judgement:
15 of 1959, 14 of 1960 and 21 of 1959.
Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights.
Frank Anthony and J. B. Dadachanji, for the petitioners (In Petns.
Nos. 15 and 21 of 1959).
612 H. J. Umrigar, O. P. Rana and A. G. Ratnaparkhi, for the petitioners (In Petn.
No. 14 of 1960).
L. K. Jha and section P. Varma, for the respondent (In Petn.
No. 15 of 1959).
C. K. Daphtary, Solicitor General of India, M. Adhikari, Advocate General for the State of Madhya Pradesh and I. N. Shroff, for the respondent (In Petn.
No. 14 of 1960).
H. N. Sanyal, Additional Solicitor General of India and C. P. Lal, for the respondent (In Petn.
No. 21 of 1959).
November 23.
The Judgment of the Court was delivered by section K. DAS, J.
These three writ petitions have been heard together, as they raise common questions of law and fact.
They relate, however, to three different enactments made by the Legislatures of three different States Bihar in writ petition No. 15, Uttar Pradesh in writ petition No. 21, and Madhya Pradesh in writ petition No. 14.
The petitioners in the several petitions have challenged the 'validity of a number of provisions of the enactments in question and, in some cases, also of the rules made thereunder.
The impugned provisions are similar in nature, but are not exactly the same.
Therefore, we shall first state in general terms the case of the petitioners and then consider in detail and separately the impugned provisions in each case.
But before we do so, it is necessary to refer to some background history of the legislation under consideration in these cases.
In the year 1958 this Court had to consider the validity of certain provisions of three Acts: (1) The Bihar Preservation and Improvement of Animals Act, (Bihar Act II of 1956); (2) the Uttar Pradesh Prevention of Cow Slaughter Act, 1955 (U. P. Act 1 of 1956); and (3) the Central Provinces and Berar Animal Preservation Act, 1949 (C. P. and Berar Act LII of 1949).
The Bihar Act put a total ban on the slaughter of all 613 categories of animals of the species of bovine cattle.
The U. P. Act put a total ban on the slaughter of cows and her progeny which included bulls, bullocks, heifers and calves.
The C. P. and Berar Act placed a total ban on the slaughter of cows, male or female calves of cows, bulls, bullocks, and heifers, and the slaughter of buffaloes (male or female, adults or calves) was permitted only under a certificate granted by the proper authorities.
These three Acts were enacted in pursuance of the directive principle of State policy contained in article 48 of the Constitution.
The petitioners who challenged the various provisions of the aforesaid Acts in 1958 were engaged in the butcher 's trade and its subsidiary undertakings; they challenged the constitutional validity of the Acts on the ground that they infringed their fundamental rights under articles 14, 19(1)(f) and (g) of the Constitution.
In the decision which this Court gave in Mohd. Hanif Quareshi vs The State, of Bihar (1), it held (i) that a total ban on the slaughter of cows of all ages and calves of cows and of she buffaloes, male or female, was quite reasonable and valid; (ii) that a total ban on the slaughter of she buffaloes or breeding bulls, or working bullocks (cattle as well as buffaloes) so long as they were capable of being used as milch or draught cattle was also reasonable and valid; and (iii) that a total ban on slaughter of she buffaloes, bulls and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals was not in the interests of the general public and was invalid.
In the result this Court directed the respondent States not to enforce their respective Acts in so far as they were declared void by it.
This led to some amending or new legislation, and we are concerned in these three cases with the provisions of these amending or new Acts and the rules made thereunder.
In Bihar (Writ Petition No. 15 of 1959) the impugned Act is called the Bihar Preservation and Improvement of Animals (1) ; 78 614 (Amendment) Act, 1959 which received the assent of the Governor on January 13, 1959.
in Uttar Pradesh (Writ Petition No. 21 of 1959) the impugned Act is called the Uttar Pradesh Prevention of Cow Slaughter (Amendment) Act, 1958 and in Madhya Pradesh (Writ Petition No ' 14 of 1960) a new Act was passed called the Madhya Pradesh Agricultural Cattle Preservation Act, 1959 (Act 18 of 1959) which received the assent of the President on July 24, 1959 and came into force on January 15, 1960.
The rules made there under are called the Madhya Pradesh Agricultural Cattle Preservation Rules, 1959.
The general case of the petitioners, who are several in number in each of the three cases, is that they are citizens of India and carry on their profession and trade of butchers; they allege that the various provisions of the impugned legislation infringe their fundamental rights in that they, for all practical purposes, have put a total ban on the slaughter of she buffaloes, bulls or bullocks, even after such animals have ceased to be useful, and have virtually put an end to their profession and trade.
It is pointed out that the age up to which the animals referred to above cannot be slaughtered (20 or 25 years) has been put so high that the practical effect is that no animals can be slaughtered, and the amending or new legislation has put in other restrictions so arbitrary and unreasonable in nature that in effect they amount to a prohibition or destruction of the petitioner 's right to carry on their trade and profession.
The following allegations quoted from one of the petitions (Writ Petition No. 15 of 1959) give a general idea of the nature of the case which the petitioners have put forward: "That there is good professional authority for the view that even in countries where animal husbandry is organised on a highly progressive and scientific basis, cattle seldom live beyond 15 or 16 years.
That there is also good authority to the effect that even pedigree breeding bulls are usually discarded at the age of 12 or 14 years.
, That in India bulls and bullocks and she buffaloes rarely live even up to the age of 15 years; draught bullocks begin to age after eight years, 615 That the raising of the age limit from 15 to 20 years is arbitrary, unreasonable and against the general public interests and is repugnant to and infringes the, fundamental rights of the, petitioners under Article 19 (1)(f) and (g) of the Constitution.
That section 3 of the amending Act is a mala fide, colourable exercise of power, repugnant to the fundamental rights of the petitioners under Article 19 (1)(f) and (g).
That this arbitrary raising of the age limit will be against the public interests For the following among ' other reasons: (i) That there will, in fact, be no bulls or bullocks or she buffaloes available for slaughter as few, if any, of such animals survive in India up to the age of 15 years; (ii) that the profession, trade and occupation of millions of Muslims will be permanently and irreparably injured; (iii) that millions of members of the minority communities such as Christians, Scheduled Castes, Scheduled Tribes and Muslims, for whom cattle beef is a staple item of their diet, will be deprived of this diet; (iv) that the menace of the rapidly increasing uneconomic cattle population in such matters as the destruction of crops, being a public nuisance, will be accentuated by this arbitrary age limit, and in effect will ensure that bulls and bullocks cannot be slaughtered; (v) that the menace of the rapidly increasing population of uneconomic cattle to the fodder and other animal food resources of the country will be accentuated.
(vi) that the competition between the rapidly increasing cattle population, a large percentage I of which is uneconomic and useless, add the human population for available land will be accentuated; (vii) that this piece of legislation will ensure the steady increase of useless bulls and bullocks and must react disastrously against any attempt to improve milk production, bullock power or animal husbandry generally." 616 Similar allegations have been made in the other two petitions also.
The correctness of these allegations has been con.
tested on behalf of the respondent States, which through some of their officers have filed affidavits in reply.
We shall presently examine at greater length the averments made in these affidavits, but we may indicate here in broad outline what their general effect is.
In Bihar the age below which the slaughter of she buffaloes, bulls and bullocks is prohibited is 25 years.
The respondent State has taken the plea that the usefulness or longevity of live stock for breeding and other purposes depends to a very great extent on (a) better animal husbandry facilities like feeding and management and (b) control of animal diseases, and as these facilities are now available in a greater measure, the legislature came to the conclusion that a bull or bullock or a she buffalo below 25 years of age continues to remain useful; if a bull, bullock or shebuffalo is permanently incapacitated below that age the impugned provision permits its slaughter and therefore the legislation which is challenged conforms to the decision of this Court and does not violate any fundamental right.
In Uttar Pradesh the age is 20 years as respects bulls or bullocks, with a further restriction to be referred to later.
The reply of the res pondent State is that bulls or bullocks do not become unfit at the age of 12 or 14 years as alleged by the petitioners; on the contrary, they continue to be useful and at no time they become entirely useless.
It is then stated in the affidavit: "As a matter of fact, the age up to which the animals can live and are serviceable depends upon the care and attention they receive and the quality of the grass on which they are grazed. . . . . .According to a high authority the average age of an ox under favourable conditions would be between 15 to 20 years.
