judgement:
Appeals Nos.
47 to 50 of 1952.
Appeals from the Judgment and Decree dated the 11th May,1950, of the High Court of Judicature at Allahabad (Malik C. J. and Bhargava J.) in Miscellaneous Case No. 134 of 1949 connected with Miscellaneous Case No. 197 of 1948.
G.S. Pathak (G. C. Mathur, with him) for the appellant.
M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the respondent.
September 23.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
This batch of appeals arises out of a reference made to the High Court at Allahabad by the Income tax Appellate Tribunal, Allahabad Bench, under section 26 of the Excess Profits Tax Act, hereinafter referred to as " the Act.
" The assessments challenged in these appeals relate to different chargeable accounting periods but the questions raised are the same in all the cases.
The appellants constitute a Hindu undivided family consisting of four branches representing the four sons of one Sohan Pathak deceased.
The family carried on business at Banaras in money lending and Banaras brocade under the name and style of Sohan Pathak & Sons.
In the assessment relating to the chargeable accounting period ending on October 8, 1943, the appellants alleged that there was a partial partition among the members of the family on July 16, 1943, whereby the Banaras brocade business was divided in equal shares among the four branches and that, on the next day, the adult members of the family formed two partnerships admitting the minors to the benefits thereof, and thereafter carried on business in Banaras 160 brocade under the respective firm names of Sohan Pathak Girdhar Pathak and G. M. Pathak & Co. The appellants claimed that the family as such ceased to carry on business in Banaras brocade after July 16, 1943, though they continued to remain joint in status and that the profits derived by the two partnerships aforesaid after July 17, 1943, could not be assessed as profits of the original joint family business, as the businesses carried on by the two partnerships were distinct and newly started businesses and could neither in law nor in fact be regarded as continuation of the old brocade business.
In support of this claim the appellants strongly relied on the circumstance that the Income tax Officer treated the old business as discontinued by the family after the partial partition and granted relief on that footing under section 25(3) of the Indian Income tax Act in the assessment to income tax of the appellants as a Hindu undivided family.
The Excess Profits Tax Officer, however, rejected the claim as he was of opinion that the main purpose of the partial partition and the creation of the two partnerships was to avoid or reduce the liability of the appellants to excess profits tax, and he made adjustments under section 10 A of the Act by adding to the profits made by the appellants as a joint Hindu family till the date of the partition the profits made by the two firms during the chargeable accounting periods.
The Appellate Assistant Commissioner and the Appellate Tribunal confirmed the finding and order of the Excess Profits Tax Officer, but, at the instance of the appellants, the Tribunal referred the following questions to the High Court for its decision: 1.Whether in view of the fact that the partial partition bad been accepted by the Income tax Officer and the business was treated as having been discontinued for the purpose of assessment under the Income tax Act, the same business could legally be treated as having continued unbroken in respect of the same chargeable accounting period for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act ? 161 2.Whether in the circumstances of the case the effect of the partial partition of the Hindu undivided family on July 16, 1943, and the formation of two different firms was a transaction within the meaning of section 10 A of the Excess Profits Tax Act ? 3.Whether on the facts found by the Tribunal as stated in para.
7 of the statement of the case, it was justified to draw the inference that the main purpose behind the partial partition was the avoidance or reduction of liability to excess profits tax ? The court answered these questions against the appellants but granted leave to appeal to this court.
At a previous hearing of these appeals this court was of opinion that the material facts relating to the partial partition and the formation of the partnership and the findings of the Tribunal in regard thereto had not been clearly stated by the Tribunal in the original statement of the case.
The court said: " While it is true that in one place in the statement of case the Tribunal speaks of the old family brocade business as continuing without a break after the partial partition, reference is made in another place to the assets of that business having been equally divided among the four branches forming the family.
There is thus no clear finding as to how the partition of the brocade business was actually effected whether by a division in shares, each branch holding its share in severalty and the business being carried on as before on a partnership basis, or whether by an actual distribution and allotment of specific assets and liabilities among the branches resulting in the disruption of that business." The court accordingly by its order of January 12, 1953, called for a further and clearer statement of the facts on the points indicated.
The Tribunal has since submitted a supplementary statement of the case fully setting out the details of the partition arrangement and the constitution of the two firms by the members of the family after the partition.
The statement reveals that the bulk of the 162 capital as well as all " the stock in trade, the cash in hand, the cash in banks, all outstandings as on that date as also the sundry liabilities up to that day " were divided amongst each of the 14 coparceners each branch being allotted a four anna share as stated in the schedule filed by the assessees and annexed to the statement, showing that the partition was by specific distribution of the assets and liabilities and not by a division of shares merely.
With the assets and liabilities thus distributed, the two partnerships separately carried on brocade businesses similar to the one carried on by the joint family before the partial partition.
The names of the partners of the two firms are mentioned and it appears that each firm consisted of members representing all the four branches, some of them being adults and some minors, the minors in each case being only admitted to the benefits of the partnerships.
On these facts it was contended by Mr. Pathak on behalf of the appellants that the finding of the Excess Profits Tax Officer that the main purpose of the partial partition and the formation of the new partnerships was to avoid or reduce the liability of the appellants to excess profits tax was not supported by any material on record.
Secondly, assuming that there was material on which the officer could have come to such a finding, the old family business in Banaras brocade having been actually closed down, the officer had no power in assessing the profits of that business to make adjustments under section 10 A of the Act by adding the profits made by the two firms after July 17, 1943.
And lastly, and alternatively, there was undoubtedly a change in the persons carrying on the old business after July 16, 1943, even if it were regarded as still continuing, the Hindu undivided family being a "person" [section 2(17)] distinct from the individuals Composing it, and such business ' must, under section 8(1), be deemed for all the purposes of the Act (except for one not material here) to have been discontinued and a new business to have been commenced, and the same consequences followed.
Mr. Patbak did not argue 163 that the partial partition and the constitution of the two partnerships were not "transactions" within the meaning of section 10 A.
Nor did he insist that the acceptance of the partition and allowance of relief by the Income tax Officer under section 25(4) of the Income tax Act concluded the matter for purposes of section 10 A of the Act, as appears to have been contended in the earlier stages of these proceedings.
The first contention can be disposed of in a few words.
It appears from the facts found by the tax authorities as well as by the Appellate Tribunal that the partial partition and the formation of the partnerships were brought about at a time when the profits of the Banaras brocade business showed a definitely upward trend.
If the main purpose of these transactions was not to evade liability to excess profits tax, the appellants were asked to explain what the purpose was, and they said that they wanted to protect the interests of the minor members whose shares in the partnership assets would not be liable for the losses, if any, of the firms, while the entire family properties would be liable for any loss incurred in the family business.
This explanation was not acceptable because such protection was not thought of when the family business was earning smaller profits and also because, according to the constitution of the partnerships, while each branch was given the same 4as.
interest, the responsibility for losses falling on the branch which had no minor members would be heavier than what would be borne by the branch which had no adult members, a disparity which the purpose put forward by the appellants failed to explain.
In these circumstances we agree with the High Court in holding that there was sufficient material to support the inference drawn by the Appellate Tribunal that the main purpose behind the partial partition and the formation of the partnerships was the avoidance or reduction of liability of the family business to excess profits tax.
The real and substantial question in the appeals is whether in view of the finding of fact that the old family business was wound up, its assets and liabilities 164 having been actually distributed among the coparceners, and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, ' section 10 A has any application to the case.
Question No. 1, which is supposed to have raised this point, was not happily framed.
As already stated, Mr. Pathak did not argue that the Income tax Officer 's finding as to the discontinuance of the old family business precluded the Excess Profits Tax Officer from considering the issue.
It is now well settled that, for the purposes of the Act, a business is a unit of assess ment, and the charging section 4 provides for the tax being levied in respect of the profits of " any business to which this Act applies.
" Section 5 specifies the businesses to which the Act applies, and they are businesses " of which any part of the profits made during the chargeable accounting period is chargeable to income tax " by virtue of certain specified provisions of the Indian Income tax Act, 1922.
There are some provisos to this section, one of which excludes the application of the Act to " any business the whole of the profits of which accrue or arise in a Part B State.
" It is thus manifest that the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period.
In other words, if a business, having been discontinued, earned no profit during the chargeable accounting period in question, no excess profits tax can be charged in respect of such business, and that being the position here as respects the old joint family business in Banaras brocade, the appellants are not liable to be taxed as a Hindu undivided family in respect of that business.
But, argues the learned Attorney General, that result cannot follow by reason of section 10 A of the Act which runs as follows: 10 A. Transactions designed to avoid or reduce liability to exces profits tax. (1) Where the Excess Profits Tax Officer is of the opinion that the main purpose for which any transaction or transactions was or were effected (whether before or after the passing of the 165 Excess Profits Tax (Second Amendment) Act, 1941) was the avoidance or reduction of liability to excess profits tax, he may, with the previous approval of the Inspecting Assistant Commissioner, make such adjustments as respects liability to excess profits tax as he considers appropriate so as to counteract the avoidance or reduction of liability to excess profits tax which would otherwise be effected by the transaction or transactions.
