the Act which no doubt says that in respect of the turnover of purchases of the goods notified under section 3 D(1), no tax can be levied under any other provision of the Act.
But section 3 F of the Act which was introduced into the Act subsequently by U.P. Act No. 3 of 1971 provides that every dealer liable to pay tax under section 3, section 3 A, section 3 AA or section 3 D whose total turnover of sales or purchases or of both in any assessment year exceeds rupees two lacs shall, in addition to the said tax, pay for that assessment year an additional tax at the rate specified therein.
Since section 3 D of the Act is expressly mentioned in section 3 F, it has to be held that section 3 F, overrides sub section (4) of section 3 D and that additional tax can be collected even in respect of the turnover of purchases of goods notified under section 3 D(1) notwithstanding sub section (4) of Section 3 D of the Act.
It cannot be said that by enacting sub section (4) of section 3 D, the State Legislature forfeited its power to levy any other tax under the Act on the goods notified under section 3 D(1) for ever.
It is always open to the Legislature to modify the effect of sub section (4) of section 3 D by a subsequent legislation.
We do not, therefore, find any substance in the contention that additional tax levied under section 3 F cannot be levied in respect of the turnover of purchases of goods notified under section 3 D(1) of the Act.
The first contention, therefore, fails.
We shall now proceed to consider the question whether market fees paid on transactions of sale or purchases of specified agricultural produce in the market area established under the Adhiniyam can be included in the turnover of purchases for purposes of levy of tax under the Act.
Before the amendment of section 17(iii) (b) of the Adhiniyam by U.P. Act No. 7 of 1978, it specifically provided that market fee payable on transactions of sale or purchase of specified agricultural produce in the market area should be paid by the purchaser.
After the amendment which was brought into force with retrospective effect from June 12, 1973, market fees payable on transactions of sale or purchase of agricultural produce within the market area can be realized by the Market Committee 715 from the commission agent who is authorised to realize the same from the purchaser by virtue of section 17(iii)(b)(1) which reads: "17. . . . (iii) . . . . . (b). . (1) If the produce is sold through a commission agent the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the Committee.
" The argument urged on behalf of the appellant is that when a dealer who in this case happens to be a commission agent is permitted by law to collect the market fee which he is liable to pay to the Market Committee from the purchaser, such market fee cannot form part of the consideration for sale and, therefore, cannot be included in the turnover of purchases for purposes of levy of tax under the Act.
But on behalf of the State Government, it is urged that all sums paid by a purchaser to a seller or to a commission agent for the purchase of the goods including any tax or fee payable by him form the consideration for the purchase and, therefore, are liable to be included in the turnover of purchases.
Reliance is placed by the State Government on M/s George Oakes (P.) Ltd. vs State of Madras in which this Court while interpreting a similar provision in the Madras General Sales Tax Act, 1939 observed that the expression 'turnover ' meant the aggregate amount for which goods were bought or sold whether for cash or deferred payment or other valuable consideration and when a sale attracted purchase tax and the tax was passed on to the consumer what the buyer had to pay for the goods included the tax as well and the aggregate amount so paid would fall within the definition of turnover.
In the above case, the Court was construing the meaning of the expression 'turnover ' appearing in a statute in which there was no provision authorising the seller to recover the sales tax payable by him from the purchaser although the price of the goods realized by him included the sales tax payable by him and thus he had passed on his liability to the purchaser.
The next decision on which reliance was placed by the State Government is Delhi Cloth and 716 General Mills Co. Ltd. etc.
vs Commissioner of Sales Tax Indore.
In that case this Court held that the expression 'Sale price ' as defined in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 included the sales tax collected by a dealer from his purchaser as there was no provision in that statute imposing any liability on the purchaser to pay the tax imposed by it on the dealer and there was no law empowering the dealer to collect the tax from his buyer.
In both the decisions referred to above, this Court relied upon Paprika Ltd. & Anr.
vs Board of Trade and Love vs Norman Wright (Builders) Ltd. in which it had been laid down that the price payable by a purchaser under a contract of goods for the purpose of certain penal provisions was the price fixed by the contract and a seller who wished to recover the amount of the purchase tax should, except where an adjustment was authorised by statute, include that amount in the price so fixed.