Even under conditions prevailing in Uttar Pradesh, bulls can live upto 20 years or more as would appear from an analysis of a survey report of the animal husbandry department.
" 617 On these averments the respondent State contends that the legislation is valid.
In Madhya Pradesh also the age is 20 years.
The Under Secretary to the( State Government in the Agricultural Department ' has made the reply affidavit in which it has been stated inter alia that conditions in Madhya Pradesh are different from conditions in other States.
The affidavit then states: "The State of Madhya Pradesh has a total area of 107,589,000 acres, out of which total cropped area is 43,572,000 acres.
Forest area is 33,443,000 acres, area not available for cultivation is 11,555,000 acres, uncultivated land is 18,405,000 acres and fallow land is 5,834,000 acres.
It will thus be seen that this State has a large forest area and plenty of grass land for pasturage.
As the forests supply the greater part of the fuel needs of the human population, the dung of animals is largely available as manure.
The legislature considered that bulls, bullocks and buffaloes are useful in this State till they are well past twenty years of age and that they should not be slaughtered till they are past that age and are also unfit for work or breeding.
The problem of animals dying of slow starvation or of worthless animals depriving useful animals of fodder needs no consideration in this State.
The agricultural community in the State benefits by the existence of animals as long as they are useful.
" There are also further averments as to the shortage of breeding bulls, working bullocks and she buffaloes in Madhya Pradesh.
On these averments the contention of the respondent State is that the cattle in that State are useful up to the age of 20 years.
We have indicated above in general terms the case of the petitioners and the reply which the respondent States have given.
We proceed now to a detailed consideration of the impugned legislation in each case.
(1) We take up first the Bihar Preservation and Improvement of Animals (Amendment) Act, 1959 and the rules made under the main Act of 1955.
Section 3 of the Act as amended reads: "section 3.

dataset_name: IN-Abs

summary:
In Mohd. Hanif Quareshi vs The State of Bihar the Supreme Court held that a total ban on the slaughter of bulls, bullocks and she buffaloes after they had ceased to be useful was not in the interests of the general public and was invalid.
Thereafter, the Bihar Legislature passed the Bihar Preservation and Improvement of Animals (Amendment) Act, 1958, the Uttar Pradesh Legislature passed the U. P. Prevention of Cow Slaughter (Amendment) Act, 1958 and the Madhya Pradesh Legislature passed a new Act, the M. P. Agricultural Cattle Preservation Act, 1959.
Section 3 of the Bihar Act prohibited the slaughter of a bull, bullock or she buffalo except when it was over 25 years of age and had become useless.
Rule 3 of the Bihar Preservation and Improvement of Animals Rules, 1960 prescribed that the certificate for slaughtering an animal could be granted only with the concurrence of the Veterinary Officer and the Chairman or Chief Officer of a District Board, Municipality etc., and if the two differed, then according to the decision of the Sub Divisional Animal Husbandary Officer.
Section 3 of the U. P. Act permitted the slaughter of a bull or bullock only if it was over 20 years of age and was permanently unfit.
It further provided that the animal could not be slaughtered within 20 days of the grant of 'a certificate that it was fit to be slaughtered and gave a right of appeal to any person aggrieved by the order granting the certificate.
Section 4(1)(b) of the Madhya Pradesh Act provided that no bull, bullock or buffallo could be slaughtered except upon a certificate issued by the competent authority and section 4(2)(a) provided that no certificate could be issued unless the animal was over 20 years of age and was unfit for work or breeding.
Section 4(3) gave a right of appeal to any person aggrieved by the order of the competent authority.
Section 5 provided that no animal 611 shall be slaughtered within 10 days of the date of the issue of the certificate and where an appeal was preferred against the grant of the certificate, till the time such appeal was disposed of.
The petitioners, who carried on the profession and trade of butchers, contended that the various provisions of the three Acts set out above infringed their fundamental rights by practically putting a total ban on the slaughter of bulls, bullocks and she buffaloes even after the animal had ceased to be useful and thus virtually put an end to their profession and trade.
Held, (i) that the ban on the slaughter of bulls, bullocks and she buffaloes below the age of 20 or 25 years was not a reasonable restriction in the interests of the general public and was void.
A bull, bullock or buffalo did not remain useful after 15 years, and whatever little use it may have then was greatly offset by the economic disadvantages of feeding and maintaining unserviceable cattle.
The additional condition that the animal must, apart from being above 20 or 25 years of age, also be unfit was a further unreasonable restriction.
Section 3 of the Bihar Act, section 3 of the U. P. Act and section 4(2)(a) of the M. P. Act were invalid.
(ii) Rule 3 of the Bihar Rules was bad as it imposed dis proportionate restrictions on the rights of the petitioners.
The procedure involved such expenditure of money and time as made the obtaining of the certificate not worthwhile.
(iii) The provisions in the Uttar Pradesh and Madhya Pradesh Acts providing that the animal shall not be slaughtered within 20 and10 days respectively of the issue of the certificate and that any person aggrieved by the order of the competent authority, may appeal against it, were likely to hold up the slaughter of the animal for a long time and practically put a total ban on slaughter of bulls, bullocks and buffaloes even after they had ceased to be useful.
These provisions imposed unreasonable restrictions on the fundamental rights of the petitioners and were void.
Mohd. Hanif Quareshi vs The State of Bihar, [1959] S.C.R. 629, State of Madras vs V. G. Row, ; and The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga, , referred to.


judgement:
Appeal No. 364 of 1957.
Appeal from the judgment and order dated February 22, 1956, of the former Bombay High Court in I.T.R. No. 31/1955.
N. A. Palkhivala and I. N. Shroff, for the Appellants.
A. N. Kripal and D. Gupta, for the Respondent. 1960.
November 22.
The Judgment of the Court was delivered by SHAH, J.
This is an appeal by seven appellants with leave granted by the High Court of Judicature at Bombay certifying that it involves a question of importance.
The appellants held 570 out of a total issue of 800 shares of the Navjivan Mills Ltd., Kalol, a public limited company hereinafter referred to as the Mills.
Between the years 1943 47, the Mills purchased 5,000 shares of the Bank of India Ltd. At an extraordinary general meeting of the shareholders of the Bank of India held on May 6, 1948, a resolution was passed increasing the share capital of the Bank and for that purpose offering new shares to the existing shareholders in the proportion of one new share for every three shares held by the shareholders.
The face value of the new shares was to be Rs. 50, but the shares were issued at a premium of Rs. 50.
The shareholders had to pay Rs. 100 for each new share.
The Mills as the holder of 5,000 shares became entitled to receive 1,6662 shares of the Bank of India at the rate of Rs. 100 per share.
The Bank of India communicated its resolution by letter dated May 25, 1948 and enclosed therewith three forms, form A for acceptance, form 586 B for renunciation and 'form C which may compendiously be called a form for allotment to nominees.
On receiving the circular letter, the Directors of the Mills passed the following resolution: "Resolved that the company having a holding of 5,000 ordinary shares in the capital of the Bank of India Ltd. having now received an intimation from the said Bank that this company is entitled to get 1,6662 more ordinary shares on payment of Rs. 50 as capital and Rs. 50 as premium per each share and it is considered proper to invest in the said issue of the said Bank the funds of this company to the extent of 66 shares only and to distribute the right of this company to the remaining 1,600 shares of the said issue amongst the shareholders of this company in the proportion of the shares held by them in this company.
IT IS HEREBY RESOLVED that the funds of this company may be invested in the 66 shares out of 1,666 shares offered by 'the Bank of India Ltd., and the right to the remaining 1,600 shares is hereby distributed among 800 shares of this company in the proportion of right to two shares of the Bank per one ordinary share held in this company.
The Managing Agents may take steps to intimate the shareholders to exercise the right if they like to do so.
" Accordingly, the Mills exercised the right to take over only 66 shares out of the shares offered and resolved that the right to the remaining 1,600 shares be distributed amongst its 800 share holders.
The seven appellants as holders of 570 shares of the Mills became entitled to 1,140 shares of the Bank of India.
The appellants agreed to the allotment of these shares and ultimately transferred them to a private company Jesinghbai Investment Co. ' Ltd. The assessment of the seven appellants and of other shareholders of the Mills was reopened under section 34(1)(a) of the Indian Income Tax Act by the Income Tax Officer on the footing that, the release by the Mills of the shares of the Bank of India amounted to a distribution of "dividend" and the value of the right released in favour of the shareholders though taxable 587 under section 12 of the Act, had escaped tax.