This provision, it is claimed, empowers the Excess Profits Tax Officer to ignore any transaction (s) the main purpose of which was the avoidance or reduction of liability to excess profits tax and to proceed on the footing that such transactions) had not been effected, and, in the present case, the partial partition as well as the subsequent formation of the partnerships having been found to be transactions the main purpose of which was the avoidance or reduction of liability to excess profits tax, the officer had authority to assess the appellants ' old family business in Banaras brocade on the basis of its continued existence during the relevant chargeable accounting periods.
We are unable to accept this contention.
If, under section 4 of the Act read with section 5, the old joint family business cannot be regarded as one " to which this Act applies," section 10 A, one of the provisions of the Act, can have no application to such business.
The learned Attorney General 's argument that sections 4 and 5 must be read along with section 10 A in determining whether the Act applies to any particular business or not involves the fallacy that, in determining the initial issue whether the Act does or does not apply to a given business, you have to look not merely at the provision which defines the scope and application of the Act but other provisions also which presuppose its application.
We are of opinion that the issue whether the Act applies or not to a particular business must be determined solely with reference to section 5, and section 10 A must be construed as 23 166 applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected.
The learned Attorney General conceded that, if a person who had been paying excess profits tax transferred the business to a Part B State, it would not be competent for the Excess Profits Tax Officer to take action under section 10 A to make adjustments on the footing that the assessee continued to carry on his business in the same place as before such transfer, even if it was found that the transfer was effected for the main purpose of avoiding or reducing his liability to excess profits tax.
In that case, the Attorney General admitted, the Officer would be running counter to the express prohibition contained in the proviso to section 5 to which reference has been made and he did not challenge the correctness of a decision to that effect by the Bombay High Court, (Commissioner of Excess Profits Tax, Bombay City vs Moholal Maganlal) (1).
But we fail to appreciate the distinction in principle between that case and the present, for, to both alike the Act is made inapplicable by section 5.
The reasoning of the learned Judges in the Bombay case, namely, that if the Act is inapplicable to a particular business and there would thus be no liability to excess profits tax in respect of that business, no question could arise of avoiding or reducing any liability to excess profits tax under section 10 A, would equally apply to the present case and must lead to the same result.
Reference was made by the Attorney General in the course of his argument to the proviso to section 2(5) which says that " all businesses to which this Act applies carried on by the same person shall be treated as one business for the purposes of this Act.
" We find it difficult to appreciate the bearing of this section on the point at issue.
It is clear that the proviso can operate in respect of businessess to which the Act applies and not otherwise, and it carries the, matter no further.
(1) [1953] 23 167 In the view we have expressed above, it is unnecessary to deal with the alternative contention based on section 8(1) of the Act.
We allow the appeals, set aside the answer made by the High Court to question No. 1 and answer it as follows: In view of the finding of fact that the old joint family business in Banaras brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not legally be treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act.
The judgment of the High Court will stand in other respects.
The appellants will have their costs of the appeals.
Advocates ' fee one set.
Appeals allowed.

summary:
A Hindu undivided family carried on business in money lend ing and brocade.
On the 16th July, 1943, there was a partial partition amongst the members by which the brocade business was divided and its assets and liabilities were partitioned in equal shares between the members of the family.
On the next day the adult members of the family formed two partnerships admitting minors to the benefit thereof, and carried on the brocade business under two separate firm names though they continued to remain joint in status.
The Income tax Officer accepted the partial parti tion and treated the brocade business of the family as having been discontinued, but the Excess Profits Tax Officer held that as the main purpose of the partial partition was avoidance of tax, it was an artificial transaction, and, treating the business as unbroken, made adjustments under section 10 A of the Excess Profits Tax Act, by adding to the profits made by the assessees as a joint family till the date of the partition, the profits made by the two firms after partition during the chargeable accounting period : Held, (i) under sections 4 and 5 of the Excess Profits Tax Act, the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period, and, as the old joint family business in brocade was discontinued and earned no profit during the chargeable accounting period in question, the appellants were not liable to be taxed as a Hindu undivided family in respect of that business; (ii)that the issue whether the Excess Profits Tax Act applies to a particular business must be determined solely with reference to section 5 of the Act, and section 10 A must be construed as applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected; and in view of the finding that the old joint family business in brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not be 159 legally treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act.


judgement:
minal Appeal No. 202 of 1962.
Appeal by special leave from the Judgment and Order dated August 1, 1962, of the Mysore High Court in Criminal Appeal No. 213 of 1961.
W. section Barlingay and A. G. Ratnaparkhi, for the appellant.
R. Gopalakrishnan and B. R. G. K. Achar, for the res pondent.
April 1, 1964.
The Judgment of SUBBA RAO and DAS GUPTA JJ. was delivered by DAs GUPTA J. RAGHUBAR DAYAL J delivered a dissenting opinion.
DAS GUPTA, J.
The appellant, who was a registration clerk in the Haveri Post Office in the Mysore State, was tried by the Sessions Judge, Dharwar, on charges under section 52, section 53 and section 55 of the Indian Post Office Act.
The prosecution case is that on the 18th October 1955 a registered letter containin half portion of a ten rupee note and petition on behalf of one Muppayyagonda asking for the said note to be exchanged for a fresh note was received at the Haveri Post Office at 4.30 p.m. from the Branch Post Office at Kabbur.
The appellant who was a, registration clerk at Haveri at the time, however, detained the registered envelope instead of 608 despatching it that very day as he should have done.
He despatched it the next day.
It was the prosecution case that the appellant removed the half portion of the ten rupee currency note from inside the envelope and to cover up his misconduct made alterations in the petition contained in the envelope and in the list of registered articles.
All this was discovered, it is said, when the Reserve Bank of India, to which this envelope was addressed made enquiries in the matter on finding that no note had been enclosed with the petition.
The appellant admitted that the envelope was received at the Haveri Post Office on October 18, 1955 and also, that he did not despatch it on that date.
His case was that it was received at about 5.30 p.m. on the 18th and so it was too late for despatch on that date but that he despatched it duly on the 19th, On a consideration of the evidence the Sessions Judge held that the charge under section 52 of the Indian Post Office Act for the theft of currency note and for secreting the registered articles had not been established and acquitted him of that charge.
He, however, found it proved that the appellant bad fraudulently altered the lists of registered articles and thereby committed an offence under section 55 of the Indian Post Office Act.
He also held that the appellant had wilfully detained the envelope and thus committed an offence under section 53 of the Indian Post Office Act.
He accordingly convicted the appellant of the charges under Ss. 53 and 55 of the Indian Post Office Act and sentenced him to undergo two months ' imprisonment on each charge.
The sentences were directed to run concurrently.
On appeal.
the High Court of Mysore set aside the ap pellant 's conviction under section 55 of the Indian Post Office Act but maintained his conviction under section 53, being of opinion that while the wilful detention of the envelope by the appellant had been proved, the alleged alterations by him in the list of registered articles had not been established.
Against the High Court 's decision the present appeal has been preferred by the appellant, Ramchandra Narasimha Kulkarni.
In support of the appeal it is contended by Dr. Barlingey that as the allegations of theft of the note or of alterations in the list of registered articles by the appellant have not been established, the appellant must be held not to have committed any offence under section 53 of the Indian Post Office Act.
It is argued that assuming that the envelope was detained by the appellant as alleged, he cannot be said to have detained it `wilfully" unless it is shown that he bad some purpose in doing it.
But, the purpose alleged by the prosecution was that he wanted to commit theft of the currency note, and to cover this up, to make alterations in the list of registered articles, these purposes have not been established.
So, argues the learned Counsel, the detention of the envelope should be held 609 to have been made without any purpose but only through inadvertence or mere carelessness.
That would not constitute, according to the learned Counsel, a, wilful detention.
The words "wilful" and "wilfully" are frequently used in many statutes and have come up for judicial consideration in the courts of this country as also elsewhere.
The meaning given to these words have differed in different contexts.
Sometimes, any intentional act has been held to be a wilful act.
(Re Young and Harston)(1).
Often, it has been said that the word wilful suggests bad conduct or action though it does not necessarily connote blame.
(Wheeler vs New Merton Board Mills)(2) Not infrequently the word has been used to mean that the act had been done with a bad purpose or without justifiable excuse or stubbornly, obstinately or perversely.
(United States of America vs Harry Murdock)(3).
Some decisions stress the requirement of deliberation or reckless disregard of the fact whether the act was or was not in breach of duty in deciding whether it has been wilful.
(Hudson vs Official Liquidator(4); and In re T.N.K. Govindarajulu Chetty)(5).
In the last mentioned case, viz., In re T.N.K. Govindarajulu Chetty 's case, the Madras High Court held that a submission of a false return cannot be a wilful submission unless the dealer has deliberately made the return with the knowledge that he was excluding a taxable item, though in almost similar circumstances another Bench of the same High Court took a different view and held that even though when an assessee, under the impression that a particular item is not taxable and, therefore, need be excluded in the return, omits lo make a mention, of it in the return which he furnished with the full knowledge of his having committed the same, he has "wilfully" omitted it.
(In re Jayarama Chettiar) (6).
A review of these various decisions brings out clearly the guiding principle that the meaning to be attached to the words " wilful" or "wilfully" has to be ascertained on a close examination of the scheme and nature of the legislation in which the words appear and the context in which they are used.
Turning now, for this purpose, to the Indian Post Office Act, we notice that s.53 which makes punishable the wilful detention or delay of a postal article by an officer of the post office in one of the several sections which create offences under this Act.
