judgement:
Appeals Nos. 1061 and 1627 to 1629 of 1966.
Appeals by special leave from the judgment and order dated March 9, 10, 1965 of the Bombay High Court in Revision Applications Nos.
1428, 1427, 1430 and 1676 of 1961.
M. C. Chagla, J. L. Hathi, K. L. Hathi and K. N. Bhat for the appellants (in all the appeals).
R. P. Bhat, Janendra Lal, R. A. Gagrat and B. R. Agarwala, for the respondent (in all the appeals).
The Judgment of the Court was delivered 'by Shah, J.
Under an indenture dated August 2, 1950, Dossibai respondent in this appeal granted a lease of 555 sq. yards in village Pahadi, Taluka Borivli to Mathura Prasad appellant herein for constructing buildings for residential or,business purposes.
The appellant constructed buildings on the land.
He then submitted an application in the Court of the Civil Judge, Junior Division, Borivli, District Thana, that the standard rent of the land be determined under section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The Civil Judge rejected the application holding that the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for constructing buildings for residence, education, business, trade or storage.
This order was confirmed on September 28, 1955, by a single Judge of the Bombay High Court in a group of revision applications : Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar : Nos. 233 to 242 of 1955.
But in Vinayak Gopal Limaye vs Laxman Kashinath Athavale(1) the High Court of Bombay held that the question whether section 6(1) of the Act applies to any particular lease must be determined on its terms and a building lease in respect of an open plot is not ex (1) I.L.R. 832 cluded from section 6(1) of the Act solely because open land may be used for residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh petition in the Court of the Small Causes, Bombay, for an order determining the standard rent of the premises.
The application was filed in the Court of Small Causes because the area in which the land was situated had since been included within the limits of the Greater Bombay area.
The Trial Judge rejected the application holding that the question whether to an open piece of land let for the purpose of constructing buildings for residence.
education, business or trade section 6 (1) of the Act applied was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by a Bench of the Court,of Small Causes and by the High Court of Bombay.
With special leave, the appellant has appealed to this Court.
The view expressed by the High Court of Bombay in Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar (Civil) Revision Application No. 233 of 1955 (decided on September 28, 1955) was overruled by this Court in Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1).
In the latter case the Court affirmed the view expressed by the Bombay High Court in Vinayak Gopal Limaye 's case (2).
But all the Courts have held that the earlier decision of the High Court of Bombay between the same parties and relating to the same land is res judicata.
Section II of the Code of Civil Procedure which enacts the general rule of res judicata, insofar as it is relevant, provides : "No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court." The Civil judge, Junior Division, Borivli, was competent to try the application for determination of standard rent, and he held that s 6(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for construction of residential and business premises.
The rule of res judicata applies if "the matter directly and substantially in issue" in a suit or proceeding was directly and sub (1) I.L.R. (2) 833 stantially in issue in the previous suit between the same parties and had been heard and finally decided by a competent Court.
The Civil Judge, Junior Division, Borivli, decided the application between the parties to the present proceeding for determination of standard rent in respect of the same piece of land let for construction of buildings for residential or business purposes.
The High Court has held that a decision of a competent Court may operate as res judicata in respect of not only an issue of fact, but mixed issues of law and fact, and even abstract questions of law.
It was also assumed by the High Court that a decision relating to the jurisdiction of the Court to entertain or not to entertain a proceeding is binding and conclusive between these parties in respect of the same question in a later proceeding.
But the doctrine of res judicata belongs to the domain of procedure : it cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpretation of enactment affecting the jurisdiction of a Court finally between them, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby.
A decision of a competent Court on a matter in issue may be res judicata in another proceeding between the same parties : the "matter in issue" may be an issue of fact, an issue of law, or one of mixed law and fact.
An issue of fact or an issue of mixed law and fact decided by a competent court is finally determined between the parties and cannot be re opened between them in another proceeding.
The previous decision on a matter in issue alone is res judicata : the reasons for the decision are not res judicata.
A matter in issue between the parties is the right claimed by one party and denied by the other, and the claim of right from its very nature depends upon proof of facts and application of the relevant law thereto.
A pure question of law unrelated to facts which give rise to a right, cannot be deemed to be a matter in issue.
When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties.
A previous decision of a competent Court on facts which are the foundation of the right and the relevant law applicable to the determination of the , transaction which is the foundation of the right and the relevant law applicable to the determination of the transactions which is the soured of the right is res judicata.
A previous decision on a matter in issue is a composite decision: the decision of law can not be dissociated from the decision on facts on which the right is founded.
A decision on an issue of law will be as res judicata in a subsequent proceeding between the same parties, if the cause of action of the subsequent Proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor 834 when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law.
The authorities on the question whether a decision on a question of, law operates as res judicata disclose widely differing views.
In some cases it was decided that a decision on a question of law can never be res judicata in a subsequent proceeding between the same parties : Parthasardhi Ayyangar vs Chinnakrishna Ayyangar(1); Chamanlal vs Bapubhai (2) ; and Kanta Devi vs Kalawati(3).
On the other hand Aikman, J., in Chandi Prasad vs Maharaja Mahendra Mahendra Singh(1) held that a decision on a question of law is always res judicata.
But as observed by Rankin, C.J., in Tarini Charan Bhattacharjee vs Kedar Nath Haldar(5) : "Questions of law are of all kinds and cannot be dealt with as though they were all the same.
Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law.
In such questions the rights of parties are not the only matter for consideration.
" We may analyse the illustrative cases retating to questions of law, decisions on which may be deemed res judicata in subsequent proceeding.
In Bindeshwari Charan Singh vs Bageshwari Charan Singh(1) the Judicial Committee held that a decision of a court in a previous suit between the same parties that section 12A of the Chota Nagpur Encumbered Estates Act 6 of 1876 which renders void a transaction to which it applies was inapplicable, was Yes judicata.
In that case the owner of an impartable estate, after his estate was released from management, executed a maintenance grant in favour of his minor son B, but without the sanction of the Commissioner as required by section 12A of the, Act.
B on attaining majority sued his father and brothers for a maintenance grant at the rate of Rs. 4,000 per annum.
The claim was decreed, and the plaintiff was awarded a decree for a grant of Rs. 4,000 inclusive of the previous grant of 1909, and the Court held that the grant of 1909 was valid in law.
The father implemented the decree and made an additional maintenance grant upto the value of the decreed sum.
In an action by the sons of B 's brothers challenging the two grants on the plea that the grants were illegal and not binding upon them, the Judicial Committee held that the plea was barred as res judicata in respect of both the grants in respect of the first because there was an express decision on the validity of the first grant in the earlier suit, and in respect of the second the (1) I.L.R. (3) A.I.R. [1946] Lah. 419.
(5) I.L.R. (2) I L.R, (4) I.L.R. 23 All.
(6) L.R. 63 I.A. 53.
83 5 decision in the first suit was res judicata as to the validity of the second grant which was made in fulfillment of the obligation under the Court 's decision.
The Judicial Committee held that in respect of the first grant, the decision that section 12A did not apply to the grant, was res judicata, and in respect of the second grant the construction between the same parties of section 12A was res judicata.
Validity of the second grant was never adjudicated upon in any previous suit; the second grant was held valid because between the parties it was decided that to the grant of maintenance of an impartible zamindari section 12A of the Chota Nagpur Encumbered Estates Act had no application.
This part of the judgment of the Judicial Committee is open to doubt.
Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same, parties : Tarini Charan Bhattacharjee 's case(1).
It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different.
In a case relating to levy of tax a decision valuing property or determining liability to tax in a different taxable period or event is binding only in that period or event, and is not binding in the subsequent years, and therefore the rule of, res judicata has no application; see Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill(2) A question of jurisdiction of the Court, or of procedure, or a pure question of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit.
Rankin, observed in Tarini Charan Bhattacharjee 's case(1) : "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory by precluding the parties from reopening or recontesting that which has 'been finally decided.
" A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the Court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does.
not possess under the statute, the question cannot operate as res judicata bet (1) I.L.R. (2) 83 6 ween the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
It is true that in determining the application of the rule of res judicata the Court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be, reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned a subsequent proceeding between the same parties.
But, where the decision is on a question law, i.e. the interpretation of a statute, it will be res judicata in a subsequent proceeding between the same parties where the cause of action is the same for the expression "the matter in issue" in section 11 Code of Civil Procedure means the right litigated between the parties, i.e. the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata,for a rule of procedure cannot supersede the law of the land.