The order of the Income Tax Officer reassessing the income of the seven appellants was confirmed in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal.
At the instance of the appellants, the i following question was submitted by the Tribunal to the High Court at Bombay under section 66(1) of the Income Tax Act: "Whether on the facts and circumstances of the case the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend" within the meaning of section 2(6A) of the Indian Income Tax Act.
" The High Court reframed the question as follows: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd., in favour of the assessees amounted to a distribution of "dividend"?" and answered it in the affirmative.
The High Court observed that the definition of "dividend" in section 2(6A) was an inclusive and not an exhaustive definition, and even if the distribution of the right to the shares of the Bank of India could not be regarded as dividend within the extended meaning of that expression in section 2(6A), it was still dividend within the ordinary meaning of that expression and was taxable as income in the hands of the appellants.
Counsel for the appellants contended that the High Court was not justified, having regard to the form of the question which expressly related to the distribution of the right to the Bank of India shares being dividend within the meaning of the definition in section 2(6A) of the Income Tax Act, in enlarging the scope of the question and in answering it in the light of its ordinary meaning.
There is no substance in this contention.
"Dividend" is defined in section 2(6A) as inclusive of various items and exclusive of certain others which it is not necessary to set out for the purpose of this appeal.
"Dividend" in its ordinary meaning is a 588 distributive share of the profits or income of a company given to its shareholders.
When the Legislature by section 2(6A) sought to define the expression "dividend" it added to the normal meaning of the expression several other categories of receipts which may not otherwise be included therein.
By the definition in section 2(6A), "dividend" means dividend as normally understood and includes in its connotation several other receipts set out in the definition.
The Tribunal had referred the question whether the distribution of the right to apply for the Bank of India shares amounted to distribution of dividend within the meaning of section 2(6A) and in answering that question, the High Court had to take into account both the normal and the extended meaning of that expression.
In the question framed by the Tribunal, there is nothing to indicate that the High Court was called upon to advise on the question whether the receipts by the appellants amounted to dividend only within the extended definition of that expression in section 2(6A).
It was also urged that in nominating its shareholders to exercise the option to purchase the new issue of the Bank of India, the Mills did not distribute any dividend.
The Mills were, it is true, not obliged to accept the offer made by the Bank of India, however advantageous it might have been to the Mills to accept the offer: it was open to the Mills to renounce the offer.
The Mills had three options, (1) to accept the shares, (2) to decline to accept the shares, or (3) to surrender them in favour of its nominee.
It is undisputed that when the shares were offered by the Bank of India to its shareholders, the right to apply for the shares had a market value of Rs. 100 per share.
The face value of the new share was Rs. 50 but the shareholders had to pay a premium of Rs. 50, thus making a total payment of Rs. 100 for acquiring the new share.
The new shares were quoted in the market at more than Rs. 200: and the difference between the amount payable for acquiring the shares under the right offered by the Bank of India and the market quotation of the shares was indisputably the value of the right.
The Mills could not be compelled to obtain 589 this benefit if it did not desire to do so: it could accept the shares or decline to accept those shares or exercise the option of surrendering them in favour of its nominees.
This last option could be exercised by nominating the persons who were to take over the shares and that is what the Mills did.
The Mills requested the Bank of India to allot the shares to its nominees, and the request for allotment to its nominees amounted to transfer of the right.
By its resolution, the Mills in truth transferred a right of the value of Rs. 200 for each share held by its shareholders.
This was manifestly not distribution of the capital of the Mills.
It was open to the Mills to sell the right to the shares of the Bank of India in the market, and to distribute the proceeds among the shareholders.
Such a distribution would undoubtedly have been distribution of dividend.
If instead of selling the right in the market and then distributing the proceeds, the Mills directly transferred the right, the benefit in the hands of the shareholders was still dividend.
Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value.
The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend.
It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value.
But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered.
We are therefore of the view that the High Court was right in holding that the distribution of the right to apply for and obtain two shares of the Bank of India (at half their market value) for each share held by the shareholders of the Mills amounted to distribution of dividend.
The appeal fails and is dismissed with costs.
Appeal dismissed.

summary:
The appellants were shareholders of a company known as Navjivan Mills Ltd. which held a large number of shares of the Bank of India.
The Bank with the object of increasing their share capital offered some more shares to the Mills for a price including premium which was about half the market value.
The Mills purchased a small number of the shares so offered with their own funds and distributed their right to acquire the remaining shares to their shareholders in the proportion of two shares of the Bank for one share held by them.
The assessment of the appellant was reopened by the Income Tax Officer under section 34(1)(a) of the Income tax Act on the footing that the release of the right to the shares of the Bank of India amounted to distribution of dividend.
Appeals against the order of the Income Tax Officer having failed, the High Court at the instance of the appellants framed the following question: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend"? 585 The High Court answered the question in the affirmative.
On appeal with a certificate of the High Court, Held, that the view taken by the High Court was correct.
The distribution to the shareholders of the Mills of the right to obtain two shares of the Bank of India for each share held by them at half the market value amounted to distribution of "dividend" which was liable to be taxed.


judgement:
Appeals Nos. 321 and 322 of 1956.
Appeals by special leave from the judgment and decree dated September 21.
1951, of the Mysore High Court in Regular Appeals Nos.
3,24,13 and 25 of 1948.
49, arising gut of the judgment and decree dated 85 664 January 9, 1948, of the Principal DistriCt Judge, Bangalore, in Original Suits Nos.
55 of 1946 47 and 117 of 1945 46 respectively.
section K. Venkataranga Aiyangar and section K. Aiyangar, for the appellant.
B. K. B. Naidu, for the respondents.
February 1.
The Judgment of the Court was delivered by SHAH, J.
V. R. Subramanyam, the appellant herein is the owner of plot No. 29, Subedar Chattram Road in the town of Bangalore.
B. Thayappa respondent is a building contractor.
The appellant entrusted the respondent with the work of constructing a house and shops on the plot, on terms and conditions set out in a written agreement dated October 1, 1942, which was slightly modified on October 6, 1942.
By the agreement the respondent was to construct for the appellant on the plot six shops abutting a public road, the main building at the rear of the shops, an out house and a garage according to a site plan.
The respondent was to be remunerated at rates specified in the agreement: for constructions with R. C. C. roofing, the rate stipulated was Rs. 4 2 0 per square foot and for " tiled construction " it was Rs. 3 2 0 per square foot.
The Municipality of Bangalore did not sanction the plan as proposed by the appellant.
The plan was altered and it was sanctioned, subject to those alterations.
By the alterations the shops were deleted from the plan, the area of the out house was increased, and a puja room on the ground floor and an extra room on the first floor were added to the plan.
A compound wall was also to be constructed.
The respondent carried out a substantial part of the construction work according to plan and the appellant paid to him diverse sums of money and delivered building materials.
The aggregate amount accordingly received by the respondent was Rs. 20,200.
But before the work could be completed disputes arose between the appellant and the respondent about the work done by the latter.
The appellant claimed that the work done was defective and that he was entitled to compensation for effecting 665 repairs necessary to rectify the defects.
The respondent claimed compensation at certain rates set up by him for work done for the appellant for which no express provision was made in the written agreement.
Each party set up an oral agreement about the remuneration to be paid to the respondent for the extra work which was not included in the original agreement.
The appellant filed a suit in the court of the Subordinate Judge, Bangalore, against the respondent which was later transferred to the court of the Principal District Judge, Bangalore, and numbered O. section 54 of 1946 47, for a decree for Rs. 8,515 4 0 being the amount of compensation which the appellant claimed he was entitled to receive from the respondent for defective work and for delay in completion of the construction.
The respondent filed a suit against the appellant which was later transferred to the Court of the Principal District Judge, Bangalore, and numbered 55 of 1946 47.
By this suit, the respondent claimed a decree for Rs. 5,988 12 0 being the remuneration due to him for the work done in constructing the house less Rs. 20,200 received from the appellant.
The respondent filed another suit No. 117 of 1945 46 for a decree for Rs. 15,001 10 9 with interest and notice charges being the amount due to him for the construction of the out house, godown, first floor room and flight of steps and the value of some building materials which the respondent claimed he had left in the premises of the appellant and which the latter had wrongfully removed.
The trial court granted to the appellant a decree for Rs. 3,000 in suit No. 54 of 1946 47.