There are 21 such sections, being sections 49 (1)31 Ch. D. 174.
(2) 1933(2) K.B. 669.
(3)78 Law E. 389.
(4) A.I.R. 1929 All. 826.
(5)1951 2 S.T.C. 27.
(6) I.L.R. 1949 Madras, 121.
L/P(D)ISCI 20 610 to 56 and 58 to 70, all in Chapter X of the Act.
Some of these offences, viz., those under Ss. 49, 58, 59, 63, 64, 65, 66 and 67 are punishable only with fine.
The offences under Ss. 50, 51, 52, 53, 54, 55, 56, 60, 61, 62, 68 and 69 are made punishable also with imprisonment.
Of these again, the offences under section 53, are punishable with imprisonment which, may extend to seven years; offences under Ss. 53, 54, 55, 56, 60, and 68 are punishable with imprisonment which may extend to two years; offences under Ss. 61 and 62 are punishable with imprisonment which may extend to one year while offences under Ss. 51 and 69 are punishable with imprisonment which may extend to six months only.
An offence under s, 50 is punishable with imprisonment extending to one month or with fine extending to Rs. 50/ .
This comparison clearly shows that the legislature took a more serious view of the offence of wilful detention of a postal articles (section 52) than of many other offences in this Chapter.
Delay in the conveyance or delivery of a mail bag or other postal articles in the course of transmission by a person employed to carry the same is made punishable with only a fine of Rs. 501 (section 49).
Withdrawal from duties of office without permission or without having given a month 's previous, notice in writing by a person employed to carry or deliver a mail bag or postal article is also made punishable only with imprisonment extending to one month or with fine extending to Rs. 501 .
Making of a false entry in the register with intention to induce the belief that an article has been delivered is made punishable with imprisonment extending to only six months or with fine extending to Rs. 100/ .
But Wilful, detention of a postal article is made punishable with imprisonment extending to two years.
Is it reasonable to thin that the legislature would prescribe this heavy punishment for detention of a postal article which was not deliberate and on purpose, while prescribing lighter punishment as mentioned above for the offences under Ss. 49, 50 and 5 1.
We do not think so.
The very fact that this comparatively heavy punishment of two years ' imprisonment has been prescribed for wilful detention while lighter punishment has been prescribed under Ss. 49, 50 and 51, justifies, in our opinion, the concclusion that the word "wilful" was used by the legislature to mean only such detention which was deliberate and for some purpose.
It is interesting to notice in this connection that in the, preceding section 52 the legislature after making punishable the offence of theft of a postal article or of dishonest misappropriation of the same, also made punishable the secretion, destruction or throwing away any postal article if done "for any purpose whatsoever".
It is, in our opinion, reasonable to think that in section 53 when the word "wilfully" was used, the 611 legislature also intended that the detention would be punishable only if made for some purpose.
Coining now to the facts of the present case, we find that the prosecution alleged a definite purpose, viz., the purpose of theft of the contents of the envelope as the purpose with which the postal article was detained.
The existence of that purpose has not, however, been established.
Nothing was suggested before us as to, what other purpose the appellant could 'have had in detaining the article.
There is, therefore, no escape from the conclusion that the detention was not deliberate and on purpose, but as a result of either inadvertence or carelessness or negligence.
So, the appellant cannot be said to have detained or delayed the article 'wilfully '.
Accordingly, we allow the appeal, set aside the order of conviction and sentence passed by the High Court and order that the appellant be acquitted of the charge against him.
RAGHUBAR DAYAL, J.
The main question to determine, in this case, is what the expression 'wilfully detains or delays ' in section 53 of the Indian Post Office Act, 1898 (Act VI of 1898), hereinafter called the Act, means.
I do not agree that it means such detention which was deliberate and for some purpose.
I am of opinion that the detention or delay would be 'wilful ' if it was intentional and deliberate on the part of the officer of the post office, as opposed to detention or delay on account of negligence or inadvertence.
The word 'wilful ' or 'wilfully ' used in other enactments have been construed by Court in this manner.
I may refer 'to some of these cases.
In Taylor vs Vergette(1) 'wilful delay ' has been construed ,to mean 'intional delay '. 'Wilfully ' means that the act is done deliberately and intentionally, not by accident or inadvertence, but so that the mind of the person who does the act goes with it".
In Tamboli vs Great Indian Peninsular Railway Company(3) the Privy Council had to construe the expression 'wilful neglect ' in determining the responsibility of the railway administration or its servants and approved of what was said by Lord Russel in Reg.
vs Senior(2).
(1) (2) , 290.
(3) L.R. 55 I.A. 67=I.L.R. L.P(D)LSCI 20(a) 612 In Wheeler vs New Merton Board Mills, Ltd.(1) it was said: " 'Wilful act ' is plain English, and I can entertain no doubt that the installing of this machine without guard or fence for use in the factory was a wilful act by some one.
It was an act, and it was intentional.
It is true that though 'wilful ' and 'intentional ' are synonymous. . wilful ' is more commonly used in modern speech of bad conduct or actions than of good, though it does not necessarily connote blame; but that is far from supporting the strange contention that wilful act in section 29, sub section 1, must be confined to something done with intent to injure".
In Hudson vs Official Liquidator(2) 'wilful default ' was construed and it was said at p. 930: "The adjective 'wilful ' in 'wilful acts or defaults ' has evidently been used as a description and not as a definition.
The idea intended to be conveyed is that the default is occasioned by the exercise of volition or as the result of the non exercise of will due to supine indifference, although the defaulter knew or was in a position to know that loss or harm was likely to result.
The word does not necessarily suggest the idea of moral turpitude.
We have also to eliminate the elements of accident or inadvertence or honest error of judgement.
The default must be the result of deliberation or intent or be the consequence of a reckless omission. 'Wilful default ', therefore, is indicative of some misconduct in the transaction of business or in the discharge of duty by omitting to do something either deliberately or by a reckless disregard of the fact whether the act or omission was or was not a breach of duty".
This view was accepted by the Madras High Court in T.N.K. Govindarajulu Chetty, In re(3).
The words 'wilful ' and 'wilfully ' have been used in the various provisions of the Act do not lead to any different interpretation of these words.
Section 6 of the Act provides, inter alia, that no officer of the Post Office shall incur any liability by reason of any loss, mis delivery, delay or damage, unless he has caused the same fraudulently or by his wilful act or default.
(1)[1933] 2 K.B. 669.
(2) A.I.R. 1929 All.
826 (3) 1951 2.
S.T.C. 27.
613 Section 48(c) provides that no suit or other legal proceed ing shall be instituted against the Government or any officer of the post office in respect of the payment of any money order being refused or delayed by, or on account of, any accidental neglect, omission or mistake by, or on the part of an Officer of the post office, or for any other cause whatsoever, other than the fraud or wilful act or default such officer; and brings out effectively the contradistinction between wilful act or default of an officer and an act done on account of accidental neglect, omission or mistake.
Section 49 to 70 provide for offences.
Sections 49, 50 and 51 deal with offences which are committed by persons who are employed to carry or deliver any mail bag or any postal article, in course of transmission by post.
They are thus offences by carriers of postal articles.
They can be committed both by the officers of the postal department and by others as well.
Such of the acts contemplated by those sections which can also fall under the other sections exclusively applicable to officers of the post office, will naturally be dealt with under those sections.
The persons who will be dealt with under Ss. 49 to 51 or other sections providing for lighter punishments will be those who are not officers of the postal department but are concerned in any manner with the transmission of the post.
Clause (c) of section 49 makes punishable the loitering or making delay in the conveyance or delivery of any mail bag or postal article, and thus emphasizes the necessity of prompt transport of postal articles.
Sections 52 to 66 provide for offences by officers of a post office.
Section 52 provides punishment for committing theft or dishonestly misappropriating in respect of or, for any purpose whatsoever, secreting, destroying or throwing away any postal article in the course of transmission by post or anything contained therein.
The offence is punishable with imprisonment upto seven years and also with fine.
This is the most serious offence.
It is to be noted for our purpose that the secreting, des troying or throwing away of the postal article for any pur pose whatsoever is an offence.
An act done with a purpose must be a deliberate act and a, deliberate act must also be one done with some purpose.
The legislature, where it intended to make the purpose behind an act an ingredient of the offence, expressly stated so.
If the word 'wilful ' or 'wilfully ' is used in the Act as a synonym for an act done deliberately and for some purpose, the expression 'wilfully ' could have been used in the place of 'for any purpose whatsoever '.
This, however, the legislature did not do, though it used that word in the very next section, viz., section 53 which reads: 614 .lm15 "Whoever, being an officer of the Post Office, contrary to his duty, opens, or causes or suffers to be opened, any postal article in course of transmission by post, or wilfully detains or delayed or causes or suffers to be detained or delayed, any such postal article, shall be punishable with imprisonment for a term which may extend to two years, or with fine or with both: Provided that nothing in this section shall extend to the opening, detaining or delaying of any postal article under the authority of this Act or in obedience to the order in writing of the Central Government or the direction of a competent Court".
Sections 54, 55 and 56 make certain acts done fraudulently, knowingly or with intent, punishable with imprisonment upto two years or fine.
Section 55 makes the fraudulent altering or secreting or destroying of a document which an officer of the post office is entrusted with keeping, punishable with imprisonment upto two years and with fine.