From the observations made in the decisions referred to above, it follows that where a dealer is authorised by law to pass on any tax payable by him on the transaction of sale to the purchaser, such tax does not form part of the consideration for purposes of levy of tax on sales or purchases but where there is no statutory provision authorising the dealer to pass on the tax to the purchaser, such tax does form part of the consideration when he includes it in the price and realizes the same from the purchaser.
The essential factor which distinguishes the former class of cases from the latter class is the existence of a statutory provision auhorising a dealer to recover the tax payable on the transaction of sale from the purchaser.
It is on account of the above distinction that this Court held in Joint Commercial Officer Division II.
Madras 2 etc.
vs Spencer & Co. etc.
that the sales tax which a seller of foreign liquor was liable to pay under section 21 A of the Madras Prohibition Act, 1937 did not form part of the turnover on which sales tax could be levied under the Madras General Sales Tax Act, 1959 because the seller was entitled to recover the sales tax payable by him from the purchaser.
The relevant part of section 21 A of the Madras Prohibition Act, 1937 referred to above read thus: "21 A.
Every person or institution which sells foreign liquor (a) X X X (b) X X X 717 shall collect from the purchaser and pay over to the Government at such intervals and in such manner as may be prescribed, a sales tax calculated at the rate of eight annas in the rupee, or at such other rate as may be notified by the Government from time to time, on the price of the liquor so sold.
" In the course of the decision in the case of Spencer & Co. this Court observed thus: "It is clear from sec.
21 A of the Madras Prohibition Act, 1937 that the sales tax which the section requires the seller of foreign liquor to collect from the purchaser is a tax on the purchaser and not on the seller.
This is what makes the authorities on which counsel for the appellants relied inapplicable to the cases before us.
Under sec.
21 A the tax payable is on the price of the liquor and that tax is to be paid by the purchaser, the seller is required to collect the tax from the purchaser which he has to pay over to the Government Sec.
21 A makes the seller a collector of tax for the Government and the amount collected by him as tax under this section cannot therefore be a part of his turnover.
Under the Madras General Sales Tax Act, 1959 the dealer has no statutory duty to collect the sales tax payable by him from his customer, and when the dealer passes on to the customer the amount of tax which the former is liable to pay, the said amount does not cease to be the price for the goods although "the price is expressed as X plus purchase tax" (Paprica Ltd. & Anr.
vs Board of Trade But the amounts collected by the assessees concerned in these appeals under a statutory obligation cannot be a part of their taxable turnover under the Madras General Sales Tax Act, 1959.
" We do not find any substantial difference between section 21 A of the Madras Prohibition Act, 1937 and section 17(iii) (b) (1) of the Adhiniyam.
Whereas the levy under section 21 A of the Madras Prohibition Act, 1937 was sales tax payable to the State Government, under section 17(iii) (b) of the Adhiniyam, the levy in question is market fees payable to the Market Committee and secondly whereas the former provision stated that "every person or institution which sells foreign liquor. . shall collect from the purchaser and pay over to the Government. .", the latter provision states that "If the produce is sold through a commission agent, the commission agent may realize the market fees from the purchaser and shall be liable to pay the same to the Committee".
718 The levies in both the cases are statutory although under the Madras Prohibition Act, 1937, it is a tax payable to the Government and under the Adhiniyam, it is a fee payable to a Market Committee which is a statutory body.
The only distinguishing feature between the two laws is that whereas the Madras Act provides that every person who sells foreign liquor shall collect sales tax from the purchaser, the Adhiniyam provides that the commission agent may realize the market fees from the purchaser.
The use of 'shall ' in the former case and of 'may ' in the latter case is not of much consequence in so far as the question involved in the present case is concerned because in both the cases the seller or the commission agent who is liable to pay the tax or the fee, as the case may be, is entitled statutorily to realize it from the purchaser and wherever a dealer is authorised by law to do so, the tax or fee realized by him from the purchaser cannot be treated as part of the turnover for purposes of levy of sales tax.
The contention of the appellant that market fees payable under the Adhiniyam cannot be included in the turnover of purchases has, therefore, to be upheld.