To the respondent, he granted a decree for Rs. 2,989 6 0 in suit No. 55 of 1946 47 and in suit No. 117 of 1945 46, he granted a decree for Rs. 13,329 10 9.
Both the parties felt themselves aggrieved by the decrees passed in the three suits and six appeals were preferred to the High Court of Judicature of Mysore at Bangalore against those decrees.
The High Court reversed the decree passed in suit No. 54 of 1946 47 and dismissed the appellant 's claim in its entirety.
The decrees 666 passed in suit Nos.
55 of 1946 47 and 117 of 1945 46 were also set aside and proceedings were remanded to the District Court with a direction that a qualified engineer be appointed as Commissioner to determine the amounts payable to the respondent for work done in addition to the work agreed to be done under the written contract.
The High Court ordered that the same be determined " in accordance with the directions " given in the judgment.
The appellant has appealed to this court against the decrees in suits Nos.
55 of 1946 47 and 117 of 1945 46 with special leave under article 136 of the Constitution and he challenges the directions given in the order of remand.
The dispute between the parties related to the construction of the out house, garage, puja room, the room on the first floor, the stair case 'leading to the upper floor room and the compound wall.
In respect of these constructions (except for the compound wall) the District Judge awarded compensation to the respondents at the rate of Rs. 4 2 0 per square foot and in respect of the compound wall he awarded compensation at the rate of Rs. 5 per running foot, and certain additional charges.
The High Court held that the respondent was entitled to receive compensation at the prevailing market rate for constructions which were not covered by the agreements dated October 1, 1942 and October 6, 1942.
The High Court negatived the plea of the respondent that the appellant had agreed to pay him at " extra rates for deviations and additions not specifically contained in the original agreement.
" The High Court then held that for the construction of the out house,puja room and the upper floor room, the respondent was entitled to receive compensation at the rate of Rs. 4 2 0 and for the out house he was entitled to receive " some extra amount for the additional constructions. " In these items, according to the High Court, there was no material deviation from the original plan.
The High Court further directed that for the flight of stairs compensation be paid either "by way of a lump sum or on cubical content whichever was more practicable or common according to the rates which they proposed to indicate for such 667 additional work. " The High Court however held that there was substantial variation from the original contract in the construction of the garage, and therefore the garage could " not be covered by the contracted rate" and must be paid for at the rates current at the end of the year 1943.
The High Court also directed that " if the extra items not covered by Exs.
VII and VII(a) have been constructed or supplied by the defendants as claimed in his bills Exs.
XXI, XXII and XXIII are to be paid for in addition to the flat rate, the basis on which they should be paid for may. . be fixed in accordance with the rates contained in exhibit II.
" Counsel for the appellant submitted that as in the view of the High Court the respondent failed to prove the oral agreement pleaded by him, the suit should have been dismissed, and they should not have awarded compensation quantum meruit which was not claimed.
it was urged that the respondent must succeed or fail ' on the case pleaded by him, and not on a cause of action not pleaded.
In our view, there is no substance in this contention.
As we have already observed, in respect of the additional work done by the respondent, both the parties set up conflicting oral agreements.
These were not accepted by the High Court.
If a party to a contract has rendered service to the other not intending to do so gratuitously and the other person has obtained some benefit, the former is entitled :to compensation for the value of the services rendered by him ' Evidently, the respondent made additional constructions to the building and they were not done gratuitously.
He was therefore entitled to receive compensation for the work done which was not covered by the agreement.
The respondent claimed under an oral agreement compensation at prevailing market rates for work done by him: even if he failed to prove an express agreement in that behalf, the court may still award him compensation under section 70 of the Contract Act.
By awarding a decree for compensation under the Statute and not under the oral contract pleaded, there was in the circumstances of this case no 668 substantial departure from the claim made by the respondent.
It was then urged that the High Court was in error in directing assessment of compensation for the additional work " in accordance with the rates mentioned in exhibit II.
" The plaintiff 's witness T. section Narayana Rao had admitted that the rates in exhibit II were the current market rates for building construction work similar to the appellant 's building.
In the view of the High Court, the rates set out in that bill were not excessive.
If with a view to restrict the scope of the enquiry, the learned judges of the High Court gave a direction to the Commissioner for assessing compensation on the basis of rates which were approved by the plaintiff 's witness, it cannot be said that any serious error was committed in incorporating that direction which would justify our interference.
Finally it was urged that the appellant was entitled to claim the loss suffered by him on account of defective work by way of an equitable set off in the claim made by the respondent in suits Nos.
55 of 1946 47 and 117 of 1945 46.
But the appellant made a claim in a substantive suit for compensation for loss suffered by him because of the alleged defective work done by the respondent.
That suit was dismissed by the High Court and it is not open to the appellant thereafter to seek to reagitate the same question in the companion suits when no appeal has been preferred against the decree in suit No. 54 of 1946 47. and no plea of equitable set off has been raised in the written statements in the companion suits.
In our view, there is no substance in any of the contentions raised.
The appeals therefore fail and are dismissed with costs.
One hearing fee.
Appeals dismissed.

summary:
The appellant entered into an agreement with the respondent who was a building contractor entrusting him with the work of constructing a house and shops.
The respondent undertook the work but before it could be completed disputes arose between them and the appellant claimed compensation for effecting repairs to rectify defective work done by the respondent, and the respondent claimed compensation at certain rates set up by him for work for which there was no express provision in the written agreement.
Suits based on their respective claims were filed by the appellant and the respondent which were partly decreed by the trial court.
The High Court dismissed the appellant 's suit in its.
entirety and remanded the respondent 's suit directing the appointment of a qualified engineer for determining, according to the directions given in the judgment, the amount payable to the respondent for work done in addition to the agreed work under the contract.
The appellant contended that the respondent having failed to prove the oral agreement pleaded the respondents ' suit should have been dismissed and compensation quantum meruit which was not claimed should not have been awarded.
Held, that if a party to a contract rendered service to the other not intending to do so gratuitously and the other party had obtained some benefit, the former was entitled to compensation for the value of the services rendered by him.
The respondent not intending to do gratuitous work was entitled to compensation for additional work not covered by the written agreement.
Even if the respondent failed to prove his claim for compensation at the prevailing market rate under an oral agreement the court had jurisdiction to award compensation for work done under section 70 of the Contract Act.
The appellant 's suit having been dismissed by the High Court and no appeal having been preferred against it, it was not open to him to reagitate the same question of compensation in the companion suits in which no equitable set off was claimed.


judgement:
Appeals Nos.
396 to 398 and 419 to 421 of 1959, and 152 of 1960.
Appeals by special leave from the judgment and order dated November 5, 1958, of the Punjab High Court in First Appeals from Orders Nos.
42 to 44, 60 to 62 and 55 of 1955 respectively.
M. C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants (in C. As.
396 to 398 of 59) and Respondent No. 2 (in C. As.
419 to 421 of 59 and 152 of 60).
A. V. Viswanatha Sastri and G. C. Mathur, for the appellant (In C. As.
419 to 421 of 59), Respondent No. 1 (In C. As.
396 to 398 of 59) and Respondent No. 3 (In C. A. No. 152 of 60).
G. C. Mathur, for the appellant (In C. A. No. 1.52 of 60).
Gopal Singh and D. Gupta, for Respondent No. 2 (In C. As.
396 to 398 of 59) and Respondent No. 1 (In C. As.
419 of 59 and 152 of 60).
February 2.
The Judgment of the Court was delivered by 679 GAJEMDRAGADKAR, J.
This is a group of seven appeals all of which arise from the same land acquisition proceedings in respect of which the Punjab Government originally issued a notification under section 4 of the Land Acquisition Act, 1894, on March 23, 1948.
By this notification the State Government declared its intention to acquire land in the Ambala District for the construction of the new Capital for East Pun ab.
No action was, however, taken in pursuance of this notification.
Meanwhile the Punjab Legislature passed the East Punjab Requisition of Immovable Property (Temporary Powers) Act, 48 of 1948.
Under the provisions of this Act the Government requisitioned the land in question for the purpose of resettling the persons who were likely to be evicted from their fands as a result of the construction of the new Capital.
The said land was actually acquired on May 20,1951.
This land forms part of a Jagir known as "Singh Purian " and comprises the areas of villages Mataur, Dhirpur, Saneta and Giddarpur in the District of Ambala.
It appears that these villages originally formed part of the area covered by the Cls Sutlej States.
section Amrao Singh was entered as owner of the land thus acquired.