In the present case the decision of the Civil Judge, Junior Division, Borivli, that he had no jurisdiction to entertain the application for determination of standard rent, is, in view of the judgment of this Court, plainly erroneous : see Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1) If the decision in the previous proceeding be.
regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction 'of the Court in derogation of the rule declared by the Legislature.
The appeals are allowed, and the orders passed by the High Court and the Court of Small Causes are set aside and the proceedings are remanded to the Court of First Instance to deal with and dispose them of in accordance with law.
There will be no order as to costs throughout.
Y.P. Appeals allowed.

dataset_name: IN-Abs

summary:
The appellant obtained lease of an open land for construction of buildings.
After the constructions, the appellant applied for determination of standard rent under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The application was rejected holding that the provi sions of the Act did not apply to open land let for construction.
This view was confirmed by the High Court.
Sometime thereafter in another case the High Court held that the question whether the provisions of the Act applied to any particular lease must be determined on its terms and a building lease in respect of an open plot was not excluded from the provisions of the Act solely because open land may be used from residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh application for determining the standard rent.
The Trial Judge rejected the application holding that question of the applicability of the Act was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by first appellate court and on further appeal by the High Court.
HELD:The judgment did not operate as res judicata.
A question relating.
to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the court holds that it has no jurisdiction, the decision will not, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does not possess under the statute, the decision will not operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
in determining the application of the rule of res judicata the court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned in a subsequent proceeding between the same parties where the cause of action is the same, for the expression "the matter in issue" in section 11, Code of Civil Procedure means the right litigated between the parties, i.e., the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded_ from challenging the validity of that order because of the rule of res judicata, for a rule of procedure cannot supersede the law of the land.
83 1 if the decision in the previous proceeding be regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction of_the Court, in derogation of the rule declared by the Legislature.
[835G 836 F] Parthasardhi Ayyangar vs Chinnakrishna Ayyangar, I.L.R. , Chamanlal vs Bapubhai, I.L.R. , Kanta Devi vs Kalawati, A.I.R. 1946 Lah.
419,, Tarini Charan Bhattacharjee vs Kedar Nath Haldar, I.L.R. , and Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill, , approved.
Chandi Prasad vs Maharaja Mahendra Mahendra Singh, I.L.R. 23 All.
,5, disapproved.
Bindeshwari Charan Singh vs Bageshwari, Charan Singh, L.R. 63 I.A. 53, doubted.


judgement:
Appeals Nos.
1991 1992, 2010 and 2011 of 1968.
Appeals from the judgment and order dated October 9, 1967 of the Gujarat High Court in Wealth Tax Reference No. 3 of 1964.
B. Sen, section K. Aiyar and B. D. Sharma, for the appellant (in C. A. Nos. 1991 and 1992 of 1968) and the respondent (in C. As.
2010 and 2011 of 1968).
8 20 N. A. Palkhivala and I. N. Shroff, for the respondent (in C. As.
Nos. 1991 and 1992 of 1968) and the appellant (in C.As.
2010 and 2011 of 1968).
The Judgment of the Court was delivered by Hegde, J.
These appeals by certificate under section 29 of the Wealth Tax Act, 1957 (to be hereinafter referred to as the Act) arise from a reference under section 27(1) of the Act to the High Court of Gujarat.
Therein four questions were referred to the High Court for its opinion.
,These four questions really gave rise to two questions of law viz. (1) whether under the three trust deeds referred to therein the assessee got annuities falling within the scope of section 2(e) (iv) ? and (2) whether the value of the jewels owned by the assessee was exempt under section 5(1)(viii) in computing the net wealth of the assessee ? The assessee is an individual and the assessment years with which we are concerned in these appeals are 1957 58 and 195859, the corresponding valuation dates being December 31, 1956 and December 31, 1957.
By a deed of settlement dated September 7, 1945 the father of the assessee settled certain shares of the Indian Companies of the estimated value of Rs. 5,50,325/ upon trust for the benefit of his two sons and his daughter, the assessee.
By another deed of settlement dated October 12, 1945 he settled certain other shares upon trust for the benefit of the assessee and her two brothers.
All the terms of the two trust deeds relevant for our present purpose are identical.
By a deed of settlement dated September 30, 1945, the mother in law of the assessee settled upon trust a sum of Rs. 3,88,931/ and shares of some Indian Companies of the aggregate market value of Rs. 11,81,670/ .
The assessee is one of the beneficiaries named in that deed.
The assessee also possessed jewellery of the value of Rs. 80,000/ .
As regards the payments to be made to the assessee under the afore mentioned three trust deeds, the contention of the assessee is that under each of those deeds, she has only a right to an 'annuity ' and the terms and conditions relating thereto preclude the commutation of any portion thereof into a lumpsum grant and hence in view of section 2(e)(iv), the value of those annuities cannot be included in the computation of her net wealth.
As regards the jewellery her case is that they are articles of her personal use and therefore their value cannot be taken into consideration in ascertaining her net wealth.
She contends that the value of those jewellery is exempt under section 5(1)(viii).
The Wealth Tax Officer rejected both those contentions and assessed her after including in her net wealth the value of the benefits receivable by her under 821 the trust deeds in question as well as the value of the jewellery minus Rs. 25,000/ , deduction given under section 5(1)(xv) as it stood at the relevant time.
Against that order the assessee went up in appeal to the Assistant Appellate Commissioner.
That officer agreed with the conclusions reached by the Wealth Tax Officer and he accordingly dismissed the appeal of the assessee.
Thereafter the assessee appealed to the Tribunal.
The Tribunal held that the payments to be made to the assessee under the trust deed executed by her mother in law is an 'annuity ' entitled to exemption under section 2(e) (iv).
As regards the payments to be made to the assessee under her father 's, settlement deeds, it opined that as the assessee was entitled to withdraw from the trust fund at her own discretion after she attained majority and after she gave birth to one child, one half of the corpus, to that extent commutation was possible.
Therefore to the extent of one half of the value of the annual payments to be made to her under those deeds, the assessee was not entitled to exemption under section 2(e)(iv) but she was entitled to exemption as regards the other half.
The Tribunal rejected the assessee 's claim for exemption under section 5(1)(viii) i.e. in respect of the value of the jewellery.
One a reference under section 27(1), the High Court of Gujarat held that the payments to be made to the assessee under the three settlement deeds do not come within section 2(e)(iv) but the value of the jewellery is exempt under section 5(1)(viii).
Both the assessee as well as the Revenue have appealed against that decision.
We shall first take up the contention of the assess6e that the payments to be made to her under the trust deeds are annuities which by the terms and conditions relating thereto preclude the commutation of any portion thereof into a lumpsum grant and hence are within the scope of section 2(e)(iv).
If those payments fall within the scope of that provision, they cannot be considered as the assets of the assessee and therefore their value cannot be reckoned in determining her net wealth under section 2(m).
Under section 3, the charging section, only the net wealth of an assessee can be brought to tax.
Hence we have to examine the terms of the settlement deeds to find out whether the benefits conferred on the assessee by any or all of those deeds can be considered as annuity.
As stated earlier the two settlement deeds executed by the father of the assessee are expressed more or less in identical language.
It was conceded at the bar that whatever construction we may place on one, would be equally applicable to the other.
Therefore we shall take up the deed executed on September 7, 1945 by the father of the assessee.
Under cl. 3 of that deed it is provided that the trustees, after deducting from the income of the 822 shares in question, all costs and expenses incurred in or about the administration of the trust, should at the end of every calendar year pay the whole residue to the assesses and her two brothers in equal shares.
But after the death of the assessee her heirs are not entitled to any share in that income.
Therein provision is made by the settler for disposition of the corpus of the trust.
But it is provided that notwithstanding anything contained to the contrary in the deed of Trust after assessee attained majority and after the birth of her first child when and so often as might be required by the assessee, the trustees are required to pay a portion of the corpus of the trust fund not exceeding in the whole one half thereof to the assessee and this payment of the corpus was to be absolutely freed and discharged from the trust and provisions of the trust deed.
The other provisions of the trust deed are not relevant for our present purpose.
Under the trust deed executed by the assessee 's mother in law on December 30, 1945, the husband of the assessee and her two brothers in law were constituted as the Trustees.
Under cl.
(a) of that deed, the trustees were required to pay the income of the trust fund after deducting the expenses to the assessee during her life time.
The rest of the clauses in that trust deed relate to disposition of the corpus to different beneficiaries after the life time of the assessee.
It is clear from the terms of the three trust deeds referred to earlier that the assessee had a life interest in each of those funds.
Further under the trust deeds executed by her father, she was also entitled to a portion of the corpus under certain circumstances.