There is, however, no substance in the third contention of the appellant that the commission (dami) payable by a purchaser to a commission agent operating within a market area established under the Adhiniyam cannot be treated as forming part of the turnover of purchases for two reasons (i) the commission paid by the purchaser is not any tax or fee payable to a Government or statutory body which is not a party to the contract of sale and (ii) the commission is actually the profit of the dealer who in this case happens to be a commission agent and should, therefore, necessarily be considered as consideration for the sale of goods.
The provisions contained in section 10 of the Adhiniyam and the Rules framed thereunder do not in any way affect the above conclusion reached by us.
Section 10 of the Adhiniyam merely provides that as from the date to be notified by the State Government in the Gazette, no person shall, in a Principal Market Yard or Sub Market Yard, levy, charge or realize, any trade charges other than those prescribed by rules or bye laws made under the Adhiniyam, in respect of any transaction of sale or purchase of the specified agricultural produce and no Court shall, in any suit or proceeding arising out of any such transaction, allow in any claim or counter claim, any trade charges not so prescribed.
It also provides that such charges shall be collected from the purchasers thereby barring the collection of such charges from the producers of agricultural produce who are ordinarily the sellers in a market area.
Sub rule 719 (1) of Rule 79 of the Rules framed under the Adhiniyam provides that as from the date notified by the State Government no person shall, in a Principal Market Yard or Sub Market Yard, levy, charge or realise, in respect of any transaction of sale or purchase of the specified agricultural produce any trade charges, other than those specified by the Market Committee under sub rule (2) thereof, and sub rule (2) of Rule 79 authorises the Market Committee to make bye laws prescribing the maximum commission that may be charged by a commission agent or a broker.
Sub rule (3) of Rule 79 reiterates that all trade charges shall be payable by the purchaser.
A combined reading of section 10 of the Adhiniyam, Rule 79 of the Rules made under the Adhiniyam and the bye laws made by the Market Committee shows that a commission agent cannot realize any commission higher than what is prescribed by law.
The commission chargeable by the commission agent is not a sum which he has in his turn to pay to an authority either by way of tax or by way of fee but is only a reward for the services rendered by him.
We, therefore, reject the above submission made on behalf of the appellant.
For the foregoing reasons, the appeal is allowed in part.
The inclusion of the market fees in the turnover of purchases of the assessee for purposes of levy of tax under the Act is set aside.
The assessing authority is directed to modify the order of assessment in accordance with this decision.
In the circumstances of the case, the parties shall bear their own costs.
N.V.K. Appeal allowed in part.

summary:
Section 3D of the U. P. Sales Tax Act, 1948 provides for the levy of a tax on the turnover of purchase of goods by a dealer.
Sub section (4) provides that on the issue of a notification under sub section (1), no tax shall be levied under any other section in respect of the goods included in the notification.
In 1971 section 3F was included in the Act providing for the levy of additional tax on certain dealers.
The section provides that every dealer liable to pay tax under section 3D (among others) whose total turnover exceeds rupees two lakhs would in addition to the said tax be liable to pay for that assessment year an additional tax at the rates specified therein subject to the other provisions of the section.
Section 10 of the U. P. Krishi Utpadan Adhiniyam, 1964 provides no levy or realisation of any trade charges other than those prescribed by rules or byelaws made under the Adhiniyam in respect of transactions of sale or purchase of specified agricultural produce.
Section 17(iii)(b) empowers the market committee to levy market fees and to utilize such market fees collected by it under that section for purposes of the Adhiniyam.
Before the amendment of the provision by U. P. Act No. 7 of 1978, it specifically provided that market fee payable on transactions of sale or purchase of specified agricultural produce in the market area should be paid by the purchaser.
After the amendment which was brought into force with retrospective effect from June 12, 1973, market fees payable on transactions of sale or purchase of agricultural produce within the market area can be realized by the Market Committee from the Commission agent who is authorized to realize the same from the purchaser by virtue of section 17(iii)(b)(1).
The rules and bye laws made under the Act also provide that a commission agent shall not realise any commission higher than that prescribed by law.