His wife is Sardarani Gurdial Kaur and his son is Satinder Singh.
The estate of Amrao Singh was at the relevant time being managed by the Court of Wards.
Pursuant to the provisions of the Act compensation was assessed by the estate officer and was accordingly offered by the State Government to the Court of Wards.
The Court of Wards agreed to the amount of compensation thus offered and Amrao Singh himself did not object to it.
Satinder Singh, however, was not willing to accept the said compensation and he raised several objections contending that it was wholly inadequate.
He also objected to the compensation being paid either to the Court of Wards or to his father Amrao Singh, and in support of this contention he urged that since the estate once formed part of Cis Sutlej States, Amrao Singh was entitled only to its usufruct for his life and had no right to alienate or otherwise deal with its corpus.
Satinder Singh 's plea was that after the 87 680 amount of compensation was finally determined it should be deposited in Government Securities or alternatively a part of it should be paid to him as compensation for the land of his reversionary rights.
This plea applied to the three villages of Mataur, Saneta and Giddarpur.
In regard to the village of Dhirpur, Amrao Singh 's wife Sardarani Gurdial Kaur claimed that she was in possession of the said village as it was charged for the payment of her maintenance by a compromise decree passed in her favour and against her husband Amrao Singh.
She therefore claimed for herself the entire amount of compensation.
Thus the contest about the apportionment of the compensation amount took a triangular form.
At this stage it would be convenient to refer to the relevant provisions of the statute under which the present proceedings have been taken.
In 1948 the relevant Punjab statute was East Punjab Act, 48 of 1948.
Section 2 of the said Act deals with the requisitioning of property, and section 3 empowers the State Government to acquire requisitioned properties.
Section 5 prescribes the principles according to which compensation had to be paid in regard to acquired properties.
Section 5(e) provides that the arbitrator, in making his award, shall have regard to the provisions of sub section
(1) of section 23 of the Land Acquisition Act, 1894 (1 of 1894) so far as the same can be made applicable.
This Act was followed by the Punjab Requisitioning of Immovable Property (Amendment and Validation) Act, 1951 (President 's Act No. 2 of 1951).
By section 5 of this Act section 5 of the earlier Act was amended, inter alia, by adding one provision.
This provision provides that where any property is acquired in connection with the new Capital of the State of Punjab compensation may be paid whether by agreement or by award of the arbitrator, either in money or in kind or partly in money and partly in kind, and where there is no person competent to alienate the property, or there is a person with limited interest in such property, or there is any dispute as to the persons entitled to receive the compensation or as to the apportionment thereof, the arbitrator shall make an award in such a manner or 681 make an arrangement in such a way as may be equitable having regard to.
the interests of the persons concerned; in other words, the principle of equitable apportionment which had been recognised by section 32 of the Land Acquisition Act of 1894 has in effect been added by this amending Act.
In 1953 the Punjab Requisitioning and Acquisition of Immovable Property Act, 1953 (XI of 1953), came into force.
Section 24 of this Act repeals the two earlier Acts of 1948 and 1951, and after this Act came into force it was the provisions of this Act that governed the proceedings relating to the requisitioning, and acquisition of immovable properties in Punjab.
The equitable principle which was inserted in the Act of 1948 by the amending Act of 1951 has been retained in the present Act under section 8 (3).
Section 23 (1) of this Act validates requisitions and acquisitions of properties there specified, while sub section
(2) of the said section provides, inter alia, that acquisition of immovable property purporting to have been made before the commencement of this Act shall be deemed for all purposes to have been validly made as if the provisions of the said enactment or order had been included and enacted in this section, and this section had beenin force on and from the date of the acquisition.
It has been held by a Full Bench of the Punjab High Court in Colonel His Highness Raja Sir Harindar Singh Brar Bans Bahadur, Ruler, Faridkot State vs The State of Punjab (1) that compensation for property acquired under the Land Acquisition Act, 1894 or under the Punjab Act of 1948 must be paid in accordance with the principles set out in those Acts and not in accordance with the principles set out in the later Act of 1953.
This position is not disputed by either party in the present proceedings.
Thus it is common ground that for determining the amount of compensation and its apportionment amongst the rival claimants the provisions of the relevant Act of 1948 are applicable though the proceedings were held under the relevant provisions of the later Act of 1953.
In fact, the appointment of the arbitrator who conducted the proceedings (1) 682 in the present case was made by the State Government under section 8(1)(b) of the Act of 1953.
We have already noticed that the provisions of section 8 (3) of this Act were included by an amendment in the earlier Act of 1948 by the amending Act of 1951.
Before the arbitrator the acquisition proceedings were dealt with in four different cases, each one being related to the lands in one of the four villages in question.
On the contentions raised by the parties the arbitrator first considered two preliminary issues.
They were: (1) Is Satinder Singh competent to object to the amount of compensation awarded in the case, and (2) Is the appointment of the arbitrator invalid on account of the agreement between the State and the Court of Wards about the amount of compensation payable by the State to the Court of Wards.
It appears that Amrao Singh contended that his son Satinder Singh had no locus standi in the matter, and that since he and the Court of Wards had agreed to the amount of compensation offered by the State the arbitrator had no jurisdiction to hold any enquiry on the claim put forward by Satinder Singh.
The arbitrator, however, rejected Amrao Singh 's pleas, and held that he was entitled and bound to hold the proceedings and to consider the merits of the pleas raised by Satinder Singh.
The arbitrator then proceeded to examine the merits of the rival contentions.
He found that the property in suit was a part of Cis Sutlej States and so Amrao Singh had only a limited interest in it and had no right to alienate it.
As a result of this conclusion the arbitrator held that Satinder Singh, who was the next heir, was entitled to contest the amount of compensation and was also entitled to claim a share in the distribution of the amount.
In regard to Dhirpur land he held that Sardarani Gurdial Kaur was entitled to retain the possession of the village for her maintenance under a compromise decree and that both Amrao Singh and Satinder Singh were bound by the said decree.
In the result the arbitrator determined the amount of compensation and directed that the entire amount of compensation in regard to Dhirpur 683 should be invested in Government Securities in the name of the holder of Manauli Estate with a charge in favour of Gurdial Kaur which would entitle her to its annual profits in lieu of maintenance.
He also directed that on the death of Gurdial Kaur the amount should be divided half and half between the then holder of the Estate and the next heir or heirs taken together.
In regard to the lands in the three other villages the arbitrator directed that the amount of compensation determined by him should be paid in cash, 3/4ths to Amrao Singh and 1/4th to the next sole heir Satinder Singh.
The amount originally offered by the Government and ultimately awarded by the arbitrator were as follows: Village Govt.
Offer Award Mataur (Plus Rs. 93,309.00 Rs. 1,82,813.00 15% acquisi tion charges) Saneta Rs. 42,179.00 Rs. 55,377.00 Giddarpur Rs. 15,726.00 Rs. 27,640.00 Dhirpur Rs. 1,17,912.00Rs.
2,27,860.00 It would thus be seen that the contest made by Satinder Singh in respect of the amount of compensation originally offered by the Government substantially succeeded inasmuch as the total amount offered was increased by the arbitrator by Rs. 2,24,564/ .
The order thus passed by the arbitrator was recorded by him in the four cases tried before him in respect of the four villages.
These orders became the subject matter of several appeals in the Punjab High Court.
The State of Punjab preferred four appeals 67 to 70 of 1955; Satinder Singh preferred three appeals 42 to 44 of 1955; Amrao Singh preferred four appeals 59 to 62 of 1955; and Sardarani Gurdial Kaur preferred Appeal No. 55 of 1955.
In its appeal the State urged before the High Court that Satinder Singh was not competent to object to the compensation offered by the State and so the proceedings held before the arbitrator were invalid.
It was also urged alternatively that Amrao Singh and Sardarani Gurdial Kaur were not entitled to compensation at the higher rates directed by the arbitrator, and that the benefit 684 of the award should be available only to Satinder Singh, and it was contended that the amount of compensation fixed by the arbitrator was excessive.
All these contentions have been rejected by the High Court and the appeals preferred by the State have been dismissed.
The State has not challenged the correctness of the decision of the High Court, and so we are not concerned in the present appeals with the merits of the pleas raised by the State before the High Court.
In the appeals preferred by Satinder Singh the High Court rejected his plea that the valuation fixed by the arbitrator in respect of certain properties was inadequate.