The question for decision is whether the benefits obtained by the assessee under those deeds can be held to come within section 2 (e)(iv).
The expression "annuity" is not defined in the Act.
In Halsbury 's Laws of England, 3rd Edn. Vol.32 at p. 534 (paragraph 899), the meaning of the word "annuity" is explained thus "An annuity is a certain sum of money payable yearly either as a personal obligation of the grantor or out of property not consisting exclusively of land." In Jarman on Wills at p. 11 13 "annuity" is defined thus "An annuity is a right to receive de anno in annum a certain sum; that may be given for life, or for a series of years; it may be given during any particular period, or in perpetuity; and there is also this singularity about annuities, that, although payable out of the personal assets, they are capable of being given for the purpose of devolution, as real estate; they may be given to a man and his heirs, and may go to the heir as real estate.
" 823 In Williams on Executors and Administrators "annuity" is described as a yearly payment of a certain fixed sum of money granted for life or for years charging the person of the grantor only.
In Bignold vs Giles,(1), Kindersley V. C. described "annuity" in these words: "An annuity is a right to receive de anno in annuma certain sum; that may be given for life, or for a series of years; it may be given during any particular period, or in perpetuity; and there is also this singularity about annuities, that although payable out of the personal assets, they are capable of being given for the purpose of devolution, as real estate; they may be given to a man and his heirs, and may go to the heir as real estate so an annuity may be given to a man and the heirs of his body; that does not, it is true constitute an estate tail, but that is by reason of the Statute De Donis, which contains only the word 'tenements ', and an annuity, though a hereditament, is not a tenement; and an annuity so given is a base fee.
" Proceeding further the learned judge observed: "But this appears to me at least clear; that if the gift of what is called an annuity is so made, that, on the face of the will itself, the testator shows his intention to give a certain portion of the dividends of a fund, that is a very different thing; and most of the cases proceed on that footing.
The ground is, that the Court construes the intention of the testator to be, not merely to give an annuity, but to give an aliquot portion of the income arising from a certain capital fund." Illustrations of annuity given in section 173 of the Indian Succession Act also show that it is a right to receive a specified sum and not an aliquot share in the income arising from any fund or property.
Ordinarily an annuity is a money payment of a fixed sum annually made and is a charge personally on the grantor.
On an analysis of the relevant clauses in three trust deeds, it is clear the assessee was given thereunder a share of the income arising from the funds settled on trust.
Under those deeds she is not entitled to any fixed sum of money Therefore it is not possible to hold that the payments that she is entitled to receive under those deeds are annuities.
She has undoubtedly a life interest in those funds.
In Ahmed G. H. Ariff vs Commissioner of Wealth Tax, Calcutta (2) , a Division Bench of the Calcutta High Court held that the right of a person to receive under a wakf an aliquot (1) Drew 345; (Revised Reports 113 p. 390).
(2) 824 share of the net income of the wakf property is an 'asset ' within the meaning of the Wealth Tax Act, 1957 and the capital value of such a right is assessable to wealth tax.
Therein the Court repelled the contention that the right in question was an 'annuity '.
This decision was approved by this Court in Ahmed G. H. Ariff & Ors.
vs Commr.
of Wealth Tax, Calcutta(1) and the same is binding on us.
A similar view was taken by another Bench of the Calcutta High Court in Commissioner of Wealth Tax vs Mrs. Dorothy Martin(1).
In that case under the will of the assessee 's father the assessee was entitled to receive for 'her life the annual interest accruing upon her share in the residuary trust fund.
The Wealth Tax Officer included the entire value of the said share in the assessable wealth of the assessee and subjected the same to tax under section 16(3) of the Wealth Tax Act, 1957.
That order was confirmed by the Assistant Appellate Commissioner but the Tribunal in appeal excluded the same in the computation of the net wealth of the assessee.
On a reference made to the High Court, it was held that on a construction of the various clauses in the will, the assessee was entitled to an aliquot share in the general income of the residuary trust fund and not a fixed sum payable periodically as "annuity" and, therefore, the value of her share was an asset to be included in computing his net wealth.
These decisions in our view correctly lay down the legal position.
In this view it is not necessary to consider whether the income receivable by the assessee under those deeds either wholly or in part is capable of being commuted into a lumpsum grant.
For the reasons mentioned above we agree with the High Court that payments to be made to the assessee under the three trust deeds cannot be considered as annuities and hence she is not entitled to the benefit of section 2(e)(iv).
This takes us to the question whether the High Court was right in its view that the value of the assessee 's jewellery should not be taken into consideration in determining her net wealth.
The Tribunal has taken the view and the High Court has agreed with that view that the jewellery in question are articles intended for the personal use of the assessee.
As mentioned earlier those jewels were valued at Rs. 80,000/ ; out of that amount Wealth tax Officer deducted Rs. 25,000/ under section 5(1)(xv).
The assessee claims that in view of section 5(1)(viii), the value of those jewels cannot be included in the computation of her net wealth.
Section 5(1)(viii) reads: "5.
(1) Wealth tax shall not be payable by the assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee (1) ; (2) 825 (viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal, or household use of the assessee.
" There is no dispute that the Jewels in question were intended for the personal use of the assessee; but it is said on behalf of the revenue that section 5(1)(viii) does not apply to jewels as those articles are specifically provided for under section 5(1)(xv).
On the other hand it is urged on behalf of the asessee that section 5(1)(xv) deals with jewellery which are not intended for personal use of the assessee such as heirloom or other jewellery which are retained as valuable assets or intended for the use of persons other than the assessee whereas section 5(1)(viii) takes in only such jewellery as are intended for personal use of the assessee.
We think the contention advanced on behalf of the assessee is the correct one.
It is well known that the jewellery is widely used as articles of personal use by the ladies in this country specially by those belonging to the richer classes.
That being so jewellery intended for the, personal use of the assesses comes within the scope of section 5(1)(viii).
But the jewellery mentioned in section 5 (1) (xv) need not be articles intended for personal use of the assessee.
That provision deals with jewellery in general.
The two provisions deal with different classes of jewellery.
That is made further clear by section 5(1)(xiii) which says that Wealth Tax shall not be payable by assessee in respect of any drawings, paintings, photographs, prints and other heirloom not falling within cl.
(xii) and not intended for sale but not including jewellery.
If the contention that the jewellery is exclusively dealt with by section 5(1)(xv) is correct then there was no occasion for the legislature to refer to jewellery in section 5(1)(xiii).
From an analysis of the various provisions in section 5, it appears to us that therein there are four provisions dealing With jewellery viz. (1) jewellery intended for personal use of the assess.
5(1) (viii); (2) jewellery that is heirlooms.
5(1)(xiii); (3) jewellery in the, possession of any ruler section 5(1)(xiv) and (4) jewellery in generate section 5(1)(xv).
Under section 5(1)(xv) as it stood at the relevant time every assessee was entitled deduct a sum of Rs. 25,000/ from out of the value of the jewellery in her possession whether the same was intended for her personal use or not but under section 5(1) (viii) the value of all the jewellery intended for the personal use of the assessee stands excluded in the computation of the net wealth of an assessee.
For the reasons mentioned above we think the High Court was right in answering the question relating to the value of the jewellery in favour of the assessee.
In the result these appeals fail and they are dismissed no costs.
V.P.S. Appeals dismissed.

summary:
The assessee was an individual.
She was entitled for her life, to an aliquot share of the income arising from the funds settled on trust by three trust deeds and 'received payments of such share.
She also possessed jewellery, intended for her personal use, of the value of Rs. 80,000.
On the questions : (1) whether the payments to the assessee were annuities falling within the scope of section 2(e)(iv) of the Wealth Tax Act, 1957, whose value could not be included in the computation of her net wealth; and (2) whether the value of the jewels was exempt under section 5(1) (viii).
HELD : (1) Under the trust deeds, the assessee was not entitled to any fixed sum of money.
Therefore, the payments to the assessee under the trust deeds could not be considered as annuities and hence, she was not entitled to the benefit of section 2(e)(iv).
[824 E F] Ahmed G H. Ariff vs Commissioner of Wealth Tax, Calcutta, ; followed Commissioner of Wealth Tax vs Mrs. Dorothy Martin, (1968) 60 I.T.P 586, approved.
(2) Under section 5 there are four provisions dealing with jewellery, namely, (a) jewellery intended for ' the personal use of the assessees.
5(1)(viii), (b) jewellery which forms an heir loom section
5(1)(xiii),(c) jewellery in the possession of any ruler section 5(1)(xiv); and (d) jewellery in general.
5(1)(xv).