The Sales Tax Officer included the market fee and commission (dami) payable to the commission agent operating within a market area established under the U. P. Krishi Utpadan Mandi Adhiniyam, 1964 in the turnover of purchases 708 of the appellant for the purposes of levy of sales tax under section 3D of the U. P. Sales Tax Act, 1948: On appeal by the appellant the Assistant Commissioner (Judicial) Sales Tax upheld the order of the Sales Tax Officer.
In an earlier case the High Court upheld the inclusion of the market fee and the commission (dami) in the purchases turnover for the purposes of levy of sales tax and therefore, the appellant was granted special leave to appeal to this Court directly from the order of the Assistant Commissioner.
Before this Court, it was contended that (i) it was not open to the Assessing Authority to demand any additional tax under section 3F in view of the provisions contained in section 3D(4)(ii).
The market fee paid on transactions of sale or purchase of specified agricultural produce in the market area could not under the Adhiniyam, be included in the turnover of purchases for the purposes of levy of tax under the Sales Tax Act.
(iii) The commission (dami) payable by a purchaser of goods to the commission agent, being a trade charge could not also be included in the turnover of purchases.
^ HELD: 1.
There is no substance in the contention that additional tax levied under section 3F could not be levied in respect of turnover of purchases of goods notified under section 3D(1) of the Sales Tax Act.
Although, section 3D(4) says that in respect of turnover of purchases of goods notified under section 3D(1), no tax can be levied under any other provisions, section 3F introduced in 1971 provides, that every dealer liable to pay tax under section 3D whose total turnover of sales or of purchases, or of both in any assessment year exceeds rupees two lakhs would, in addition to the said tax, pay for that assessment year an additional tax at the rate specified therein.
[714F, B C].
Since section 3D is expressly mentioned in section 3F, this section overrides section 3D(4), and that additional tax can be collected even in respect of turnover of purchases of goods notified under section 3D(1) notwithstanding section 3D(4).
[714D].
It cannot be said that by enacting sub section 4 of section 3D the legislature has forfeited its power to levy any other tax under the Act on the goods notified under section 3D(1) for ever.
It is always open to the legislature to modify the effect of section 3D(4) by subsequent legislation.
[714E].
The contention of the appellant that market fee payable under the Adhiniyam cannot be included in the turnover of purchases must be upheld.
Where a dealer is authorised by law to pass on any tax payable by him on transaction of sale to the purchaser, such tax does not form part of the consideration for the purposes of levy of tax on sale or purchases but where there is no statutory provision authorising the dealers to pass on tax to the purchaser, such tax does form part of the consideration when he includes it in the price and realises the same from the purchaser.
The distinguishing factor between the two is the existence of a statutory provision authorising a dealer to recover the tax payable on the transaction of sale from the purchaser.
[718D, 716D E].
The use of the word, "may" in section 17(iii)(6)(1) providing that the commission agent may realise the market fee from the purchaser is not of much consequence.
The seller or the commission agent who is liable to pay the tax or the fee is entitled statutorily to realise it from the purchaser and wherever a dealer is authorised by law to do so, the tax or fee realised by him from the purchaser cannot be treated as part of the turnover for the purpose of levy of sales tax.
[718B C].
709 M/s. George Oakes (P) Ltd. vs State of Madras ; , Delhi Cloth and General Mills Co. Ltd. etc.
vs Commissioner of Sales Tax, Indore, [1971] Supp.
S.C.R. 945, Paprika Ltd. & Anr.
vs Board of Trade , Love vs Norman Wright (Builders) Ltd. referred to.
Joint Commercial Officer, Division 11, Madras 2 etc.
vs Spencer & Co. etc.
[1975] Supp.
S.C.R. 439 applied.
There is no force in the appellant 's contention that the commission (dami) payable by the purchaser on goods to the commission agent operating within a market area established under the Adhiniyam cannot be treated as forming part of the turnover of purchases because a conspectus of the provision of the Adhiniyam and rules made thereunder and the bye laws of Market Committee shows that a commission agent cannot realise any commission higher than what is prescribed by law.
The commission chargeable by the commission agent is not a sum which he has in his turn to pay to an authority either by way of tax or by way of fee but is only a reward for the services rendered by him.
[718E, 719 C D]