It also rejected his plea that the amount of compensation ordered to be divided between him and his father Amrao Singh should be deposited in Government Securities.
The High Court held that though equitable considerations would be relevant in deciding the question of apportionment, it would be inexpedient to direct that the amount should be deposited in Government Securities because in that case no one will ever be absolutely entitled to it.
The High Court also thought that since the State in whose favour the estate may finally lapse owing to escheat did not object to the apportionment made by the arbitrator there was no reason to interfere with the actual order.
as to apportionment between father and son which the arbitrator thought was reasonable.
In dealing with this question the High Court took the view that the alleged reckless extravagance of the father on which the son relied was not relevant.
In the result the three appeals filed by Satinder Singh were dismissed.
The High Court then dealt with the appeal preferred by Amrao Singh, and it confirmed the finding of the arbitrator that the property acquired originally formed part of Cis Sutlej States and that in regard to the said States the rule is now well settled that the Jagirs large or small in Cis Sutlej States are non transferable and are even exempt from attachment as political pensions, the holder for the time being having only life interest in the estate, the corpus of which is to be 685 kept intact so that it may pass from heir to heir and lapse in favour of the Government in the absence of any legal heir.
The High Court also held that even if the character of the property was considered from the angle of the general custom of Punjab the same conclusion followed because the property in question was undoubtedly ancestral immovable property in the hands of the father qua his son and as such the father had no right to alienate it to the prejudice of his son without legal necessity or any other compelling reason.
That is how the principal point urged by the father against the claim set up by his son was rejected and his appeals were dismissed.
The appeal preferred by Sardarani Gurdial Kaur also met the same fate and was dismissed.
It appears that all the three claimants urged before the High Court that they were entitled to interest at a reasonable rate on the amount of compensation from the time that the property was acquired and they lost possession of it.
This contention was likewise rejected by the High Court, and it was held that under the relevant Act of 1948, it was not permissible to award interest on the amount of compensation, The result was that the decision of the arbitrator was fully confirmed and all the appeals preferred before the High Court were dismissed.
This decision of the High Court is challenged by special leave by the three claimants Amrao Singh, Satinder Singh and Sardarani Gurdial Kaur respectively.
The appeals preferred by Satinder Singh are Civil Appeals Nos. 396 to 398 of 1959; Amrao Singh 's appeals are Civil Appeals Nos. 419 to 421 of 1959, whereas Sardarani Gurdial Kaur 's appeal is Civil Appeal No. 152 of 1960.
That is how this group of seven appeals arises from the same land acquisition proceedings taken by the State of Punjab in respect of the lands situated in the four villages already mentioned.
We would hereafter refer to Satinder Singh as the appellant, Amrao Singh as respondent 1, the State of Punjab as respondents, and Sardarani Gurdial Kaur as Sardarani.
Logically then the first point which we must consider is the nature of the property and the title of 686 respondent 1 in relation to it.
That is the principal point which Mr. Viswanatha Sastri sought to raise before us in the appeal filed by respondent 1.
This question has been considered both by the arbitrator and the High Court elaborately and they have concurred in making a finding against respondent 1.
As the judgment of the High Court points out the fact that the lands in question originally formed part of the domain of section Budh Singh or of the Cis Sutlej States was not seriously disputed before the High Court.
This implied concession naturally makes Mr. Sastri 's task very difficult.
Besides, we are not satisfied that there is any substance in the plea which Mr. Sastri has raised before us on this point.
The history of the property has been considered by the arbitrator, and the arbitrator as well as the High Court have placed considerable reliance on the relevant statements made in the Punjab Land Administration Manual compiled by Sir James Mac.
Douie and revised in 1931.
Reliance has also been placed on the relevant statements in the compilation known as the " Chiefs and Families of Note in the Punjab " published by the Punjab Government in 1940.
The pedigree table of the Singh Purian family given in this publication shows that the family was founded by section Kapur Singh who held the title of Nawab.
section Budh Singh was his grandson and he was the head of the family in 1809.
Amrao Singh is a descendant of Gopal Singh who was one of the seven sons of Budh Singh.
The large Jagirs owned by the families are situated in Kharar and Rupar Tehsils of Ambala District and they formed part of the area formerly known as Cis Sutlej States.
Paragraphs 100, 101 and 102 of Douie 's Land Administration Manual give a detailed account of the families and the in properties.
The same is also briefly mentioned in the Punjab Gazetteer dealing with Ambala, District.
It appears from this material that the Sardars in the Cis Sutlej States were independent Rulers whose ancestors ultimately came under the protection of the British Government in about 1809.
Between 1809 to 1847 the British Government tried to enforce good 687 government amongst the semi independent States; in order to achieve this object the British Government gradually strengthened its hold and tightened the reins with a view to enforce good government.
It appears that the Government exercised the right of escheat very freely and whenever there was lapse of heirs it G. took up the management and government of the area in its own hands.
After 1846 Government began to introduce sweeping measures of reform and with that object Government reduced the privileges and rights of the petty chieftains.
In 1849 the chieftains lost their sovereign powers and were deprived of their criminal, civil and fiscal jurisdiction so that they became no more than Jagirdars.
Their rights in the lands held by them were, however, left untouched.
Rules regarding succession to these Jagirs were framed by the Central Government from time to time and family custom was respected within reasonable limits.
One of these rules is to be found in paragraph III of Douie 's Manual.
Clause (c) of this paragraph laid down " that alienations by a Jagirdar or pattidar of portions of his holding, whether to his relations or strangers, shall neither be officially recognised nor officially recorded.
" Similarly paragraph 164 emphasised the inalienable character of the Jagirs and referred to the opinion expressed by the Court of Directors whereby the said character was clearly and unambiguously notified.
" We should have supposed ", said the Court of Directors, " that there could be no necessity for notifying this as a rule, since it follows from the very nature of a Jagir, which cannot be alienated and can only be attached for the life of the holder.
" There is thus no doubt that the statements in the authorised publications to which we have just referred and on which the High Court and the arbitrator have relied conclusively show that the holder of property which was a part of Cis Sutlej States did not own the property absolutely but held it as a limited owner.
The Kaiflat Taluka of Singh Purian family which has been produced in these proceedings supports the same conclusion.
688 Mr. Sastri, however, wanted to contend that the evidence on the record was insufficient to justify the conclusion that the lands under acquisition formed part of the original estate of section Budh Singh; but he fairly conceded that respondent 1 had not gone into the witness box and had not purported to justify his plea that any of the lands in dispute have been acquired either by him or by his ancestors in such manner that they could be treated as the absolute properties of the holder.
The circular issued by the Office of the Commissioner and Superintendent of Cis Sutlej States on February 26, 1857, unambiguously shows that " all proprietary right to any part of the lands forming a part of the Jagir which may be held by the Jagirdar will be considered as pertaining to the Jagir and will go to the holder of the Jagir for the time being." This principle was applicable even to houses and other buildings standing on the Jagir which are in the nature of forts and may be considered to appertain to the estate.
The only exception made was in regard to the shops built or acquired by the Jagirdar in a town apart from his place of residence.
Therefore, on the material as it stands it is difficult to sustain the plea that the concurrent findings made by the arbitrator and the High Court on the question about the character of the property and the nature of the title held by the holder of the said property are wrong.
Incidentally it may be added that the same conclusion has been reached by the High Court on the ground of the customary law prevailing in the Punjab.
We must accordingly proceed to deal with the rest of the dispute between the parties on the basis that the respondent 1 is not the absolute owner of the property and that the appellant is entitled to represent the reversionary interest in the present proceedings.
That takes us to the pleas raised by the appellant in his appeals.
On his behalf it has been urged by the learned Attorney General that the whole amount of compensation in respect of the three villages Matsur, Sunets and Giddarpur should be appropriately invested Pond both he and respondent 1 should 689 be allowed to enjoy the income coming from the said investment in the share which may ultimately be fixed between them.
In support of this contention he relies on the provisions of section 32 (1) (b) of the Land Acquisition Act 1 of 1894.
This provision empowers the Court to direct that the compensation amount payable to the owners should be invested either in Government or approved securities and the payment of interest or other proceedings arising from such interest should be directed to the person or persons who would for the time being have been entitled to the possession of the lands under acquisition.
The argument is that since respondent 1 was not entitled to alienate the property and was under an obligation to keep the corpus in tact for the benefit of the reversioners the compensation amount payable in respect of the acquisition of the said property should be similarly treated and saved for the benefit of the reversioners; in other words, it is urged that the compensation amount should be treated as a conversion of the corpus of lands and the same should not be distributed as directed by the High Court.