This act is con sidered less heinous than that of secreting, destroying or throwing away of any postal article in the course of transmission by post, for any purpose whatsoever.
Section 66(1) makes the master of a ship who, in certian circumstances, knowingly has in his baggage or in his possession or custody, any postal article within the exclusive privilege conferred on the Central Government by section 4, punishable with fine which may extend to Rs. 50/ for every such postal article.
Here a certain act committed knowingly is made an offence.
Sub section
(2) of section 66 makes the detention of any postal article, after a demand for it has been made by an officer of the post office, punishable.
Here, the mere detention after a demand is made penal irrespective of the intention or purpose behind such detention.
Section 67 makes the detention of mails or any postal article in the course of transmission by post by anyone except under the various circumstances mentioned in the section, in offence.
Here again, mere detention is made an offence irrespective of the circumstances in which it is made, excepting for reasons mentioned in the section iteself.
Section 68 reads: "Whoever, fraudulently retains, or wilfully secretes or makes away with, or keeps or detains, or when required by an officer of the post office, neglects or refuses to deliver up, any postal article in 615 course of transmission by post which ought to have been delivered to any other person, or a mail bag containing a postal, article, shall be punishable with imprisonment for a term which may extend to two years, and shall also be punishable with fine".
It is to be noticed that 'wilfully ' secreting any postal article in the course of transmission by post is an offence under this section.
A comparison with the provisions of section 52 of the Act indicates that the legislature must have used the expresssions 'wilfully ' and 'for any purpose whatsoever ' in different senses.
maliciously with intent to injure any person, offences. 'Wilfully" here is used as something distinct from 'maliciously ' and is, further used in addition to the expression 'with intent to injure any person ', that is to say, the particular purpose or intent is in ingredient of the offence in addition to 'wilfully '.
Sections 6 and 48(c) provide that an officer of a post office would be liable for the loss, misdelivery, delay or of damage to any postal article in the course of transmission or for the delay in the payment of a money order, only when this happens as a result of his wilful act or default.
The person suffering from such misdelivery etc., has no claim against the officer of the post office if that thing has been the result of something which could not be said to be the wilful act or default of a postal officer.
It is no concern of the addressee or recipient of an article in transit by post that the wilful act or default of the postal officer was with a certain purpose or not and whether that officer succeeded in that purpose or not.
:Vie should be successful in his claim if the postal officer has deliberately not acted in the manner he is required to act tinder the Act or the rules framed thereunder or if he has deliberately acted in violation of the duties entrusted to him.
In either case, the act of the officer concerned would be wilful inasmuch as he would act intentionally in violation of his duty or in a manner in which he is not to act and not accidently or inadvertently.
The provision of s.53 of the Act require that the office wilfully detains ' the postal article and that the act of detention be contrary to his duty prescribed by or under the Act.
Section 21(2)(c) empowers the Central Government to make rules providing for the detention and disposal of articles in course of transmission by post in certain circumstances.
Sections 22(1), 23, 26.
27B and 37(2) provide for the circumstances in which postal articles can be detained or delayed.
It is not necessary to detail those circumstances.
The clause 'contrary to his duty ' governs both the act of opening 616 of the Postal article and to the act of detaining it.
The first necessary ingredient of the offence under section 53 is that the postal officer should act contrary to his duty.
Such an act, however, can take place by accident or negligence also, without the officer 's knowing it or even giving any thou ]it to it and therefore without his exercising his will in that matter.
The legislature, therefore, felt that accidental or negligent acts be not made offences and that detention of the postal article, even if it be contrary to duty, be protected and that only such detention of the articles be made punishable which be committed wilfully, i.e., when the officer applied his mind towards the act and has committed it deliberately with the intention of committing it.
The mere act of detaining mails or postal articles by any person other than a postal officer is made punishable only with fine under section 67 of the Act.
This indicates that the punishment under section 53 is severe because the culprit is an officer of the post office who has opportunities to detain the postal article and who acts contrary to his duty.
The proviso to section 53 refers to cases which would have come within the main provisions, and provides that the main provisions do not extend to the opening, detaining or delay ing of any postal article under the authority of the Act or in obedience to the order in writing of the Central Government or the direction of a competent Court.
Such acts would be undoubtedly deliberate and without any criminal purpose.
The use of the expression 'for any purpose whatsoever ' in section 52 is no guide to construe the word 'wilfully ' in section 53.
It appears to have been used in section 52 in contradistinction to the mens rea necessary for the commission of the offence of theft or of dishonest misappropriation.
Its use makes it clear that the act of secreting, destroying or throwing away of the postal article will be punishable if with a purpose, whatever that may have been.
I, therefore, construe 'wilfully ' in section 53 to mean 'inten tionally and deliberately ' and not accidently or negligently and hold that the appellant has been rightly convicted of the offence under that section.
I am further of opinion that even if the expression 'wil fully detains ' in section 53 of the Act means a detention delibe rate and for some purpose, the appellant is not entitled to an acquittal on the findings the Courts have arrived at.
The appellant, in ordinary course of business, would have forwarded the registered letter by the mail on October 18, 1955 when it had been received at the usual hour and the ap pellant 's contention that it was received after the despatch 617 of the mail has not been accepted.
It follows that the appellant deliberately detained the registered letter.
The intention and deliberation was directed towards the detaining of the registered letter and to the non forwarding of it in due course With the mail that day.
Every intentional and deliberate act must be with some purpose or object.
It may be that in some cases the object be achieved by the mere doing of the act intended, that is to say, the object was just the doing of that act.
In other cases, an act may be done with some further object also.
The appellant 's purpose behind his intentional act of detaining the registered letter must have been to remove what he might have suspected the letter to contain.
If he did not have any such object, he could not have any reason to depart from his duty and detain the letter instead of sending it by the next mail in the ordinary course of his duties.
His act, therefore, in detaining the letter, amounted to his detain ing it wilfully.
that he himself opened the letter, tempered with its contents, and removed the half currency note, facts which have been proved to have been committed by someone, does not mean that his detaining the letter was not on purpose.
A person may do an act with a certain purpose and yet may not succeed in his purpose.
Even if he succeeds it may not be possible for any other person to establish that he did that act for that purpose and did succeed in achieving that purpose.
I would, therefore, dismiss the appeal.
ORDER BY COURT In accordance with the majority opinion, the appeal is, allowed, the order of conviction and sentence set aside and the appellant ordered to be acquitted of the charge against him.
Appeal allowed.

dataset_name: IN-Abs

summary:
The appellant was a registration clerk in a post office.
He was prosecuted on the allegation that he committed theft of a half of a ten rupee note contained in a registered letter along with a petition for exchanging it, for altering the petition and for detaining the registered letter for a day with the purpose of committing the theft and making the alteration.
He was charged under Ss. 52, 53 and 54 respectively of the Post Offices Act, 1898.
The Sessions Judges who tried the case found him not guilty of the offence under section 52 but guilty under Ss. 53 and 55.
On appeal to the High Court he was found not to be guilty of the offence under section 55; the conviction under section 53 was maintained.
Thereupon he appealed to this Court.
It was contended by the appellant before this Court that as suming that he detained the envelope he cannot be said to have detained it "wilfully", unless it is shown that he had some purpose in doing it and since the purpose alleged by the prosecution has not been proved the appellant cannot be said to have committed the offence under section 53.
Held: per K. Subba Rao and K. C. Das Gupta, JJ.
A review of the case law brings out clearly the guiding principle that the meaning to be attached to the words "wilful ' or ',wilfully" has to be ascertained on a close examination of the scheme and nature of the legislation in which the words appear and the context in which they are used.
Re Young and Harston, Wheeler vs New Merton Board Mills, United States of America vs Harry Murdock, , Hudson vs Official Liquidator, A.I.R. 1929 All. 826, In re T. M. K. Govindarajulu Chetty, 1951 2 S.T.C. 27 and In re Jayarama Chettiar, I.L.R. referred to.
(ii) A comparison of the various sections of the Act shows that the legislature took a more serious view of the offence of wilful detention of postal articles than any of the offences in Ch.
X and has, therefore, prescribed a comparatively heavy punishment.
Hence it is reasonable to think that in section 53 when the word "wilfully" was used the legislature also intended that the detention would be punishable only if made for some purpose.
(iii) The prosecution alleged in the present case that the purpose was theft of the note but the existence of that purpose has not been established and detention was not deliberate and hence the appellant cannot be said to have detained the article wilfully.
Per Raghubar Dayal, J. (dissenting) The legislature where it intended to make the purpose behind an act an ingredient expressly stated so, as for example in section 52.
If the word "wilful" or "wilfully" is used in the Act as 607 a synonym for an act done deliberately and for some purpose, the expression wilful could have been used in the place of "for any purpose whatsoever".
This the legislature did not do though it used that in section 53.
(ii) The mere act of detaining a postal article by any person other than a postal officer is made punishable with only fine under s, 67 and a higher punishment is provided under section 53 because the culprit is an officer of the post office who has opportunities to detain the, postal articles and who acts contrary to his duties.
(iii) The expression "wilfully" in section 53 means "intentionally and deliberately" and not "accidently" or "negligently".
(iv) From the facts of the case it is proved that the appel lant deliberately detained the registered letter.
His intention and deliberation were directed towards the detaining of the registered letter and to the non forwarding of it in due course with the mail that day.
Every intentional and relevant act must be with some purpose or object.