Under section 5(1)(xv), as it stood in 1958 59, every assessee was entitled to deduct a sum of Rs. 25,000 from out of the value of the jewellery whether the same was intended for personal use or not; but under section 5 (1) (viii) the value of all the jewellery intended for the personal use of the assessee stands excluded in the compu tation of the net wealth of an assessee.
Therefore, the jewellery in the present case is exempt under section 5(1)(viii).
[825 D, E G]


judgement:
Appeal No. 1370 of 1966.
Appeal from the Judgment and decree dated February 16, 1966 of the Rajasthan High Court in D. B. Civil Regular First Appeal No. 86 of 1958.
R. K. Garg, section C. Agarwal, D. P. Singh, V. J. Francis and section Chakravarty, for the appellants D. V. Patel, Janendra Lal, and B. R. Agarwala, for the respondents.
The judgment of the Court was delivered by Bhargava, J.
This appeal arises out of a suit for Partition of properties in the family of one Lalaji Ramchandra who Was the ,common ancestor of the parties to the suit.
He had two sons, Govindraoji 'and Motilal alias Krishnaraoji.
The plaintiffs/ appellants and the non contesting proforma respondents are the descendants of Motilal, while the contesting respondents are the descendants of Govindraoji, the principal one being Chandrakant Rao who was defendant No. 1 in the suit.
The appellants sought Partition of all the family properties, including eight villages known ,as "the sarola Jagir" which were situated in the erstwhile State of 'Kota.
The trial Court dismissed the suit in its entirety, holding 83 9 that none of the properties in suit was ancestral property.
On appeal by the present appellants, the High Court of Rajasthan upheld the dismissal of the suit insofar as the appellants had claimed a share in the eight villages forming the Sarola Jagir, while the suit in respect of the other properties was decreed and a preliminary decree passed in respect of those properties.
The appellants have come up to this Court in this appeal, by certificate granted ,by the High Court, against the order of the High Court refusing to grant partition of the eight villages of the Sarola Jagir.
In order to appreciate the point raised in this appeal the history of this Jagir in this family may be recited briefly.
Lalaji Ramchandra and his eldest son Govindraoji were awarded this Jagir by means of a Parwana dated 8th April, 1838 issued by His Highness Maharao Ramsingh, Ruler of Kotah.
It appears that the Maharao had contracted debts with the family of Lalaji Ramchandra even in the time of his ancestors and, at the relevant time, the amount of debt exceeded Rs. 9 lakhs.
This debt was guaranteed by the British Government.
In lieu of this debt, this Jagir, which was already being enjoyed by Lalaji Ramchandra with certain limitations, was given jointly to him and his son Govindraoji, stating that it was being conferred in perpetuity and was always to remain from sons to grandsons and was to be free from all taxes which were being exacted up to that time, such as Barar and Sewai.
At the same time, Govind Rao executed a deed of release by which he accepted the adjustment of the amount due from the Maharao against this grant of jagir.
These documents thus show that this Jagir was originally granted by Maharao Ramsingh, Ruler of Kotah, jointly in the names of Lalaji Ram Chandra and his son, Govindraoji in lieu of the debt which the Maharao owed to them.
Subsequently, this property was treated as property of the joint family of Lalaji Ramchandra Motilal the second son of Lalaji Ramchandra, was born after this grant and his name was also mutated against the Jagir villages.
On the death of Govindraoji, the name of his adopted son, Ganpat, Raoji, was brought in, while Motilal, the uncle, managed the property on behalf of the family.
Motilal executed a will in respect of his properties, including these villages, specifically stating that half of this property belonged to Ganpatraoji, while half would belong to his adopted son, Purshottam Raoji.
After the death of Motilal, Ganpatraoji became the manager of the property and Purshottam Raoji 's name was also entered against this property.
On the death of Ganpat Raoji, the name of his eldest son Chandrakant Rao was mutated while Purshottam Raoji in the capacity of the eldest member of the family, started managing the property.
The property thus remained in the family, being treated as joint family property and, even during the years between 1852 and 1868 when efforts were made by the Maharao of Kotah to dispossess this 8 40 family, the British Government had intervened to ensure that the property remained with this family, insisting that the Maharao could only resume the Jagir on repayment of the loan in respect of which discharge had been obtained when this Jagir was conferred.
The property was thus continued to be treated as joint family property until the death of Purshottam Raoji when a question arose as to the mutation of names of his descendants in his place.
Chandrakant Rao desired that his name alone should be shown as the holder of this Jagir and, on 22nd October, 1937, gave a statement before the Revenue Commissioner claiming that the eldest son in the eldest branch had the right over the jagir according to the custom and usage in Rajputana and, consequently, mutation in the records should be in his name alone.
A report was sent by the Revenue Commissioner and the matter was dealt with by the Maharao of Kotah himself in Mehakma Khas.
The order of the Maharao on that report was passed on 22nd January, 1938.
By this Order, a direction was made that this Jagir, like all other Jagirs, should be given the status of an impartible estate and it should be given proper shape by being liable to render 'Chakri, and 'Subhchintki to the Ruler.
It was further ordered that the Jagir will be governed by the rule of primogeniture, so that Chandrakant Rao alone would be held to be the Jagirdar.
As a result, all these eight villages of the Sarola Jagir came to be shown as the property of Chandrakant Rao alone.
The claim of the plaintiff in this suit was that the Jagir having been joint Hindu family property, the rights of the plaintiffs, who are the successors in interest of Purshottam Raoji, cannot be defeated by the order of the Maharao dated 22nd January, 1938 ,and, consequently, the appellants together with the proforma respondents who are also descendants of Purshottam Raoji are entitled to 1/2 share, whereas the other 1/2 share only can be claimed by the contesting defendants, including Chandrakant Rao, who are descendants of Ganpatraoji.
Both the trial Court and the High Court have held that, after the order of the Maharao of Kota dated 22nd January, 1938, this Jagir came to be, governed by the rule of primogeniture, with the result that Chandrakant Rao alone was the owner of this property, while all other members of the family could only claim maintenance out of this property.
Consequently, the claim of the appellants for a share in these villages on partition was negatived.
It is the correctness of this decision that has been challenged, before us.
Since, in this case, no effort was made on behalf of the respondents to contest the correctness of the finding given by the High Court that all these villages were joint family property and were treated as such right up to the year 1937 when Purshottam Raoji died, we need not enter into the details of the evidence on the basis 841 of which this finding has been recorded.
The question that falls for decision is whether the Maharao of Kota by his order dated 22nd January, 1938, could validly change the nature of the property.
make it impartible and governed by the rule of primogeniture when the property was already joint family property.
In deciding this question, the crucial point is that the Maharao of Kota was an independent and sovereign Ruler whose orders in his State were law.
He had absolute power to make any orders, and the Order dated 22nd January, 1938 has, therefore to be given the force of law which, when it was passed, could not be challenged as invalid.
Counsel for the appellants, however, urged that all orders passed by an independent and sovereign Ruler do not have the force of law.
It is only those orders which purport to lay down a law for the State which cannot be challenged and which would remain in force even after the merger of the Kota State in India and after, the enforcement of the Constitution under article 372 of the Constitution.
His submission was that, when passing the Order dated 22nd January, 1938, the Ruler was only exercising executive powers of directing mutation of names and was not exercising any legislative powers.
The nature of the Order passed by him, however, shows that this submission cannot be accepted.
No doubt, that Order was made on a report which was put up before the Maharaoji for deciding who should be held to be the owner of the Jagir when Purshottam Raoji died.
The Order shows that the Maharao took notice of the fact that the Sanad had been granted in the name of Lalaji Ramchandra and his eldest son Govind Rao on executing a deed of release in respect of the debt, but it added that, when the unpaid debt was changed in the form of a Jagir and no special condition was laid down regarding it and the name of only the eldest son was written in the 'Sanad ' though another brother was present there, it has to be held that the Jagir was intended to be given on the same rules on which the other Jagirs were granted The Order then proceeds to take notice of the fact that, though the mutation should have been in the name of Chandrakant after the death of Ganpat Rao, a practice had developed of entering more than one person as the holders of this Jagir.
It appears that, in order to give effect to the original intention that this Jagir should be governed by the same rules as all other Jagirs, the Maharao proceeded to lay down that this ' Jagir should also be impartible and should be held by the eldest member of the family in the eldest branch.
The Ruler considered it desirable to make this Order, because it was envisaged that, it the entire Jagir, was distributed amongst all the members of the family, then even the name of Thikana ' would disappear.
It was considered desirable that this Jagir should be governed according to the custom of the States in Rajputana including Kota State under which the eldest son of the senior branch alone was entitled to hold the property.