Section 32 deals with cases where the land acquired belonged to any person who had no power to alienate the same; and since respondent 1 was not entitled to alienate the property the principle enunciated by section 32(1) (b) is pressed into service as an equitable principle which should be applied to the present case.
In support of this argument the learned Attorney General has relied on decisions of different High Courts where this principle has been extended to watan property (Shri Somashekhar Swami vs Bapusaheb Narayanrao Patil (1) ), to the property belonging to an idol (K. C. Bannerjee, Official Receiver, In re (2) ), to the property held by a widow (Mt. Gangi vs Santu & Others (3)), or to land belonging to an impartible estate (Special Deputy Collector, Ramnad vs Rajah of Ramnad (4) ).
This contention, however, ignores that the provisions of section 32 (1) (b) are intended to be applied only provisionally and for a short period.
The scheme of (1) A.I.R. 1948 Bom.
(2) A.I.R. 1928 Cal 402.
(3) A.I.R. 1929 Lah.
(4) A.I.R. 1935 Mad.
690 section 32 is that in cases to which the said section applies the Court shall order the compensation amount to be invested in the purchase of other lands which would be held under the right, title and conditions of ownership as the land in respect of which the compensation amount has been deposited.
That is the plain effect of section 32(1)(a).
Section 32 (1) (b) comes into operation if such purchase cannot be effected forthwith; and it has to remain in operation until such purchase is made.
In other words, if the compensation amount cannot be immediately invested in the purchase of other lands, as an interim measure the said amount may be invested in the prescribed securities and income thereof distributed to those who were entitled to it.
Therefore, even if the principle underlying section 32 is extended to the present case on equitable considerations it would not justify the appellant 's claim that the compensation amount should itself be treated as corresponding to the corpus of lands acquired and should be permanently invested in suitable securities leaving to the parties concerned the right to enjoy only its income.
Such a course is plainly inconsistent with the principle recognised by section 32(1)(a).
Therefore, we are not prepared to accede to the argument that the compensation amount should not be divided between the parties and should be permanently deposited in the fund set apart in proper investments.
If the said amount must, therefore, be divided between the appellant and respondent 1 how should it be divided? That is the next question which calls for our decision.
The appellant contends that the fairest way to distribute this amount would be to divide it half and half between him and respondent 1.
We are inclined to hold that this contention is well founded.
As the High Court has observed, it is not at all easy to estimate the relative value of the two interests represented by the appellant and respondent 1.
The High Court thought that the ratio may be 2/3 and 1/3 or 3/4 and 1/4 there being little to choose between the two; and so it confirmed the apportionment made by the arbitrator.
This decision, however, suffers from one serious infirmity.
The High Court thought that 691 the conduct of respondent 1 which was characterized by the appellant as the conduct of a reckless spend.
thrift and squanderer was wholly irrelevant in determining the shares to which the appellant and, respondent 1 were respectively entitled.
In our opinion, in deciding the question of apportionment on equitable grounds it is relevant and material to take, into account the grievance made by the appellant that the money which would be left with respondent 1 would be frittered away by him and no part of it would reach the reversioner.
In support of this contention, the appellant relied on the past conduct of respondent 1.
Several alienations made by him are cited and attention is invited to the fact that after respondent 1 became a major his estate has been taken over by the Court of Wards for management under section 5(2) (b) of the Court of Wards Act, 1903, from 1928 to 1938, 1939 to 1947, 1948 to 1954.
It has also been urged that since 1954 respondent 1 has made several unauthorised alienations.
We do not propose to consider the validity of each one of these allegations but we have no hesitation in holding that on the material available on the record it would be difficult to reject as unfounded the apprehensions which the appellant entertains in regard to the fate of the amount which may be given to respondent 1.
Besides, we are also inclined to take into account the fact that the appellant himself has a son and in apportioning the amount we have to bear in mind the fact that the amount is being paid in respect of the lands which respondent 1 holds as a limited owner and the reversionary interest in respect of which has to be safeguarded.
We would, therefore, direct that the amount of compensation in respect of the three villages should be divided between the appellant and respondent 1 half and half.
It is significant that the amount of compensation in respect of the fourth village which is at present charged for the maintenance of Sardarani has been ordered to be divided half and half.
Therefore, we would uphold the contention raised by the learned Attorney General on behalf of the appellant and direct that the said amount should be divided not as 692 2/3 and 1/3 but half and half between the father and son.
The next point which the learned Attorney General wanted to urge was that the increase in the amount of compensation directed by the arbitrator should be paid to him exclusively.
His case was that the Court of Wards and respondent 1 had accepted the amount offered by the State Government, and it was because he raised contentions that the proceedings were referred to the arbitrator whose award ultimately enhanced the compensation amount to a very large extent.
This contention was not raised either before the arbitrator or before the High Court, and we have therefore not allowed the appellant to raise it before us.
That takes us to the question of interest which has been urged before us by all the three claimants alike.
The argument is that the amount of compensation awarded should carry a reasonable rate of interest from the date of acquisition when the claimants lost possession of their properties.
This argument has been rejected by the High Court principally on the ground that the relevant Act of 1948 makes no provision for payment of interest and omission to make such a provision amounts in law to an intention not to award interest in regard to compensation amount determined under it.
In support of this conclusion the High Court has referred to the fact that section 5(e) of the Act specifically makes applicable the provisions of section 23(1) of the Land Acquisition Act of 1894, and that, it is said, inevitably leads to the inference that sections 28 and 34 of the Act which deal with the payment of interest are not intended to apply to the proceedings under it.
In our opinion, this conclusion is not wellfounded.
It would be legitimate to hold that by the application of section 23(1) in terms the provisions of section 23(2) are by necessary implication excluded.
If the Legislature has provided that only one part of section 23 should be applied it would be reasonable to hold that the other part of section 23 was not intended to be applied; but we do not see how it would be reasonable to hold 693 that by the application of section 23(1) the principles under lying the provisions of sections 28 and 34 are also excluded.
Therefore, it is necessary to examine this question on general grounds and principles without assuming that the application of these general considerations is excluded by any of the provisions of the Act.
What then is the contention raised by the claimants? They contend that their immovable property has been acquired by the State and the State has taken possession of it.
Thus they have been deprived of the right to receive the income from the property and there is a time lag between the taking of the possession by the State and the payment ' of compensation by it to the claimants.
During this period they have been deprived of the income of the property and they have not been able to receive interest from the amount of compensation.
Stated broadly the act of taking possession of immovable property generally implies an agreement to pay interest on the value of the property and it is on this principle that a claim for interest is made against the State.
This question has been considered on several occasions and the general principle on which the contention is raised by the claimants has been upheld.
In Swift & Co. vs Board of Trade (1) it has been held by the House of Lords that " on a contract for the sale and purchase of land it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took, or might safely have taken, possession of the land.
" This principle has been recognised ever since the decision in Birch vs Joy (2).
In his speech, Viscount Cave, L.C., added that " this practice rests upon the view that the act of taking possession is an implied agreement to pay interest ", and he points out that the said rule has been extended to cases of compulsory purchase under the Lands Clauses Consolidation Act, 1845.
In this connection distinction is drawn between acquisition or sales of land and requisition of goods by the State.
In regard to cases falling under the latter category this rule would not apply.
(1) 532.
(2) ; , 694 In Inglewood Pulp and Paper Co. Ltd. vs New Brunswick Electric Power Commission (1), it was held by the Privy Council that " upon the expropriation of land under statutory power, whether for the purpose of private gain or of good to the public at large, the owner is entitled to interest upon the principal sum awarded from the date when possession was taken, unless the statute clearly shows a contrary intention.
" Dealing with the argument that the expropriation with which the Privy Council was concerned was not effected for private gain, but for the good of the public at large, it observed " but for all that, the owner is deprived of his property in this case as much as in the other, and the rule has long been accepted in the inter pretation of statutes that they are not to be held to deprive individuals of property without compensation unless the intention to do so is made quite clear.
The right to receive the interest takes the place of the right to retain possession and is within the rule.
" It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession.
The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact that section 5(3) of the Act makes section 23(1) of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the payment of interest.
That is the view which the Punjab High Court has taken in Surjan Singh vs The East Punjab Government (2), and we think rightly.