He, therefore obtained the letter wilfully and is guilty of the offence under section 53.
Taylor vs Vergette (861) , Reg.
vs Senior , Tamboli vs Great India Peninsular Railway Company, L.R. 55 I.A. 67, Wheeler vs New Merton Board Mills Ltd. , Hudson vs Official Liquidator, A.I.R., 1929 All. 826 and T. N. K. Govindarajulu Chetty, 1951 S.T.C. Vol. 2, 26, referred to.


judgement:
Appeal No. 505 of 1963.
Appeal from the judgment and order dated March 6, 1961 of the Punjab High Court (Circuit Bench) at Delhi in I.T.R. No. 16 of 1959.
section K. Kapur and B. P. Maheshwari, for the appellant.
C. K. Daphtary, Attorney General, K. N. Rajagopal ' Sastri and R. N. Sachthey, for the respondent.
April 1, 1964.
SHAH, J.
The appellant which is a Hindu undivided family was the registered holder of 1,500 shares of M/s Govan Bros. (Rampur) Ltd. in the year of account October 1, 1950 to September 30, 1951.
Pursuant to a resolution passed by the board of directors of M/s Govan Bros. (Rampur) Ltd. hereinafter called 'Govan Bros. ' at a meeting held on August 30, 1950, the appellant received a dividend warrant dated December 28, 1950 for Rs. 4,12,500/being interim dividend in respect of its shareholding in Govan Bros.
This amount was brought to tax with the other income of the appellant in the assessment year 1952 53 by the Revenue authorities.
after rejecting the objection of the appellant that it represented income for the assessment year 1951 52.
At the instance of the appellant the Appellate Tribunal drew up a statement of the case and referred the question set out hereinbelow to the High Court of Punjab under section 66(1) of the Indian Income tax Act: "Whether on a true interpretation of Article 95 of the First Schedule to the Indian Companies Act, 1913, the dividend of Rs. 4,12,500/ was liable to be included in the assessment year 1952 53.
" The High Court recorded an answer to the question in the affirmative.
Against the order of the High Court, this appeal is preferred by the appellant with certificate granted by the High Court.
Even though the question was framed a; , if article 95 of the First Schedule to the Indian Companies Act, 1913, ap plies to Govan Bros, it is common ground that the company 581 was registered under the Companies Act of the former Rampur State, and it had adopted special Articles of Association in supersession of Table A of the Companies Act.
The relevant articles of Govan Bros. dealing with declaration or payment of final and interim dividends were articles 73 and 74.
The High Court therefore proceeded to deal with the question on the footing that it was, by the question referred, called upon to interpret article 74 of the Articles of Association of Govan Bros.
It is common ground between the appellant and the Revenue that the provisions of the Companies Act of the former Rampur State were in terms identical with the provisions of the Indian Companies Act, 1913.
The appellant contend that the directors of Govan Bros. had in exercise of authority expressly conferred upon them by article 74 declared dividend in their meeting dated August 30, 1950 and on such declaration the dividend became a debt due to the appellant and under the Indian Income tax Act it became taxable in the year of assessment 1951 52, for the previous year of the appellant had ended on September 30, 1951.
The Commissioner of Income tax says that the directors of Govan Bros. had paid by warrant issued on December 28, 1950 pursuant to a resolution dated August 30, 1950, interim dividend and it was only on payment the dividend became taxable under section 16(2) of the Indian Income tax Act.
It is said by the Commissioner that dividend final or interim is taxable not in the year in which it is declared but only in the year in which it is paid, credited or distributed, or deemed to be paid, credited or distributed, and that in any event a resolution by the Board of Directors to pay interim dividend does not create an enforceable obligation, for it is always open to the directors to rescind the resolution for payment of dividend even if it is one in form declaring dividend.
The Indian Companies Act, 1913 contains no provision for declaration of dividend either interim or final: it does not say as to who shall declare the dividend, nor does it say that dividend may be declared in a general meeting of the company.
But section 17(2) provides that the company may adopt all or any of the regulations contained in Table A in the First Schedule to the Companies Act as its articles of association, and shall in any event be deemed to contain regulations identical with or to the same effect, amongst others, as regulation 95 and regulation 97 contained in that Table.
Regulation 95 of Table A provides that the company in general meeting may declare dividends, but no dividends shall exeed the amount recommended by the directors, and regulation 97 states that no dividends shall be paid otherwise than out of profits of the year or any other undistributed profits.
Regulation 96, which is not an obligatory article, provides that the 582 directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company.
Govan Bros. had in their Articles of Association made the following provision with regard to dividends: "article 73.
The Company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits.
article 74.
When in their opinion the profits of the company permit, the directors may declare an interim dividend.
article 77.
No dividend shall be payable, except out of the net profits arising from the business of the company, and no larger dividends shall be declared than is recommended by the directors.
" By article 80 it was provided that unless otherwise directed by the company in general meeting any dividends may be paid by cheque or warrant sent through the post to the registered address of the member entitled to the same.
In article 74 relating to payment of interim dividend.
there was a slight departure from the regulation under Table A of the First Schedule to the Companies Act.
Whereas under regulation 96 Table A the directors are authorised to pay to the members interim dividends, by article 74 of the Articles of Association of Govan Bros. the directors are authorised to declare interim dividend.
It may be noticed that under section 17, adop tion of an article in form identical with, or to the same effect as regulation 96 of Table A, is not made obligatory.
The material part of section 16(2) of the Income tax Act as it stood before it was deleted by section 7 of the Finance Act, 1959 with effect from April 1, 1960, read as follows: "For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or distributed or deemed to have been paid, credited or distributed to him The clause in terms made dividend the income of the year in which it was paid, credited or distributed or was deemed to have been paid, credited or distributed.
In the present case dividend was paid to the appellant on December 28, 1950.
It is not the case of the appellant that the amount was either credited in the books of account of Govan Bros. to the appellant or was distributed or deemed to have been paid, credited or distributed to the appellant before the close of the appellant 's year of account ending September 30, 1950.
But Mr. Kapur contends that under the law governing companies 583 on declaration, dividend interim or final becomes due, and it must be regarded for the purpose of the Income tax Act as paid to the member on the date on which it is declared.
There is no doubt that a declaration of dividend by a company in general meeting gives rise to a debt.
"When a company declares a dividend on its shares, a debt imme diately becomes payable to each shareholder in respect of his dividend for which he can sue at law, and the Statute of limitation immediately begins to run": In re Severn and Wye and Severn Bridge Railway Company(1).
But this rule applies only in case of dividend declared by the company in general meeting.
A final dividend in general may be sanctioned at an annual meeting when the accounts are presented to the members.
But power to pay interim dividend is usually vested, by the articles of association, in the directors.
For paying interim dividend a resolution of the company is not required: if the directors are authorised by the articles of association they may pay such amount as they think proper, having regard to their estimate of the profits made by the company.
Interim dividend is therefore paid pursuant to the resolution of the directors on some day between the ordinary general meetings of the company.
On payment, undoubtedly interim dividend becomes the property of the shareholder.
But a mere resolution of the directors resolving to pay a certain amount as interim dividend does not create a debt enforceable against the company, for it is always open to the directors to rescind the resolution before payment of the dividend.
In The Lagunas Nitrate Company (Limited) vs J. Henry Schroeder and Company (2) the directors of a company passed a resolution declaring interim dividend payable on a future date, and requested the company 's bankers to set apart, out of the money of the company in their hand, into a special account entitled "interim Dividend Account", a sum sufficient to cover the dividend, pending the company 's instructions.
But before the date fixed for payment, the directors resolved that pending certain litigation to which the company was a party, payment of dividend be postponed.
it was held by the Court that the directors had the right even after resolving to pay interim dividend to rescind the resolution and no enforceable right arose in favour of the members of the company by the declaration of interim dividend.
In Halsbury 's Laws of England, III Edn., Vol.
6 p. 402, article 778, it has been stated: "A directors ' declaration of an interim dividend may be rescinded before payment has been made." (1) (1)17 Times Law Reports 625.
584 Therefore a declaration by a company in general meeting gives rise to an enforceable obligation, but a resolution of the Board of Directors resolving to pay interim dividend or even resolving to declare interim dividend pursuant to the authority conferred upon them by the articles of association gives rise to no enforceable obligation against the company, because the resolution is always capable of being rescinded.
Therefore departure in the text of article 74 of the Articles of Association of Govan Bros. from the statutory version under Table A of the power in respect of interim dividend which may be entrusted to the directors, makes no real difference in the true character of the right arising in favour of the members of the company on execution of the power.
The directors by the Articles of Association are entrusted with the administration of the affairs of a company; it is open to them if so authorised to declare interim dividend.
They may, but are not bound to, pay interim dividend, even if the finances of the company justify such payment, even if the directors have resolved to pay interim dividend, they may before payment rescind the resolution.
Counsel for the appellant does not rely upon any evidence of actual payment or upon any credit given to the appellant in the books of account of the company nor upon any distribution.
Even the resolution of the directors of August 30, 1950 is not on the record, and there is no evidence that it was resolved to pay the dividend on any date before it was actually paid, and the company had taken any step to implement the resolution within the year of account corresponding to the assessment year 1951 52.
There is no statutory provision which gives rise to a fiction that on declaration of interim dividend, it should be deemend to be paid, credited or distributed.