Thereafter, the Maharao proceeded to lay down that this Jagir should be L 10 Sup C I (NP)70 9 84 2 equated with other Jagirs by making a direction that the holders of this Jagir should also render 'Chakri ' and should continue to do 'Subhchintki '.
Having made this direction, the Ruler then held that.
since this 'Thikana ' was being given proper shape, its custom and status must be similar to that of all other Jagirdars in the State.
These directions given by the Ruler clearly show that, though the proceedings came to him on the basis of a report for directions as to the mutation entry to be made on the death of Purshottam Rao, he proceeded to lay down the principles Which were to govern this Jagir thereafter.
The Ruler decided that this Jagir should be placed on equality with all other Jagirs in the State and should be governed by the same laws.
The Order thus made was clearly an exercise of legislative power by which the Ruler was competent to lay down that, though this Jagir had in the past been joint family property, it was to be thereafter impartible property governed by the rule of primogeniture and Chandra Kant Rao as the eldest member of the senior branch was to be the sole Jagirdar.
This was, therefore, a case where the Maharao exercised his powers of laying down the law with respect to this one single Jagir.
It cannot be said that the Order passed by him was a mere executive order and did not result in exercise of his powers of making the law.
In this connection, counsel for the appellants relied on the principle laid down by this Court in Rajkumar Narsingh Pratap Singh Deo vs State of Orissa and Another(1) to canvass his submission that the Maharao, in this case, was not exercising legislative powers when he passed the Order dated 22nd January, 1938.
In that case, the effect of a Sanad granted by the Ruler of Dhenkanal State had to be considered and 'the question arose whether the Sanad could be treated as existing law within the meaning of article 372 of the Constitution.
The Court, after taking notice of previous decisions, drew a distinction between orders made by a Ruler having the force of law and orders which may be of executive nature, and held "The true legal position is that whenever a dispute arises as to whether an order passed by an absolute monarch represents 'a legislative act and continues to remain operative by virtue of cl.
4(b) of the Order, 'all relevant factors must be considered before the question is answered; the nature of the order, the scope and effect of its provisions, its general setting and context, the method adopted by the Ruler in promulgating legislative as distinguished from executive orders, these and other allied matters will have to be examined before the character of the order is judicially determined." (1) ; 843 On an application of these principles in that case, it was held that the Sanad in question could not be held to be a legislative act.
In our opinion, even if these principles are applied to the case,before us, it has to be held that the Order of the Maharao dated 22nd January, 1938 amounted to exercise of legislative power.
As we have already indicated earlier, the very mature of the Order, which changes the law applicable to the Jagir, indicates that it was a legislative act and not a mere executive order.
The Maharao did not purport to lay down that the Jagir was already governed by the rule of primogeniture; what he did was to apply the rule of primogeniture to this Jagir for future.
Such an order could only be made in exercise of his prerogative of laying down the law for the State.
The mere fact that it was laid down for one single Jagir and was not a general law applicable to others in the State is immaterial, because it does not appear that there were any other similar Jagirs which also required alteration of the law applicable to them.
There is also nothing to show that during the period of his rule, the Maharao had adopted any special procedure for promulgating the laws in his State.
The manner in which the Order was passed indicates that, in this State, the Maharao considered himself competent to lay down the law at any time he liked.
Reliance was also placed on the decision of this Court in State of Gujarat vs Vora Fiddali Badruddin Mithibarwala(1), but that case, in our opinion, has no application at all.
In that case,, the question arose whether an agreement entered into by a Ruler had the force of law.
In the case before us, there is no such question of any agreement.
In dealing with that question, the Court relied on the following extract from a decision of the Court in an earlier case of The Bengal Nagpur Cotton Mills Ltd. vs The Board of Revenue, Madhya Pradesh and Others(2) : "It is plain that an 'agreement of the Ruler expressed in the shape of a contract cannot be regarded as a law.
A law must follow the customary forms of law making and must be expressed as a binding rule of conduct.
There is generally an established method for the enactment of laws, and the laws, when enacted, have also a distinct form.
It is not every indication, of the will of the Ruler, however expressed, which amounts to a law.
: An indication of the will meant to bind as a rule of,,., conduct and enacted with some formality either traditional or specially devised for the occasion, results.
in a law but not an agreement to which there are two parties, one of which is the Ruler.
" Emphasis was laid by counsel on the views expressed in this passage that a law, must follow the customary forms of law making.and ' (1) ; (2) A.T.R. 1964 S.C. 8.88 844 must be expressed as a binding rule of conduct.
In the present case, there is nothing to show that, in the State of Kota, there was any other customary form of law making.
The Order of 22nd January, 1938 clearly expresses the direction of the Ruler that the Jagir must be governed by the same customary law as other Jagirs as a binding direction which was to govern the future conduct of the holders of this Jagir.
The principle relied on, therefore, does not show that this Order of 22nd January, 1938 did not amount to a legislative act on the part of the Maharao.
Reference was also made to the decision of this Court in Major Ranjit Singh Rao Phalke vs Smt.
Raja Bai Sahiba (dead) by her legal representatives & Vice Versa(1) where the Court said : "It is now settled law that every order of the Maharaja cannot be regarded as law, particularly those which were in violation of his own laws." and again repeated: "The position today is that every order of the Ruler cannot be regarded as law but only such orders as contain some general rule of conduct and which follow a recognised procedure of law making." In that case, the particular order of the Ruler which was questioned had been made in contravention of one of the existing laws of the State and it was held that such an order could not be treated as law.
In the case before us, the position is quite different.
There was no law of the Kota State which could be held to be contrary to the Order dated 22nd January, 1938.
In fact, the general law govern ing all Jagirs in the State was the customary law under which the Jagirs were owned by the eldest member of.
the senior branch, and all that this Order did was to apply the same law to this Jagir also.
It is true that no special procedure of law making was adopted by the Maharao when making this Order; but that circumstance cannot change the nature of the Order specially when there is nothing to indicate that there was any recognised procedure of law making in the Kota State at that time.
In these circumstances, we hold that the High Court was quite correct in arriving at the decision that these eight villages ', at the time when the suit for partition was instituted, were impartible property governed by the law of primogeniture and Chandrakant Rao respondent alone had to be treated as the owner of these villages.
It, however, appears that, during the pendency of the suit, Jagirs were resumed in Rajasthan including this Jagir which stood in the name of Chandrakant Rao and cash compensation was paid in respect of it.
It was urged by counsel for the appellants that, (1) Civil Appeals Nos. 982 and 983 of 1964 decided on 18th July, 1967.
845 even if the Jagir was impartible and governed by the rule of primogeniture, the right, which earlier Vested in the members of the family when it was joint family property, would be exercisable when the Jagir was converted into cash and lost its status of impartible estate.
It was, therefore, claimed that, after the Jagirs had been converted into cash under the Rajasthan Land Reforms and Resumption of Jagirs Act No. VI of 1952, the appellants should have been granted a share in the compensation received by Chandrakant Rao on the basis that this property was earlier joint Hindu family property.
In the altemative, it was also urged that, even if this claim of the plaintiffs/appellants is not accepted, they would at least be entitled to claim a part of the compensation in lieu of their right of maintenance.
These two aspects do not seem to have been considered by the trial Court and even the High Court in one sentence disposed of this matter by saying that, since the appellants were only entitled to maintenance, they could not claim any share in the compensation money paid under the Rajasthan Act VI of 1952.
In dealing with this aspect, we are handicapped by the circumstance that the suit was instituted before this Act VI of 1952 was.
passed, so that there was no specific pleading in this behalf by the plaintiffs appellants.
The trial Court, therefore, ignored this aspect altogether, and even the High Court did not take into account the effect of Act VI of 1952 in the, two aspects which have been mentioned by us above.
Since, however, this is an appeal against a preliminary decree in the suits and the suit is still to continue in the trial Court, we think it appropriate to direct that these questions should be properly raised in the trial Court by amendment of the pleadings in the plaint, if necessary, and should be considered and decided by that Court.
It will be for that court to give a fresh decision whether, the appellants are entitled to claim a share in the compensation money received in lieu of these eight villages under Rajasthan Act VI of 1952.
The result is that this appeal is dismissed, subject to the modification that the case will go back to the trial Court for deciding the question whether the plaintiffs/appellants can claim a share in the compensation money or not, as indicated above.
Costs of this appeal shall abide the decision on this claim of the plaintiffs appellants to a share in the compensation money.
R.K.P.s.
Appeal dismissed.