It is, however, urged by Mr. Gopal Singh for respondent 2 that what the claimants are entitled to receive is compensation, and since the word " compensation " is used by section 5(1) both in respect of requisition as well as acquisition it would not be fair to import the general rule about the payment of interest where property is acquired.
Compensation, it is urged, should represent the price of the property and there is no (1) , (2) A.I.R. 1957 Punj. 265, 695 justification for adding to the said price any amount by way of damages.
We are not impressed by this argument.
When a claim for payment of interest is made by a person whose immovable property has been acquired compulsorily he is not making claim for damages properly or technically so called; he is basing his claim on the general rule that if he is deprived of his land he should be put in possession of compensation immediately; if not, in lieu of possession taken by compulsory acquisition interest should be paid to him on the said amount of compensation.
In our opinion, therefore, the fact that section 5(1) deals with compensation both for requisition and acquisition cannot serve to exclude the application of the general rule to which we have just referred.
Mr. Gopal Singh then relied on some observations made by this Court in Seth Thawardas Pherumal vs The Union of India (1).
Bose, J., who spoke for the Court has set out four conditions which must be fulfilled before interest can be awarded under Interest Act of 1839, and observed that not one of those was present in the case with which the Court was concerned.
That is why it was held that the arbitrator had erred in law in thinking that he had the power to allow interest simply because he thought the demand was reason able.
Having come to this conclusion the learned Judge proceeded to make certain observations in respect of the applicability of section 34 of the Code of Civil Procedure.
He added that section 34 does not apply because the arbitrator is not a Court within the meaning of the Code, nor does the Code apply to arbitrators, and but for section 34 even a Court would not have the power to give interest after the suit.
These observations were considered by this Court in Nachiappa Chettiar vs Subramaniam Chettiar (2), and it was pointed out that they were obviously not intended to lay down any broad and unqualified proposition like the one which is urged before us by Mr. Gopal Singh in the present appeal.
In this connection we may incidentally refer to Interest Act, 1839 (XXXII of 1839).
Section 2 of this (1) (2) ; 696 Act confers power on the Court to allow interest in cases specified therein, but the proviso to the said section makes it clear that interest shall be payable in all cases in which it is now payable by law.
In other words, the operative provisions of section 1 of the said Act do not mean that where interest was otherwise payable by law Court 's power to award such interest is taken away.
The power to award interest on equitable grounds or under any other provisions of the law is expressly saved by the proviso to section 1.
This question was considered by the Privy Council in Bengal Nagpur Railway Co. Ltd. vs Buttanji Ramji (1).
Referring to the proviso to section 1 of the Act the Privy Council,observed " this proviso applies to cases in which the Court of equity exercises its jurisdiction to allow interest.
" We have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by judicial decisions as an equitable right; and so, the proviso to section 1 of the Interest Act saves the said right.
We must accordingly hold that the High Court was in error in rejecting the claimants ' case for the payment of interest compensation amount, and so we direct that the said amount should carry interest at 4% per annum from the date when respondent 2 took possession of the claimants ' lands to the date on which it deposited or paid the amount of compensation to them.
In the appeal preferred by the Sardarani, Mr. Mathur attempted to challenge the propriety of the order passed by the High Court directing that the amount of compensation in respect of Dhirpur lands should be .invested and that the Sardarani should receive her maintenance from the interest accruing from such investment.
Apart from the fact that the order made in that behalf is fair and just, it is clear that the learned counsel for the Sardarani himself had suggested that such an order should be passed.
Therefore, we cannot allow Mr. Mathur to raise any contention against the said order in the present appeal.
(1) (1938) L.R. 65 I.A. 66, 697 Mr. Mathur further contended that if we were to award interest on the amount of compensation his client would be entitled to receive the whole of the interest on the compensation amount ordered to be paid in respect of the lands in Dhirpur village.
That no doubt is true, and indeed Mr. Mathur 's claim in that behalf is not disputed either by the appellant or by respondent 1.
We would accordingly modify the decree passed by the High Court by directing that the amount of compensation payable in respect of the lands in Mathur, Saneta and Giddarpur may be divided half and half between the appellant and respondent 1, and that interest should be paid on all the items of compensation determined by the High Court at 4% per annum.
The interest in regard to the compensation payable for Dhirpur lands should be paid to the Sardarani, whereas the interest in regard to the lands in the three other villages should be paid half and half to the appellant and respondent 1.
In making the payments of compensation amounts to the respective parties whatever amounts may have been withdrawn by or on their behalf should be taken into account and their claims should be properly adjusted in that behalf.
In the circumstances of this case we direct that the appellant should get half his costs from respondent 1 and the other half from respondent 2 in his three appeals.
There will be only one set of hearing costs.
The costs in the remaining four appeals should be borne by the parties.
C. A. Nos.
396 to 398 of 1959 and C. A. No. 152 of 1960 allowed in part.
C.A. Nos.
419 to 421 of 1959, dismissed.

summary:
Lands in four villages forming part of the Cis Sutlej jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of"Immovable Property (Temporary Powers) Act, 1948.
At the time of the acquisition A was the holder of the jagir.
Possession over one of the villages had been given to 677 A 's wife G in lieu of maintenance under a consent decree.
The matter of payment of compensation was referred to an arbitrator.
A claimed that he was entitled to the entire compensation amount as he was the present holder of the jagir.
A 's son S claimed that the lands, acquired were inalienable, that A merely had a life interest therein and that the compensation money should be deposited out of which A should get only the interest for his life.
G claimed that she was entitled to the entire compensation in respect of the lands over which she was in possession.
All the claimants claimed interest on the compensation amount from the date of taking of possession to the date of payment of compensation.
The arbitrator held: (i) the acquired lands were inalienable and A merely had a life interest thereiq, (ii) S was entitled to a share in the compensation awarded, (iii) the amount of compensation for the first three villages should not be deposited but should be divided between A and S in the proportion of 3/4th to 1/4th, (iv) the compensation for the fourth village should be deposited and the interest thereof be paid to G and after the death of G the amount be divided between A and S half and half, and (v) the claimants were not entitled to any interest on the amount of compensation.
On appeal the High Court confirmed the awards in toto.
The claimants appealed to the Supreme Court by special leave.
Held, that the acquired lands formed part of a Cis Sutlej Jagir which was inalienable, that A was merely a limited owner thereof and was not entitled to the entire amount of compensation and that the reversioners were also entitled to a share therein.
The compensation amount could not be permanently deposited leaving the parties the right to enjoy only its income.
Even if the equitable principle of section 32, Land Acquisition Act, 1894, was applied it would not justify the permanent investment of the compensation amount.
Section 32(1)(b) was intended to be applied provisionally for short periods, where other lands had to be purchased out of the compensation money but were not immediately available and the money had to be invested as an interim measure till such lands were available.
It was fair to divide the compensation money in respect of the first three villages half and half between A and section In deciding the question of apportionment on equitable grounds it was relevant and material to take into account the facts that no part of the amount paid to A would reach the reversioners, that S himself had a son and that the reversionary interest had to be safeguarded.
Shri Somashekhar Swami vs Bapusaheb Narayanrao Patil A.I.R. , K. C., Banerjee, Official Receive?, In re: A.I.R. 1928 Cal.
402, Mt. Gangi vs Santu A.I.R. 1929 Lah. 736 and Special Deputy Collector, Ramnad vs Rajah of Ramnad A.I.R. 1935 Mad. 215, referred to.
Held, further, that the claimants were entitled to interest at 4% per annum on the compensation amount from the date when possession was taken by the State to the (late on which it deposited 678 or paid the amount of compensation to the claimants ' The provision in section 5(e) of the 1048 Act which made section 23(1) of the Land Acquisition Act, 1894, applicable did not exclude the application of SS. 28 and 34 of the latter Act which dealt with the payment of interest.
On general principles, the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property ; the right to receive interest took the place of the right to retain possession.
The application of this rule was not excluded by section 5 of the 1948 Act.
Even under the Interest Act, 1839, the power to award interest on equitable grounds was expressly saved by the proviso to section 1.
Swift & Co. vs Board of Trade , Birch vs joy ; and Inglewood Pulp and Paper Co. Ltd. vs New Brunswick Electric Power Commission , applied.
Surjan Singh vs The East Punjab Government A.I.R. 1957 Punj.
265, approved.
Seth Thawardas Pherumal vs The Union of India and Nachiappa Chettiar vs Subramaniain Chettiar ; , referred to.