In support of the plea that interim dividend was taxable in the year of assessment 1951 52, the appellant relies upon two facts only the power vested in the directors to declare interim dividend, and the passing of a resolution by the directors relating to interim dividend on August 30, 1950 followed by the drawing of dividend warrants dated December 28, 1950.
But for reasons already stated a resolution of the board of directors declaring interim dividend, until it is implemented by some step taken by the company, creates no enforceable right in the shareholders.
The judgment of the Bombay High Court in Commissioner of Income tax, Bombay vs Laxmidas Mulraj Khatau(1) on which counsel for the appellant relies, does not assist him either.
In that case the company declared a dividend out of its profits, and made it payable a few days later.
The dividend was paid on the (1) 585 date on which it was made payable by the resolution of the company.
The Income tax Officer treated the amount received by the member as dividend income for the assessment year in which it was actually received.
The High Court of Bombay in a reference under section 66 observed that a; , soon as the divi dend was declared it became the income of the assessee which income the assessee could deal with or dispose of in any manner he liked.
Chagla C. J., speaking for the Court enun ciated the law as follows: "It is impossible to give a literal construction to the expression "paid" used in this sub section (sub section
(2) of section 16).
If a literal construction were to be given, then it would amount to this that "until the dividend warrant was actually cashed and the dividend amount was actually realised it cannot be stated that the dividend was paid to the share holder.
* * * * * I think the proper construction to give to that word is when the dividend is declared then a liability arises on the part of the company to make that payment to the shareholder and with regard to the shareholder when the income represented by that dividend accrues or arises to him.
The mere fact that the actual payment of the income is deferred is immaterial and irrelevant." But whether dividend interim or fixed is income taxable in a particular year of assessment must be determined in the light of section 16(2) of the Indian Income tax Act.
The Legislature had not made dividend income taxable in the year in which it becomes due: by express words of the statute, it is taxable only in the year in which it is paid, credited or distributed or is deemed to be paid, credited or distributed.
The Legislature has made distinct provisions relating to the year in which different heads of income become taxable.
Salary becomes taxable by section 7 when it is allowed to the employee or becomes due to him, whether it is actually paid to him or not.
Interest on securities under section 8 is taxable when it is received by the assessee.
Under section 9 tax on property becomes payable not on any actual receipt of income from the property but on a purely national computation in the year of account of a bona fide annual value of the property, subject to the adjustments provided in that section.
Profits and gains of business, profession or vocation carried on by an assessee are computed in accordance with the method of accounting regularly employed by the assessee, unless the Income tax Officer being of the opinion that profits or gains cannot properly be deduced therefrom, directs otherwise.
Other sources of income and dividends are included in this residuary class become taxable in the year in which they 586 are received or accrue or arise or are deemed to be received, accrued or arise, according to the nature of the particular income.
The year in which a particular class of income be comes taxable must therefore be determined, in the light of its true character, and subject to the special provision, if any, applicable thereto.
The Legislature has enacted an express provision making dividend income taxable in the year in which it is paid, credited or distributed or is to be deemed, so paid, credited or distributed.
The test applied by Chagla C. J., that because the dividend becomes due to the assessee who has the right to deal with or dispose of the same in any manner he likes, it is taxable in the year in which it is declared, cannot be regarded as correct.
The expression "paid" in section 16(2) it is true does not contemplate actual receipt of the dividend by the member.
In general, dividend may be said to be paid within the meaning of section 16(2) when the company discharges its liability and makes the amount of dividend unconditionally available to the member entitled thereto.
Chagla C. J., has himself in Purshotamdas Thakurdas vs Commissioner of Income tax, Bombay City '(2) expressed a different view.
The learned Chief Justice in delivering the judgment of the court referred to Laxmidas Mulraj Khatau 's case (3) and observed that the principle of that case applied only to those cases where in facts the dividend was paid to the shareholder and not to cases where a contingent liability was undertaken and no payment was made.
He observed: "* * * one thing is clear from the language used by the Legislature that it did not intend to equate "paid" with "declared" in every case.
Therefore, it is open to us to consider, notwithstanding the Khatau Mills ' case, whether on the facts of this case, it could be said that dividend has been paid, which although it may have been declared may never be payable and in fact has not been paid.
" If the mere declaration of dividend in general meeting of the company is not to be regarded as payment within the meaning of section 16(2), much less can it be said that a resolution declaring interim dividend which is capable of being rescinded by directors operates as payment before the company has actually parted with the amount of dividend or discharged obligation by some other act.
The High Court was therefore right in recording an affirmative answer to the question propounded for the consideration of the Court.
The appeal fails and is dismissed with costs.
Appeal dismissed.

summary:
The appellant held shares in a company the Board of Directors of which by a resolution dated August 30, 1950 declared interim dividends.
The appellant received a dividend warrant dated December 28, 1950 for a certain amount being the interim dividend in respect of its share holdings in the company.
The appellant 's year of accounting had ended on September 30, 1950.
The revenue authorities brought to tax the amount so received with other income of the appellant in the assessment year 1952 53 after rejecting the objection of the appellant that it represented income for the assessment year 1951 52.
In a reference made under section 66(1) of the Indian Income tax Act, 1922, the High Court agreed with the Revenue authority that the dividend was in view of article 95 of the First Schedule to Indian Companies Act, 1913, liable to be included in the assessment year 1952 53.
Held: A declaration of dividend by a company in a general meeting gives rise to a debt.
In re Severn and Wile and Severn Bridge Railway Co. , referred to.
But a mere resolution of the Directors resolving to pay a certain amount as interim dividend does not create a debt enforceable against the company for it is always open to the Directors to rescind the resolution before payment of the dividend.
The Lagunas Nitrate Company (Ltd.) vs J. Henry Schroeder and Company, 17 Times Law Reports 625, referred to.
Commissioner of Income tax, Bombay vs Laxmidas Mutraj Khatau, , distinguished.
(ii) The test applied by Chagla C. J. (in C.I.T., Bombay vs Laxmidas Mulraj Khatau, that because the ,dividend becomes due to the assessee who has the right to deal with or dispose of the same in any manner he likes, it is taxable in the year in which it is declared cannot be regarded as correct.
(iii) Dividend may he said to be paid within the meaning of section 16(2) of the Indian Income tax Act, 1922 when the company discharges its liability and makes the amount thereof unconditionally available to the member entitled thereto.
Purshottamdas Thakurdas vs C.I.T., Bombay, , referred to.
I P(1)) 1 S.C.I 17 (a) 580 (iv) The declaration of interim dividend capable of being rescinded by the directors does not operate as a payment under section 16(2) of the Income tax Act before the company has parted 'with the amount of dividend or discharged its obligation by some other act.


judgement:
Appeal No. 46 of 1961.
Appeal from the judgment and decree dated July 17, 1958 of the Patna High Court in Appeal from Original Decree No. 162 of 1952.
Sarjoo Prasad and D. N. Mukherjee, for the appellant.
R. C. Prasad, for respondents Nos.
565 April 1, 1964.
The Judgment of the Court was delivered by MUDHOLKAR, J.
This is an appeal by a certificate granted by the High Court of Patna under article 133(1)(a) of the Constitution, and arises out of a suit instituted by the appellant against the respondents for the recovery of a sum of Rs. 57,000/ .
The appellant holds permanent lease hold rights over a colliery called the Jealgora Govindpur Colliery and had worked the colliery himself for some time.
On January 31, 1949, he granted a sub lease of the colliery to respondent No. 4 for a term of five years.
At that time, 2803 tons of slack and rubble coal was lying in the colliery, and under the terms of a separate agreement executed by respondent No. 4, he was liable to pay for this coal at the rate of Rs. 10/ per ton after selling it.
According to the appellant, this coal was sold by respondent No. 4, but he was not paid its price amounting to Rs. 28,030/ .
Further, according to him, royalty and commission were due to him from the respondents in respect of the coal extracted by them from the colliery, as also Rs. 1,355 / 8 / 3 on account of a loan taken by them from him on February 17, 1949.
The total claim was tentatively valued by him at Rs. 57,000/ .
He joined respondents 1, 2 and 5 as defendants to the suit on the ground that these three persons along with respondent No. 4 formed a partnership firm known as Saurashtra Coal Concern which was joined in the suit as defendant No. 5 and is now respondent No. 3 before us.
The appellant 's case was that respondent No. 4 was a benamidar for the partnership firm and, therefore, all the respondents were liable for the claim.
Respondents 4 & 5, who are father and son, admitted the appellant 's contention that the lease was obtained by respondent No. 4 on behalf of the partnership firm, but their contention was that they surrendered their lease hold interest to the appellant on November 1, 1950, which was accepted by him, and that he was, therefore, not entitled to the claim in respect of royalty and commission from them for the period subsequent to November 1, 1950.
Further, according to them, the coal which was lying in the colliery was not actually weighed at the time of the agreement and the figure of 2803 tons was put down only as a rough estimate.
According to them, on the date of the surrender of the lease by them, there was a stock of more than 2803 tons of slack and rubble, etc., as well as soft coke, including the stock left by the appellant at the time of granting the sub lease, because that could not be sold, and the appellant took possession of the entire stock lying in the colliery in November, 1950, after promising to adjust it towards the dues.
They, therefore, 566 disclaimed all liability to pay the price of 2803 tons of coal.