summary:
L had two sons G and M. L. and his elder son G were granted a Jagir by the then Ruler of Kotah jointly in their names, in lieu of a debt which the Ruler owed to them.
This property was treated as property of the joint family of L.
The name of M, the second son born after the grant, was also mutated against the Jagir villages.
The names of the descendants of G and M were from time to time similarly mutated against the Jagir and this Jagir as well as other property of the joint family was managed for some time by the eldest member belonging to either branch of the family.
The respondent C was a descendant of G and claimed in 1937 before the Revenue Commissioner that as the eldest son in the eldest branch he alone had the right over the Jagir according to the custom and usage in Rajputana and, consequently, mutation in the records should be in his name alone.
On a report by the Revenue Commissioner, the Ruler passed an order on 22nd January, 1938, directing that the Jagir, like all other Jagirs in the State should be given the status of an impartible estate and should be liable to render 'Chakri ' and 'Subchintki ' to the Ruler.
It was further ordered that the Jagir would be governed by the rule of primogeniture, so that C alone would be held to be jagirdar.
The appellants, who were the descendants of M, sought partition of all the family properties including the villages in the Jagir.
Although the Trial Court dismissed the suit, on appeal, the High Court granted a decree in respect of other properties but upheld the dismissal of the suit in so far as the appellants had claimed a share in the Jagir.
The appellants claimed that the jagir having been joint Hindu property, their rights as successors in interest of M could not be defeated by the order of Ruler dated 22nd January, 1938, and consequently, the appellants were entitled to their proper share in the Jagir.
It was contended that all orders passed by an independent and sovereign Ruler do not have the force of law.
It is only those orders which purport to lay down a law for the State which cannot be challenged and which would remain in force even after the merger of the Kotah State in India and, after the enforcement of the Constitution, under article 372 of the Constitution.
It was submitted that, when passing the Order dated 22nd January, 1938, the Ruler was only exercising executive powers of directing mutation of names and was not exercising any legislative powers.
HELD: Dismissing the appeal.
(i) The High Court was right in holding that the villages in the Jagir, at the time when the suit for partition was ' instituted, were impartible 838 property governed by the law of primogeniture and C alone could be treated as the owner of these villages.
(ii)The very nature of the Order, which changed the law applicable to the Jagir, indicated that it was a legislative act and not a mere executive order.
The Ruler did not purport to lay down that the Jagir was already governed by the 'rule of primogeniture; what he did was to apply the rule of primogeniture to this Jagir for future.
Such an order could only be made in exercise of his prerogative of laying down the law for the State.
The mere fact that it was laid down for one single Jagir and was not a general law applicable to others in the State was immaterial, because it does not appear that there were any other similar Jagirs which also required alteration of the law applicable to them.
L843 B D] (iii)Although no special procedure of law making was adopted by the Ruler when making this Order, that circumstance could not change the nature of the Order specially when there was nothing to indicate that there was any recognised procedure of law making in the Kotah State at that ,time.
[844 F G] Rajkumar Narsingh Pratap Singh Deo vs State of Orissa and Another ; ; referred to.
State of Gujarat, vs Vora Fiddali Badruddin Mithibarwala ; and Major Ranjit Singh Rao Phalke vs Smt.
Raja Bai Sahiba (dead) by her legal representatives and Vice Versa Civil Appeal Nos.
982 :and 983 of 1964 decided on 18th July, 1967 ; distinguished.


judgement:
l Appeal Nos.
2130 and 2131 of 1969.
Appeals by special leave from the judgment and order dated June 16, 19, 1969 of the Bombay High Court in Special Civil Application No. 41 of 1969 and S.C.A. No. 1774 of 1969.
C. K. Daphtary, Suresh A. Shroff, P. C. Bhartari and O. C. Mathur, for the appellants (in both the appeals).
H. R. Gokhale, N. H. Gurshani and N. N. Keswani, for res pondent No. 1 (in both the appeals).
B. D. Sharma and section P. Nayar, for respondent No. 2 (in both the appeals).
856 The Judgment of the Court was delivered by Civil Appeal No. 2130 of 1967 Shah, J.
The High Court of Bombay dismissed in limine a petition filed by the Century Spinning Manufacturing Co. Ltd. hereinafter called 'the Company 'for the issue of a writ restraining the respondent Municipality from enforcing the provisions of the Maharashtra Municipalities Act 40 of 1965 relating to the levy, assessment, collection recovery of octroi and in particular section 105 and Ss. 136 to 144 thereof, and from enforcing the Maharashtra Municipalities (Octroi) Rules, 1967, and from acting upon resolutions passed by the Municipal Council dated September 9, 1968 and ' September 13, 1968, and from levying, assessing, collecting, recovering or taking any other step under the Act, rules or the resolu tions and for an order restraining the Municipality of Ulhasnagar from levying, assessing, collecting any octroi on the goods imported by the Company within the limits of the Municipal Council for a period of 7 years from the date of its first imposition.
With special leave, the Company has appealed 'against, the order rejecting the petition.
The Company was incorporated under the Indian Companies Act, 1913.
It set up its factory in 1956, within the limits of village Shahad, Taluka Kalyan on a site purchased from the State of Bombay, and within an area known as the 'Industrial Area '.
No octroi duty was then payable in respect of goods imported by the Company into the Industrial Area for use in the manufacture of its products.
On October 30, 1959, the Government of Bombay issued a notification announcing its intention to constitute a Municipality for certain villages, including the Industrial Area.
The Company and other manufacturers who had set up their plants and factories objected to the proposed constitution of the Municipal Area.
On September 20, 1960, the State of Maharashtra (successor to the State of Bombay) published a notification constituting with effect from April 1, 1960 the Municipality including the area in which the Industrial Area was included.
Representations were then made by the Company and other manufacturers for excluding the Industrial Area from the Ulhasnagar Municipal District Area.
On April 27, 1962 the Government of Maharashtra (the new State of Maharashtra having been constituted under the Bombay Reorganization Act, 1960) proclaimed that the Industrial Area be excluded from the Municipal jurisdiction.
The District Municipality then made a representation to the Government of Maharashtra that the proclamation dated April 27, 1962, be withdrawn by the Government.
The Municipality agreed to exempt the existing factories viz., the Company and other manufacturers whose factories were then existing in the Industrial Area from payment of octroi for a period of seven years from the date of levy of octroi and for exempting new industrial units from payment of octroi for 8 5 7 a similar period from the date of establishment.
The Government of Maharashtra acceded to the request of the Municipality to retain the Industrial Area within the local limits of the Municipality.
On August 24, 1963, the District Municipality passed a resolution to implement the agreement.
It was resolved that the Municipality "agrees to give a concession to the existing factories by exempting them from the payment of octroi for a period of 7 years from the date of levy of octroi tax and by exempting new factories from the payment of the octroi tax for a period of 7 years from the date of their establishment as recommended by the Government of Maharashtra".
On October 31, 1963, the Government of Maharashtra issued a notification withdrawing the proclamation dated April 27, 1962, and the Industrial Area became part of the Ulhasnagar Municipal District.
Relying upon the assurance and undertaking given by the Municipality the Company claims that it had expanded its activities and commenced manufacturing new products by, setting up additional plant which it would not have done "but for the concessions given, assurances and representations made and agreement arrived at on May 21, 1963".
On September 10, 1965, the Legislature of the State of Maha rashtra enacted the Maharashtra Municipalities Act which repealed the Bombay District Municipal Act 3 of 1901.
the notification declaring the area of the former District Municipality of Ulhasnagar into the Ulhasnagar Municipality became effective as from June 15, 1966.
The Ulhasnagar Municipality took over as successor to the Ulhasnagar District Municipality, the assets and the affairs of that body.
On September 9, 1968 the Ulhasnagar Municipality resolved "to levy minimum rates of octroi duty as shown in columns 4 and 6 on all items shown in Sch. 1 to the Rules", and by resolution dated September 13, 1968, the Municipality 'adopted with effect from January 1, 1969, the rates for the imposition of octroi duty on the goods imported for use, sale and consumption within the Municipal Council limits.
At a special meeting held on December 24, 1968, the Munici pal Council considered the letters written by the Government of Maharashtra dated November 22, 1968 and December 10, 1968, drawing the attention of the Municipality to the circumstances in which the Industrial Area was included and retained in the local limits of the Ulhasnagar District Municipality and continued to reman within the local limits of the Municipality, and "advised the Municipality to pass a resolution confirming such exemption and honour the commitments of its predecessor." The Municipality ignored the advice and resolved that the Government of Maharashtra be informed that the Municipality would consider afresh on Sup.