They also denied having taken a loan from the appellant as alleged by him.
No separate written statement was filed on behalf of respondent No. 3, but respondents 1 & 2, who were defendants 2 & 4 in the trial court, denied the appellant 's claim totally.
According to them, respondent No. 4 took the sub lease in his personal capacity and not on behalf of the 'other respondents.
They averred that there was no privity of contract between them and the appellant and that, therefore.
he was not entitled to a decree against them.
The real facts, according to them, are that the respondent No. 4 took a sublease of the property from the appellant and gave a managing agency of the same to the Saurashtra Coal Concern of which the first respondent is the financing partner and the second respondent is the working partner.
This concern was, they say, never a sub lessee of the appellant.
They also denied having anything to do with the stock of coal which the appellant is alleged to have sold to the 4th respondent.
The trial court negatived the claim of the appellant in respect of the loan but decreed the claim for Rs. 28,030/ as the price of coal and commission thereon against all the respondents.
It further passed a preliminary decree for ascertaining the precise amount of royalty and commission which would be due to the appellant on account of the sub lease.
The trial court further said that the minimum amount under this head would be Rs. 26,000/ .
Respondents 1 to 3 preferred an appeal to the High Court and the High Court accepted it.
Thus, the position now is that the decree of the trial court stands only against respondents 4 & 5, but has been set aside as against respondents 1 to 3.
In view of the fact that both the courts below have found concurrently that the sub lease in question was taken by respondent No. 4 alone, the only point urged by Mr. Sarjoo Prasad in support of the appeal is that respondent No. 4 being a partner in the Saurashtra Coal Concern, all the partners of the firm are liable under the lease inasmuch as the firm admittedly came into possession of the demised colliery.
He points out that even according to respondents 1 to 3, they came into possession of the demised colliery immediately after the execution 'of the sub lease, and wants this Court to infer from this that the partnership had already come into existence before the lease was obtained.
This, however, has never been the case of the appellant in the courts below.
The only case which he put forward was that the lease was taken by respondent No. 4 on behalf of all the respondents.
In other words, his case was that respondent No. 4 was a benamidar for the partnership firm.
It is only 567 this case which the respondents had to meet, and in our judgment, it would not be proper to permit the appellant to make out an entirely new case at this stage.
Apart from that, section 22 of the , clearly provides that in order to bind a firm by an act or an instrument executed by a partner on behalf of the firm, the act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm.
The sub lease was not executed in the name of the firm, and it has been found by the courts below that respondent No. 4 in obtaining the lease, did not act 'on behalf of the firm.
This in substance means +,hat in obtaining the sub lease, the parties to it did not intend to bind the firm by that transaction.
In support of his contention, Mr. Sarjoo Prasad has strongly relied upon the decision in Karmali Abdulla Allarakia vs Vora Karimji Jiwanji and others(1).
That was a case in which the question for consideration was whether one of the two partners is liable upon a hundi drawn by one of the partners though the hundi was not drawn in the name of the firm.
The Privy Council following the decision in Gouthwaite vs Duckworth(1) held that the other partner would be liable though on the face of it the hundi did not purport to be on behalf of the firm.
That decision, however, does not help the appellant, because while the transaction in connection with which the hundi was drawn, was admittedly a partnership transaction, in the case before us, it has been found that the transaction, that is, the taking of the sub lease, was not on behalf of the partnership.
The next case relied upon was Mathura Nath Choudhury vs Sreejukta Bageswari Rani and others(2).
In that case, the question was whether the firm is liable for the money borrowed by one of its partners.
The High Court pointed out that this is a question of fact and depends upon the facts and circumstances of each particular case.
In that case also, it was found that the liability arose upon a contract entered into by one of the partners in connection with the partnership business.
This case is, therefore, similar to the one just referred to above.
The third case relied upon is Pandiri Veeranna vs Grandi Veerabhadraswami(4).
In that case, the question was whether the fact that one of the several partners had authority to acknowlede liability to save limitation as against his partners, had to be established only by direct evidence or whether it could be inferred from the surrounding circumstances.
The High Court held that it was (1) ILR at 274, etc.
(2) (1810) 12 East 421.
(3) 46 CLJ 362.
(4) ILR Bench).
568 permissible to establish the existence of authority from the surrounding circumstances.
The case is thus of no assistance to the appellant.
The next case relied upon was Lakshmishankar Devshankar vs Motiram Vishnuram, etc.(1).
There, it was held that where money borrowed by one partner in the name of the firm but without the authority of the co partners has been applied to paying off the debts of the firm, the lender is entitled in equity to repayment by the firm of the amount which he can show to have been so applied and the same rule extends to money bona fide borrowed and applied for any legitimate purposes of the firm.
It is difficult to appreciate how this case advances the present matter further, because here, the sub lease has not been obtained in the name of the firm.
The last case relied upon was Gordhanadas Chliotalal Seth vs Mahant Shri, Raghuvirdasji Gangaramji(2) That again is a case in which the firm was held to be bound by the debts contracted by the managing partner for the purposes of the factory run by the firm.
All the partners were held liable, because the transaction was entered into, by the managin partner for the purpose of the partnership business.
This case is similar to the one just referred to above and is, therefore, of no assistance to the appellant.
Mr. Sarjoo Prasad also referred to two other decisions in Ram Kinkar Banerjee and others vs Satya Chararan Srimani and others(3) and Raja Sri Sri Jyoti Prasad Singh Deo Bahadur vs Samuet Henry Seddon(4).
In these cases, the defendants sought to be made liable were assignees of a lease, but that is not the case here.
Indeed, Mr. Sarjoo Prasad quite rightly conceded that respondents 1 to 3 cannot be made liable upon the ground that there was a privity of estate between them and the appellant.
We, therefore, agree with the High Court that the decree should be limited only against respondents 4 and 5, and dismiss the appeal with costs.
Appeal dismissed.
(1)6 BLR 1106.
(2) 34 BLR 1137.
(3)AIR (4) ILR 19 Pat.
433 at 459.

summary:
The plaintiff appellant instituted a suit against the defen dants respondents for the recovery of a sum of Rs. 57,000/ .
The appellant was holding permanent lease hold rights over a certain colliery.
On January 31, 1949 the appellant granted a sub lease of the colliery to respondent No. 4 for a term of 5 years.
He joined respondents 1, 2 and 5 as defendants to the suit on the ground that these three persons along with respondent No. 4 formed a partnership firm known as Saurashtra Coal Concern which was joined in the suit as defendant No. 5.
The appellant 's case was that respondent No. 4 was a benamidar for the partnership firm and, therefore, all the respondents were liable for the claim.
Respondents 1 and 2 denied the appellant 's claim totally.
According to them, respondent No. 4 took the sub lease in his personal capacity and not on behalf of the other respondents.
Respondents 4 and 5 who are father and son, admitted the appellant 's case that the lease was obtained by respondent No. 4 on behalf of the partnership firm.
The trial court passed the decree against all the respondents.
On appeal, the High Court set aside the decree as against respondents 1 to 3 but affirmed the same against respondents 4 and 5.
Held: that Section 22 of the , clearly provides that in order to bind a firm by an Act or an ins trument executed by a partner on behalf of the firm, the Act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm.
The sub lease was not executed in the name of the firm.
On the facts of this case it was held that in obtaining the sub lease, the parties to it did not intend to bind the firm by that transaction, and therefore the decree should be limited only against respondents 4 and 5.
Karmali Abdullah Allarakia vs Vora Karimji Jiwanji, I.L.R. , Gouthwaite vs Duckworth, (1810) 12 East 421, Mathura Nath Choudhury vs Sreejukta Bageswari Rani, 46 C.L.J. 362, Pandiri Veeranna vs Grandi Veerabhadi aswami.
T.L.R. , Lakshmishankar Devshankar vs Motiram Vishnuram, 6 B.L.R. 1106 and Gordhandas Chhotalal Seth v, Mahant Shri Raghubirdasi Gangaramji, 34 B.L.R. 1137, distinguished.


judgement:
Appeal No.241 of 1961.
Appeal from the judgment and decree dated March 4, 1958, of the Patna High Court in Appeal from Appellate Decree No. 1335 of 1952.
634 R.S. Sinha and R.C. Prasad, for the appellants.
Sarjoo Prasad and B. P. Jha, for the respondents nos.
1 and 2.
April 3, 1964.
The judgment of the Court was delivered by DAS GUPTA, J.
This appeal arises out of a suit for re demption of a large number of usufructuary mortgages in favour of the defendants.
The plaintiff who owned 1.67 acres.
of lands which were recorded in Khata 56 and 10.56 acres in Khata 57 in village Sarifabad gave 1.27 acres out of Khata 56 and 8.24 acres out of Khata 57 lands in mortgage to the several defendants by separate mortgage bonds.
Part of the remaining land was sold by him and the rest settled by him with the first defendant on Batai terms.
The plaintiff 's case is that under the terms of the mortgage bonds the mortgagees were liable to pay rent to the landlord.
The mortgagees however defaulted in the payment of rent for some years.
A suit for the arrears of rent was brought by the landlord and a decree obtained.
In execution of the decree the lands were sold.
The purchasers were one Besolal and Mst.
Kirti Kuer, who according to the plaintiff, were only benamidars of defendants 1 and 2 and other mortgagees.