CI(NP)70 10 858 merits any representation of a tax payer for exemption from payment of octroi, and if any such representation was made by the factories situate in the Industrial Area, the Council would consider the same and take such action as it would deem fit.
Thereafter the Municipality sought to levy octroi duty and to recover from the Company octroi duty amounting to approximately Rs. 15 lakhs per annum.
The Company moved a petition before the High Court of Bombay under article 226 of the Constitution for the writs set out earlier seeking to restrain the Ulhasnagar Municipality from enforcing the octroi Rules.
The High Court may, in exercise of its discretion, decline to ,exercise its extra ordinary jurisdiction under article 226 of the Constitution.
But the discretion is judicial : if the petition makes a claim which is frivolous, vexatious, or prima facie unjust, or may not appropriately be tried in a petition invoking extra ordinary jurisdiction, the Court may decline to entertain the petition.
But a party claiming to be aggrieved by the action of a public body or authority on the plea that the action is unlawful, high handed, arbitrary or unjust, is entitled to a hearing of its petition on the merits.
Apparently the petition filed by the Company did not raise any complicated questions of fact for determination, and the claim could not be characterised as frivolous, vexatious or unjust.
The High Court has given no reasons for dismissing the petition in limine, and on a consideration of the averments in the petition and the materials placed before the Court we are satisfied that the Company was ,entitled to have its grievance against the action of the Municipality, which was prima facie unjust, tried.
The Company pleaded that the, Ulhasnagar Municipality had" entered into a solemn arrangement" not to levy octroi duty for aperiod of seven years from the date of its imposition.
The evidence relating to the undertaking was contained in public records.
The Government of Maharashtra advised the Municipality that it was acting in violation of the terms of that undertaking.
By its resolution the Municipality declined to abide by the undertaking of itspredecessor.
There is undoubtedly a clear distinction between a represen`tation of an existing fact and a representation that something will be done in future.
The former may, if it amounts to a representation as to some fact alleged at the time to be actually in existence, raise an estoppel, if another person alters his position relying upon that representation.
A representation that something will be done in the future may result in a contract, if another person to whom it is 859 addressed acts upon it.
A representation that something will be done in future is not a representation that it is true when made.
But between a representation of a fact which is untrue and a representation express or implied to do something in future, there is no clear antithesis.
A representation that sotmething will be done in future may involve an existing intention to act in future in the manner represented.
If the representation is acted upon by another person it may, unless the statute governing the person mak ing the representation provides otherwise, result in an agreement enforceable at law; if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting thereupon but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation.
Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice.
The obligation arising against an individual out of his representation amounting to a promise may be enforced ex contractu by a person who acts upon the promise : when the law requires that a contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation may be if the contract be not in that form be enforced against it in appropriate cases in equity. 'In Union of India & Ors.
vs Mls.
IndoAfghan Agencies Ltd.(1) this Court held that the Government is not exempt from the equity arising out of the acts done by citizens to their prejudice, relying upon the representations as to its future conduct made by the Government.
This Court held that the following observations made by Denning, J., in Robertson vs Minister of Pensions(1) applied in India "The Crown cannot escape by saying that estoppe ls do not bind the Crown for that doctrin e has long been explode d.
Nor can the Crown escape by praying in aid the doctrin e of executi ve necessi ty, that is, the doctrin e that the Crown cannot bind itself so as to fetter its future executi ve action.
, We are in this case not concerned to deal with the question whether Denning, L.J., was right in extending the rule to a different class of cases as in Falmouth Boat Construction Co. Ltd. vs Howell(1) where he observed at p. 542 : "Whenever Government officers in their dealings with a subject take on themselves to assume authority in a (1) ; (2) (3) 8 6 0 matter with which the subject is concerned, he is entitled to rely on their having the authority which they assume.
He does not know, and cannot be expected to ]mow, the limits of their authority, and he ought not to suffer if they exceed it.
" It may be sufficient to observe that in appeal from that judgment (Howell vs Falmouth Boat Construction do.
Ltd.) Lord Simonds observed after referring to the observations of Denning, L.J. "The illegality of an act is the same whether the action has been misled by an assumption of authority on the part of a government officer however high or low in the hierarchy. . .
The question is whether the character of an act done in force of a statutory prohibition is affected by the fact that it had been induced by a misleading assumption of authority.
In my opinion the answer is clearly : No." If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted.
A public body is, in our judgment, not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice.
Mr. Gokhale appearing on behalf of the Municipality urged that the petition filed by the Company apparently raised questions of fact which in the view of the High Court could not appropriately be tried in the exercise of the extra ordinary jurisdiction under article 226.
But the High Court has not said so, and on a review of the averments made in the petition this argument cannot be sustained.
Merely because a question of fact is raised, the High Court will got be justified in requiring the party to seek relief by the somewhat lengthfiy, dilatory and expensive process by a civil suit against 'a public body.
The questions of fact raised by the petition in this case are elementary.
The order passed by the High Court is set aside and the case is remanded to the High Court with a direction that it be readmitted to the file and be dealt with and disposed of according to law.
The High Court will issue rule to the Municipality and the State and dispose of the petition.
We recommend that the case may be taken up for early hearing.
We had during the pendency of the appeal in this Court made an order restraining the levy of octroi duty.
We extend the operation of the order for a fortnight from this date to enable the 861 Company to move the High Court for an appropriate interim order pending hearing and disposal of the writ petition.
There will be no order as to costs in this Court.
Costs in the High Court will be costs in the cause.
Since we have granted special, leave against the order dismissing the petition, we do not deem it necessary to consider whether the order rejecting the application for certificate was erroneous.
Civil Appeal No. 2131 of 1969 is therefore dismissed.

summary:
The appellants companies set up their factories within an "Industrial Area", No octroi duty was payable in respect of goods imported by the appellants into the Industrial Area for use in the manufacture of its products.
The State of Maharashtra constituted a Municipality for certain villages including the Industrial Area.
On representations made by the appellants and other manufacturers, the State proclaimed the exclusion of the Industrial Area from the Municipal Jurisdiction.
The Municipality made representations to the State requesting that the proclamation, be withdrawn, agreeing to exempt the factories in the Industrial Area from payment of octroi for seven years from the date of the levy.
The State acceeded to the request of the Municipality.
The appellants claimed to expand their activities relying upon the Municipality 's assurance and undertaking.
The Maharashtra Municipalities Act was enacted and the respondent Municipality took over the administration of the former municipality as its successor.
Thereafter, the respondent Municipality sought to levy octroi duty on the appellant amounting to about Rs. 15 lakhs per annum.
The appellants filed a petition under article 226 of the Constitution to restrain the respondent Municipality from enforcing the levy of the Octroi.
The High Court dismissed the petition in limine.
In appeal by special leave, HELD : The case must be remanded to the High Court for being readmitted to its file and dealt with and disposed of according to law.
The High Court may, in exercise of its discretion, decline to exercise its extra ordinary jurisdiction under article 226 of the Constitution.
But the discretion is judicial; if the petitioner makes a claim which is frivolous, vexatious, or prima facie unjust or which may not appropriately be true in a petition invoking extraordinary jurisdiction, the Court may decline to entertain the petition.
But a party claiming to be aggrieved by the action of a public body or authority on the plea that the action is unlawful, highhanded, arbitrary or unjust is entitled to a hearing of its petition on the merits.
Apparently the petition filed by the Company did not raise any complicated questions of fact for determination, and the claim could not be characterised as frivolous, vexatious or unjust.
The High Court has given no reason for dismissing the petition in limine, and on a consideration of the averments in the petition and the materials placed before the Court the appellants were entitled to have its grievance against the action of the Municipality, which was prima facie unjust, tried.
Merely because a question of fact is raised, the High Court will not be justified in requiring the party to seek relief by the somewhat lengthy, dilatory and expensive process by a civil suit against a public body.
The questions of fact raised by the petition in this case are elementary.
[858 C F] Public bodies are as much bound as private individuals to carry out representations or facts and promises made by them, relying on which 855 other persons have altered their position to their prejudice.
The obligation arising against an individual out of his representation amounting to a promise may be enforced ex contractu by a person who acts upon the promises when the law requires that a contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute and if the contract be not in that form the obligation may still be enforced against the body in appropriate cases, in equity.
[859 D] If our nascent democracy is to thrive different standards "of conduct ,for the people and the public bodies cannot ordinarily be permitted.
A public body is not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice.
[860 D] There is undoubtedly a clear distinction between a representation of an existing fact and a representation that something will be done in future.