It is his case that this purchase enured for the benefit of the mortgagor, that is, the plaintiff, and so the right of redemption of the mortgagees has not been affected.
The prayers were for a declarations that the purchase was for the benefit of the plaintiff and for redemption of the mortgagees.
The suit was contested by defendants 1 and 2 only.
Of these defendants, Chamroo Sao is the purchaser, and Besolal, defendant 2 is the son of the other purchaser Mst.
Kirti Kuer.
They denied the allegation that Besolal and Mst.
Kirti Kuer were their benamidars and contended that the right of redemption has been extinguished by the court sale.
The Trial Court held that the plaintiff had failed to show that the auction purchasers were benamidars of the mortga gees and in that view dismissed the suit.
On appeal, the Additional District Judge, Patna, came to a contrary conclusion.
He held that the put chase, though in the name of Besolal and Mst.
Kirti Kuer was really by the, first and the second defendants.
He also accepted the plaintiff 's case that under the terms of the mortgage bonds the mortgagees were liable to pay the rent and the rent sale having been brought about due to the default of the mortgagor and the mortgagee they could not be allowed to take advantage of the sale.
So, according to the learned Judge, the equity of 635 redemption in favour of the plaintiff still subsisted and that he was entitled to redeem the mortgaged property.
Accordingly, he set aside the judgment of the Trial Court and passed a preliminary decree for redemption.
Against this decree the two defendants appealed to the High Court of Patna.
The appeal came up for hearing in the first instance before a Single Judge (Mr. justice Sahai).
On a consideration of the evidence, he was of opinion that the liability of rent of 2.67 acres was upon defendant I and that payment of rent of 87 acres which was purchased and 1.76 acres which was taken in ijra, the total being 2.43 acres, was upon defendant 2, that for payment of rent of 3.83 acres was upon the other defendants, and the plaintiff was liable to pay the rent of only about 3.39 acres out of the entire area of 1.67 acres of Khata No. 56 and 10.65 acres of Khata No. 57.
The question which therefore arose was whether section 90 of the Trusts Act would operate to keep the equity of redemption alive in cases where the sale took place due to the default of the mortgagor as well as the mortgagees, the default on the part of the mortgagees, who purchased the properties at the sale being also substantial.
The learned Judge referred this point for decision to a Division Bench.
The Division Bench of the High Court held that section 90 of the Trusts Act did not apply to these circumstances.
In this view the High Court allowed the appeal, set aside the decree of the first appellate court and restored the decree of the Trial Court.
The present appeal by Mst.
Basmati Devi, who is the legal representative of the original plaintiff who was substituted in his place, is against the High Court 's decision dismissing the suit.
In coming to a conclusion that section 90 of the Trusts Act did not apply to cases where the sale took place due to the default of the mortgagor as well as the mortgagee, the High Court appears to have followed a number of previous decisions of the same High Court.
In support of the appeal it is urged that the view taken by the High Court in the present case as well as the previous decisions of the Patna High Court is incorrect and defeats the very object of section 90 of the Indian Trusts Act.
Section 90 of the Indian Trusts Act is in these words: "Where a tenant for life, co owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in 636 derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit.
of all persons so interested, the advantage so gained but subject to repayment by such persons of their due share of the expenses properly incurred, and to, an indemnity by the same persons against liabilities properly contracted, in gaining such advantage.
" The question for consideration is whether in circumstances like the present where the decree and the sale in execution of it are brought about by the default of both the mortgagor and the mortgagee, the mortgagee can be said to have taken advantage of his position by purchasing the property at the sale.
The High Court appears to think that unless the sale was brought about by the default of the mortgagee alone the mortgagee cannot be said to have taken advantage of his position in making the purchases.
What seems to have weighed with the learned Judges is that even if the mortgagee had done his duty by paying the rent he was liable to pay, the sale would still have taken place as the mortgagor did not pay that portion of the rent which he was liable to pay.
So, they thought that the mortgagees, though they took advantage of the fact that the property had been brought to sale, could not be said to have taken advantage of their position as mortgagees.
With this view we are unable to agree.
In our opinion, the fact that the mortgagor had made a default, does not alter the position that the mortgagee had also defaulted in paying the rent he was liable to pay.
By his default he has contributed to the position that a suit had to be brought for arrears of rent and ultimately to the position that the property was put to sale in execution of the decree obtained in the suit.
This contribution to the bringing about of the sale was a. direct result of his position as a mortgagee.
When therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee.
This, in our opinion, is the position in law even if the mortgagee 's liability was to pay less than the major portion of the rent of the holdings.
Whether this would be true even where the portion which the mortgagee is liable to pay is so very small that the property is not ordinarily likely to be brought to sale for that amount, it is unnecessary for us to decide in the present case.
In the present case, the finding is that the liability of the defendants 1 and 2 was to pay a substantial portion of the rent.
To say in such circumstances that they did not take 637 advantage of their position as mortgagees is entirely unrealistic Such a construction would put a premium on dishonesty on the part of mortgagees whenever the entire burden of payment of rent was not left squarely on the mortgagee as under the provision of s.76 of the Transfer of Property Act.
Mr. Sarjoo Prasad, who appeared before us on behalf of the respondents, tried to persuade us that in any case the plaintiff 's suit should fail as regards the lands recorded in Khata No. 57.
As, according to him, these mortgagees were not at all liable to pay any portion of the rent of this holding.
He drew our attention in this connection to exhibit 2, the mortgage bond executed in favour of Chamroo Sao, and to the statement made therein: "Annual rent payable to the zamindar is the concern of me, the executant".
This argument proceeds on the basis that the holding recorded in Khata No. 57 continued to be separate and distinct from the Khata No. 56.
It is thus in direct conflict with the plea of these very defendants in their written statement that the two holdings had been consolidated into one holding with one rental.
As the oral and documentary evidence on the Paper Book prepared in the appeal did not clearly show whether or not these two holdings had become one, we called for one of the documents, exhibit B which seemed likely to throw some light on the matter.
The document has now been received.
It is the copy of a judgment of a suit between these parties in which this very question, viz., whether the two holdings had been consolidated into one or not, was raised.
It was decided hat such consolidation had taken place.
It is clear that it was after such consolidation that the second rent suit was brought in respect of that consolidated holding and it was that consolidated holding which was sold in execution of the decree.
It is clear therefore that the mortgage bond Ex.2 in which the mortgagor accepted liability to pay rent to the zamindar in respect of the mortgaged land in Khata No. 57 does not affect the correctness of the High Court 's finding that the liability to pay rent of the holding that was sold was partly of the mortgagor and partly of the mortgagees and, that it was the default of both the mortgagor and the mortgagees that brought about the sale.
Accordingly, we allow the appeal, set aside the judgment and decree of the High Court and restore the decree made by the Additional District Judge, Patna.
A Pleader Commissioner shall be appointed by the trial court on a deposit of Rs. 50/ as his fees by the present appellant within two months from this date for taking accounts as to the amount due to the defendants on the date of the decree.
A preliminary decree for redemption shall be passed in the usual terms.
As the suit as also the appeal before the District Judge had been brought in forma pauperis the High Court made an order 638 directing the plaintiff to pay the court fee on the plaint as well as on the memorandum of appeal.
That order is set aside.
Instead, we order the first and the second defendants in the suit to pay the court fee payable on the plaint as also on the memorandum of appeal.
The present appeal to this Court has also been brought by the appellant as a pauper.
As she has succeeded in the appeal, we order the contesting respondents, i.e., the first and the second defendants, to pay the court fee payable on the memorandum of appeal to this court.
The appellant will get her costs from the first and the second defendants through out.
Appeal allowed.

summary:
The plaintiff brought a suit for redemption of a large num ber of usufructuary mortgages in favour of the defendants.
The case of the plaintiff was that under the terms of the mortgage bonds the mortgagees were liable to pay rent to the land lord.
The mortgagees, however, defaulted in the payment of rent for some years.
A suit for arrears of rent was brought by the land lord and a decree obtained.
In execution of the decree the lands were sold.
According to the plaintiff, the purchasers of the mortgaged lands were only benamidars of defendants 1 and 2 and other mortgagees.
The plaintiff claimed that the right of redemption was not affected by the Court sale because the purchase was for the benefit of the plaintiff.
The suit was contested by defendants 1 and 2 only.
Their case was that the right of redemption had been extinguished by the court sale; that the purchasers were not the benamidars of the defendants.
The Trial Court dismissed the suit.
On appeal, the Additional District Judge set aside the judgment of the Trial Court and passed a preliminary decree for redemption.
Against this decree the two defendants appealed to the High Court.
The appeal was heard by the Division Bench.
The High Court held that in the present case section 90 of the Trusts Act did not apply because the court sale took place due to the default of the mortgagor as well as the mortgagees.
In this view the High Court set aside the decree of the first Appellate Court and restored the decree of the trial court.
Held: The fact that the mortgagor had made a default, does not alter the position that the mortgagee had also defaulted in paying the rent he was liable to pay.
By his default he has contributed, to the position that a suit had to be brought for arrears of rent and ultimately to the position that the property was put to sale in execution of the decree obtained in the suit.
This contribution to the bringing about of the sale was a direct result of his position as a mortgagee.
When therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee.
This is the position of law even if the mortgagee 's liability was to pay less than the major portion of the rent of the holdings.
In this view section 90 of the Trusts Act applies to the facts of this case.