The former may, if it amounts to a representation as to some fact alleged at the time to be actually in existence, raise an estoppel if another person alters his position relying upon that representation A representation that something will be done in future may result in a contract, if another person to whom it is addressed acts upon it.
A representation that something will be done in future is not a representation that it is true when made.
But between a representation of a fact which is untrue and a representation express or implied to do something in future there is no clear anti thesis.
A representation that something will be done in future may involve an existing intention to act in future in the manner represented.
If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law; if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting thereupon but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation.
[858 H 859 C] Union of India & Ors.
vs M/s. Indo Afghan Agencies Ltd., ; Robertson vs Minister of Pensions, ; Falmouth Board Construction Co. Ltd. vs Howell, , referred to.


judgement:
iminal Appeal No. 40 of 1968.
Appeal by special leave from the judgment and order dated January 23, 1968 of the Patna High Court in Criminal Revision No. 91 of 1968.
D. P. Singh, D. N. Mishra and Govind Das, for the appel lant.
R. C. Prasad, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, C. J.
On May 28, 1966, Bhola Prasad Mandal, Supply Inspector Pathargama with other officers searched a godown belonging to Nagarmal Tekriwal (appellant) and found stored therein 45 quintals of rice, 90 quintals of paddy, 5 50 quintals of grains, 3 quintals of wheat, one quintal Arhar and 207 quintals of Khesari together with weighing scale and weights and measures.
As Nagarmal did not possess a licence under the Bihar Foodgrains Dealer 's Licensing Order, 1966, he was prosecuted under section 7 of the Essential Commodities Act for violation of cl. 3 of the order.
He was convicted by the Munsif Magistrate, First Class and sentenced to undergo rigorous imprisonment for six months.
The foodgrains found in his possession were also ordered to be forfeited to the State.
He appealed unsuccessfully to the Sessions Judge, Santhal Parganas, Dumka and his revision in the High Court was summarily dismissed.
He now appeals by special leave granted by this Court.
The defence of the appellant was that he was an agriculturist and that the foodgrains were grown by him on the lands he had taken on lease from various parties.
In support of his defence, he produced both documentary and Oral evidence.
The documentary evidence consisted of certain lease deeds executed by 'him and his brother in favour of the lessors.
Oral evidence showed that he and, his brother were in possession of 80 90 bighas of land on which Paddy and other foodgrains found in his pos session, were grown, 901 The case proceeded against him on the basis of the presump tion under para 3 of the Order.
It may be read here "Licensing of wholesale and retail dealers (1) No person shall carry on business as a whole sale dealer or retail dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by licensing authority.
(2) For the purpose of this clause, any person other than a bona fide consumer or an agriculturist, who stores any foodgrains in any quantity shall, unless the contrary is proved, be deemed to store the foodgrains for the purpose of sale.
" It was held that as he had stored foodgrains above the permitted quantities for a wholesale dealer, he would be regarded as a wholesale dealer within the order.
The defence, before us again is that he is an agriculturist and is not liable to the penalty under the law, because the presumption in his case cannot be drawn.
It is also submitted that his case that he was an agriculturist stands completely proved in this case.
The learned Magistrate rejected the documentary evidence on the ground that the lease deeds were not registered and were not admissible in evidence under section 49 of the Registration Act.
The learned Sessions Judge did not accept this ground; at least he did not say anything about it.
He held that such documents could be brought into existence at any time and were thus not reliable.
Both the Magistrate and the Sessions Judge did not accept the evidence of the witnesses on the ground that they were interested in the appellant.
Mr. B. P. Singh, in arguing the case has drawn our attention to a ruling of this Court in Manipur Administration vs M. Nila Chandra Singh(1) and contended that the appellant cannot be regarded as doing business as a dealer unless a series of transactions by him of sale were proved against him.
The ruling does say that the words "carrying on the business" in the context of the Act postulate a course of conduct and continuity of transactions.
Therulingmaynof be applicable in certain circumstances, as for example where even a single transaction can be demonstrated to be in the course of business.
Carrying on of business may be found in one instance or more, depending upon the circumstances of the case.
(1) ; 90 2 However, in the present matter we need not worry about the ,carrying on of business, because in our opinion, the appellant has successfully proved that he is an agriculturist and the presumption under paragraph 3(2) of the order cannot be drawn against him.
That paragraph expressly excludes bona fide consumers and agriculturists from the presumption to be drawn from proof of storage only.
It is obvious that sub paragraph speaks of storage for sale as a dealer although the words "as a dealer" are not there, because storage has reference to 'business as a dealer and that is the essence of the Order.
The fiction in the second sub paragraph must be carried to its logical conclusion.
In the present case, the appellant produced a number of lease deeds in which leases of various parcels of land are shows to have been granted to him.
He also produced receipts of payment of lease money and he cited witnesses who deposed on oath that he and his brother cultivated 80 90 bighas of land.
No doubt, the lease deeds are not registered, but for the purpose of a criminal prosecution, we have to see whether they are genuine or not and Whether an inference of innocence can be based upon them.
In our judgment they serve the collateral purpose of showing that the lands about which the witnesses spoke orally were held by him for purposes of cultivation.
If that be so, then, he is an agriculturist and it is easy to see that the evidence which was 'brought for ward of witnesses deposing orally was not concocted to set up a false defence.
Indeed no adequate reasons were given for rejecting the testimony of witnesses.
The learned Magistrate rejected the testimony of one witness on the ground that he is the next door neighbour and has a "soft corner for him".
We do not know why the evidence of the next door neighbour should be rejected; it can only be rejected if there is something intrinsically wrong with that evidence.
The total circumstances in the case show that the appellant was in fact carrying on agricultural ,operations.
He executed a number of lease deeds, produced receipts and proved by oral evidence that he was an agriculturist.
In his case, therefore, the presumption under para 3(2) could ,not be drawn.
If that presumption is not drawn, then the case against him stands unproved because of the exemption which agriculturists enjoy.
On the whole, we are satisfied that his conviction was im properly reached.
We allow the appeal and set aside his conviction.
His bail bonds are cancelled.
The order of forfeiture of foodgrains is also set aside.
We are informed that the foodgrains were sold.
If any money has been recovered by sale of the foodgrains, it shall be handed over to the appellant.
Appeal allowed.

summary:
On search of the appellant 's premises foodgrains above quantities permitted under the Bihar Foodgrain Dealer 's Licensing Order 1966 were found.
He was prosecuted under section 7 of the Essential Commodities Act for violation of cl. 3 of the Order.
The appellant produced oral and documentary evidence to show that he was an agriculturist and therefore the presumption tinder cl.
3(2) of the order that he had stored the foodgrains for sale could not be drawn against him.
The documentary evidence aforesaid consisted of lease deeds executed by the appellant and his brother in favour of lessees.
The oral evidence showed that he, and his brother were in possession of 80 90 bighas of land on which the foodgrains found in his possession were grown.
The documentary evidence was rejected by the trial magistrate on the ground that the lease deeds not being registered were not admissible in evidence under section 49 of the Registration Act.
The Sessions Judge in appeal did not 'rely on the lease deeds for the reason that such documents could be brought into existence at any time.
Both the trial magistrate and the Sessions Judge rejected the oral evidence as unreliable because it was given by persons who were next door neighbours and as such interested in the appellant.
The appellant 's revision petition before the High Court was summarily rejected.
By special leave he appealed to this Court.
HELD : (i) Cl.
3(2) of the Order expressly excludes bona fide consumers and agriculturists from the presumption to be drawn from proof of storage only.
It is obvious that the sub clause speaks of storage for sale as a dealer although the words 'as a deal& ' are not there because storage has reference to business as a dealer and that is the essence of the order.
The fiction in the second sub clause must be carried to its, logical conclusion.
[902 B] ii) No doubt the lease deeds were not registered but in a criminal case it had to he seen whether they were genuine or not and whether, an inference of innocence could be based ' on them They served the collateral purpose of showing that the lands about which the witnesses spoke orally were held by him for purposes of cultivation.
[902 D] (iii) There is no reason why the evidence of a next door neighbour should be rejected unless there is something intrinsically wrong with it.
[902 E F] (iv)The total circumstances in the case showed that the appellant was in fact carrying on agricultural operations.
He executed a number of lease deeds, produced receipts and proved by or a evidence that he 900 was an agriculturist.
In his case therefore the presumption under cl.
3(2) could not be drawn.
If that presumption was not drawn, the case against him stood unproved because of the exemption which agriculturists enjoy.
[902 F G] The appeal must accordingly be allowed.
Manipur Adminisration vs M. Nila Chandra Singh, [1964] 5 S.C.R.574.
referred to and explained.